Episode 5 | The true cost of a lack of trust in the property industry | Shannan Whitney, BresicWhitney

Confessions of a sales agent; what the future holds and what needs to change.

This is quite a philosophical conversation with Shannan Whitney of BresicWhitney about the relevance of real estate agents in our changing world. We talked about many “elephants” and Shannan did not hold back on discussing:

• Outmoded real estate agent practises

• How self promotion in the age of social media misses the mark

• Where industry awards fall short and reward the wrong type of behaviour

• How the accepted measures of success fail both vendors and buyers

• Why the current industry structure doesn’t support change

• The importance of trust in a real estate transaction and how lack of trust hurts both buyers and sellers

• How published price guides make agents accountable, which is why many won’t commit to them

• What happens behind the scenes when a low offer is made

• Decoding “agent-speak” with some handy translations

• What do auction price guides really mean?

The insights in this episode about the offer process will change the way you buy your next property.

Links:

BresicWhitney
www.bresicwhitney.com.au

Veronica’s blogs on auction quoting:
How to decode auction price guides.
Video: what do auction price guides mean?

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 19th April 2018

Veronica: 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, and co-host of Foxtel’s, Location Location Location Australia. 

Chris: And I'm Chris Bates, financial planner, mortgage broker and wealth coach 

Veronica: And together we’re going to uncover who’s really making the decisions when you buy a property.

Chris: In a moment Veronica will introduce our guest, and I can tell you you’ll want to listen on to hear what he has to say about the tricks and the tactics agents use when you make an offer.

Shannan: Through all sorts of methods, which is glorified and promoted at industry events, to then try and bring that into a situation where someone’s going to pay the price and if you think about that, that can’t be done in a positive way, there are no positive outcomes there.

Chris: And stick around for this week's elephant rider boot camp and we have a cracking Dumbo of the week coming up.

Chris: 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 are looking to get advice, please seek the help of a licensed Financial Advisor or Buyer's Agent. They will tailor and document their advice to your personal circumstances. Now, let's get cracking.

Veronica: This week we’re picking the brains of Shannan Whitney co-founder and CEO of BresicWhitney estate agents.

Shannan’s real estate career started when he discovered that he preferred property to university and his early days were spent at McGrath, where he specialised in in Sydney’s inner suburbs.

His bio says that he noticed a young Ivan Bresic coming up through the ranks of the agency where they both worked and, they shared some similar traits and beliefs, but Shannan gravitated towards him because Ivan was good at everything he wasn’t.

What I’ve noticed about BresicWhitney is that they’ve made a big impact on the way in which property is advertised and marketed in Sydney. Shannan saw that no one had made the connection between property and lifestyle which seemed so obvious to him. 

And because real estate deals with an essential part of every person’s life, the literal roof over their heads Shannan believes that real estate agents have a responsibility to support the community.

Together with Ivan, BresicWhitney’s aim is to transform the contemporary real estate experience in Sydney.

Welcome Shannon.

Shannan: Thank you

Chis: Thanks Shannan for ah giving us your time.

One of your lines on your website was “Housing and property are an integral part of life, it’s more about well-being than investment”

I’d just love to get your view on that and how that’s kind of changed over your career, and why you think that’s so important?

Shannan: I started in the early nineties in real estate and um, probably the cultural messages and the beliefs in the nineties is very different to what it is today in a social sense.

And I guess what I found was through the nineties there was such a lot of focus on the agent and individualism and the role that we have, that my sense was that the industry lost sight of what role we actually play and there was too much self-focus.

And therefore as a result I think that much of the humanity and the goodness in terms of what we can provide was kind of lost and I think that was important for us as an organisation to recognise that, ah in terms of the vision we have and the values in which we wanna conduct ourselves.

Veronica: It’s really interesting you say that Shannon because one of the things I’ve really noticed in in particularly in recent times is this rise of the cult of the personal brand.

Shannan: mmm

Veronica (cont): And so what you’re saying is that was you know established in the early nineties that everyone was very much about themselves. 

Shannon: Yes 

Veronica (cont): But I’m observing that there’s a bit of resurgence around that,

Shannan: Yes

Veronica (cont): So that seems to be maybe there’s two schools of thought going on?

Shannan: mmm-mmm

I think that’s that’s a re correct observation, I think that you have to go back to pre-nineteen ninety and that’s the era pre John McGrath, and it’s before my time.

But what John McGrath did which was so successful and valuable for the industry was he lifted the standards of professionalism, and the way in which John did that very successfully was to bring more focus on, the agent and the role and the practise of our agent. 

Now that was very appropriate and I think it was very useful for the time. We’ve now moved on twenty years and I think you have to just look outside the industry and look at what are some of the major and important themes for people around the world, and the rise of millenniums the change in consumerism, the way that people the standards and what they expect. Therefore the role of the individual in terms of real estate in the in the real estate service is probably now superseded and now they’re looking for other things.

The challenge the real estate industry have of course is that we’re finding it difficult to really understand and articulate what our value is, and that’s proven to be a very challenging kind of phase for us.

And my observations is that we’re retreating back to what we know and that is that if we continually return the focus to ourselves, and perhaps your observations are correct, I would agree, almost turbo charging that idea and that concept,

Chris: mm-hmm

Shannan (cont): As a means to try to perhaps justify and validate what value that we provide. And I guess we’re trying very hard to do that but from my observations I don’t think it seems to be, don’t seems to be engaging the market that well.

Chris: Do do you mean when you say going back to what you know.

