Unstuck
Saturday 27th of November 2021
Gina, Maddie, Phoebe, Sim, Kathy, Mal
when it’s not working
and there’s a solution
you need to get Unstuck!
Records Broken This Week
East Melbourne
Sarah Case and Warwick Anderson
Eaglemont
Kathy Malcolm and David Oster
Santa's Flesh Wound
Gina Kantzas
The market has changed.
Overall, there are fewer buyers per home than immediately post Lockdown 6.
Some say an easing of 5% in the last month – that is fair. (Michael Armstrong of Kay and Burton’s, Monday Morning Snap two weeks ago – good summary).
This easing is also to be expected.
Demand is down and Supply is up, so that means Price is ?
Yes, down.
Why?
No one reason, it’s a combination of things.
- More stock – And that feels the biggest reason and that occurs every November since Adam was a boy. And it’s not only more stock on-market – we are knee deep in off-markets or next year’s homes getting ready. Buyers can sense this and therefore they don’t feel the urgency of now now now they felt in October.
- Fatigue – as a city we are traumatised and many who didn’t buy or sell in October on the adrenalin rushes have now got to the had a gutful stage and they have put the cue in the rack until next year.
- As well the pundits, banks and predictors have started to tell their fiction stories again and the media with little to do are reporting these with the usual misguided reverence. The bedtime fables are seemingly largely negative of the future. Ok, they were last year as well – they got it wrong in 2020. They got it wrong in 2019 and 2018 and 2017 as well – chances are they may get the 50/50 coin toss right eventually and give themselves a pat on the back for a 20% correct fairy tale prediction rate.
We think a negative market right now is a generalization. We see things more as the normal ebb and flow and to give you some perspectives we have revisited our Lockdown Price Guide in Graph 1 below. What we are seeing may be no more than a flesh wound or the usual November itchy rash.
In Graph 2 with the REIV help we have given you the longer term bigger picture on the median movements of Toorak, Brighton, Albert Park and Hawthorn. It really does show strong surges since late 2019 – and you could be adding 20% onto those markets during Lockdown. BUT perhaps you are missing the mark to be adding 50% onto your home’s value over the last 5 years as you forgot about the Grand Canyon price drop of 2018.
The exciting thing about our industry, it’s like the horse races and the footy you never know for sure. We feel we will have to wait until Labour Day weekend 2022 to call it definitively one way or the other and our bet says the market will definitely……… (sorry, ran out of ink).
On the flip side, we bought an off market this week that broke records – well done Kathy Malcolm and Dave Oster. Marcus and Nicole also broke records in Rowland St Kew. Sarah Case and Warwick Anderson with no car parking got another huge East Melbourne number. And the ever-reliable Scott Patterson and Bec Edwards blew all expectations out of the water for a south facing, Grace Park home, when you consider the Hilda result only a few weeks before. Simon Gowling has done it again – another almost $10million auction in Albert Park. Andrew Hayne and Fiona Ansell Jones push the Wheatland Road Malvern record even higher halfway between $6.5m and $7.0m or near on $12,000 per improved sqm WOW. So yes, absolutely a number of sad sacks hanging around with no Christmas filler, but records are still being broken on the A-graders with interest.
Santa isn’t dead yet, a few of his reindeer are just a little tired and partially traumatised.
We hope you get some value from our Unstuck article below and the Grattan Institute’s Social Housing article via the link.
Unstuck
When a potential buying client looks you dead in the eye and says – “Mal and Gina we’ve missed five times in a row why should we consider you?”
When a potential selling client looks you dead in the eye and says – “I don’t trust them, they are all the same, so why would you be able to help me?”
What are Gina and I meant to say?
When your procrastinating and the market moves 15% and you look us dead in the eye and ask – “but how can you justify your 1% to 2% fee?”
When the opening line from an unsolicited phone enquiry is – “Mal and Gina, I get all the exclusives on the Domain or Realestate App and the email blasts from the agents.”
or
“Mal and Gina he’s my friend, I agree with his price, he is a nice man” …or the doozy. “I know a lot about real estate, I have bought and sold in the last 20 years.”
When all this happens what are Gina and I meant to say? You are stuck and our words mean little.
If you think you should allocate the same time to agent selection or your buying process as you do to selecting a weekend holiday …….. what can we say?
When you tell us you haven’t got time (due to a work meeting) to think and meet about you and your children’s long term future what can we say…….?
