Episode 107 | Get Auction Ready | Veronica Morgan, Good Deeds

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How to bring your “A Game” to any auction
Top property expert commentator and trusted Buyers Agent, Veronica Morgan’s long awaited book is here, ‘‘Auction Ready: How to buy Property at Auction even though you’re scared s#!tless’. In this episode, the tables have turned, Chris interviews Veronica, and Veronica gives the inside scoop and shares her secrets to help property buyers master the art of auctions.

Here’s what we covered:

Veronica Morgan releases her new book ‘Auction Ready: How to buy Property at Auction even though you’re scared s#!tless’
What percentage of quality assets are sold under auction conditions?
How to understand the value of a property through a price guide.
Thinking beyond getting a 'good deal'.
What happens if the property has great macro factors but needs a renovation?
How far will you push your budget?
What happens when you miss out?
The life changing results of buying a quality asset.
What value do buyers agents bring to your property search?

GUEST LINKS:
To request a promo code for "Auction Ready" please email us here.

AUCTION READY: HOW TO BUY PROPERTY AT AUCTION EVEN THOUGH YOU'RE SCARED S#!TLESS

By Veronica Morgan

Buy on Amazon

HOST LINKS:
Looking for a Sydney Buyers Agent? www.gooddeeds.com.au
Work with Veronica: info@gooddeeds.com.au

Looking for a Mortgage Broker? www.wealthful.com.au
Work with Chris: hello@wealthful.com.au

EPISODE TRANSCRIPT:
Please note that this has been transcribed by half-human-half-robot, so brace yourself for typos and the odd bit of weirdness…
This episode was recorded on 10 October, 2019

Veronica Morgan: You're listening to the elephant in the room property podcast where the big things that never get talked about actually get talked about. I'm Veronica Morgan, real estate agent buyer's agent, cohost of Foxtel's location, location, location Australia and author of a new book auction ready how to buy property even though you're scared shitless.

Chris Bates: And I'm Chris Bates, financial planner, mortgage broker, and together we're going to uncover who's really making the decisions when you buy property.

Veronica Morgan: Don't forget that you can access the transcript for this episode on the website as well as download our free boom or forecaster report. Which experts can you trust to get it right, the elephantintheroom.com.au please stick around for this week's cracking Dumbo, of the week coming up

Chris Bates: Before we get started. Everything we talk about on this podcast is general in nature and should never be considered to be personal financial advice. If you're looking to get advice, please seek the help of a licensed financial advisor or buyers agent. They will tailor and document their advice to your personal circumstances. Now let's get cracking.

Veronica Morgan: Well, I've got some really exciting news. My book has finally been published. It's called auction ready, how to master auctions and bid like a pro. Now you may have heard me briefly mentioning this book in the intro of recent episodes. I've made a slight name change. It used to be how do I own property at auction even though he's scared shitless. Now, I changed it after some sensible but slightly boring feedback, but you listeners will always know the title I wanted in my heart of hearts. The book has been a long time in the making and draws upon my experiences selling agent where I sold hundreds of property at before and after auction.

Veronica Morgan: And if you go back to episode eight you'll hear from auctioneer, David Scholes, and David was responsible for a great deal of what I learned back in my selling days. Now, of course, I've built on this knowledge over the past 13 years as a buyer's agent. And then the amazing guests we've had on these podcasts have taught me even more specifically Damien Cooley in episode two, Tim Heavyside in episode 36 our filter vaguely in episode 92 and let's not forget the episode that kicked this whole thing off where behavioral scientists, Simon Russell taught us about 12 ways in which our subconscious is motivated by auctioneer's and the entire auction process. So in this episode, Chris is going to pick my brains and I'm going to share some of the secrets are revealing the book. And at the end I'll give you a discount code where you can get your very own copy for a 30% discount.

Chris Bates: Oh, thank you. Oh, that's a good effort. You know, they don't take they don't just happen. How long has it taken you to write the book?

Veronica Morgan: Oh, interestingly enough, over years and years and years I've been writing blogs and articles, et cetera, et cetera. And so I started putting a framework around it in January, I spent most of January filling in the gaps and adding content and I thought that that was pretty much it. You send it off to an editor and you know, just gets whipped into shape it as three and it's later and an additional 10,000 words. We have a book.

Veronica Morgan: Okay. And you're going for the bookshops and airports and all that sort of stuff or is it going, how far, how far are you going? The promotion was, Oh, if they'll have me, yes, I'll have anyone that will stock my book. Anyone out there book stockist you can have it. I'll spread the word.

Chris Bates: Why did you go for auctions? Like why did you focus as a key part of that in your title and why didn't you just go for how to buy property?

Veronica Morgan: Well, well I, there's a so much already written out there about how to buy a property well. And I guess I find the auction a whole auction process very mystifying for most people. But for me, I get it. I just get the language. I get the objection, objectives, objections as well. I get what everyone is trying to achieve in the process and because I understand it so intrinsically it's like I speak this language and I just realized that most people don't speak the language of auction. So why do you think,

Chris Bates: Do you know have any, like in terms of the areas, like in the inner rings of say Sydney, Melbourne, Brisbane, not so much, but what percentage of the quality assets do you think actually still sell under auction conditions? Like do you think it's half or more than that?

Veronica Morgan: So in the inner ring, so it traditionally, even when I started in real estate back in 2000 it was traditionally an inner ring thing and you know, anywhere outside of that it all, it all came down to whether the vendor would pay for advertising or not. And so in the outer areas, as I call, vendors won't pay for advertising. And in the inner areas they sort of started paying for it. Melbourne has is known as the auction Capitol of Australia. So that's actually much more prevalent. And even in the outer areas, I think probably we're using auctions or selling more at auction earlier than in Sydney. And certainly as the market started booming and people realized in outer areas that they were going to, you know, there was demand, you know, when there's more demand, obviously that's ideal.

Veronica Morgan: And also when you've got a non homogenous product, so if you've got building of apartments and they're all exactly the same, so much point really auctioning them.

Chris Bates: But I think getting auction though, I don't know.

Veronica Morgan: Sometimes. Yeah, well not so much the new stuff. Like it's very unusual that somebody would auction five-year-old apartment in a block. Everything's the same. But weirdly enough, see this is a thing to auction. Used to be a distressed sale. It was like a desperate vendor. And then it sort of flipped to be really about, well I know I've got a unique product, I know that they're scarce, I know there's lots of buyers around that will fight for it and I don't really know what it's worth, you know? So unless those buyers get out there and compete, so it's the perfect forum for it. So it's, it's sort of interesting how auction sort of fits both ends of the spectrum in a way. The bargain hunters and the and the premium property or.

Chris Bates: Do you think some agents, like some agents, you know, they're always going to auction, but sometimes they never actually go to the auction. You know, they sell auction just to that around, there's lots of agents that use auctions as a smokescreen and then they ended up selling it.

Veronica Morgan: Yeah. And this is a thing, one of the benefits of an auction for an agent in terms of selling is that if you're not really sure on where the price is at or where buyers might be prepared to pay for a certain property, then you put it on an auction campaign and the market pretty much determines, or if you've got one great buyer's prepared to pay more than everybody else, you sort of shake the sieve if you like. And the biggest rocks will still be in that sieve. So that's a really effective way of working out exactly what the market will pay for a particular property. So when you get a lot of these agents that might be going pre auction, it's because they haven't really fully worked out where they should price it to sell it. And so part of that whole auction process is that lead up is getting all that information from buyers.

