Matt Brady From Belle Property Reveals Valuation Myths
This video could shatter what you thought you knew about property valuations.
In this video you will learn:
1. How to maximise a property’s sale price.
2. Why comparable sales can be irrelevant.
3. How to spot good value properties that are underpriced.
4. Plus much much more…
Daniel: Matt Brady, so tell me a little bit about yourself and Belle Property. What do you do?
Matt: Well, Daniel, well I’ve been selling real estate now for 17 years. I started here as a cadet, when I was 17, and I bought the business when I was 23. We rebranded to Belle Property 3 years ago and now have a team of 13.
Daniel: How many millions of dollars worth of property do you sell per year?
Matt: Approximately $65 million per year. Obviously, some years have been better than others, but on average about $65 million a year.
Daniel: Wow, and you’ve been doing this . . .
Matt: Since I was 17.
Daniel: What are the steps involved in appraising a property’s worth?
Matt: Well, there’s a couple of ways that you can do it, and obviously experience, I think, is one of the key factors. We go into a lot of depth because we believe that pricing that property correctly is ultimately what’s going to win you the business in the end. If somebody has an over, higher expectation, often we’ll walk away and tell them that we can’t help them. We do, do a lot of data. We go through a lot of data. Gut feeling, which probably sounds a little bit loose, but if we really don’t believe that it sits where it should be, we’ll tell the people. We’ll say, “Look, this is where it sits.” We’ve got alot of support information. That’s the main way. It probably doesn’t answer your question really, really well.
Daniel: When you look at data, you’re looking at sales data in the area?
Matt: Sales data in the area, comparable sales, so what’s previously sold. What’s currently on the market is a big factor. Often, for instance, I had a property recently in Balgowlah, and there was a lot of competition for it. I said to the owners, “We’re ready to go.” I said, “Let’s just hold off.” I wanted to wait until a fair bit of the competition had been sold. Once they had been sold, we then launched. There wasn’t as much choice in the market, which in turn meant that we were going to get a better price, and we did. We got a great price on that property.
Daniel: I know when I’ve looked at property valuations that have comparable sales, recent, comparable sales, but I don’t remember seeing much on there about taking into consideration what’s currently on the market and how that’s going. You mentioned that just recently. But how big a factor is that?
Matt: It’s a massive factor. I think it’s more important what’s currently on the market than previous sold properties. To me, I try not to dwell on previous sold properties too much, as well, because it’s history. It’s gone. They were sold in different markets. Look we do take them into account, but I try not to base my decisions solely on that, because it’s history. It’s gone. Also look at the current buyer pool as well. Who’s out there? When I’m looking through the house, I’m ticking through my head. Who have I got that would pay, for instance, if the property was worth $1.4 million, who have I got that would pay $1.2 for it? Who have I got that would pay $1.3? Who have I got that would pay $1.4? Within yourself, you peter out at some point where you think, I just don’t think that I’ve got a buyer that’s going to pay that sort of money for it.
Daniel: That’s interesting. Do you get a lot of property valuers call you for the opinions on the properties that they’re valuing?
Matt: Absolutely, absolutely.
Daniel: They’re looking at, obviously, RP data, and do they go inspect properties themselves? Have you heard of that?
Matt: They solely go on history.
Matt: I mean, they obviously look at the current climate. They would look at current stock levels on what’s on, but they visibly don’t inspect all the properties, I’m sure.
Daniel: I guess that’s, because you’re right, that is history. It could be becoming less important because the market does move quite rapidly, doesn’t it?
Matt: I agree. I think it’s more important about what sort of buyer pool have you got for this home and what is its competition. That is the two most important factors in my opinion.
Daniel: Here’s a tough question that I’ve thought about. If I’m ringing around and I’m getting appraisals from agents on properties, the reason why I wanted to interview you is you gave me an appraisal on a property and you sold the property for us and you got pretty much exactly, whether it was luck of the draw or not, you got pretty much what you said it was worth, and the market sort of changed. My question is: How can you trust what the agent is telling you or that sort of anecdotal type evidence?
Matt: I think if you’re purely picking an agent, and I always tell the people that we’re sitting in front of that hopefully you’re going to win their business. I always tell them, “Don’t pick your agent purely on price. It’s more about the strategy.” I think that a lot of agents aren’t really educated. The great agents know that process very well on how to position the property, how to attract the right buyers. I think that really most people should be picking their agent on the process, on how are they going to go about getting to that end price. Anyone can go in and try to win the business in dropping the commission and pumping the price up, but I think that, really, you need to pick the agent that shows you a proven strategy and examples. Show them examples of other properties that you’ve sold and how that happened. That’s how you should be picking your agent, not on price.
