oc | Monday 25th May

The Brady Bunch

It’s 6.00 pm on Saturday, 4th April and this week the isolation has given me the ability to have longer, more in-depth and focused conversations with some of the many people I respect in our industry.

It has also given the ability for some to wind down and reflect before (re)setting a course after Easter.

At the halfway point of our two-week pause, we wanted to know what is happening in , High-End, Real Estate in April 2020, now we are a week into Stage 3 shutdowns.

So I went to the true experts – not the baloney peddlers, the incomplete and false stats experts. No not the TV personalities and economists, some of whom don’t know a buying signal from the shooshing away of an annoying insect. No, I missed them and went to some agents in the field whom I respect.

Let’s call them the Brady Bunch: Rebecca Edwards, Andrew McCann, Jenny Dwyer, Rae Tomlinson. Paul Bond, Richard Winneke, and Paul Richards. A mixture of male and female, directors and non-directors, all experienced and covering , and high-end Melbourne.

These interviews were an average of 15 minutes each and to avoid the marketing hype, we all agreed to no specific quotes so as we could more succinctly get to what is really going on at the Top-End right now.

These are my interpretations of their insights on what is really happening over $2m.

Overall, one telling observation was that unlike a week ago, conversations were a lot calmer, more accepting and less hurried AND despite a few agency director marketing slogans – ALL AGREED it was wasn’t business as usual and in fact, it was far from it.

All were confident in their abilities to get through this and I detected no panic. Sure, plenty of uncertainty but no panic.

Possibly this was because none had felt any serious financial pain yet, as April was always going to be a write-off due to school and Anzac holidays. By the time Victoria’s Stage 3 announcement came, many of the existing March campaigns were almost over and very few new campaigns had actually started, as very few were planned for April. May’s campaigns whilst progressing in the pipeline, had not yet gone public, so changes were relatively easy.

All agents had a record or greatly improved first quarter, so again the afterglow may have been masking any current insecurities, as cash flow to the agents themselves had been strong up until this last week.

In the last fortnight, all agents had reported very strong sales activity as:

Many buyers and sellers chose the uncertainty of action over the uncertainty of inaction.

There has been significant mopping up on both sides of the fence.

So as we go into whatever market we are going into:

The last market finished strongly with its peak on February 28th.

As we go into a new market, experienced agents right now are confident they can see this through to the other side.

My Tuesday morning walk this week.

Question: Is it business as usual? Many agent newsletters are telling us it is.

All Answers: Emphatically and unanimously No. In fact, not one of the conversations was interrupted by a phone call or text or even email. Not one agent cut me off or had to go.

I think it’s fair to say the mood was one of acceptance and time now for reflection (not pessimism) with a view to reset, when each of us arrived at our own clarity.

The Business of Real Estate

  1. All agreed post-Easter would be some sort of market unless the government shut us down. Most felt that unless the virus got completely out of control, we would not be shut down, as it was felt that both Scomo and Dan wanted us to keep producing stamp duty and income taxes to help pay for all this.
  2. Whilst key agents would get through this – not so sure about agencies themselves. There was divergence on whether the hardest hit would be the small or bigger agencies.
  3. Overall it was felt there would be lay-offs, people leaving our industry and it would be very hard for some players. That is the nature of our beast – it can be very unforgiving to new and inexperienced players (agents, buyers and sellers) when a market turns.

Sellers

  1. A significant number of sellers had moved to wait and see.
  2. However, there were still real sellers out there.
  3. A number of sellers have pulled May selling campaigns – some due to health concerns and some due to they don’t see themselves getting the prices they want.

Buyers

  1. Buying activity has largely been from the existing buyer pool.
  2. Almost all buyers understand there are new rules for inspection.
  3. This is the biggest news – all agents report almost zero new buyer enquiry this week.

Is this buyer drop due to Easter holidays, short term wait and see or the 2020 virus trend for buyer (Bidderman) numbers?

Prices – It’s simple

  1. A-graders – down 0-5%
  2. B-graders – down 5-10%
  3. C-graders – not selling

Price free fall? Too early to tell was the consensus and unlikely on A-graders.

Methods

  1. Mostly moved to EOI or Off-market with some private sales.
  2. Mostly moved to 15-minute private appointments, blocked together.
  3. Qualifying questions being asked around the ability to act now and the ability to pay (bank finances).

Finance

  1. A regular phone question before a visit agreed to – did they have their finances ready – meaning in writing.
  2. Would the banks honour on a long settlement?
  3. More finance clauses going into contracts.

Online Auctions

Were a clear NO at this price level.