Veronica Morgan: So, and I think Phil De Fagley may have even talked about it actually in our episode with him because it's something that, you know, I used to say when I was a selling agent, the auction campaign and auction is on a four week marketing process. It's really in my views a good six weeks a really well, you know, well handled auction campaign, you've got to think of six weeks because the thing is if it doesn't sell on the day, you need to have worked out exactly where it will sell so that you can price it accordingly immediately afterwards and within two weeks you'd sell it. So that's sort of basically the way it should work.

Chris Bates: So how do you as an agent a selling agent make sure you keep everyone interested because Tom's actually dangerous, right? If you're, if I'm selling my property and I'm going, it's six weeks. And you know, there's only a certain amount of period before Christmas where everyone switches off. I am. And there's only 70 buyers out there and some are hotter than others. But if I drag this on for six weeks, I could lose good buyers. Like how does a selling agent make sure that they keep enough interest in the quality assets so the buyers don't go off and buy something else?

Veronica Morgan: Yeah, well they don't have to worry so much for quality. There's the ones that aren't quality to worry about. It's a really good question because really the auction campaign typically is actually only three weeks, right? So you've got the first Saturday open house in second set at open house, third set at open house, and then your auctions on the fourth Saturday. So that's actually a three week campaign. So when I say six weeks, it's like the, the week leading up to your first open house. And then if it does pass and you've got two weeks after. So that's the full six weeks, right? So therefore three weeks is where they've got to harness all of that interest and they've got to keep everyone bubbling and, and get them to the day, you know? So yes, that is something that a good or a good agent is really skillfully managing.

Veronica Morgan: And you know, and I know, Oh God, years back, I remember one year I had a situation where there was Eastern Anzac day sort of within two weeks of each other and I ran a couple of five week campaigns and they were way too long. I mean trying to corral all those buyers even though you had those two quite significant breaks in in the market. So it can sort of certainly understand why agents where there's a low was is a drop off in listings around those periods of time because agents don't want to be running campaigns over those holiday periods.

Chris Bates: Well that's what I'm looking at now actually, that they try to rush it to get it in before the school holidays and then it all went flat. There's not enough interest. So then they pumped, then they go, I can't do the auction in the middle of the school holidays or the week when they come back and I don't want to do the and straight after the school holidays because you know it's still too soon then and enough times to say it cause they've been away. So these campaigns gone from a two week to a six or seven week or an option for an auction campaign because you know they really probably should leaving the dates. Well they moved it once, but they had to move it four weeks.

Veronica Morgan: And that must be laugh. If they're pushing it out, there's a massively clear sign to buyers. There's not much interest when they bring it forward, which does happen. So I've had situations where say, normal three-week campaign, there is so much interest and there are buyers throwing offers at the agent. The agent says, bugger this, I'm pulling the option forward a week. So that usually means that the agent knows they're pretty much, that's the peak of interest and they're worried about letting it go any further. I might lose a few buyers. And also if they're heading into spring, for instance, where people are expecting more stock to come on the market, the agents are aware that other agents will have other stock, they'll have other stock, they want to make sure the buyers are going to be taken off out of the market, whichever buyer is going to buy, that property is taken out of the market and that property is taken off the market before there's an influx. So there are, there's quite a lot of thinking around by the more enlightened agents around exactly how they time their campaigns.

Chris Bates: Let's say I'm trying to sell a property though, and it starts with $2 million and it's on a house in Balmain and I go do a inspection for somebody who wants to sell. And I also have a very similar product and they want to sell for $2 million. How does an agent manage that conflict where they're selling two products that are very similar price point? But they've signed one up first. Do they just list both properties and say,

Veronica Morgan: Yup, they don't even think about it as a conflict? Yup.

Chris Bates: And so if you're a seller, do you, are you more, you know, is that a problem when you potentially go to an agent that's probably sewn up the whole area like there potentially. Now I've got two properties that they're going to show buyers.

Veronica Morgan: Look, it's interesting because you do have, there'll be sellers that will be worried about that and they want to go with the other agent that isn't conflicted. But the reality is the buyers are the buyers. The buyers will be dealing with that agent and that agent, just because you know that agent's selling two properties, a similar price bracket doesn't mean that those buyers can be somehow corralled because you'd go with a different agent. So it's an interesting sort of question. The reality is if two properties are on the market, same time buyers are going to compare them. Yup. I remember when we interviewed Marnie Seinor from McGrath over there in Coogee Maruba that area and she was talking about that where she basically had two properties and she just made sure that one bought one, one bought the other. So, so you know, you have that sort of orchestration. If you like or conducting, you know, so there's the agent conducting the buyers, like they're in orchestra, you know, like you play this one, you play that instrument.

Chris Bates: Oh man. You, if you've got say a recruiter and you've got two jobs and you've got two great, you know, one prefers one, you are probably, you know, trying to get the ends meet and I think, you know, I think, you know, make sense from a seller's point of view to be doing that in sense of on price guides. Like yeah, it's, it's so hard to know what to, how to read Price guides. I mean, what do you thinks your kind of go to wave? Is it knowing the agent before you know, the price guide? Like how do you, how do you actually know what a property is worth by looking at a price guide or do you know?

Veronica Morgan: Well, a price guide is an indication and that is all it can be taken as and there is legislation in new South Wales in every state basically. I mean, certainly in new South Wales I'm obviously very familiar with that legislation in Victoria. Remember when we interviewed Tim Heavyside and he really talked through you know, their requirement, the agent's requirements in terms of price guides. So look, they have to be able to demonstrate that they've done the research to be able to quote a certain price. But underneath all of that, there's so much that goes on. So the reality is that I look at a price guy to say, okay, well that's an indication to me of what they put on the agency agreement. Now let's face it, some agents will have a conversation with their owner that is goes along sort of these lines. Well, we need to generate competition in order to sell your property for the best price at auction.

Veronica Morgan: If I quote what we think it's worth, the buyers will add 10% and that is going to discourage them from getting involved in getting ready to bid at this property because they won't want to pay 10% more than what we think it's worth. So therefore I have to quote a lesser figure in order to get those buyers interested, right? So it's all a game. Everyone's playing this game. And so they put it to the owner and the owner will agree or disagree, right? So, and not all agents do this by the way. I'm just putting it out there that some agents do do this. And some agents admit to me that they do this.

Chris Bates: Well they are damned if they do damned and damned if they don't if.

Veronica Morgan: They're in a tough position. And I, I 100% get it. And I, and this is why I say to buyers, right? You play your part in this too. You know, you don't tell the agent really what you're going to pay. Do you know, you know, in fact, most buyers I would hazard don't even know what they're really going to pay until they get to the auction that stopped bidding anyway. Well there's a heap wrong with that. That's what this book is designed to exterminate. There's a heap wrong with that, but this is the thing. Buyers don't even know what they're prepared to pay. Agents know that buyers don't even know what they're prepared to pay half the time. So therefore, all this stuff's going on. They have to provide or create the conditions to let the auction, you know, work its magic and actually get the price, the best price for the owner. And it might even be that working its magic is getting that highest interested party to make a whopping great offer prior.

