REB Leadership Series: Making sales when times are tough

In this exclusive roundtable discussion, three Top 100 agents discuss how the investor lending crackdown might play out and swap tips about winning business in a challenging market.

REB leadership series

These are uncertain times for the real estate industry, with regulators cracking down on investor lending and trying to remove risk from the mortgage and housing system.

How will it all play out? This was one of the subjects up for discussion when REB held an exclusive roundtable event for three members of the Top 100 Agents club, Alexander Phillips, Julian Hasemer and Steven Kourdis.

There was talk of reduced business, a shift in buyer sentiment and even a possible cooling in the red-hot Sydney market – but also uncertainty over what the future would hold.

The three agents, who between them wrote almost $550 million of business in 2014, also discussed how to handle the challenges of real estate practice, such as when listings dry up or the market turns down.

Another subject on the agenda was the importance of pre-listing packages and how the three agents handle listing presentations.

 

Will this crackdown on investor lending affect your business?

Alexander Phillips, Phillips Pantzer Donnelley

It’s already affected ours a little bit. I had a gentleman the other day come out to look to buy something. He had his finance pre-approved but he had to re-do it and he can’t get approval now at that level. They don’t allow you to account for your rental income as part of your mortgage repayments anymore, apparently – I’m not sure if that’s 100 per cent correct but that’s what I’ve been told.

Julian Hasemer, 1st City Hasemer & Caldwell-Eyles

It hasn’t really been having an impact on my specific core business because we’re typically doing a lot of the owner-occupier stuff and haven’t been doing as much investor stuff, so I’m probably not across it as well as Alex and the others.

Alexander Phillips, Phillips Pantzer Donnelley

Do you guys have many investors up your way, Steve?

Steven Kourdis, McConnell Bourn Estate Agents

No, we’re the same – owner-occupiers. The LVRs have gone from 5 to 20 per cent and that’s probably affected long-term purchasers like downsizers, as people don’t have that sort of deposit available, so I’m feeling it a little bit.

Alexander Phillips, Phillips Pantzer Donnelley

I thought downsizers wouldn’t have a problem with that because they’ve all got mainly cash?

Steven Kourdis, McConnell Bourn Estate Agents

Well we’ve got people who are going to buy but aren’t actually ready to go into it straight away. Like we’ve got a guy wanting a property at $5.3 million and he didn’t have the 20 per cent deposit because he wasn’t actually making a lot of money. He wanted the negative gearing – he was going to rent it out, believe it or not. So he had $5.3 million on the table but he couldn’t get the finance together. He’s pretty wealthy but he didn’t have that deposit sitting around.

Julian Hasemer, 1st City Hasemer & Caldwell-Eyles

It’s a lot of money, isn’t it?

Steven Kourdis, McConnell Bourn Estate Agents

I thought he was a bit nuts. Why would you buy a really nice house and rent it out?

Julian Hasemer, 1st City Hasemer & Caldwell-Eyles

Exactly, the returns on it would be two or three per cent.

Alexander Phillips, Phillips Pantzer Donnelley

Up your way [Lindfield, Sydney], the rental yields would be even lower than that, wouldn’t they?

Steven Kourdis, McConnell Bourn Estate Agents

Yes, the rent is pretty low.

 

How do you expect this investor lending crackdown to play out?

Alexander Phillips, Phillips Pantzer Donnelley

I think everyone’s still uncertain as to what it all actually means.

Julian Hasemer, 1st City Hasemer & Caldwell-Eyles

I think it’ll have a ripple effect in terms of how it affects the confidence through the marketplace. Already, we’re starting to see a bit of a shift from buyers. There’s all this talk about the market bubble about to burst. I think a lot of people who I’ve been speaking to recently are suggesting they’re just going to hold off and wait for things, they’re waiting for this bubble to burst. There’s no bubble in my opinion that’s going to be bursting. I think it’s just a sentiment within the marketplace, there’s really nothing on the horizon that tells me that there’s going to be this burst of a bubble. I think it’s just going to plateau and people coming to the realisation of where the market’s got to, but the talk of a bubble to me is not true.

A lot of people who I’ve been speaking to recently are suggesting they’re waiting for this bubble to burst

Steven Kourdis, McConnell Bourn Estate Agents

I think it is cooling off a little bit, but we’ve got low supply levels in our area anyway, so the demand is still there and hence the pricing is still quite strong.

Alexander Phillips, Phillips Pantzer Donnelley

I think the only thing that will make the bubble burst – if there is such a thing – is if there’s an oversupply of stock, which I reckon will happen this year.

Julian Hasemer, 1st City Hasemer & Caldwell-Eyles

You think there’ll be an oversupply?

