Belinda: I feel because, again, this demographic may well have not had a real estate transaction in 20 to 50 years, prices certainly look a lot different.? That volume of money is not something they have done before so they are worried they are paying too much? How can they know if they are paying the right price for a property or in fact selling for the right amount?
Rich: The way in which we can help in this is when we find the right property, for the downsizer or the rightsizer, we do a very detailed appraisal of that property.? We look at comparable sales, we look at what’s recently transacted in the last one to three months. We do the same job, probably even more detailed than a registered valuer will do, we actually have a valuer on my staff and we are very accurate with our appraisals. We take between two to two and a half hours to appraise the value of one property. Most people who are doing their research would have no idea about how to estimate the true value of property. The agents when they list a property for sale have to write an estimated selling price as a value on what’s called an ?agency agreement?, there’s a range around about a 10% range. So it might be $1.5M to $1.65M.? They will always quote 1.5 to the general public, not quite the lower end of that range to try and entice buyers to come in.??
We give our vendors a detailed report on the market and help them understand the dynamics of the market and just protect them. Essentially, we provide a level of protection to make sure they don’t pay more than they need to. We’re really tough negotiators. We try to save our clients dollars. There are some really good opportunities out there.? Regarding property prices, if you haven’t transacted for 10 to 20 or 30 years, the market has moved dramatically. Property prices in Sydney have typically doubled every 10 to 11 years. Our current median house price is around $1.1M, but you go back to 2011, a median house price was $560,000. So you can just see that prices do keep moving over time. There’s a lot of strong drivers for that.
Belinda: Can I ask how that works with your fee?
Rich😕 Sure, our fees work on a fixed fee structure. Most agents, to sell your home will charge around 2% as a general figure to sell your home. So we work on a fixed fee basis, and the approximate equivalent range is between 1.5 to 2%. Once you get up to around a $2M purchase, our fees go around one and a half percent, so we charge a retainer fee of between $3,000 to $5,000 up front to start the searching process. We find the property, we appraise it, negotiate before the process and then we charge a final fee upon successfully buying the property. But the thing is, we know we can save our clients anywhere from three to 10 times our fee. So effectively, you get our service almost for nothing, without the headache and the stress.? In the last three months, I’ve transacted several properties. I bought a lovely little two-bedroom unit in Manly that we appraised for $1.32M. Now I got that for just under $1.2M, saving the client $120,000. Now, our fee was $20,000 but they’ve saved $120,000. I bought another property in Killarney Heights, it was worth $2.4M. We missed out on this previous client on a couple of options before that. Then, with the COVID environment prices, I was able to save them $200,000. Our fee was around the $28,000 mark, but I saved them $200,000. They were just over the moon. They said they could never have found this without me. Another one is in Pennant Hills, recently, for a lovely family with a couple of young children. It was appraised at $1.55M. And I bought that house for $1.4M. So I saved them $150,000 in that transaction. So it just gives you a little sort of test and it’s also not just about the savings, it’s obviously very important that the client gets the right property. When you’re in a moving or fast or a hot market where prices are rising, you have a lot of buyers that are bidding each other by five or $10,000. And the prices are just going crazy. So it’s also important to know when to stop and where to find alternative opportunities.
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