Being honest……… Gina and I can’t say a lot and we don’t. We are not psychiatrists or miracle workers. We are in real estate. So, we politely take our leave … and quickly.
Has any of the above offended you or made you think? Do we sound arrogant or are we confident?
Have we said something you may disagree with, and you have switched off because in property you are only looking for someone who agrees with you?
Maybe you need the buying or selling agent who……………never debates, but also never actually communicates to you. An agent who never actually gets to know what you really, really want.
Maybe you are stuck.
This article is what we do. We Unstuck you or you Unstuck yourself. We Communicate.
Below are two letters and three recent notes. No edits. Nothing has been changed except the names, $ and address. One note is similar to what we sent to two clients this month – otherwise written from scratch, no templates……….. Our advice, our communications, our Marketnews is not a template, nor a script. It has structure, but never cut and paste. It is bespoke, for you. We think about how we communicate, how we can help you get what you really, really want and perhaps how you can get unstuck.
Unstuck Letters & Notes
November 2021
Dear Dianne and Peter
……….You came to us to maximise your current situation financially, after you had decided to sell the magnificent 14 Florence – which both of you have put an incredible amount of blood, sweat and tears into.
Your $ maximization came with the rider that you do want to sell – you do want to move on.
We chose ——-, was there anybody else? I couldn’t be happier with her attitude and efforts and smarts. I couldn’t be happier with how the home has been received and talked about. For me, from my distance (all my jobs are from this distance), a very good process.
So, victory beckons for us all – the question is what does a victory look like, and will we snatch defeat from the jaws of that victory or shall we as a team make the victory even sweeter by some really good teamwork and decisions?
ÏÏÏÏÏ
I use the word victory deliberately. I want you to understand there is win and loss here.
The win is not a number, the win is doing what you really, really want to do.
The loss is not doing that.
The loss maybe not selling or selling at a number you do not think reflects your efforts.
The win may be a number, it may not be – it may simply be a result (hold or sell). Hold would at best be a partial win, as your main goal is to sell Florence at a number you think reflects true value to you.
What is that number, what does a win look like and how do we get it?
That number may be whatever happens on Auction Day tomorrow – the market – a solid campaign – wide advertising on the net plus the Fin Review and Marketnews – a good market and a good agent. Well-presented and good access to all potential buyers. Your goal is then a result and your victory is you sell the home.
If your goal is to sell the home – it feels like that will happen tomorrow night. We open the bidding at $5,600,000 and we shut up and we take what comes.
Alternatively, victory may be a specific number. A number you choose. It could be $5,800,000. It could be $6,000,000. It could be….? Your goal is then to get a number.
ÏÏÏÏÏ
If your goal is to sell a number – say $6,000,000 then we open the bidding at $5,600,000 and
- Bidding takes it past $6,000,000. Yay!!
- Bidding stops short of $6,000,000, its passed in and we deal with the highest bidder to $6,000,000 or in light of info you change your number to match theirs. Yay
- Bidding doesn’t start or it stops short, and we place the property for sale on the net at $6,000,000 on Thursday. Less Yay
ÏÏÏÏÏ
Most people at this point then say, but what would you do Mal, I trust you, please advise.
My advice is crystal clear in my mind and is as follows.
- If you need to move on spiritually then I would take what is on offer tomorrow either under the hammer or in a post auction negotiation. Nobody could argue the campaign has not exposed your home to the current market well and nobody could argue that within our skill base, the market has not been tested at differing price points. Take it, move on, satisfied it is what you wanted to do – which was to sell as well as the market allowed.
- If you want a price – then hold for it. Your home is good enough. However, understand that it then becomes a journey of the mind. Holding against what others are telling you is not easy for some. Like it’s not easy for me to write this because if I am wrong then that may affect my relationship with you, and I don’t want that. If you hold, you may get less than what you want and less than what was on offer at auction tomorrow. You may……… and if the market eases it becomes even harder………the offers are lessening and your relationship fractures and your relationship with us also teeters a little. BUT
A price at this level often only involves one buyer and one seller in a meeting of minds and usually the buyers and the sellers have got to where they are because they have some money and negotiating skills.
Your house warrants a good price – it is special – it is rare. If you are prepared to hold and deal with the emotional angst – then I would be prepared to turn up every day for a long time till it happened. Could you survive renting it out? It could take a year or even two to get the number you want, but I feel the home may well get it (if you can handle the emotional baggage).