Alexander Phillips, Phillips Pantzer Donnelley

From mid-spring onwards.

Julian Hasemer, 1st City Hasemer & Caldwell-Eyles

Yes, I think the supply levels are the big key at the moment.

Alexander Phillips, Phillips Pantzer Donnelley

People are being a lot more fastidious about what they’re willing to compromise on. About 12 months ago it was more like just grab something for the sake of it, but I think people are less willing to make those compromises now.

 

How do agents keep winning business when listings dry up?

Alexander Phillips, Phillips Pantzer Donnelley

Agencies are getting more desperate to win business [in Sydney].

Julian Hasemer, 1st City Hasemer & Caldwell-Eyles

There are a lot of agents out there who would still, no matter what, say, “Oh no, that’s not a good price”, just to get a listing. I had one the other day where an agent paid for the styling and paid for the whole marketing campaign, so I had to step back and say this isn’t the business I want to be conducting, I’m not a bank and we're risking our time and our staff’s time and our energy, and that’s enough risk.

Steven Kourdis, McConnell Bourn Estate Agents

Well that agent’s interest is in getting a result – not the best result because his money’s on the line and he probably wants a return on it.

Julian Hasemer, 1st City Hasemer & Caldwell-Eyles

Some of the things that desperate agents do, the agents who are fighting for every last bit of business…

Alexander Phillips, Phillips Pantzer Donnelley

There are a lot of agents out there who we compete against that haven’t had any business for a year, so it goes to show that it’s gone to a new level in how competitive it is and if you’re not switched on you’re done. And it’s also the stock being down about 15 per cent.

Julian Hasemer, 1st City Hasemer & Caldwell-Eyles

Even with the booming times you’d have to say that 80-85 per cent of real estate agents are making a basic bare-minimum wage.

Steven Kourdis, McConnell Bourn Estate Agents

Would you let your kids into the industry?

Julian Hasemer, 1st City Hasemer & Caldwell-Eyles

I think if you’re coming from a family line of real estate it might be a different story, but if you’re just getting into the industry without any sort of family name it’s a very tough gig, and longevity is really what gets you there.

Alexander Phillips, Phillips Pantzer Donnelley

It’s not that bad when you sell something off the market in two days for a $2 million property – that’s $40,000.

Julian Hasemer, 1st City Hasemer & Caldwell-Eyles

I think we're extremely blessed in the industry that we're in and that you can get to those levels.

Steven Kourdis, McConnell Bourn Estate Agents

I think the prices have made up for the missing stock levels from the agent’s perspective. The prices are up there and the fees are making up for the lack of stock. The market’s gone up about 15 per cent but we’ve got 15 per cent less stock so we’re in the same position.

 

How do agents succeed in a declining market?

Alexander Phillips, Phillips Pantzer Donnelley

Well, if you’re doing an upgrade in a down market it’s the best time to be doing it, it’s just having the confidence to actually do it.

Julian Hasemer, 1st City Hasemer & Caldwell-Eyles

You don’t really change the messages in your marketing – it’s more the motivation.

Alexander Phillips, Phillips Pantzer Donnelley

In a down market it’s harder to get vendors to lower their prices, whereas in an up market vendors are greedy and it’s just shifting with how things are.

Steven Kourdis, McConnell Bourn Estate Agents

It’s no different to two or three years ago. That was a tough market in 2011 and 2012 so I think for us we have to represent the client. Whenever we’re in front of the client, we talk about their best interests and wherever the market is we give them the right advice. That’s important for the longevity of your business.

 

How important is it for agents to be able to accurately assess their performance?

Steven Kourdis, McConnell Bourn Estate Agents

Financially, everyone’s got needs and families, so you should know if you're not performing.

Julian Hasemer, 1st City Hasemer & Caldwell-Eyles

Everyone’s always got an excuse. Even if you go through a week or two where things don’t seem to be happening the way they were a few weeks ago, you get a bit down on yourself and come up with excuses. But I think you quickly adapt and realise what you've been doing in the past will come good and will make up for it. You’re going to have little highs and lows all the way through, and I’m sure the real estate agents who are struggling to make a bare minimum wage – gosh they must be forever coming up with excuses.

Alexander Phillips, Phillips Pantzer Donnelley

Every listing that I miss, I know that I’ve done everything possible and if I’ve missed it I’ve missed it and I move on. I don’t ask why I’ve missed it because there are various things, but as long as you know you’ve done everything possible...

Every listing that I miss, I know that I’ve done everything possible and if I’ve missed it I’ve missed it and I move on

 

Do you send pre-listing packages?