Shannan: mmm

Chris (cont): Are you referring to hitting the phones, going back to a purely kind of sales focus compared to, kinda connecting with buyers, connecting with sellers and going to a more real relationship advisor role?  

Shannan: No what we’ve done is we haven’t real what what what we’re seeing is, we’re seeing evidence that we haven’t actually changed our view and our beliefs at all.

What we’re seeing is to Veronica’s point is, that we’re, we’re continually focusing on ourselves as the point of difference, and doing everything we can particularly now in the age of social media to promote that concept. That concept in the belief of an agent is “That’s what will provide my relevance”,

Chris: mm-hmm

Shanna (cont): And they’re trying to attract to the people that pay them and that is the vendors.

Chris: mm-hmm

Shanna (cont): So of course the logic is the more I do that, the better I will be and the more success I will have. 

And in the age of social media, different channels, different ways of communicating, I would agree with Veronica we’re seeing much much more of that in perhaps ways that we weren’t used to seeing and I think that probably some of the ways that we’re, you know, some of the ways and methods that are being used are quite extreme, um but I don’t see that as really changing or evolving from what we’ve been doing for the last twenty years, we’re just doing more of it.  

Veronica: It’s a new platform I guess.

Shannan: Correct

Veronica (cont): We’re given, more megaphones. (laughs)

Shannan: Yes we are, yes we are.

Chris: And to the people that are encouraging a personal brand that showing that they’re getting record prices for vendors, and they’re selling huge amounts of property rather than, the result they’re actually creating a society by helping people.

Shannan: Yeah so if I’ll give you an example. 

Shannan (cont): My wife owns a dress shop in Paddington, now yesterday my wife perhaps sold a dress, perhaps sold a couple. The idea about prompting the fact that they sold that dress to their community or to that audience,

Veronica: laughing

Shannan (cont): Is quite bazaar.

Veronica: It is I agree!

Shannan (cont): It is bazaar! Now the reason why they don’t do that is because no one cares. 

Veronica: mmm

Chris: mmm

Shannan (cont): And I think where we go wrong is we continually feel that by self-promotion, and by glorifying whatever it is that we think we do, is some sort of means of adulation, provides us with opportunities and they think or we think that society thinks that that’s wonderful.

Veronica: It is really funny isn’t it, because I often think oh record you know record price for the street or record price for the building and you think, well just because the last property sold ten years ago, by virtue of that fact alone you’re going to get a record.

Shannan: Of course 

Veronica (cont): It’s actually got nothing to do with your ability. (laughing)

Shannan: No one. And and and in fairness who cares. 

Chris & Veronica: Yeah!

Veronica: Exactly!

Shannan (cont): No one actually cares.

Veronica: They care!

Shannan (cont): Um, so that’s my experience and I say that because I’m an agent.

Chris: mm-hmm

Shannan (cont): And I’m sensitive to how people respond to us.

Chris: mm-hmm

Shannan (cont): And I certainly sympathise and understand why one does it,

Chris: mm-hmm

Shannan (cont): I’ve never seen it to be a successful strategy.

Chris: Unfortunately a lot of vendors would probably gravitate to I guess agents, that in the light of society are seen to be very successful and that are pumping their kind of success up and,

Shannan: mmmm

Chris (cont): Awards and, you know they’re the top selling and these things are kinda, I guess helping them to,

Shannan: Self perpetuating

Chris (cont): Yeah to, well I should pick that agent and then the agent just keeps on, on it.

And so I think that cycle unfortunately needs to be broken.

Shannan: mmm

Chris (cont): Is that something that BresicWhitney avoid doing, is that something you don’t enter awards, do you?

Shannan: Ah yeah, I I I’d say we discourage,

Chris: Okay

Shannan (cont): I think it’s important to say that, we feel very strongly that people should make their own decisions and have that opportunity to do so.

However we certainly try and help educate them and you know we’ve got a responsibility to help mentor young professionals, in this realm and we’d certainly do our best to try and help them understand what many different facets are to their decision. 

The real estate industry have this belief that that is the formula for success. There is little or very no focus on people that have a lot of success that don’t do that, and there is little to no attention given, and I can certainly say with experience there is an awful lot of practitioners that have succeeded and continue to succeed, without using tactics and um behaviour and actions,

Chris: mm-hmm

Shannan (cont): that frankly conflict with a lot of people’s values and morals with society.

Veronica: We were having a conversation, Chris and I, about about awards only the other day and,

Shannan: mmm

Veronica (cont): And I entered an award, the REINSW award you know when I was first a buyer’s agent.

Shannan: Yes

Veronica (cont): Because and that’s why people do it because obviously you want to get yourself a little bit or credibility and, you know I was a finalist.

Shannan: mmmm

Veronica (cont): Now couple of years ago I actually had the pleasure of being a judge for,

Shannan: Yes

Veronica (cont): For a few years for the very same awards and I looked at the same people, ah basically submit their application every year and they’re they’re struggling to get enough people to submit, so therefore, you have to do something pretty terrible to not be a finalist.

Shannan: You do, and and I see that and I’ve taken a similar approach.

What I ah strongly contest and and certainly don’t agree with that, the measure for success used by institution is not what I believe to be the right measures to value 

Veronica: mmmm

Shannan (cont): people who are successful in what they do.

Veronica: Definitely agree 

Shannan (cont): The me the measures are completely wrong, it does not in any means demonstrate to me that there is a well-rounded professional, considerate practitioner, um it’s playing to the very same things that created well they bought the industry out into the realm of professionalism in the nineties and we simply have not moved on.