ÏÏÏÏÏ
If the bidding stops at $5,770,000 then the only way to get to $6,000,000 is for you to make all of us believe $6,000,000 is your number AND they are prepared to do it.
You need to talk to each other or if not possible then to ——– and me.
- If you can’t agree, flip a coin and reach agreement (I am not joking) – because you will both suffer if you do not go into tomorrow and possibly beyond on this home with some unity – I promise you this 100% – we all lose (——– and I as well, but more importantly your family and friends) if both of you are not united on this one issue – Florence.
My recommendation is to be clear on what you really, really want, wait, and see what happens and then be decisive and united in a deal or a hold till a deal.
Warm regards to two people I like a lot
Mal (and Gina)
We met these clients 8 weeks ago (leaving covid lockdown out of it) and all homes we looked at were off–market. Not one was on market. Quirkily we went back to the first one we had found and bought it this week. The letter was written just prior to starting a negotiation.
November 2021
Dear Pauline and Dev,
Welcome to the next stage of the journey.
Our structure, our process is designed primarily for one thing – to get you what you really, really want.
Fundamentally we have found it is the answering of three questions by you.
- What is it I really, really want?
- Is this it? (Sub question is it any good?)
- How? (How much money, risk, time am I prepared to take?)
We are now part way through Question 2 for the first time.
You have got past your first impressions and sleep tests and you are now working through your gut tests. If you change your mind and no longer really really want to buy 59 Cornwall (absolutely fine) then we should move on or at the very least sit for a while.
Is this it – is 59 Cornwall what I want and is it any good?
Only you can answer this question.
Our role is to help you do this by examining the PPP’s – Position, Property (land and building) and Price characteristics of 59 Cornwall against your outcomes (emotional + financial + physical = emotional), which we have been trying to help you define into your PPP’s – of where do you want to live (Position), how much do you want to spend (Price) and what do you want your home to look like eg bedrooms, yard, facade etc…… (Property)
So right now, we are helping you ascertain if your PPP’s match Cornwall’s PPP’s. If they do, then we move to Question 3. If they don’t, we go back to Question 1.
So, are Cornwall’s PPP’s any good for you?
ÏÏÏÏÏ
Just before we do that – a quick word on definitions – is it any good – how do we assess that?
Of course, we have personal bias in our opinions – but we do try and stabilize that somewhat by adopting the role of the everyman, the everywomen or what you and others may call the market opinions. Yes, it’s still our opinion of other human opinions – not an exact science as any relationship can attest to.
The market value on any one property is many opinions (developer, bank, renovator, land buyers, desperate family, council,……) but market price is only three opinions (influenced greatly by other opinions) and those three opinions are the sellers, the highest other bidders (if there is one) and yours. For you – yours is the most important. Banks, commentators, valuers, agents and advisors/relatives all have opinions, but they do not directly impact 59 Cornwall – they indirectly do via the 3 above opinions.
We make this point because the 3Ps are ultimately opinions and for a transaction to take place they are distilled into values and those $ values in modern Melbourne, must at some point be the same price, between the buyer and the seller.
You will need to gain clarity on what your values are for 59 Cornwall. There is a right and a wrong answer on values – but for many it is not a $ number.
The right answer for value is doing what you really, really want and the wrong answer on values is not doing what you really, really want. They may be a $ or it may be a result or it indeed may be both.
ÏÏÏÏÏ
We tell you, your values then – as you have not done this before? No, we don’t.
We take the role of the highest other buyer and the seller (the other parts of the market) and the reports we give, reflect our best efforts to tell you what we think others may be thinking, so as you can make your decisions on 59 Cornwall being any good or not.
The report or what we call a rating is a series of checklists, in a form and in an order that we have found over the years has allowed clients to be happy/contented and to pay us/not complain or sue post their buying and selling decisions.
The rating asks a series of questions about the PPP’s – and those questions have evolved, but basically have remained the same over the decades about every home we assess. The questions we have found are a critical mass or sample of sufficient size, to form what we consider professional advice for our clients to be able to make good decisions.
The answers we keep simple: red, amber and green (good bad or indifferent, above, average or below, yes, no or maybe). The questions and answers are always against the same criteria and weightings we set 20 years ago and are the same for every home. That criterion is precinct type – so technically you could rate a hut in Africa and compare it against an apartment in Manhattan as to market quality and value.
The number we distill is not a wrong or a right or an answer. It is a talking point, a guide. For perspective we have bought very few homes rated below 500 and very few above 900 (not that many in existence). 600 in Inner Melbourne would be average, 700 above average and 800 exceptional.
