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James sits down with JJ Taylor, Managing Director of @realty, to discuss all things about buying and selling real estate.
In this interview James and JJ chat about:
- JJ’s journey to starting @realty (00:30)
- @realty’s business (01:08)
- The difference between exclusive agency, sole agency and open listing (04:00)
- The agency agreement he would recommend for a first-time seller (08:16)
- Current trends in the Gold Coast property market (09:45)
- Benefits of a buyers market (12:34)
- Questions a seller can ask to pick the right agent (14:37)
- Some trends of home buyers on the Gold Coast (23:13)
- His top 3 tips for choosing an agent to sell your home (24:54)
- His top 3 tips for buyers at open homes (26:29)
- Plus so much more!
Read on below for the full transcription of our interview:
– G’day everybody. James from mrkts.com.au here, and today we are privileged to be joined by a Mr. JJ Taylor., the managing director of @Realty, an up and coming innovative real estate company in Australia. JJ has been in the industry for 10 years plus, overseas in Singapore and here in Australia. Today we’re gonna talk about all things that we can learn about buying and selling real estate. So, JJ, thank you for coming in.
– Yeah, thank you, James, for having me.
– Best way to start, I think, is to give us a succinct CV, if you can.
– Under one minute, what’s your past?
– Yeah, okay. That’ll work.
– If you can.
– Well, I’ll sum up ten years in one minute. Basically, ten years ago I moved over to Singapore, as you just mentioned. I lived there for two years. I was involved in project management whilst living over there. Moved back to Australia, back to the Gold Coast. I was involved with land acquisition for a private development company. I moved into more of a project management role. Then, started @Realty five years ago. At @Realty, we’ve grown to nearly 600 agents across the country in the five years. The reason, I think, for our growth, is really due to the innovative structure that we have created. Which, basically, gives the real estate agent a platform to, more or less, run and operate their own business without the risks and cost that would normally be associated if they were to be doing that independently.
– We do operate in a variety of marketplaces around the country. Particularly, in five different states, as well as metropolitan and rural areas. We do have a heavy focus on technology and software.
– Excellent. It seems like the modern market, the nimble aspect of business is becoming much more important. Either you and I or that for the agents. Do you run the marketing side of things?
– We do, we do. So, we cover a lot of the back end services that, generally, agents don’t like to necessarily do themselves, a lot of the administrative tasks. Through our proprietary software, we are able to facilitate the listing process which does encompass ordering the marketing products for the campaign. So, we give the agents the freedom of flexibility to really pick and choose, number one, what market they want to work in, so we don’t define any regional areas or territories that they have to work in, like a lot of our competitors will do for their agents. Secondly, we give them the freedom and flexibility to choose, really, what they believe is best suited for that particular client, for that particular property in the marketplace up there, and for the market conditions that are currently operating in that marketplace. Then, we run and facilitate everything in the background for them. We will organize the marketing through our suppliers. We facilitate the invoicing and the payment systems. Once it gets to the stages of an offer or a contract coming in, we will utilize our trust accounts, coordinate with solicitors and conveyancers, and all the other parties to make sure that the conditions are satisfied throughout the process.
– Excellent. So, you’re there, and it gives your agents the ability for the purchasers and the sellers to be on the ground and actually doing the job–
– That they need their clients, or that what their clients expect of them.
– Yeah, freeing up the agent to focus on what’s important in their line of business. Which is really looking after the clients, the customer, and making sure that property transaction is a smooth process, one that the client benefits from, buyers and sellers, and they are able to really focus on the needs of their clients, rather than the day to day administrative tasks.
– So, then, let’s have a think about some of the definitions. I think it’s good to start–
– From a level playing field.
– So, there’s exclusive agency, sole agency, open listing, and auction. If somebody’s there, and they’re looking to sell their home, what are the benefits and drawbacks of each of these?
– You really have two paths you can go down. Which is the path of an auction, or the path of a private treaty. A private treaty really encompasses the three that you just mentioned being sole agency, exclusive agency, and open agency.
– Now, an auction, let’s talk about that. We all know what an auction is. Generally, there is a set time in the future of when the auction is going to take place. We’ll have a reserve price set by the vendor. Now, the vendor doesn’t have to set that reserve price the day they sign the listing authority. They can wait until closer to the auction time. The campaign is run by the real estate agents. Generally, there’s an auctioneer on the dates. Although, these days there are virtual auctions that take place. There are platforms where you can either do the auction on an Ebay-style platform. We can actually see bids coming in and people can bid. Yep. There’s also live auctions, similar to what we’re doing right now. There’s a camera there, and somebody can bid in China, the USA, Canada; bidding live whilst watching the live feed through the camera.