Veronica: How do you deal with that in your business? Cause what, how many let’s just say sales for for the moment.

Shannan: Yes

Veronica (cont): How many people do you have in your sales business?

Shannan: Ah so we have forty eight in that area.

Veronica: Okay. 

And and we all know there’s a lotta ego in sales and there’s a lot of money to be made etcetera etcetera, um how do you deal with it? Because you talk about the values but yet ye that’s a lot of people to in an industry that I know it’s difficult to get people with the values.

Shannan: Yep

Veronica (cont): So how do you proactively tackle that?

Shannan: With a lot of difficulty.

Veronica: mmm

Shannan (cont): I would answer that question by saying that um, firstly we’ve invested and prioritised culture, and you simply cannot change behaviour or you simply cannot, inflict any meaningful change without having the right cultural environment in order to do it.

Veronica: Or support it, yep.

Shannan (cont): I made that decision in two thousand and eleven that if we were and wanted to be anything different, and if we were serious about the vision of our company, and as you’ve seen in my many of my notes, I try to stay away from the term real estate agent, and I don’t do that because I think it’s a wrong thing, I think what I’m trying to explicitly um, imply is that we have an opportunity to be much more than that.

So that’s a (sigh), without going into detail because that’s a whole other podcast that whole journey but.

Veronica: ahe (laugh) 

Shannan (cont): But the reason why that’s important is because in order to create a culture to support what you want to do as a business or what you want to do with your vision, that is a daily commitment. And that daily commitment is a financial, is a personal, and is a very big leadership commitment.

And that was decision that we made in two thousand eleven. To this day it’s, the only thing that we focus on and um it’s the only thing that we really invest meaningfully in, outside of you know our own technology decisions. 

Veronica: Did you want to quickly articulate that?

How you articulate it to your stakeholders?

Shannan: It is about bringing people on a journey and it’s about helping them, helping them understand that we have a level of responsibility, we have an opportunity in terms of adding value to people in their lives, we also have to consider that if we are going to be a business and we are going to be something that simply clips the ticket along the way, then we have to ask ourselves is that what we want to do?

Chris: mm-hmm

Shannan (cont): And if the answer is no, and I think it’s important that it doesn’t mean that everyone should do this, it means that we decide we want to do this, and therefore we need to take people along that journey and that journey is about education, the journey’s about challenging their beliefs.

Chris: mm-hmm

Shannan (cont): The journey is also about allowing them to make mistakes, the journey is about accepting people are at certain stages of their development.

Chris: Yep

Shannan (cont): But it’s also important because it means that they have an opportunity rebuilding their own practise, and we can get to that in a minute in terms of that, the connection between that and buyers, and then as individuals and as people they can ask themselves how do they want to exist professionally.

Chris: Yep

Shannan (cont): And that’s a decisions that everyone actually does have, and everyone should make, but you have to be realistic that unless you’re in a certain environment and a certain cultural environment, you will respond to what those messages are.

Chris: I mean that’s one of the most frustrating things I see with professions that are selling something um, majority of those organisations is a sales culture.

Shannan: Yes

Chris (cont): And you live and die by the numbers. 

Shannan: Yep

Chris (cont): And if the numbers aren’t happening then you need to work harder to make the numbers happen.

Shannan: Yep

Chris (cont): And then the stress begins and then the pressure to sell rises.

Shannan: Yep

Chris (cont): And then at some point selling becomes the priority and the outcome comes secondary. And, you know that’s why I think you’ve got a huge burn out rate in real estate agents because you know they’re not going to survive a year, because if the numbers aren’t happening you’re gone and that happens in mortgage broking, financial advice.

Shannan: Everything

Chris (cont): Many industries and...

Veronica: It’s also it’s not just like the organisation though imposing those targets, it’s actually very much the culture within the business.

So, you know because you’ll have the high performers and they’ve got all the trapping of success you know, they got the the flash car, they got flash suits, the the holidays whatever it is that they’re, you know having as their status symbols effectively.

And so the young entrants into, when I say young that’s just in terms of experience, new entrants into the business into the industry, look to that as being that’s where I wanna go,

Shannan: Yes

Veronica (cont): And of course so it’s there’s pressure from both ends here.

Shannan: There are.

Shannan (cont): Ah I think you also have to accept, because everything you’ve said is right, you know we’re going through a banking royal commission now,

Chris & Veronica: mmmm! (laugh)

Shannan (cont): Where there’s a lot of focus on the mortgage broking ah,

Chris: Yep

Shannan (cont): Business approach model.

You’ve got a fundamental issue here and you know Veronica’s right the messages are very clear for those who are looking for those success symbols you know and what we’re aspiring to.

What are the messages given by the leadership of, not just businesses but also the organiz the institution? Um and simply when the remuneration structure and the way that people are paid are driven by one source, and of course that’s going to influence and that’s going to decide where the behaviour lies.

So you have ah you know you have a situation where people either consciously or unconsciously know who’s paying them,

Chris: mm-hmm

Shannan (cont): And ninety percent of their time is spent on either, finding them, capturing them, trying to kill them,

Chris: mm-hmm

Shannan (cont): Or trying to do whatever they can to get them.

Chris: mm-hmm

Shannan (cont): And that leaves very small amount of time to do the other part of the ecosystem, which is probably the largest part,

Chris: mm-hmm

Shannan (cont): Then you wonder why we have this misalignment,

Chris: mm-hmm

Shannan (cont): And this, this issue about customer service.