Veronica Morgan: So however it transpires their job is to make that happen, create the circumstances where it happened. Underquoting is part of that. So you a whole industry that, and I tell you because I sat in the briefing rooms, you know, REI new South Wales, we're in a whole a whole road show on the new laws back at the end of 2016 and you know, you get agents that take it on and go, right, well I'm just going to comply with the law and this is a requirement and I'll explain to buyers and all that sort of stuff. So you will get some buy some agents it will quite realistically. So therefore if every buyer runs out and says okay, I'm going to add 10% cause they all and acquire it, well it's actually not true. Some don't. So you get those that will actually have a conversation.

Veronica Morgan: Explain really clearly to the buyers. This is why, this is why we believe this is, this is around the figure you need to be at. And obviously we want competition might go for more, but this is a reasonable expectation. Other agents will swear to you in the blue and you know, swear black and blue. That is that even a saying, but anyway, yeah, swear till they're blue in the face that you know that these comparables that they're using to justify their guide are truly comparable, but you know they're like nine months old or they're actually nowhere near as good as the actual property. Yes.

Chris Bates: I think at the start you don't, you when you've been looking for a while, you know, if you've been just new into the market, you think, well I looked at the, you know the table at the open, there's a few comparables. I think I'm going to get it for one six. Everyone's telling me one six and you get to the auction, it sells for nine did you, you know, you just have it and then you feel a bit disillusion, then you start shopping in a different area. Yeah. So let's say it is the week before the auction and the agent's now saying, look, I think we just have to go to auction because the vendor needs to see how much interest there is in the property and they're not going to take any offers prior because they just want to see how much interest there is and they're not sure whether they're going to sell it, you know? Do you think that's true or do you think that's just another way for the agent to encourage more people to come to the auction and just have a crack.

Veronica Morgan: I'd be surprised if an agent ever said they're not even sure whether they're going to sell it. Yeah, because, because what the agent is trying to do is make you think they're going to sell it. So you've got to be there because if you're not there and they sell it, you miss out on your dream home. So it's V I mean I might have a conversation every now and then with an agent who faces up to me that the owner is completely out of control on price. And so they know that I know how to handle that information and we'll have a conversation around, well what are we going to do about that if my client was to buy it? Whereas the average buyer has got zero idea of how to handle that information and the agent knows they don't know how to handle it.

Veronica Morgan: So the agent would never in a blue fit tell them that. So it's like when you, you know, the question, how many contracts have you got out? Love that one. It's this one of the dumb questions that really useless. But other good questions. My spot, we haven't read the book yet. All of the questions there. I'll give you one. I mean, so to give you an example with the, how many contracts are out, it's like, well, I used to say I could have had 20, I'd still say four. I could have none. I'd say four. Four is like this nonthreatening number that creates the idea that you're not the only idiot that likes it. But at the same time, there's not so much interest that you don't have a chance, you know, and this is the balance that that agents are trying to deal with. So it's like he's a question that a lot of people ask, Oh, will they sell before auction? Now buyers ask that because they sort of think that you should ask it and they haven't really thought even, well, what am I going to do with the information if I get it? Am I ready to make an offer? Have I decided what it's even worth?

Chris Bates: So you're saying you shouldn't be signing those, asking those questions until you've answered these other questions.

Veronica Morgan: Exactly. And you should actually not ask a question unless you actually know what you're going to, what you specifically need to know and what you're going to do with that information. So the more clever a question to ask in that situation is, once you've made your mind up, yep, I really like this property. I know they're underquoting. I know what the recent sales are and I know pretty much what it's worth. I know what I'm prepared to push myself to because of X, Y, and Zed in terms of it's required for me, et cetera, et cetera, et cetera. All of that sort of stuff. I've had the building in Pestana, I've had this done, I've had that or the two diligence that I need to have done now that I'm committed and I know that I want to buy this property, I know where I'm paid to go with that. Now I can have a conversation around making an offer and then it's not, Oh, will the, will the vendor sell prior because what sort of vague answer you're going to get out of that?

Chris Bates: Yeah, it makes me just reflect sometimes when I've, when I go traveling and we go to a market and you know, I quite enjoy the whole, like, you know, you go around and just negotiate on things and you know, you pick up a belt and then, you know, you start negotiating on it and say, I want, you know, you know, you gotta a 10, a 10th of what the price is and then you'd work your way back up. But if you don't actually know what you should want to pay for it, that is why most skilled at this they knew. And then you walk away and you're like, yeah, I'm not sure if that's a good deal or not. You've done no market research. You go around the other aisle and you see the same belt for, you know, for a fraction of the price. And so yeah, I think there's a kind of same as this. As soon as you start saying, what's the price, what will they sell? If you haven't done your due diligence, your just going to get directed into whatever channel that they want to direct you to.

Veronica Morgan: And that's a good analogy there about, you know, haggling in the market. Cause I remember when I used to go and visit Rachel and my friend who lived in Hong Kong, right?

Veronica Morgan: And you know we go to the market and she was it ace Hagler I mean she was been phenomenal but she'd always say never haggle on this. She actually want to buy it. And this is a thing too that, that, that, and I hadn't even thought of this until you just said that to be honest, that you know, people do start negotiations for property before they've really decided where they want to buy it or not. Yeah. We talked with Simon Russell, remember about the consistency effect. So you start doing that. All of a sudden you find yourself in a negotiation and you go, Oh hang on a minute, do I, it's all very awkward. Some people actually buy without really fully thinking through the ultimate question. Do I want to buy it?

Chris Bates: Well that's it. Cause we've got to I was reading about this recently, like a bargain Hunter mentality. Like sometimes people will buy because they think they're getting a good deal, not because it's a good investment, not because it suits their longterm dreams or goals or whatever. It's just it's a good deal. And yeah, that's not a works with property. You can't buy lots of good deals. You can only buy one or two of them. And that's it. So you must, getting a good deal is not what you're looking to achieve. You're trying to get a good asset that grows. So I think that setting your price limit though when should you be doing that? And then let's say you probably are under what you think it's going to sell for. How do you, you know, I say it's okay to yourself that I am going to pie more than I think it's worth because I really want the property

Veronica Morgan: In my business, right? We have this, what we call four pillars that you need to consider when you are setting a price. And the very first one is you've got to understand the quality of the assets. So this is about the quality in terms of its longterm potential because, and we talk about on this podcast all the time, a great assets that do really well even when the market's tanked, you know? And so what I see is in a hot market, for instance, people pay a great prices for B and C great assets because of FOMO. So you've got to sort of think, well hang on a minute, how would this one go in a cold market? How would this one sell? Would it be competitive? Would I want to buy it if it wasn't a hot market? And, and that's a really important thing because if no, I wouldn't, then don't push yourself on this one. You know, you might decide you're going to go at a certain level, but don't push yourself. Right.

Chris Bates: What happens if the properties macro level, it's a great property. I.E Great straight, great aspect right front, teach that side. But there's things that are bright, dragging it down because of it needs a good reno. It's hasn't got grain area and it needs green area or, or there's things that are flawed about it that can change, but it's still macro level. It's a good property.

Veronica Morgan: Yeah, that's, that's part of asset quality for me. I look at assets to say, well, can I fix those things that are wrong with it or can't I? And if I can't, then absolutely it's B or C, you know, if, if I can address those, then that's a great value add opportunity. But still don't pay for potential pay for the quality of the asset. So people pay for potential all the time. I thought, well that's stupid. He might as well hang around by the one that's already done. If you're paying for potential, you know, so. So yes, at the fundamental quality of the asset is good. That's what you're paying for, not the potential. The next thing is.