– Same rules apply?
– Same rules apply–
– As a standard auction?
– That’s right. Same rules apply so–
– If you’re the winning bidder you are unconditional at that point. So, that is a key feature. I guess a key definitive difference with auctions, is if you are the winning bidder, you need to be prepared. It is unconditional at that point, so definitely be aware of that. Essentially, what would happen is, if the bids meet the market, meaning they hit the reserve price and above, the property will result on the day and the auctioneer will call once the property is on the market, meaning the bid has hit the reserve price. If the bid does not hit the reserve price, what would happen is, generally, the auctioneer will take a vendors bid to close off the auction. They’ll work with the bidders who aren’t present on the day and they will also then try and negotiate with them. If not, it goes into more of a, basically a private treaty campaign thereafter. A private treaty campaign, to begin with, or thereafter, it’s mentioned as an exclusive sole agency, or open. An open agency effectively means that you’re not locked into that particular real estate agency. If I’m a real estate agent and you’re a homeowner and you wanted to sign an open agency with myself, you’re also able to sign an agency agreement or listing authority, in Queensland’s case it’s a form 6, with any other real estate agency, as well.
– Okay, okay.
– So, you can not lock into one particular agency. Exclusive and sole are very similar. Exclusive means that you’re locked in with just me. Generally, for a period of 90 days. We can extend after that 90 days, but also what would normally happen after the 90 day exclusive period, you would automatically revert to an open agency at that point. So, you continue to market on an open agency agreement. A sole agency, very similar to an exclusive with one small difference, is the homeowner has the ability to sell their property without paying a commission.
– So effectively, again that example, if you’re the homeowner and you somehow find a buyer through your local basketball team–
– Yeah. That would be the day.
– Who wants to buy your house, and they decide to purchase that house, because it’s your buyer, you found it, you effectively did the hard work. Even though you and I had a sole agency agreement, you would not have to pay me a commission.
– Okay. Very good. So, when educating people, or first, sort of, comers to the industry, would you say if you’re selling your property the simplest way, you’d wanna trust one individual with the exclusive or–
– Absolutely. Absolutely. I mean, think about it from this perspective, would you want five, 10, 20, real estate agents out there marketing your property and all giving you different inputs of information? You’d be at information overload. You wouldn’t be able to decipher what is true feedback from the market because it’s coming from so many different perspectives. You’d have a variety of different campaigns. There’s no succinct message out there in the marketplace. It can become pretty chaotic and stressful for the homeowner. So, it is very important to pick the correct agent, to begin with. We can discuss some ways of doing that in a second. Certainly, find somebody that you trust. Find somebody that you know has the ability to achieve the results that you wanna achieve. Work out the best strategy, moving forward, with that single person. So that you do have that one source who is out there representing you and can bring you back qualified feedback.
– Basically, you’re putting up a focal point–
– That’s right.
– For the market to concentrate on, and then the feedback will come through one passage.
– That’s right.
– Very good, very good. Let’s talk about the current market, if we can. We’ll try to keep it to the Gold Coast, for now, because that’s the area in which we live, so we can operate on a better premise. Although, you do have agents all over Australia, so you can touch on the other capital markets, if you want to. So, let’s talk about current trends. What is your team noticing in the marketplace at the moment?
– Certainly what the biggest shift that has occurred, is we’ve gone from a sellers market to a buyers market. That is very prominent in the southern markets. So, New South Wales and Victoria, particularly suburbs of Sydney and Melbourne. I believe we’re starting to see that occur up here in Queensland, as well. What we saw, obviously, in New South Wales and Victoria was an extraordinary run up of prices. Which has now started to level itself out. So, we are seeing a retraction of values in the markets down there. We haven’t seen the retraction of values here in Queensland, but I think what we have, what we are starting to see, is a longer time of market for listings. There are less and less buyers out there. There’s less and less buyers out there particularly due to some external factors. A lot of those external factors are the Royal Commission, which has had a huge influence on–
– Banking and mortgages and credit. Developers would know that.
– That’s a huge, huge factor on the market. Overseas purchasers aren’t looking at Australia like they were 18 to 24 months ago. What we’re seeing, it’s a combination of these. These external factors are really starting to put pressure, making it more difficult for buyers to buy the properties that they want. You combine that with the run up of prices, which has created an unaffordability gap in some marketplaces. Certainly not all over the Gold Coast, but there would be pockets of the Gold Coast, as with any city where people do want to live, but it’s a little bit out of reach for some people.