Yes, there is some industry appetite for a $1,000,000 single fronter with volcanic bidding. But say at the $3m level, there’s;

  1. No trust.
  2. No atmosphere.
  3. No buyers (well maybe only a one and not the way to go).

Marketing

  1. Some but not all sellers are not wanting to spend advertising money on Internet. Campaigns are expensive in days of tight cash-flow. Perhaps Domain and Realestate.com.au could move to a model of payment – only if you sell.

Are we in real estate helping to flatten a curve?

We talked about inspections and Covid-19 issues

  1. Tyre-kickers have reduced as agents ask more questions for the sake of their own and their sellers’ health.
  2. All agents have thought about single visits and social distancing – not all have moved to electronic brochures only. Most can do electronic authorities and contracts.
  3. Definition of Essential Travel for Buyers.

Many buying and selling agents are wanting to do what the government(s) wants them to do. It is a little unclear on what constitutes an essential trip. This is not a criticism of the government(s) and we are not saying this should be the definition however, this seems to be developing amongst this Brady Bunch as a rough guideline.

For us agents, it is clear – a visit is work and therefore essential. However, as members of the community, we do not want to be encouraging non-essential buyer travel.

So for a buyer, what is essential buyer travel (like essential shopping and allowed) and what is non-essential buyer travel (like window shopping and not allowed)?

For a seller – if you are just putting the home out there on a long shot with no agent authority, contract or desire to meet the market – are you, in fact, encouraging non-essential travel of buyers and even risking your agent’s, buyers and your own health in a non-essential manner.

Rightly or wrongly, this group of agents seemed (my interpretation) to be saying and acting upon:

Non-essential buyer travel and not encouraged:  A investment/developer/opportunistic buyer just looking around with no specific plan or a buyer just gathering information without finance or the desire/ability to buy now.

The seller needs to be realistic and take steps to show they really want to sell if a market price can be obtained. – eg authority, clear selling price, contracts and access. (4 Off-market ducks for those who regularly read this column)

Essential buyer travel and encouraged:  A buyer looking to specifically buy a home/investment is deemed essential by this group.

Good additional suggestions were perhaps a buyer should drive-by first and/or a read of the contracts and then arrange a visit.

This is only an interpretation and perhaps a government officer, CMO or industry leader may give some clarity in the future – understanding this may not be a huge priority right now. Maybe it’s not that important if very few and only real buyers are actually travelling.

4. But for sellers (assuming you don’t get sick) this is the biggest COVID-19 issue.

The agent you choose.

Check out this email I just received. It’s innocent, nothing malicious but WOW. The start, the finish, the tone, the message are all a bit scary on a number of fronts.

Lowball offers are starting and now you can see why.

Finally, the Government.

There was very solid support for our current government leadership both federally and state.

In conclusion;

Selling agents have not felt the cash flow issues that many BUYERS and SELLERS HAVE – but do understand cash-flow issues are now upon us.

All the agents, even though they know a COVID-winter is upon us, believe they can continue in a limited form until directed by the government.

As in most retail, new buyer enquiry is almost non-existent in our market place right now. It may change if things settle post-Easter.

Prices are easing to falling, depending on property rating/grading.

All agree we are in a totally new market and nobody I spoke to thought it was temporary.

All agents I spoke to in this Brady Bunch were prepared to play their community role and adhere to any requests from state and federal governments – without looking for loopholes.

Thank you for your contributions.

Agents, Clients, Anybody.

We are here to help if you need to talk.

You can get through this – I have already been able to suspend bank payments – yes, I have to pay more – but at least I will be here to do that.

  • Your health and can we say your family’s health (from your work, not going out as much) is important
  • Cashflow (cutting expenditure) is important
  • Connection and belief in the future are important

Mal’s phone number is 0408 107 988 or Gina’s is 0457 835 255 and we are happy to talk or listen.

You can get through this if you stay healthy – mentally and physically.

So when interacting, we believe Clarity before Action in 2020.

To reduce any wasted meetings, minimise negative health contacts and to follow government guidelines.

We have guidelines (these may of course change) on how we interact on behalf of our buying and selling clients.

All of which we believe will give them and us and you a better buy or sell outcome.

We have isolated our virus buy and sell guidelines to Jamesnow.net.au

For the latest Coronavirus guidelines on how we buy and sell real estate.

Even though this is going to hurt our business, we support strongly our PM, our opposition, the National cabinet, our leader Dan Andrews and the medical CMO’s. Thank you to all our doctors, nurses, and other essential service workers like cleaners, truck drivers and those on the checkouts. Thank you.

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