Chris: So one of the ways to combat that I believe in an organisation is to pay higher base salaries, and to put less incentives on the actual numbers,

Shannan: Yes

Chris (cont): and to reward just good behaviour I guess,

Shannan: Yep

Chris (cont): ah and client outcomes.

Is that something that as an organisation that you focus on?

Shannan: We do recognise that the current remuneration model is not supporting the opportunity that we have, yes.

We probably take more of I think, I agree with everything you’ve said, I think that, base models are one way of doing it. We’re interested and we will continue to explore what the opportunity is for us as a collective, simply because we feel that our ability to add value to our clients, and I’m broadly talking about you know both parts of the the ecosystem there, will come through a collective, not as individuals.

Chris: Yep

Shannan (cont): Therefore our remuneration structure should support that,

 Chris: Yep

Shannan (cont): and that will mean that that will should be a very big shift from where it is to, what we understand that to be today.

Veronica: And that that is a huge challenge.

Shannan: Yes

Veronica (cont): Because it’s not just your organisation then it’s almost like you’ll be a silo, you know within your organisation because you’ve got to be able to attract new staff.

Shannan: Correct

Veronica (cont): And new people to the team right? And then they come from being made offers by other organisations that that dangle bigger carrots and all that sort of stuff, so it really is a challenge. Systemically,

Shannan: Yes

Veronica (cont): You know I think the whole industry is stuffed in the sense that,

Shannan: Yep

Veronica (cont): You know, they’re only paid (and we’ve had this same conversation I think with John Cunningham), and they’re only paid on success. They’re only paid if the vendor sells, and so therefore there’s gonna be at various points where there’s influence or, gonna be exerted on whether it be the vendor to lower their expectations or whether it be the buyer to pay more than they should be paying or, however it works.

Shannan: mmmm

Veronica (cont): Otherwise there’s a risk that you know the ninety days is gonna be up,

Shannan: Correct

Veronica (cont): they’ll lose their agency agreement and they’ll go off to sign up with another agent so. 

Shannan: mmmm

Veronica (cont): There there is a lot going on there that is against and,

Shannan: Correct

Veronica (cont): And this is institutionally,

Shannan: Yes

Veronica (cont): Or systemically within the industry. 

Shannan: Yes

Chris: But fundamentally if you never make that call as an organisation you’re never gonna head in,

Veronica: Never gonna get there.

Chris (cont): The right direction.

Veronica: Yeah.

Chris (cont): And so, you know not everyone is motivated by money. Intrinsic kind of motivation is kinda,

Shannan: Correct

Chris (cont): You know people are starting to at least understand it that people come to work for more reasons than to get paid.

Shannan: Yes

Chris (cont): And, you know even if the good agents you’ll start to attract because they’ll say look, “I could earn more money if I went and wrote more business at X you know Y you know real estate, but maybe as a collective we’re making a bigger impact here,

Shannan: Yep

 Chris (cont): and I believe in the story and long term that’s better for me anyway”. And

Shannan: Yeah, yeah I mean I I I’d answer that two ways.

I think firstly the the reality is Veronica a staff a lot of people won’t some to us,

Veronica: mmm

Chris: Yep

Shannan (cont): I accept that, um and I can certainly say that’s put front and centre as an organisation when we when we consider what our options are.

Veronica: Yep

Shannan (cont): And I do say and I agree with you Chris, I read that a lot about, you know, people are not motivated by money, and as someone who was thrust into the position of, ownership,

Veronica: laughs

Shannan (cont): And the realisation about being a leader, and then understanding what actually owning a business really means, which is about people. The fact that people are motivated by money is absolutely true, I’ve experienced that I continue to see it.

And I guess what I have also made a lot of mistakes on over the years is, I’ve prioritised the very thing that, sorry I’ve thought and I’ve made decisions and prioritised for the  organisation the very thing that veronica just mentioned. And that is that the means to success is the best selling agents. And through experience that’s not a successful formula at all. So, I know,

Shannan (cont): It’s easy for me to say that,

Veronica: (laughs)

Chris: mmmm  

Shannan (cont): It is

Veronica: Yeah

Shannan (cont): I think there’s a definite shift now, there’s no doubt about that and, I would say certainly with a level of confidence that I expect people will leave our organisation if those sorts of decisions are made and I don’t want to sound extreme because we don’t know what that looks like yet.

But I certainly do agree that what you’ve said is one option and there are plenty of options available. I think to businesses. But as a result of that, it is a huge step away from what the mainstream understand what the beliefs are, and a lot of people won’t follow. But like everything, do I think it’ll be a successful outcome, yes I do.

Veronica: Well you wouldn’t do it otherwise would you?

Shannan (cont): You wouldn’t do it.

And I think again what we fail to do so much in this industry is, we continually fail to look for success clues outside,

Chris: mmm-hmm

Shannan (cont): And you really need don’t have to travel very far to see them.

Chris: mmm-hmm

Shannan (cont): However we are still stuck in this belief in this mindset and the messages continue to come that this is what one needs to do to be successful. And it seems to just not work,

Shannan (cont): Outside our own industry people don’t seem to agree with us.

Veronica: No, and you can see with the royal commission that that’s that’s

Shannan: Yes

Veronica (cont): the spotlight certainly coming on that.

Now Ivan’s a bit more prolific or or active than you out there, and I guess you’re the CEO so you’re not gonna be your not your names not gonna be on as many listings as Ivan is, and Ivan also is an auctioneer we see turn up every now and then.