Chris Bates: Then you start eating into your value add.

Veronica Morgan: Right? Right.

Chris Bates: So you're not actually, yes. Well, yeah, and you, yeah, exactly. You might not be overcapitalizing per se, but you might be cutting into that potential value at where you're going to make a profit. So do you really want to do that? You know, and that's all the effort and stress and things like that. So,

Veronica Morgan: But that's the next thing. So the next thing is actually what is the property as it is now? So, so there's, what could it be worth in terms of how would this one grow in value compared to others in the area? You know, A-grade will do better than others. So that's sort of the future then. Then there's the now what is it worth now? You know, how does it compare with what's been selling recently in this area? Now, you know, if, if I compare this to a renovated property, what's that cost of renovation? Do I do I knock that off? Is that the way it prices it? So you've really got to ask all those questions. And so right in this market, the way other properties are selling that are somewhat similar, then it should, you know, fit within this band. And so that's really clean to have

Veronica Morgan: Because that's your foundation. And if it's great asset, yes, you might push yourself a little bit for it because it's a great asset. And then on the other side of the equation, so the two objective measures and the subjective measures you've got, how uniquely does it fit your requirements? Because you could have an eight grade property, he or she doesn't see you, you know, fundamentally about whether it's right or not if you're going to live in it is how does it suit you now and for the future, you know, how does it help you in your, in your longterm goals as well. So, and how uniquely is that? How many other properties have sold that would have also fit the bill in a similar way, say in the last six months, if there's a lot said you think, I'm not going to push myself so hard because you know, there's a really good chance another one will come up. And if it's like the only one that's been around for a year, you go, right, I have to push myself on this one because it's back to the drawing board if I don't get it. And then the last pillar is, is to completely not only subjective, it's here. Your budget, your affordability, what you can borrow, what you can afford to pay back, all that sort of stuff. There can be that you've got those things are uniquely yours. And obviously you can't forget them when you're setting your limit.

Chris Bates: Yeah. So let's say I think that's great. I mean getting the good asset. If it's not, then you're convincing yourself to buy the wrong property. So that's good. The, you know, the S fitting your lifestyle, you could say, yep, no it's perfect and there's not many of them, so that's good. So I should be going for this and maybe I should push, but then if you then know that steal that someone else is going to potentially kind of overspend and someone else is probably going to value it more. How do you conduct, cause at some point it could be the market's moving. You could just be shooting yourself in the foot cause it could take another year. So how far should you go over your budget?

Veronica Morgan: So there's a process that we go through. So once you've sort of got those four things really clearly thought out in your mind, then you think, okay, I am or I'm not going to push myself, right? So I am going to push myself. Then it's like, well, we've got the baseline of where it should sell. It should, however, we know it's going to be competitive with an I property, et cetera, et cetera. So therefore we can think, well, there's a good chance that we'll go over that. So then we start the process of saying, right, at what price, where you kick yourself the next morning if you don't buy it, because this is the only way really determine your unique premium. And it's like, so if it's $100,000 more for argument's sake, is that, would you kick yourself? Oh God, no. I wouldn't want to pay that. I'd freak out. I'd just, I'd be so uncomfortable. Great. That's too much. Let's go 50 grand over. What does that feel like? Oh, Ooh, Oh, I have to think about that. Okay, well let's go to 30 grand. I'll go, no, I would feel sick if I let someone pay it for that price. Okay, what about five grand

Chris Bates: But when are you asking these questions? Is it the night before the morning of

Veronica Morgan: We do days before. I reckon you need a few days of this ping pong that go particularly with a couple cause there's a lot of ping pong that goes back and forward and it's it until it lands and you're both comfortable with it and you sit on that price and you go, I will walk away if it goes for a dollar more and you just know that in the core of your being when you know that that is your walk away price, you have to stick to that. But what I actually say is add an odd number on top because what the worst case scenario is another bidder gets to your limit before you you do or they, you get to your limit and you go I'd it, I'm done and you and you're hoping the other beer puts 20 grand on top of your limit for instance. But they only put one. And that's hard because anything are great. So you need to give yourself that tiny edge that really you've pushed yourself over your upper limits so that you get, you give it that one more bit and then you go, I have answered that question. You know, would one more bid buy it now I know. No it didn't. Or yes it did. Sometimes it does.

Chris Bates: Did I say it's the Thursday, the Saturdays on the set, the auctions on the Saturday and on the Thursday they come to an agreement. I think it's, I don't want to spend more on a dollar over $2 million. Right. And then you say, look, I had a little bit on the odd number, 2,000,007. Right. Do you find though that if it is the right property though, that people start to change the next day and then they, in your experience that they do start to lift that 2 million as I get closer to the auction because of that fear of loss and it starts to rise to a higher level?

Veronica Morgan: Certainly some people do. Some people are really feminine. Some people do and then they'll go backwards and they'll go up and go down. And so we all talk them through that. The thing is that that has to be threshed out before the auction because if, when it thresh out during the auction, really bad decisions get made. Right. And I watch it. Cause when I'm, when I'm at auctions, when I'm not betting or even if I am, but particularly when I'm not, I love it cause I'm not, I'm not vested in, I really purely observing and I see people and I see the conversations between couples in particular and think they've got not even minutes, they've got seconds to be talking through or how many have we seen or do you reckon that, you know, this is our last one. How long do before we're gonna have to do it again? All we'd have to rent, I have to do all these sort of stuff going on. And it's like, don't one going die, you know?

Veronica Morgan: And all that does is give a green light to the other buyer who's just done exactly the same thing to get to that last bit. And they're going, well, that person's close. One more bite by it. Should we? Should we, should we, should we, you know, this whole thing goes on. I've seen bids, I've seen auctions go up $100 in $1,000 beads with this sort of conversation and this sort of pressure, and if somebody had been clear about it and known that they were prepared to walk away at sort of 50 grand in the middle of that or whatever, and they just hit it with a 10 it would have just taken the air out of that and ended it so the elephant in the room is 100% for you. The reason that Chris and I do this podcast is because we passionately believe that property buyers can do it better. We really want to help all of you understand all the risks, but also the ways in which you can avoid your elephant making the decisions

Chris Bates: Love for you to do is just to share this episode and share other episodes with people around you that are going through the property process.

Veronica Morgan: Give us a review on iTunes. Five-Star, please will be very appreciated because this is about making sure that we all benefit from the wonderful information that our guests have been sharing with us.

Chris Bates: I was at an auction recently and it was exactly that. You know, you had a mother there with the baby or the younger child in the hand. Beating has been was you know, very know sweat on the forum. The other couple, you know, she was bidding as well. And you know, two younger kids. And they got to like one, five, five or something and then they just slowly just added a thousand thousand and it was dragging out. And you though both well over their limits. I was stressed. It was, it was, it was actually like stressing me cause I was like, you guys are way over what you think you are. Like it went out to over one six and then this one lady with the kid in the arm, he was like, no, would probably a great place to be beating with a child in your arm, like trying to pull your hair and.