– Living within your means is sort of the catch call of the Albert government back then. I heard a rumor, well not a rumor, but I heard some statistics that in the outer regions of Sydney, the western suburbs specifically, they have had a 20% drop off in the marketplace. So, that’s a 20% drop in the price point, on average, across the dollar that was available. And that had returned to 2015 prices with 20% off. So, that shows you how hot that market was.
– Oh, it was incredible.
– So, the benefits of a buyers market then, or you would assume, is you can go in there and negotiate–
– With a little bit more leverage.
– But, I would take it that people would need to be prepared for that?
– Definitely. Definitely. I mean, on both sides, really. On both sides. I think if you, again this is why it’s really important to talk to the correct real estate agent to begin with and choose the correct real estate agent who has the knowledge of the local area and has the knowledge of what the neighbor’s properties have sold for. You know, cause properties sell off-market. So, having that inside knowledge can help you out a lot if you are speaking to the right agent. So, being prepared on finding out what works, what doesn’t work, what strategies you should implement, what pitfalls you should stay away from. Without going to specifics but newspaper advertising in some areas might not work for that particular property, but in other areas it might. Again, your local agent can help you navigate those waters to find the best strategy to sell your property. But, on the other side of that, buyers need to be prepared, as well. It really comes to then, I guess you had a question about what sort of three tips or three factors that they should look for or be aware of, I guess, if they’re gonna be buying. It really comes down to doing the research, doing the homework, understanding the area that they’re going into. I think these days, more important than ever, understanding what their borrowing capacity is.
– Know your budget.
– Know your budget, yeah. Speak with the banker, speak with the mortgage broker, with your lender. Get the pre-approval if you’re at that point where you are serious about purchasing. If you can walk in as a pre-approved purchaser ready and willing to buy, you’re gonna have much more leverage at that point in time, than somebody who is not.
– Yep, that’s very good. What questions would you recommend for people to ask that would give them the best idea and the confidence to know that they’re choosing the right person.
– There’s a number of sources you can find real estate agents to begin with. Number one source is probably off of referrals. So, by their neighbors that have sold properties, friends and families that have sold properties, maybe seeing sign boards around the neighborhood. There’s also a lot of online resources that you can go to look up real estate agents and their statistics and what they’ve done. You’ve got RealEstate.com, Domain, RateMyAgent, even a simple Google search. So, number one, I would recommend picking a few agents. Not just one, but speaking to multiple agents to really understand who is giving you BS and who’s gonna be the right agent for you. Then, asking questions. Even just looking online and simply saying, how many properties have they sold? What is their average days on market? What is the average price that they’re achieving? Now, that can be a little bit deceiving with online portals because a lot of times, and this is something to be aware of when looking at real estate agents and their statistics, a lot of times if that agent has moved from one agency to another, their data doesn’t always follow them. Yep, that makes sense.
– That’s just the way that these platforms are set up. So, don’t necessarily judge the book by its cover, so to speak. There might be a little bit more behind it. When you’re speaking with the agent, ask them about what their viewpoint is about the market. What do they, obviously, think their strategy and the best strategy to implement will be to sell their home? Ask them about what marketing products they believe should be used and why. Dig deep. Don’t just take it at face value. Dig deep.
– Ask those important questions.
– Ask those important questions, yeah.
– The thinking behind it is extremely important.
– Exactly right. Exactly right. A lot of times I think what you’ll find, as well, or what I’m gonna go find, is that an agent, if they’re working for a big brand, or even an independent brand, they are, generally, dictated by that brand and what they have to sell from the marketing campaign package. So, right away, that agent might not have that vendor’s best interest to begin with. A lot of times groups are locked … An agency might lock themselves into a certain package with an advertiser and they are forced to sell that particular product of that package. Again, dig deep. Why do I need to go to a premium on Domain or a premiere on RealEstate.com, or why do I need to do this newspaper ad? Then, compare that to the other campaigns that come through from other agencies and look at that upfront spin. Just because a campaign cost 5,000 dollars and not 600 dollars, doesn’t mean the 5,000 dollar campaign is always gonna be more effective than the 600 dollar campaign.
– Correct. You’ve got to be smart with your money.