 He and this is where I you know read in your bio that that point that he’s good at everything you’re not.

Shannan: mmm

Veronica (cont): Which is a great partnership obviously.  

Shannan: mmm

Veronica (cont): Now my own personal um, I guess impression of Ivan would be that he would sell his grandmother.

Shannan: mmm-mmm

Veronica (cont): And you, I’ve always had that impression that you’re completely, it’s almost like you got your backs to each other you’re facing totally different directions.

Shannan: (little laugh) Yeah

Veronica (cont): How does that work? Because he is like the the ar the archetypical if you like,

Shannan: mmm

Veronica (cont): Salesy, salesman. 

Shannan: Yes, yes

Veronica (cont): Um so how is he, how’s he changing through this and how how does that typify or how does that symbolise, 

Shannan: mmm

 Veronica (cont): how the industry is moving? You hope.

Shannan: Yeah, yeah I’m mean I think and I I think those observations are fair um.

Ivan and I know each other very well because you know I’ve I’ve been an agent since nineteen ninety three, and Ivan worked for me in the early days and him and I both we haven’t been, we’ve mostly been together through our whole sales career

And I I think Ivan is representative of of what we understand you know the the prolific and the robust, sales agent you know sort of caricature that you that we know of, and what I’ve learnt is that I’ve always had a different, what I’ve what I’ve what I’ve accepted is, I’ve always had a different view about where the value and where the opportunity lies.

I’ve also been very optimistic that a lot of people in real estate, do things a certain way because that’s how they’ve been taught or that’s what they understand it to be, and Ivan’s a good example that there are other ways, there are better ways and there are ways that you can be successful, that you can add value to a vendor, but you can also add a lot of value to everyone else in the transaction.

And I’ve been with Ivan for twenty two years, and I will say that he has changed a lot it’s not been easy, but I have always felt that if people like Ivan can change and learn new things, then the rest of the industry can, and he’s proven that.

Veronica: Which is great, can you give us a couple of points on on where you think you know he I guess he’s symbolic of,

Shannan: Yeah

Veronica (cont): Of sort of an older style of thinking,

Shannan: Yes

Veronica (cont): Or that that you know and then the newer style of thinking and newer ways of working.

So can you give us a couple of examples of sort of old and new?

Shannan: I think that the the the new way for agents is to take on more complexity, is to be aware that it’s not just about serving the vendor, there is um two parts to this transaction and having more awareness around, understanding how we can support both sides of the transaction as an agent, delivers better outcomes.

And what that means, Veronica, is we need to take some of the focus off volume, we need to take some focus off time, we need to take some focus off getting the deal done, and we need to reconsider what are the priorities and the measures that we want to introduce

Shannan (cont): And that means that you have to help people change their practice, to help people re-adjust their practice means development,

Chris: Yep

Shannan (cont): And mentorship and that’s if you think about the real estate industry today, there is none.

So the responsibility that I have and that we have is to support our agents and people in that profession in terms of learning,

Chris: Yep

Shannan (cont): What they need to do. 

And Ivan is hugely, hugely important in that process because he is a big personality, passionate, he’s also symbolic of what success in agency does, and when Ivan has gone through the process of understanding, learning, changing how he does things, it’s hugely important for our organisation that we have leaders that we can look to, to say how do we do this Ivan? What can you help me with?

So I use, Ivan and I work together, or I can use you know that journey and that change to the benefit of other people,

Chris: Yep 

Shannan (cont): and it can be done.

Chris: I think this is a challenge for a lot of industries to step away from, you know I guess, a sales to a trusted advisor kinda role and.

I hundred percent agree one of the most powerful things when you are wanting to do that change is you need people to kinda I guess look up to, and I guess encouraging them to support if they are doing the change,

Shannan: Yes

Chris (cont): Then maybe I should do the change if I’m a young agent, and so encouraging that. I think the royal commissions is an opportunity,

Shannan: Yes

Chris (cont): For people to actually, like this podcast is an opportunity

Veronica: Yeah

Chris (cont): For us to talk about these things because,

Shannan: mmm

Chris (cont): You can only move forward when you actually discuss these things. You can’t just wipe,

Shannan: Yep

Chris (cont): Wipe it under the carpet.

Shannan: No you can’t.

Chris (cont): And one of the big things in a real estate transaction is a lack of trust,

Shannan: Yes

Chris (cont): and it starts before, you know, the phone call or the knock on the door it’s already begun.

Shannan: mmm

Veronica: Well its perception, you know that’s where it’s already in people’s minds that they can’t trust agents.

Shannan: Yes

Veronica (cont): And so that’s some of the things that I find talking to buyers is that’s the biggest challenge that they’ve got.

Shannan: mm

Veronica (cont): That you know even though there are some trustworthy agents out there, they can’t necessarily trust themselves to tell the difference.

Shannan: Correct

Chris: What are the limitations I guess this lack of trust, 

Shannan: Yes

Chris (cont): This lack of transparency? What are the limitations and the boundaries is this putting on the industry,

Shannan: Yep

Chris (cont): today?

Shannan: So there’s a triangle here.

The first, the mistrust, you know to Veronica’s point, has been built up over a long long long long time, and that mistrust is validated and reinforced in many many many, I won’t say all but many transactions, 

Chris: mm-hmm

 Shannan (cont): that happen every day. 

Where that creates limitations is that agents can actually help buyers, they can actually make this process for them simpler with less time and with probably in some cases better outcomes. 