Veronica Morgan: Do not take your kids when you

Chris Bates: And then she thought they weren't going once, going twice, you know, she's gonna win it and then bang a little stealth, bitter in the side and then 40 in another 10,000 on her beads and then auction just closed, finished. And so they went through this over their limit and things like lack of that in by it. So you know, but you know, this is quite, you know, I think they're probably more important now. Maybe let's say, cause it's been, you know, six months maybe. So play the app. But it was interesting. So I hadn't made that decision kind of prior. At what point though, do you kind of see where to stop people then and how do you stop people when they, they come to you and they say, Veronica, I want to spend 2.3 on this. But you know, it's only worth two. How do you give them the confidence to just keep looking and just, no, don't you spending too much? And because it's, I've got a client, an email on Monday from a client and you know, I could feel the deflation because I did miss out. And how do they kind of re motivate themselves to get out back on there and why,

Veronica Morgan: What often happens? It's sort of two parts to my answer to that. First of all is what happens to buyers when they miss out? You know, it is absolutely deflating and, and they to think this song never going to buy. It's almost like they go in two camps. One, one just dies for covering us as he amount of market by grit gone and y'all lick my wounds and when I feel like I'm ready for battle again, I'll re-emerge. And in which case, if the Mark has been moving, that's like, Oh, that's a shame cause you just lost out on a bedroom. And the other type of buyer gets, you know, very much I've got to pay whatever, you know, those buyers, those buyers are paying whatever. I just got to pay whatever I've got to give up. I, I, I won't do any due diligence.

Veronica Morgan: I'm not going to do building and pest inspection. It's going to go to whatever auctions on is going to pay whatever I was gonna pay because cause, cause, cause, cause cause you know, it's sort of FOMO and this sort of this mad panic is kicking in and I've seen this and I've had conversations with people and, and, and I know that. And then they go, Oh, I'm going to auction but I'm not going to bead. And I'm like, I bet you are. Because you're in that mindset of your so panicked and you just missed out and you got that pain of, you felt the loss, you know, and loss of version. We talk about, you felt the loss and you're so wanting to alleviate that pain that you will go for the sugar. Here, there's, you often call things sugar hits. That's a sugar hit of winning something and then go, Oh, Oh, I've just gone through a turnstile and I can see where I came from, but I can't go back there.

Veronica Morgan: And so what often happens is that that that buyers, they do, they just seem to think that this is a game that I'm losing. And the only way to win it is to buy something. And they lose complete and utter sight on what that something really needs to be for them to have their greater goals met. And that's a real danger. So when people come to me when they want to pay overs, I'm like, well, let's work out why, you know, let's go back to those four pillars. You know, what is it worth? How good is this asset? How uniquely does it fit your needs and what is your budget? Okay? So your budget might be more, we don't need to necessarily want to unnecessarily spend that budget just because you can, let's be more strategic around it. And because you're emotional and you just want to throw everything at it because you're sick of looking and you're sick of missing out.

Veronica Morgan: We can be there and actually protect you from your own emotions. You know, and there's been countless times where we've actually saved clients hundreds of thousands of dollars over what they would have paid, lifted their own devices.

Chris Bates: Yeah. So they would have went to the auction and paid two, three or whatever to win it. And they probably worked at a super hot market and someone's either paying, right? But you've been able to just kind of stop them there. But even if, I guess there's probably has been times where a client has said to you that they still want to overspend and that's okay.

Veronica Morgan: You know, eyes wide open is our motto, you know, so. So I'm like, right, if you wanna pay overs and you've got to really clear why for you, that's important to do. And as long as you are really clear, and I've had plenty of clients give me a limit, there's way over what I would recommend for the particular property. But I do, I'm really confident that they've absolutely understand the pros and cons and they know why they're doing it so they can sort of turn it. And go, ah, Oh, if I'd known that I wouldn't have done that. You know?

Chris Bates: And what's the biggest risk their time? Do you think that they have to sell it in a short space of time? So if the, if it is something they're going to go live in for 30 years or something like that or 20 years and they've really thought that through.

Veronica Morgan: There's two issues there. There's the, if it's not an a grade asset, the longer you own it, the worse off you are because he will lag yeah. Against the market. So it will fall away even even a half a percent. Compound annual compounded growth rate difference translates over a decade. So even on $1 million purchase in a hundreds of thousands of dollars as half a percent difference and you know that it's actually massive. The difference over time between a, B and C gray properties. So that's your first,

Chris Bates: Well, if you aren't going to do it, only do it for literally something that will perform the best in that suburb.

Veronica Morgan: Yeah. Well there people still make decisions around their home because that's what they want. They just want a home. And that's okay. As long as they understand and look, to be honest, they won't feel the pain of that until churning, you know, 10, 20, 30 years down the track when they do go to downsize and then go, Oh yeah, I'm sort of not really in as good a position I could have been, but let's face it, they've had 10 20, 30 years of living in a home they love. So they're prepared to offset that. But the thing is that if you, if your circumstances do change and look, let's face it, some people do, you know, enough people sell at a loss in this country to suggest to me that people's circumstances must change and then they have to sell, you know. And you know, I've met plenty of people who've circus who weren't backing on certain things happening and they do like a divorce or Oh yeah, I've got two kids, 10 and 12 and then have twins one straight months. I was like, alright,

Chris Bates: Something happened that we weren't planning the third and it came along. And you know, and so, you know, life is run, you know, divorces obviously that's a huge one. You know you know, family issues, you know, parents have to live with you and you haven't factored that in. I mean, even kids, I, you know, also worried that stage for us to imagine what it's like to have two kids at 10 years old into a house and what the house needs. I just don't know. Right. And so how do I know like what's too much space? What's not enough space? What's, how much green air do we need and how much do you know what I mean? And I think it's so hard to, for young families to see what life they, what requirements they need from housing as kids get bigger. Yeah. How do you, how do you, when you've got that young couple in front of you and they've got, say, you know, a newborn or a one on the way or something like that, how do you help them really think through what this, how this house needs to evolve for what they want in the future?

Veronica Morgan: It's a really good point because one of the things that I guess my benefit when I started as a buyer's agent, you know, I had a baby, she was a year old, my daughter and but I had been a sales agent for six years. And when you're a sales agent, you do get to experience why people move and what they like about their homes and what worked for them when the kids were preschool versus in primary school versus in high school. And, and you do when you're talking to parents or different demographics, when you're talking to parents at those different stages, you hear there's lots and lots of things that, that you'll hear. Like the, the toddler phase is the open plan. Living is big. You know, they want to basically be able to see from the kitchen outside living areas or connected, you know, no separate living areas. Everything is open, although they do want somewhere to hide their toys and a bath and a bathroom close to the kitchen. Right? So that's basically makes witching hour hell hell of a lot easier than it is if you've got a no bath or be a bath upstairs or you know, so there's all these sort of practicalities that, that you need when you've got little kids and then wanting to laundry.

Veronica Morgan: You can have a boss or what laundry with a bath unit. They want a laundry that, yes. So they want a bathroom, looks like a bathroom. So yeah, when the baby, when actually when it's a baby, yes, you can wash them in a laundry tub. That's, but then when they're toddlers, you want to be out of your bathroom and a lot of your time won't cut it. So then when they get to school, they get a bit noisier. You know, they, they got their television, they like to watch or when the kids are all over, they're noisy and, and you start to think, Oh, there's another living area would be really good and another, you know, but not too far away. They still got better. Keep an eye on them, you know? And so all of a sudden that additional space and also the kids, you know, little kids loved to actually sleep together in the same room.