– Be smart with your money. That’s right. That’s definitely a key component. The other thing that I would certainly try and drill into when talking to a real estate agent is finding out who am I going to be dealing with? You might be sitting in front … I might be sitting in front of you today, you as a homeowner, but then after we sign up, I might be passing you onto to somebody else and the next thing you know you’re going through a team and you’re dealing with a whole bunch of people internally, and we’ve now lost that connection. So, again, you want to make sure that you have the one point of contact.
– I’ve never seen those before.
– That’s very, very vast–
– I didn’t think that would occur. A lot of times they’ll have their marketing team, they’ll have their contracts team, they’ll have their designing team, their stylist team. So you end up dealing with a whole lot of different people, but you as a homeowner, that’s not the most, necessarily, frictionless way or easy way for you to–
– Simplest way, exactly right, for you to try to sell your home and deal with that particular group. So, you wanna make sure that the person that’s sitting in front of you is the person that’s gonna be there all the way through, day and night, whenever you need them. When deciding which agent to work with, one of the final points I like to make, is you should really make sure that that agent will be getting the most exposure they possibly can for your property. One of the ways of doing that, is to make sure that they work with other agents. One of the uncomfortable aspects of signing an exclusive, or even a sole agency agreement, and narrowing it down to that one person, is you have that uncertainty of well, I’m missing out on all these other agents that might also have buyers in their databases and how do I know that this person’s the right one? What I would be asking is, Mr. Or Mrs. Agent, are you going to be conjunctiong with other agents? Conjuncting simply means, will you be working with other agents? So, that means another real estate agent can bring a buyer to your open home, to your listing, and then the commission that you’ve agreed upon, within that listing agreement, would be split on an agreed pro-rata split between the two real estate agents.
– Separate to you as the client, that’s up to the agent that you’re selecting and in hope that he will work with other people, cause their goal, at the forefront of their mark, is to sell the property.
– That’s right, that’s right. Now again, a pitfall, or maybe a misconception, is that the real estate agent retains all of the commission that’s signed in that document. Now, in reality, what happens is a lot of these agencies will only give the agents anywhere from about 40% to 50%, on average, of that commission. So, let’s just say it’s a 10,000 dollar commission, that agent that you signed with might only be keeping 4,000 dollars. Now, if that agent has to split that 4,000 dollars with another agent, they’re not so inclined to do that. So, I would be drilling down into it to make sure that they will be doing that, working with those other agents. Actually have them write that into the listing authority so that you do have proof of that. That’s right. That way they can market it to other agents that, you know, if another agent does bring in a buyer, you know that you’re getting that maximum exposure.
– I think using that selection process is a great idea for you to get an idea of the type of negotiating you’re gonna be dealing with. You use this time when you’re getting a listing presentation, as it’s called, to start haggling a little bit and see what comes out of it. If someone’s gonna drop straightaway their commission, then you know that when there’s a buyer coming in and they offer you a price, they’re not gonna fight back on it because when the agent delivers your contract, it should be something that they’ve already negotiated, quite heavily, with the buyer that’s made the offer.
– They were made to always be aware that you’re constantly trying to get to the bottom of what you’re gonna get out of this person or how are they gonna deal with other people around you?
– Look, and it’s not to say that you should try and really negotiate that commission rate down so much that the agent just doesn’t have any skin in the game–
– They lose motivation.
– They lose motivation, right.
– Correct, correct.
– Money is a motivator at the end of the day. You want them to be motivated to sell your home. But, it is a good test at that point to see how they would handle that small of negotiation process. If they’re coming and suggesting that the commission should be over 3%, and you say well what about two and a half, how do they handle that and how do they negotiate with you on that? At the end of the day, you do get what you pay for. So, you do want to make sure that you are incentivizing good quality agents to go out there and sell your property. If you have two agents and one is charging 2.5% and the other is charging 3%, and that 2.5% you can’t see is subpar, but you’re saving .5%, you get what you pay for.
– That makes sense.
– Just think twice before you make the decision just on the commission.
– But, there are other ways to negotiate. You don’t have to just negotiate commission. There are other little marketing things that you can discuss with the agent. Just always be testing people around you that way you’ll learn–
– Always ask questions.
– Exactly. There’s talk of aging populations a lot.
– Here on the coast, we know that there are people moving up quite a bit because our weather. Even though we’ve not had the best luck, on camera–
– It’s nice today.
– This morning it was a beautiful day. So, have you noticed that there have been some people that are finding their way up to the coast deciding to purchase their final home? If you will.