Julian Hasemer, 1st City Hasemer & Caldwell-Eyles

I don't, but it's something that we're looking to incorporate.

Alexander Phillips, Phillips Pantzer Donnelley

We do it to every single person, and within half an hour.

Steven Kourdis, McConnell Bourn Estate Agents

We don’t.

Alexander Phillips, Phillips Pantzer Donnelley

A lot of the times they don’t read them sometimes they do.

Julian Hasemer, 1st City Hasemer & Caldwell-Eyles

What is it though – is it just testimonials?

Alexander Phillips, Phillips Pantzer Donnelley

No, we put the past 100 sales plus 20 testimonials and brochures of similar properties.

Steven Kourdis, McConnell Bourn Estate Agents

We do a two-step appraisal.

Alexander Phillips, Phillips Pantzer Donnelley

Where you go and look at the house and then come back?

Steven Kourdis, McConnell Bourn Estate Agents

Exactly.

Alexander Phillips, Phillips Pantzer Donnelley

With us, in our market, if you have to go away and think about it, I reckon you don’t show that you're confident if you don’t go, “This is what it’s worth, this is our fee, this is our marketing”.

Steven Kourdis, McConnell Bourn Estate Agents

But how do you get husband and wife there at the same time during the week?

Alexander Phillips, Phillips Pantzer Donnelley

That’s a question you ask before you meet. You say, “I’m only going to meet if you’re both there, even if that’s 7pm at night”. I won’t even go unless they're both there. And if one of them says, “Oh no, I’m the decision maker”, they never are, it’s always the two of them.

Julian Hasemer, 1st City Hasemer & Caldwell-Eyles

I think pre-listing kits are a very good idea. We will do them with our new branding and new launch. It’s about keeping up with competitors and a point of difference. I think a lot of the business I get is referral business, so I think there’s a bit of an understanding of what I do and what I’m capable of doing before I get in the door, as opposed to maybe a lot of cold calls. It certainly doesn’t hurt and would enhance your chances if you did have a proper pre-listing kit.

Steven Kourdis, McConnell Bourn Estate Agents

Our market’s a bit more conservative. We do the first appointment during the week, we look at the property, then we come back and we do the whole thing, so we'd probably take a pre-listing kit at the first appointment. Then we come back with a proposal and sit down and say everything.

Julian Hasemer, 1st City Hasemer & Caldwell-Eyles

I think the good thing about being there for the second time around is quite often it's the agent that’s last in front of them that has that lasting impression. I think if you’ve come in first and you’ve done your spiel and then Steven comes along and then comes back again and sits down to go through everything, depending on the vendor they may find that more appealing.

Steven Kourdis, McConnell Bourn Estate Agents

We ask a lot more questions at the first appraisal about their situation and timing, so from that you can put together a campaign and I think sometimes that’s better. Our market’s a bit more conservative so the client wants to know what their house is worth, but they're not always selling. So having a question-based first appraisal is important; so knowing their situation and then coming back with a package put together tailored to their needs. Sitting there saying, “Hey guys, this is your option, this is how much your house is worth” wouldn’t work in our marketplace.

Our market’s a bit more conservative, so the client wants to know what their house is worth, but they're not always selling

Julian Hasemer, 1st City Hasemer & Caldwell-Eyles

What percentage of clients do you think walk out with an agency agreement after the first and last listing meeting?

Alexander Phillips, Phillips Pantzer Donnelley

Half of the listings we get are because we go in saying, “You need an overhaul in your house, we’ll come back with our team of people at this time”. Even if they're getting other agents in, you're going back after other agents.

Julian Hasemer, 1st City Hasemer & Caldwell-Eyles

So you're saying you're doing some work, getting painting done?

Alexander Phillips, Phillips Pantzer Donnelley

I’ve found in the last one or two years I’ve been renovating a lot of homes. You're going in and giving those recommendations to get it painted, get the cracks repaired, get the gardens done and they're asking you if you’ve got anyone. And we do: we've got teams of people that we can get in and renovate places. It’s another shift in what we've been doing - becoming renovating real estate agents.

Steven Kourdis, McConnell Bourn Estate Agents

We've been doing it for a while.

Julian Hasemer, 1st City Hasemer & Caldwell-Eyles

Presentation is key. You’ve got to make sure that those tradesmen aren't going to let you down because that’s going to be a reflection of you.

Steven Kourdis, McConnell Bourn Estate Agents

You only use the same team of guys that you know and trust.

 

Click here to read the second part of the discussion, in which Mr Phillips, Mr Hasemer and Mr Kourdis discussed how to create efficient businesses and evaluate new technology.

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