This number we support with words for those that prefer them and graphics for those who take info via visuals. At the same time others are giving you opinions on building quality, legal, town planning and so on. Again, not exhaustive – but sufficient we have found for you to make good decisions in a timely manner.
Let’s start with Position on Cornwall
- It matches where you say you want to be.
- It is in a highly regarded area (average $persqm v others in the surrounding suburbs)
- It is close to the infrastructure most want – train, park, shops and so on.
Property
Land
- It is exceptionally large for the area. It has an error (15%) on title which we discovered, and we are in the process of clarity
- Exceptionally flat over such a large expanse for the area (due to excavation)
- South orientation which is a negative for light and sun warmth.
Building
- This is one of the single largest living spaces we have ever seen
- The building is extreme in size in all aspects except garaging (that is just big)
- Its design does mitigate the block orientation with regards to sun light.
- Maintenance and cleaning will be substantial – due to its sheer size.
- It is grand – is it intimate – is that important.
Price
- Additional risk will be attached to price due to its record nature and a quick or forced resale in down markets will see it perform poorer than the average.
- Its growth may not be as good as good investment homes that have a far higher proportion of land value as a % of price paid.
- It will date – it is not a classic period home – the finishes will lose value over time.
- As with now the homes genuine uniqueness will see (if well managed) a strong price and return if sold in an appropriate market, in an appropriate buyer to an emotional urgent buyer.
Having said that our summary is – Contemporary, grand sized entertaining home unlikely to be repeated more than once a year in the area.
ÏÏÏÏÏ
You are now at the stage of negotiation or how much?
Give us the number Mal and Gina!
We can and that number is $312. That number is made up and is unlikely to be the final number. Any number we tell you is made up and unlikely to be the final number except for some stratospherically crazy high number like double the ask which would be likely but not desirable.
Another story: We ran a contest for a prize for 100 high net worth individuals at Sandringham Yacht Club a decade ago asking them to value an unusual block of land. The answers ranged between $3m and $12m. We then gave additional pieces of information and not one of those hundred kept the same value. Values are far from an exact science.
We give a range because if we are too high then you pay too much and if we are too low then you are anchored to a number that will see you will miss out on the home.
The range is to facilitate getting what you really really want – which is a buy or a miss.
Negotiation, values, even the final price is more a process than a number. And right now we honestly don’t know what that number is, we just know a range it is likely to fall within.
The process when you are ready to offer starts with:
are you a price buyer or an outcome buyer, in other words do you primarily want to drive this process to achieve an outcome (result) or a specific price ($)?
In this market it will likely be a record price level, so is this a record home in your mind and are you happy to be in a record-breaking home?
Usually (but not always) at this price level there is only one bidder (you). However, 111 The Nelson showed there are other buyers around.
ÏÏÏÏÏ
So, the process becomes: doing what I need to do to buy it or doing what I need to do to see if my price misses or gets it. What risks am I prepared to take?
Timing is another important issue in Cornwall
- Periods of time see emotions of buyers and sellers change up and down. One day the number is a no and the next possibly a yes.
- More time allows for better prices for both – not just the buyer, for the seller may see another buyer arrive.
- Maintaining a sense of balance is important – depending on your instructions these dealings could take a week, a month – or as we showed in Marketnews two weeks ago 4 and 11 months.
The start of the due diligence will be to you later today, Pauline and Dev.
Mal and Gina
The client’s thoughts on our 8 weeks together
November 2021
We entered the home buying process with a lot of excitement but an equally significant amount of anxiety.
We have little experience in purchasing homes and even less knowledge of the luxury property market.
A friend and business partner whom had successfully purchased a high profile property in Toorak recommended us to use Mal and Gina. He said “they will always do what’s best for you and they will make sure you don’t buy a bad property”
In hindsight, what we didn’t realise is the luxury market is almost all off market. And beyond that, Mal and Gini made properties that were not for sale, be for sale. Which is an impressive thing to watch.
Buying off market seems to be a very different beast compared to turning up to an auction and hoping for the best. It seems to be a very specialised area where professional help is really important.
Another benefit of engagement Mal and Gina that we had not considered originally was the time they took to understand our families needs. Discussing travel times and all other lifestyle priorities. This really helped us zero in on what we wanted and where we wanted to buy. It was very noticeable that Gina and Mal were prepared to steer us away from buying too far from where we needed to be, even if that made their job more difficult by limiting purchase options.