Veronica Morgan: But a lot of people seem to think that they all need their own rooms. But you know, little kids do love it. And, but then if you've got kids of different genders for instance, or they don't get on, then you know, the, as they start to get in high school, you think, Oh, I might need to start separating these kids. So then you know, your needs change in that way as well. And look, the other thing too though, everyone talks about when you've got toddlers and little kids is having all the bedrooms on the same level. And then when you've got teenagers though, you really want a parent's retreat. You don't want to be anywhere near the kids. You know, when the kids are teenagers. But you do want an alarm on the front door so they can't sneak in and sneak out. But, so there's all these sort of different phases in terms of bedroom layout, where the bathrooms are, where their living rooms are.

Veronica Morgan: How many living rooms that you've got. You know, a pool, for instance, a lot of people talk about a pool becomes more and more important as the kids get older cause they want to feel like they will bring their friends, their friends home and the home can be a hub. And so the kids aren't out always elsewhere. So there's all these sorts of things that become really important. And, and close to public transport when you've got teenagers as well, when they're old enough to go out for themselves so that you don't become mom's taxi or dad's taxi. So these things you don't even think about when the kids are in primary school socializing on their own. They're not on public transport, you know, and you certainly don't think about having separate living areas where you can't see what the kids are doing or hear what the kids are doing when you've got, you know, so all of that stuff really evolves. So when someone's looking at the 20, 30 E home, when they've got little kids, they won't consider enough of the teenage stuff or the primary school staff. And so I guess that's what's really important. It's to really project yourself out there and really understand what those parents in that demographic, what you will be saying you need. Then

Chris Bates: It seems to she a that cause you, unless you've actually had these conversations with parents that are, you know, you've got teenage kids and a bought the wrong house because the ones who bought the right house a lot. All right. I do think that was a problem. Yeah. We always had a bus stop out the front and it's just got to school. Right. or you know, we always had two living areas or we, and so I think that's a really interesting insight because that's why I think maybe the best buyer's agents out there, a lot of them potentially have had that selling experience because, you know, maybe that's where they've got that insight and knowledge of what really families really want. Let's say they've come from different, not saying Nick carby good buyer's agents from other backgrounds, but that definitely helps. That could be one of the key value adds that, you know, do you find that a lot of good buyers agents who have come from that background, that's one of the key learnings they've got from being a real estate agent.

Veronica Morgan: Yeah, absolutely. And they do. They do understand motivations for selling. And so therefore, if they're worried about, like for me, my, my pure reason for living really at the moment, in a way, not my pure reason, but one very big reason for me being on the planet is to help people, this podcast help people, help people buy without regrets, you know? And so when you help people sell and you find out, well, why are they selling? What was it about the house? Did they simply outgrow it? And that's just a natural process? Or has it been that it's been like a little thorn in their side ever since they bought it? You know, there's, there's quite a lot of that insight that does come out of that, but you've got to not be a transactional person. And there's still a lot of buyer's agents that are quite transactional.

Veronica Morgan: You know, it's like, Oh, you told me you want one of these, I can go and find one of those for you. They're not actually thinking about what is it about the home that you need. And also a lot of buyer's agents are really focused on the investor market and they've got no idea about any of this stuff. And this is important for investors to understand when they're buying as well as not just owner occupiers. So, so that is a real insight that that a buyer's agent that does both understands what needs to perform as a good investment from the numbers perspective, but from this side of the livability perspective, because that's the stuff that really, yeah, it turns something into went from an eight or I guess that's the characteristics that lends itself to an eight grade property.

Chris Bates: I think it's it's a good point. And they're obviously buyer's agents that do focus a lot on investments, but really I think the best ones that do, that are coming at from a home buyer mentality and they're there. So they've got that home buyer really knowledge, experience, water people really want and they're applying that to going and buying good investments. But a lot of them out there is they're just buying what a great investments on yield or great investments because they're cheap and they're easy to buy in the is, they're not going to be too expensive. And and you know, that's, that's where the problems I think rise. But I think that you can be a buyer's agent that focuses a lot on investors, but only if you've got that kind of home buyer mindset I guess.

Veronica Morgan: Well it's because if you don't, then you're not really focusing on the quality of the asset. And this is what I guess bothers me about a lot of, we've gone right off auction ready. But anyway, what bothers me about a lot of property advisor investment property advisors is that they, you know, they're doing all this research about where to buy. They've not a lot of research of specifically what to buy. And, and I think that that's massively missing in that.

Chris Bates: So let's get back to oxygen rotary cause you rightly poured us up there. In terms of though like let's say I have got your book, actually I've got the PDF so if anyone wants it, you give it away. If I don't want 70% off the purchase price, not the 30%, I'll just make an extra 40% all have my, yeah, just upload that onto a part by.com. But no, let's say I do read the book and I will I wrote the chapters are overviews. I haven't read the whole book. It's, it's a lengthy book. And you only send it to me a couple of days ago, 134 pages or something.

Veronica Morgan: So yeah, I think so.

Chris Bates: Yeah. Something like that. Yeah. So you get me, you can digest it, you know, in a night or two. Is that going to be enough knowledge for me too? You know, really go out and do it myself or do you think it's going to give me 50% of the way there? I understand the way there. Do you still think at the end of the day I am going to still need a professional because of course, because you know, and that's one of the problems with reading, right? Like learning is there's still a lot where human element comes in and then Tyler's that advice to your personal circumstances and then guide you. So do you think it's, it'll give you a great foundation but you still at the end of the day going to go and have to seek great advice.

Veronica Morgan: You are going to do a hell of a lot better if you read the book and do it yourself. Then if you don't read the book and do it yourself and let's face it, most people are still doing it themselves. The book is really, you know, it's, it's a combination of all my experience and knowledge and thinking around it, but it's also all my observations about people shoot themselves in the foot. They really do stuff it up for themselves and over and over and over. I see this. So this is that that is really what's led me to write this book because it's likely if you read and understand this stuff, you are less likely to shoot yourself in the foot than you are if you don't have any knowledge of this. So you can do a hell of a lot better job by reading it.

Veronica Morgan: Obviously, you know, to go to an expert such as myself or one of my team, you get all of that expertise and insights and Intel and ability to think on our feet and know what to do in different situations. And, and also in my business, like God, every week we were presented with some experience that we may never have encountered before, but we've got collectively enough knowledge and experience to bear to go, you know, this would be the best part, affection path of action now. And so that's the thing that an individual buyer is never going to ever, ever, ever get because you can't physically by the thousands of properties that gives you that level of expertise. So,

Chris Bates: And I think just the way that I Brian's work, I think we can only process so much information at a time and then you're then buying with a partner and that partner is also trying to process that information and they've got different levels of experience and knowledge and fears and worries and desires and you know, and to have that independent person to manage that I find that with financial advice and even broking and things like that, it's, it's kind of being there to, to, to let them hear out everything that they've got to say. You know, and really talk it through and, you know, kind of play devil's advocate and things like that. Even if they've read the book or they've done, you know, you know, read lots of content and things like that, they haven't got that person to direct them in that conversation. And obviously we're working with a buyer's agent the moment and whenever he finds like a little bit of a hole in our thought process, he's, you know, rightly is, he's asking us about it. And I can feel like actually we, hiding our heads in the sands, we don't really want to talk about these like ignorance is bliss. And even though, you know, we talk about this stuff and I, you know, read about and learn about it and help people do it, I can still find myself Sabbath self-sabotaging.