But because, and naturally the buyers don’t feel they’re getting transparency, they in fact don’t understand the role that the agent plays, and they’re not clear about what happens with representation with the vendor, the natural thing is for two people to move further away from each other. 

And then what you end up is you end up in this dance between two people who are blind folded, who are essentially ah at odds with one another and we try and end up in a process where we find a price for for someone else who’s...

And when you when you consider that, of course you’re going to get sit a lot of situations where people come out of transactions really unhappy, and that experience is the problem that we have, we continually create this experience and we accept that it’s okay, because we’ve sold it. 

Chris: And are you treating...

Veronica: Or you expect it as well it’s

Shannan: You expect it

Veronica (cont): Yeah it is

Shannan (cont): What happens is that the role of the agent and the role of the agent is purely to represent the person who owns the house. Our ability to do that is questionable and what we do is to try and because of lack of education, lack of knowledge ah perhaps because of deceitfulness. Sometimes it’s because of the need to make sure that your numbers are such that you get a deal.

So an agent will simply imply with what they think they need to do in order to capture and secure that piece of business.

Veronica: And and so what we’re talking about here is when you what we call buying the listing or when you go in there,

Shannan: Yep

Veronica (cont): And sort of flatter the owner a little bit by,

Shannan: mmm

Veronica (cont): You know over, sort of over-estimating what they might get as a sales price because you know that they’re going to be looking at you thinking “well if you don’t believe what I think it’s worth then you’re not going to fight for it”.

Shannan: Right

Veronica (cont): And there’s all sort of beliefs that owners have,

Shannan: mmm

Veronica (cont): And it’s all so ingrained in in people’s,

Shannan: Correct

Veronica (cont): Mind and everyone’s being driven by the elephant (laughs).

Shannan: Yeah, and what happens is that once that’s you know then you’ve got a whole wrath of people in the industry that will have these great ideas about how you then, re how you then kind of um get out of situations like that.

Chris: mmm-hmmm

Veronica: mmm

Shannan (cont): And how you can actually then um kind of deliver an outcome by somehow cleverly through magic and through whatever else they come up with,

Veronica: Manipulation. (laughs)

Shannan (cont): and and this is through all sorts of methods, which is glorified an promoted at industry events,

Chris: Yep

Shannan (cont): to then try and bring that into a situation where someone’s going to pay the price

And if you think about that that can’t be done, it can’t be done in a positive way

Chris: mm-hmm

Shannan (cont): there is no positive outcomes there. 

The problem is, and this is where I sympathise, there are people in the industry that actually would like to be able to know how you do that.

Chris: mm-hmm

Shannan (cont): No one’s teaching them.

Chris: mmm

Veronica: mmm

Shannan (cont): Because those methods and those approach are condoned, they’re supported in many ways, that’s what props up a real estate business, 

Chris: mm-hmm

Shannan (cont): Because those deals just have to get done.

Chris: mmm

Shannan (cont): So what we hear is we hear all these kind of terms you hear all this terminology we hear all this jargon that this what you do in this situation, and this this is the way to do this.

Chris: Yep, yep

Shannan (cont):  And the reality is, that’s lying,

Chris: mmm

Shannan (cont): That’s lying. 

The problem for the buyers is what they’ve been told or what they digest is very different to what the, is a very different situation to what’s actually going on behind the scenes.

And when you have someone in the middle trying to navigate that, who’s got no life well no experience, very little education, no mentorships or no guidance in terms of ah someone looking after or making them accountable, they’ll say whatever comes into their mind.

Chris: mm-hmm

Shannan (cont): And if you think about that that’ going to probably, it’s not gonna lead to a lot of successful outcomes with someone who’s trying to spend five hundred thousand, one point two million. And you end up in this complete shemozzle, complete shemozzle, where, if you think about it the process can be really simple.

Chris: mm-hmm

Shannan (cont): And the.

Veronica: How are you then changing the way that or how has the way that you train and mentor your team.

Shannan: Yep

Veronica (cont): How is that reflecting this thinking?

Shannan: It actually isn’t that difficult to do it one on one,

Chris: mm-hmm

Shannan (cont): If you’ve got the time,

Veronica: mmm

Shannan (cont): And you’ve got the commitment to mentor someone. And that mentorship needs to be in a practical experience, when you do it at scale or you do it across and institution you need other mechanisms in order to help.

So you might recall I think six years, well it would be a long time ago now, seven years ago we made it mandatory to have price guides, published price guides. Now we made that decision firstly because it’s the biggest pain point that anyone is trying to buy is “just tell me the price”. 

Secondly the the benefit of that is what does it puts accountability on the real estate agent, that whatever you’ve decided upon,

Chris: Yep 

Shannan (cont): You’re going to make this public.

Chris: mm-hmm

Shannan (cont): And that puts a level of accountability that a lot of agents don’t have, 

Chris: mm-hmm

Shannan (cont): And that’s, those sorts of, those sorts of steps are very important in terms of people’s development and people’s education. What it does is it forces them to list and represent something differently,

Chris: Yep

Shannan (cont): It forces them, because if you’re going to be deceptive it’s very clear where you’re deceptive. 

Veronica: Yeah

Shannan (cont): When you don’t have these mechanisms in place, the real estate agents naturally will find ways to create situations, well “he said, she said this is this”,

Chris: Yep

Shannan (cont): At the end of the day there is something not right here. 

So that’s a really important step and I will no I will I will acknowledge that there are some people in the industry that have taken it, but I think a lot of people dis don’t recognise that we’ve done this not just for the benefit of buyers, we’ve done this for the educations and development of our agents.