Buying a home is an emotional roller coaster. Trying to act rationally while also dealing with the flood of emotions related to picturing your family life in each home is always challenging. However, having a skilled team in your corner that you know will steer you away from making a mistake is very comforting. Both in terms or finding a property and agreeing a fair price.
We highly recommend Mal and Gina.
P and D
A client’s thoughts on our 15 years together.
November 2021
“Mal helped purchase our current house, which is located in a fabulous location some 15 years ago, so when it came time to move, it was natural that we again asked for Mal and Gina’s help.
After finding our dream home, Mal and Gina took some 10 months to successfully purchase it as it was not officially on the market. We would not have been able to achieve what they did and were thrilled with the result.
They then successfully assisted in selling our house with a minimum of stress and fuss.
We have always found them to be approachable, conscientious and they have given us sound advice over the years. Thanks, Mal and Gina, you have been a pleasure to work with.
R and L
Helping a client decide are they selling their price or selling their property. Big difference!
Easter 2021
Jenny and David
You want $8m – fair enough.
The market may think your place is worth $7m.
The only agents we have spoken to think $7.25m.
You want $8m – you said that first time – we support that, because we support you.
Options
- Go to public and see if we get lucky – not recommending this
- Go off market and gauge interest probably now? – recommended (but be transparent and say to agents we feel we want $8m and review their response)
- Do nothing and wait till Spring – ok – as agents will be busy and give it no time (off market) in May.
Mal we could change agents
Yep, and they may say another number – then what do we do and if a higher number? So, do we go public then? We have conflicting views – what do we do?
No, we would go off-market, and then would that agent have the numbers to bring through new buyers after the first week – you can only keep replenishing numbers in off-market situation by bringing other buyers from other homes – the —— are very active.
An agent with Asian Aussie contacts – maybe?
ÏÏÏÏÏ
Things to think about
There is a window before Easter, but we need to style. Do we go to agent and say we are not styling as you request, and we want a bigger number – how would you go in reverse? Negative to styling – cost?
You need to consider do you have the stomach for a drawn-out campaign – off market over a longer period of time. Theory is good – in practice its mentally taxing. We can do this forever as we are not attached to result – we are attached to our relationship with you.
If we are going to do this (wait till we get our number) and we can; then you need to sit below the surface of the waves and noise on Dimmatina and wait till the market meets us or we decide to meet the market. If you don’t, I feel this may hurt you. Dave needs to decide what he really wants. I say this as your advisors – I may be wrong, but never scared to talk to you.
Hold on Mal – you are conditioning us? Yes – but with best efforts truths, not BS and you haven’t even signed with us yet!
Hold on Mal – what about capital growth and it’s a great property and ……
ÏÏÏÏÏ
Three opinions decide price – not us agents.
- You the seller
- The buyer
- The supporting bidder (if there is one)
The things that effect opinions
- Us agents
- Presentation
- Buyer/Seller circumstance (code for timing)
Ok we wait?
Ok we do, but if the market drops do we have a rental strategy?
Mal this all sounds negative. Please it’s not.
I like Dimmatina, I like you Jenny and Dave. I have confidence in —— and Gina and my skills.
Our advice is
- Get a long term quote on furniture and start now (if it makes sense and you agree – if not, that’s ok – we start in Spring).
- Watch sales and Market (Mal to advise) and decide in Spring if we go public or go quietly in 2022.
- At $8m we go off market – at $7.25m we can run a zoom auction.
Alternative to sound advice (not always correct as it not a perfect science) – but sound advice, the alternative is BS.
We lie, you go public, the market doesn’t meet your expectations and you have an internet anchor for 2 years, making a sale unlikely.
We give good advice, and we start and you get offer to accept or refuse and of course we may get lucky – it’s a good home – and get a big number.
Mal and Gina
Summary Unstuck
- When it’s not working and there is a solution you need to get unstuck.
- When you’re buying and continually missing, don’t know where to start or you’re only looking at a small part of the on-market, you need to get unstuck.
- When you’re selling and it’s not selling and your only plan is to find someone who will agree with you, you need to get unstuck.
Off Markets SELLS Starting Before Xmas
Off Markets BUYS Hopefully Before Xmas
Sky View! Borders a national park. Sweeping views of the city, the bay and all surrounds. All up a driveway you almost need a four-wheel drive WOW. 40 minutes from the CBD. Home/office, artists residence, family retreat. Corinne Sukroo (0419 805 915)
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