Veronica Morgan: Well, you know, look, I've sold a couple of properties recently and you know, this is interesting because what I've realized, I said one of them, I actually got my team, some of my team are not my entire team, but some of my team, I actually sought advice at the point he bit of negotiation at the point at which I needed to say to the agent, basically, yes, I'll sell effectively. And it was a bit less than I wanted. The agent did a great job. She actually really wrapped it up really well, but I had to give her the green light before she could do that. And I knew that I knew that much, but I was holding back. My elephant was going rampant, you know, so there was this sort of fear around that. And so my team sort of helped me stop focusing on what was happening then and there and pull back and remember the reasons why I was selling in the first place. What can you do when you sell this property? Can you still achieve what you wanted to achieve when you sell this property, which is actually to renovate my home. And the fact is yes and so therefore it was reminding me of why I was doing it and thank God for that because I was in that, that pointy, you know, part of the whole decision making process and my elephant was going off and even though I know everything, I know I still was on the cusp of making really poor decision

Chris Bates: And at that point you still end and which made it probably should have been easier. You actually had an agent that you trust because you've worked with that person for a long time and you really do have a higher level of trust. And you know, most because she could to speak

Veronica Morgan: To me as a professional, but my owner occupied, I'm sorry, my, my, my own personal emotions because it was my property. Yeah.

Chris Bates: Yeah. And that's, I just think that's, it's, it's, it's very interesting that that's really where the value is, you know? Yes. The knowledge, yes. The experience. But you know, that's all very valuable and negotiation and the skills and the strategies and all that stuff. But it's that sounding board to guide you through, up to auction day. And yeah, and I mean, on that auction final point though, you know, cause we've got to wrap this up, but should this, should the buy go to the auction or do you really think that they should leave that to the professional scene in their car? Just don't even bother coming, go get a coffee. Just let me get this job done. Or do you think that, you know, there's no harm in coming along.

Veronica Morgan: Do you remember Damien Cooley back in episode two said that, no, you should never take your client and I don't agree. I like my client to be there. And that comes back to the, our ethos, which is eyes wide open. I want them to see what happens. I actually feel really uncomfortable when a client is not there. So yes, I think they need to be there fully briefed, you know, understanding what's going on, understanding the, the variability of what can happen at auctions as well. And even though, you know, I can read it and I understand, I have to think on my feet and I won't have time to explain what we're doing in the middle of the auction to the client either. So we sort of had to preempt fair amount, what may or may not happen. But I like them to be there.

Chris Bates: Mm mm. And this I claw, cause this is happening quite a bit than my, my clients are, you know, they're going out, they're doing their research. Like sometimes I'll suggest clients to use buyer's agents, which I always do, but you know, there's affordability. There's maybe just a confidence I want to do it myself. You know, and they're already invested in the process and they just want to use how, I mean, how crazy do you think it is though? Like when people do come and they do fall in love with a property, like how much should they just use a buyer's agent just for that? Yeah. For that auction side. Like, you know, I guess it's how much, how bad can people get it wrong, I guess. And how

Veronica Morgan: Well I can get, they can get it really wrong because the thing is a, once you start beating it, even when, you know, when, if I'm watching one of my team and I think to myself, Oh, I like to OD, do it differently, you know, and we've all got our different styles and we're also thinking differently. We're also, you know, got various tactics and strategies that we're employing. And I think to myself, Oh, I wouldn't do that, but there's no way in a million years I can interject or interrupt. He started once it starts, it's like an avalanche. It's happening. You know, you're not going to be at a, you know, you can have put various is in place to sort of direct the snowfall maybe, but at the end of the day, eat, ate, it's happening. Once you start the process, you can't end something. Oh my God, what about what about, and what about? You know, I shouldn't have, Oh God. But you know, all that thinking then takes over and, and your ability to think carefully and clearly, you know, so that's a really difficult thing. So yeah,

Chris Bates: That's a good point because I think it's not a game of chess is it? It's not like you've got your three minutes to think it through. It's happening right now. And I think a lot of people will think through our competed auction. It's easy for me to say I can do one on one, but you know, I don't know how to beat, but that's not part of it. Right. There's so many levels on top of that that you just don't know.

Veronica Morgan: Auctioneer, we haven't talked about auctioneers and I do encourage all of you for listening to this to go back to those episodes I mentioned earlier on and listen to those auctioneers talk about how they create, you know, that whole environment during an auction and they create momentum and they, they, they are practiced. They are absolutely practiced at this and you are not and you don't even know how practice they are. I can recognize it because I know the ones that practice and ones that don't practice. So some of them aren't really crap actually. But you know, as a general general punter doesn't know the difference. But they are all auctioneers are trying to get momentum and most punters fall into this little rhythm and pattern and actually play along. There's very few that know how to disrupt an auction and you can't disrupt it and be disruptive.

Veronica Morgan: You've got to disrupt it in a really charming way. So it is a very, very difficult art to to perfect. And back to your question about all, should you engage a buyer's agent? To be quite honest. There are two ways that buyers, agents can work with people that come to them. There's just when you bid, and that's not enough, just giving someone your limit and saying, okay, can you bid for me? You know? Right. Yeah, sure. I'll look. I'll do it if somebody really wants to pay me the money and do it, but I do warn them that we need to have a full understanding of the background of this property, the background did the sale, the agent, the likely other buyers, their circumstances, what it's actually worth, what it's really worth to you. We need to advise you and help you set your limit.

Veronica Morgan: Because if you've said it by yourself, you probably want to jump in in the middle of the auction, tell me a bit more and that's going to blow your cover. And you know, all of these strategic things that that has to be done through a complete and full due diligence process so that you absolutely know what you're doing and are confident with whatever the limit you set and why are you doing it or whether we can find a reason why you shouldn't buy the thing in the first place and save you even more money. You know, that makes for a so much more powerful bidding than if you just basically give me a limit and pay me whatever it is or pay me as a, as a you know, appearance fee.

Chris Bates: Yeah, I mean, I guess he's just rocking up to a fight just with a knife. Right. And you just have to use that and see how you go. But if you've kind of done all your due diligence and everything like that, maybe you've got, you know, better tools in your armory and you know, you know how to use them and who to attack first and things like that. And I think it's from a good auctioneer like, you know you know, out there would take the same approach. You know, they know that they're not just doing 12 auctions today. They've got 12 individual auctions. They're going to have to, you know, focus on different buyers. They're probably prepping themselves for every auction a little bit differently. And they know exactly how to true professional. They're not just there just to sell the property and just go through the motions. And I think that's where a lot of buyer's agent, well, I don't know people just beating for you. And that's why you probably shouldn't just get someone to bid for you either. And if you're not doing so, quite frankly, that would be just as good a job

Chris Bates: Every week we hear incredible stories of the dumb things. Property buyers do dumb things that end up costing them a lot of money and or creating a whole lot of stress mistakes that can be avoided. Veronica, can you please help our listeners out here? Can you give us an example of a property Dumbo? We can all learn what not to do from these stories.

Veronica Morgan: I've got a good auction Dumbo. I've got loads of them. While the way I shared a few in previous episodes, but this is one that I saw. This is actually an agent auction number, so competitive auction, but the reserve was obviously higher than the highest bid and I was bidding at it, but I was the underbidder so we were over my, my client's limit. It was held by the next bidder and there are only three grand over my limit, so pretty close. But my limit had that extra seven grand put into it. My clients set that limit. They did stretch themselves, you know, the obviously disappointed, but they were happy to walk away at that price. I was watching at that point and I thought, well this, this should be selling, she'll be selling. And all of a sudden there's this bit of a commotion because, Oh, we're late registration.