– I think the Gold Coast has always been a desirable destination for downsizers, empty-nesters, people that want to escape the rat race. I even find in myself, if I go to Melbourne or Sydney, I love those cities, for about two or three days. Then I want to come back to the Gold Coast. So, I think there’s a lot of people who would love to place themselves on the Gold Coast. There’s obviously restrictions. They’ve got family. It’s hard to leave their network of friends and family in those locations. Jobs is another reason. I do think that what we saw, certainly over the last 12 months and 18 months, is whilst those properties were increasing in value in a dramatic fashion in Sydney and Melbourne, people are cashing out. They’re coming up here and purchasing. A dollar on the Gold Coast goes much further than a dollar in Sydney. Where they’re selling the three bedroom unit in Surry Hills, and all of a sudden they’re living in a water-front property on the Gold Coast.
– There are pros and cons.
– They’re pretty happy about that.
– There are pros and cons to all of it. Some tips for people looking to sell and choosing their agent. We’re trying to do it succinctly. What would be your top three tips for those people, when choosing an agent to sell their property.
– Sure, so top three tips. I would be looking at their history and their track record to make sure that they have a track record of achieving a price in a reasonable amount of time. So, if a property’s on the market for 30 to 45 days, that’s a pretty reasonable amount of time. If it’s getting to 60, 90 days and above, I would be sort of asking questions about what’s going on. Now, it’s not always the agent’s fault. There are difficult vendors out there.
– Very good point.
– Yeah, that could be a reason. Also, when looking at choosing an agent, look at multiple agents, not just one.
– I agree with that.
– Definitely look at multiple and compare. Third, is to make sure that agent is working in your best interest. That really comes down to the marketing campaign. Why they’re pitching that marketing campaign? Why is it that spend? Why that particular product, when why not another product that you might have in your mind? Also, in relation to conjunctions, make sure that agent will be out there conjuncting with other agents in order to maximize the exposure of your property, to not just their own database, but, hopefully, to as many databases of other agents in the area as possible.
– Fantastic. Very good three points. Now, we’re gonna move on to, what would your top three tips for buyers looking to purchase? What would be something that you think would give them a leg-up in an open home?
– Top three tips would be, number one, know the area. Whatever your circumstances are. Whether you’re looking for factors in relation to your job, maybe to your kids schooling, maybe just you wanna be next to the beach. Just know that area. Make sure that is the area that you want. If you’re certain through the negotiations, I think you’re gonna have a lot more success than if you’re kinda just, ah, I’m not really sure if I actually wanna buy this property. The other point I’d like to make is particularly with the credit crunch that were seeing within the marketplace right now. Get the pre-approval. If you can walk in with that pre-approval and you’re ready to buy right then and there on the spot because the bank is ready to provide you with that mortgage, you’re gonna have much more leverage in that negotiation.
– Excellent, excellent. And number three?
– Absolutely, absolutely. I mean, the last thing you wanna do is be buying property at the height of the market. Again, those external factors, you know, we do have changes coming in. Potential changes coming in with the change-over in government. So, if Bill Shorten and the Labour government ends up coming into power, what does that mean for you? Are you an investor? Are you a homeowner? What does that mean with either one of those two categories? There will be changes in the tax regime with capital to gains as well as negative gearing. So, those are the sort of things you need to be aware of, legislative changes.
– That’s as easy as picking up the phone and calling a broker when you’re selling that pre-approval conversation. They should be right indeed on knowing at least which direction the legislation is moving towards and they’ll know at least the perimeters that the banks have given them, and keep an eye on those interest rates if you can. More so, when they’re being passed down to the banks and if the bank’s gonna pass them on. Everything you can find on the internet. Our parents were not able to do early on so we’re blessed and we’re in that generation.
– Google is your best friend. Google everything.
– And make sure that, by looking at multiple sources, you’ll get a cross reference of it. At least there’ll be points in those articles that will match.
– That’s right. The thing is there is no stupid question for Google. Google doesn’t judge you on what your questions are. Ask it whatever you want. You might not know how to frame the question. It might be as simple as, is it a good time to buy property on the Gold Coast? There will be a lot of information about that. So, don’t be afraid to ask Google a stupid question.
– Type mrkts.com.au into your browser.
– Even better.
– JJ, thank you very much for your time.
– Yeah, pleasure.
– It’s been a real pleasure. If you want to see the full interview, head to the mrkts property members group. Where you will find more information on JJ and his company and you can do some more of that research and get started. Thank you for your time and we’ll talk soon.
– Thank you.