Chris: Yep

Shannan (cont): You know what I would say is I know I know why a lot of agents won’t do this is because they can’t. And a lot of agents who are considered to be very good and who are applauded, and lauded, and glorified, they couldn’t work that way because it puts a layer of accountability into their practice,

Chris: Yep

Shannan (cont): That they simply wouldn’t be prepared to do.

Veronica: And and you know that’s what the the laws have been put in place or the underquoting laws,

Shannan: Yes

 Veronica (cont): Have been put in place supposedly to enforce that.

Shannan: Correct

Veronica (cont): But ever that I don’t like the way they’re put together because they give agents three options.

Shannan: They do.

Veronica (cont): I guess what you’re saying is that if an agent goes to a vendor and says right “oh Mr and Mrs Vendor you’re going to get a million dollars for this house” and he’s really thinking or she’s really thinking nine hundred thousand, goes out to buyers and says “you only need to pay eight hundred to get this this property”.

Shannan: Yes

Veronica (cont): And they’re hoping that, well it’s really worth nine, I’ll work the buyers up to what it’s really worth and in the meantime I’ve got to work on you know vendor management to get their, smack them around the head a bit so they’re down to where it’s reality, 

Shannan: mmm

Veronica (cont): And that’s pretty much the way a lot of transactions are done and no wonder there’s no trust, as you say. 

Shannan: It’s a wonder. And and I think that the challenge is and I and I so sympathise, you know we I had a situation in the inner west the other day with an agent who came over.And you know I work as an agent still in terms to um, I’m still transacting um mainly because that’s one of the best ways that the organisation can help with the mentorship.

Chris: mmm

Shannan (cont): And I sympathise I get frustrated but I understand that you know people who have been in an environment, they’ve been taught an told a certain thing, and you know in that situation you know you have a you have property that is we’ve had a price guide at one point two five million, we’ve had a buyer who’s offered one point three five million and the vendor said no.

Chris: mm-hmm

Shannan (cont): I then said “what do you say to the other buyers who have a contract?” “Well I ring them and tell them” yes you should and “what do you tell them when the price guide goes up and it stays on the market?” and he said “what should I tell them?” well “I don’t know, what would you say in such a situation” and he said “well I don’t know what I should say, because if I say it hasn’t been accepted, what does that mean?” That means the vendor wants more.

Veronica: More

Chris: mm-hmm

Shannan (cont): And if you say that what happens? They’ll walk. So if you don’t say that what can you say? “well I’d say maybe he’s thinking about it, and he” you know all the things “he wants to see it on the market for another week”...

Veronica: Laughs

Shannan (cont): “We’re just waiting to see you know if you sell something else” and I said “so if you do that”

Chris: mmm

Shannan (cont): “Let’s say you do that and you tell the other buyers that that’s happening. What is it, what’s it likely that they’ll do?” “oh okay, doesn’t really make any sense but maybe they’ll remain interested in the property”

Chris: Yep

Shannan (cont): Maybe they’ll do that, maybe they won’t.

Veronica: Yep

Shannan (cont): So what happens when you get to a situation when you turn up to an auction and you’re looking at those people in the eye, and whatever the outcome of that situation is, isn’t actually what happened? Do you think that that is an appropriate way to behave?

Chris: Yep 

Shannan (cont): Forget about the real estate solution is that, you as a person do you behave that way? And if you choose to do that you can, but if you choose to do that you will have a certain existence in this industry, and you decide which one you want to be, because you have to turn up and look at these people in the eye.

Chris: Shannan this is absolute, really, really...

Shannan (cont): It happens every day.

Veronica: It does happen every day, I know it happens every day (laughs)

Chris (cont): Such such a, it’s fundamentally cutting to the core of what who, you are as a person and if you want to behave this way in a business, it actually starts to spread to other parts of your life as well. 

I mean Dan O’Reilly is an amazing behavioural kind of psychologist, economist he calls he talks about something called a fudge factor, you know and you start to cheat a little bit you know, not paying you know fudging the tax return, you know not paying the parking and these things don’t they seem small but they keep growing and then you start and it it keeps going and it happens in business, you know you start to, be a little bit dishonest there in that situation to keep buyers and then it’ll just keep going.

Chris (cont): And that’s why I love about the price guide is that I as humans, I think we need to force ourselves to be accountable and one of the ways there is with the price guide, is your saying look it’s one point one to one point two and the stories have to keep going back to that price guide.

Shannan: They do

Chris (cont): I think it’s a very powerful you know way of kind of kind of managing the situation and keeping people accountable.

Shannan: Yes

Veronica: You know buyers like it, they actually prefer it

Shannan: mmm

Chris: mmm

Veronica: Every week we hear incredible stories of 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 (cont): Now please Shannan help our listeners out here, give us an example of a property Dumbo.  We can all learn what not to do from these stories.

Shannan: Can I make it an agent?

Veronica: You can!

Shannan: So I had a guy who I’ve just um been, I’ve just sold his house in the inner west and he’s trying to buy in the eastern suburbs. 

He looked at a house he looked at a house with with with an agent and the agent and the property was was was not exclusive it was five different agents and he said I think I’ve found the house I’m gonna buy, and he said “what do you reckon I should do?” and I said ah “tell me the situation”, he said “they want over eight, they want something with a eight in front of it” you know that term?

Veronica: Laughing

Shannan (cont): I said “Okay that’s not a good start” um

Chris: Eight hundred thousand

Veronica: Eight million

All: Laughing

Shannan (cont): Ah oh sorry it’s yeah it’s the it’s the eight million mark, um.