Chris Bates: While the auction was on?

Veronica Morgan: Now I've seen this happen. A registration during the auction. Very rare, but it does happen.

Chris Bates: Auctioneers say it sometimes they're like, don't worry, you can still register.

Veronica Morgan: Yep. It's going to register. And they can, but yes, I've seen it. Driver's license, right? Yeah. So the thing is, yeah, if you think you're going to be at first of all registered. But the thing is, it's a, it's a bit of a trick. Now this is something I hadn't really, really in the middle of it, I realized what was going on. Right. So what was going on? So the highest bit is there, it's been competitive. We're out. My limit was well over what I thought it was worth. My clients were, their eyes wide open, gave me more money and I was like, this is not the sort of property I would encourage you to push yourself.

Veronica Morgan: But they wanted to for lots of the very good reasons. Yeah. This guy was over it. He starts to get agitated and he's like, well, what's happening here? What's happening here? So, so there's, there's just, we got a late registration. This guy, I'd noticed him during the registrations because of course I watched people register. He went up to the agent, he, he shook his head and he mumbled a bit and I couldn't really hear what was going on. Then I saw he was outside during the auction, the auction, the auction was held inside. He was outside. I noticed wandering around the next minute he's coming sort of the kitchen door and he's in the kitchen supposedly registering to beat. Right. While this is all going on, I was so lucky. I'm so sorry. I'm so sorry that, you know, the auctioneer was very polished in how this was handled.

Veronica Morgan: Very polished very re rehearsed dialogue around this, right about, you know, we took a late registration, et cetera, et cetera. What was really happening was the agent was on the phone to the vendor trying to get the reserve dropped so they could sell it. No, it was a bit of a harvest of course. But this was a like a distraction to get the highest bidder, you know, because if they couldn't get that reserve dropped, that agent was going to have to go to that high spitter and tried to get more money out of them. Who do you think this guy was? Oh, I think they paid him 50 bucks just to turn up and.

Chris Bates: Say, where do you get these jobs?

Veronica Morgan: This is what I think, this is what I think. The guy, you know, registers but sorta hidden behind the in the kitchen. You could sort of see this was going on, but he wasn't really eating, coming to the room or anything.

Chris Bates: That'd gotta be illegal. Right.

Veronica Morgan: I don't know if this is illegal to be quite Frank. I think this is, this is a game and, and I watched this and I was horrified because it's a game and, and I could see what they were setting it up for that. If they couldn't get that reserve drop, the agent was going to have to go to that highest bidder, get them to increase. And this was creating a sense of where there still are the interest right now that buyer supposedly registered and did not bid. Why would you bother registering at the pointy end of an auction and they're not bid. So I could see, I always, I was Groebel but it, look, it didn't make any difference to me at the end of the day because you know we were out but,

Chris Bates: But our Dumbo would have been, if you just kind of bid more because you thought against this dummy bidder, that's not even a bidder. And even if they didn't, well they, cause they didn't bid, did they? But if they did bid then you would have been at against the dummy bidder, but they couldn't have possibly been

Veronica Morgan: Never going to bead. It was designed to make that highest bidder think that there could be more competition. And if the, the agent came in after speaking to the vendor said, look, we're not quite at the reserve. Look, this person's here. I want to give you the first writer refusal look, you know, if you increase it to X then we're definitely going to get on the market. There's no further bidding. You'll actually get to buy it at that price, you know? And so they might do that also if they felt the highest bidder had more money in them. Yep. Yep. So it's the, you know, it's, it's a risky, very risky strip, but not that risky because the highest bidder is there and their bid is recorded. Like this is the first time I've seen this and I am 100% certain that this was a very deliberate ploy. And this is when people say they're going to go to auction and I want to try it myself, see how it go. This sort of staff can go on and you wouldn't know what the hell is going on. So the Dumbo could be, if that highest bidder had actually then increased their bid on the back of this sort of ruse.

Chris Bates: Yeah. I think it's just, it's interesting because at this point in time you're trying to figure out what's going on. And that just shows that you don't know. You don't know. And like even you, you, you haven't seen that before. So it was something new, but most things you've probably seen before and so you probably don't get shocked enough, but you know, there's so many different things that could happen. You'd probably say 999 of them. Right. And most people haven't seen many of them. And so, you know, I was at an auction recently and you know, I was like, why isn't this sold? Like, why isn't it on the market? Why aren't they, they sold, this is a great price. Like I thought it was more than I actually thought it was. And then they went out the back, spoke to the vendor, came back out, so it's not on the market yet. And it passed in and the auction just went dead. And I was like, you see, something's gone wrong here. Something's happened. Like what? And everyone just walked out to fight it. No one bought it. It did sell. And it did sell for more than it did. So the agents, obviously the, the vendor was holding far, I want more than this and they end up getting a better price. But yeah, it was just a really interesting cause I think everyone was shocked why this hadn't sold.

Veronica Morgan: Yeah. Nobody knows what to do. Yeah. Or that somebody, did they pay more money?

Chris Bates: Well they did. Yeah. And but it just in the, there was no like, you know, this is, sorry it's pasta and it just went by, stopped on the, on the money. And so you know, and what would you do there as a buyer? And so I'm worried about the buyer there because the buyers, you know, they ended up going to pay more,

Veronica Morgan: Buy it on the day of auction or sort of in the next week or so.

Chris Bates: It was after, it was a week after.

Veronica Morgan: So the thing is that there could have been an opportunity for the highest bidder to take advantage of the fact that there was pressure on the vendor as well. And because you go in, in new South Wales, you've got up to midnight on the day of auction to sell under auction conditions. I think in Victoria you've got another three days. You know, so every state's different. Once again so in, in new South Wales for instance, if that happens and it, you know, God bought property afterwards, that sort of scenario and I've actually paid less. So sometimes a brand new buyer comes in and pays more. The reality is usually if it's been competitive and the a and the owner is completely out of control, it's very unusual. They get more money afterwards. But, but the opportunity there was for the buyer really wanted to buy it to actually, you know, if they'd done their pricing research, they actually understood what it was worth and they knew they walk away price and it was within that limit, then they can play within that limit and still negotiate.

Chris Bates: Yeah, I, I, yeah, I think there's, I don't know what happened after, but I mean, I just sorts sold, you know, for 60 grand more than they actually at. They were kind of, I can't believe they didn't sell on the day for that price. So it's interesting cause it was just another like learning where they just wouldn't know how to play that situation. They actually should have had the power then to get the deal done, but they, on that day they didn't sell.

Veronica Morgan: No one else is bidding anymore. I don't want a bit a bit against myself and all that. The things that buyers say.

Chris Bates: Um yeah. Thank you very much.

Veronica Morgan: My pleasure. And look for you listeners who would like to get a copy of the book. As I said, I have a 30% discount for elephant listeners. So the website is get auction ready.com today you and when it gets to the point where the discount code, just stick in there, elephant.

Chris Bates: Or contact Chris, if you want one on the dodgy.

Veronica MorganFebruary 17, 2020

Episodes

Episode 107 | Get Auction Ready | Veronica Morgan, Good Deeds