Veronica: It is the eastern suburbs (laughs)

Shannan (cont): He then said “look I think it’s probably worth six seven point four” and I said “okay well” he said so “what does the agent telling you to do?” Agents telling him to put it on a contract remember that term?

Veronica: mm-hmm

Shannan (cont): I said okay, and he said “what does that mean?” and I said well I’ll you know I said I’ll decode that for you, that means that it’s not what the vendor wants, but he and the vendor actually won’t accept that price, but what he’s going to do he’s going to ask you to crystallise that. And that will give him, it’s like it’s like going into battle and giving you a couple more guns, it’ll give him a couple more machine guns to take with him.

And what he’s going to do is he’s going to sit there and he’s gonna go to the vendor “look this is all he’s going to pay, he’s flying to Paris tomorrow ah he doesn’t think it’s worth

that, there’s an auction in Vaucluse he’s probably going to bid on so there’s the price you’ve got to take it.”

And he said he would not do that, and I said yeah he will something like that, anyway came back came back and I said oh how did you go how did you go? He goes “I offered another hundred and fifty thousand and they said no”

Veronica: mmm

Shannan (cont): And I said oh it’s not, and I said “what’s going to happen?” “oh they’re gonna take it to auction” I said “alright” I said “did you ever find out what she actually wanted?” and he said “I think she wanted eight point seven” and I said “oh okay” and I said “so what did you get out of all that?” and he said “that was a complete and utter waste of time”

Veronica: Waste of time, I can hear it.

People make offers all the time don’t they, and I go and I say to them if you’re gonna low-ball, what do you hope to achieve? You know you you gotta go in with an intention, if it’s not gonna buy it you gotta get some information, you gotta get something out of this experience.

So you’re saying you went in there and got nowhere,

Shannan: Got nowhere.

Veronica (cont): didn’t buy it.

Chris: I mean it was  a very nice insight there as well around what the agents going to do with that offer

Veronica: Fantastic (laughs)

Chris (cont): Um and I appreciate that coming out, because fundamentally that’s as a buyer, and you know you’re making that offer and putting it on paper, the agent you know, is gonna go shop that offer it’s the evidence to it’s the machine gun so.

Veronica: Shannan I love the fact that you are absolutely prepared to talk about the elephant in the room, and ah thank you for coming. We will definitely get you back because I know that there’s so much more we want to talk about.

Now for listeners who want to find out more about Shannan and his business they can get online www.bresicwhitney.com.au and we’ll put a link in the show notes.

Shannan: No problem at all

Chris: Thank you so much for giving us your time and for being here today, we really appreciate it and you’ve given us some food for thought and some amazing insights

Shannan: Thank you  

Chris: We want to make you a better rider, this week’s elephant rider training is…

Veronica: All about understanding auction price guides. Now every state has legislation around this, and I will talk through New South Wales.

So as a buyer you need to understand what the agent is doing when they quote certain prices, now legislatively is that a word? 

In New South Wales an agent has three options, they can quote nothing so you are left to your own devices to work it out, they can quote a single price and so that normally is the bottom of the price range that they’ve put on the agency agreement, or they can put a range and normally if they’re going to do that is the range that they’ve put on the agency agreement.

Now they have some limitations here. If they say that it’s worth say a million dollars they can put a maximum ten percent variation from the bottom price on their agency agreements so, a million to one point one, nine hundred to nine ninety for example.

So typically if you looked at a single figure on a price guide you would add ten percent and think, okay that’s the range that’s been put on the agency agreement. It doesn’t necessarily mean that that’s what it’s going to sell for. It doesn’t necessarily mean that that’s what the vendor is prepared to accept. It doesn’t mean much beyond what’s been put on the agency agreement.

Now further to that, if an agent receives an offer that the vendor has rejected they can no longer quote less than that offer, so if you do see a price range increase during the course of a campaign, that is usually the reason.

There’s a caveat on that, and this is where it’s really important to understand this, that agents don’t necessarily take all offers as offers, for instance if it’s not in writing they won’t accept it, they won’t change their quoting. 

Even if it’s just in an email without actually having terms and conditions or it’s not on a contract they may not accept it. And if the vendor has put in writing that they will not accept offers then they’re not going to accept it, so under those circumstances you won’t see the quote price change.

So that’s the elephant rider boot camp for this week, understanding what an auction price guide actually means.

 Chris: So Veronica what have we got to add to the elephant memory bank this week?

Veronica: Well, I think the whole idea of understanding auction price guides is so important that I’m gonna pop a couple of links to blogs that I’ve written explaining it and demystifying it, but also one that gives tips on how to identify a rogue agent.

Next episode we’re interviewing Kent Lardner and he’s a data scientist with a passion for property. 

We covered a lot of ground with Kent, starting from knowing how a little bit of knowledge can be dangerous for property investors. We delved into the trouble with using median sales data, also what goes into an automated valuation model, when they’re used and why automated estimates vary so much from actual sales prices in Australia.

It’s fascinating episode, we talk a lot about technology and what that means for the future of real estate agents and property valuers.  

Chris: The Elephant in the room property podcast is recorded at the Sydney Sound Brewery, this week’s podcast was recorded and edited by Gordie Fletcher.

Veronica: Until next week don’t be a Dumbo.

Veronica: Me again, don’t forget if you’ve enjoyed this podcast please tell your friends and we’d love an iTunes review.

We’re getting lonely here.

Chris: Be aware 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.