Daniel: That makes sense, yeah. Okay. Say you were appraising a property or I’m a buyer and I’m looking to say, “What’s this property really worth?” What are some of the pitfalls that you can fall into when you’re doing that?
Matt: I think as a consumer, as a buyer, probably being emotionally attached pretty quickly. Most people, fortunately or unfortunately depending on how you look at it, buy with their heart, not with their head. I think that they need to go and do the research, as well. That’s probably the pitfall and probably talking too much. In saying that, I often find that the people that do end up buying properties and paying fair market value or whatever they paid for, are people that really go tell the agent exactly what they’re after. When they like the home, they don’t play cat and mouse. They’re pretty cut and dry, and usually they’re the people that jump off that buyer roundabout pretty quickly, because they’ve been upfront and honest with the agent pretty quickly.
Daniel: Okay. That’s a good point. When you’re looking at a property and appraising it, do you get much pressure from the owner of the property to appraise it higher?
Matt: Absolutely. I mean it’s natural. We all think our home’s worth more.
Matt: Including me.
Daniel: How do you deal with that?
Matt: Again, I think if you can present the evidence and show where it is. It can be tough, because obviously you’re trying to win the business, but keep them level headed at the same time. Again, I think that what I always come back to is if you can prove to them that this is the process we’re going to go down. It will work itself out in the wash in terms of where the market believes that it’s worth, and then it’s my job to get higher than that. Anybody can get market value for a home. That’s really easy. It’s only the great agents that can get above market value for a home. That is a really difficult one to do, because sometimes I have walked away and said to people, “Look, I really don’t believe that you’re going to get that. Thanks for the opportunity. But please if you do come onto the market, please don’t spend a lot on marketing, because you’re probably going to be $10,000 to $15,000 out of pocket and not get the result you’re after.”
Daniel: I just want to go back to something you said before, which was quite interesting. You said anyone can get market price for it, but a great agent can get that little bit higher.
Daniel: How much higher, I don’t know. Do you want to tell people . . . I don’t want you to give away your secrets, but what are some of the things you can do to get that premium price?
Matt: I think it’s about being realistic from the start, as well. Trusting that agent. For instance, I just had somebody in here before we started. Again, they were sort of putting pressure on me with where does this property sit? I said to them that we work on . . . I can’t probably say everything to you. I can’t really explain it to you very well. I believe that if you have that trust and rapport with the agent, I’ll never ask anybody to do something that I wouldn’t do myself. I’ve done that before. Many years ago, one of the first auctions I ever had, I was working for a gentleman that had owned this business previously. It was live on the auction floor. The gentleman was on the phone, the vendor, and he said, “Matt, we’ll take the price.” This was halfway through the auction. I said. “Don’t take it.” He said, “What do you mean?” I said, “Don’t take it. I know that we can do better.” There was a bit of a discussion from one of the senior agents, because I was only a junior agent saying you’re crazy. That was not the right thing to be done, but I stuck to my guns because I knew it was the right thing. On that Monday morning, I had secured another buyer at $40,000 more than on that auction floor that night. Now, I know how long it takes me to save 40 grand, and that vendor is now one of my clients for life, because he trusted me that I was going to do the right thing for him.
Daniel: Local knowledge of property, how critical is that?
Matt: I think it’s really essential. I mean, I know everything that’s on the market in my area right now. Also, too, it’s funny how many homes that you do go to that I’ve probably been to over and over in the years. Seaforth is a funny area, too, because within a kilometre you can have something on the waterfront, $6 to $7 million, and then a kilometre the other way you can have a small cottage worth $750,000.
Matt: A lot of the data, if you’re an out of area agent, the million house prices and so on can be thrown out really, really easily. I think local knowledge is second to none. You’ve got to work in your area.
Daniel: If I’m from outside the area, what’s the best way to get that local knowledge?
Matt: Again, if you’re a buyer, look for the agents that return your calls promptly. If you’ve inquired on a property, email you back when they say they’re going to email you back. For instance, two days a week I’ll pretty well sit on the phone and sit there and speak to buyers. I offer those buyers a service. If you find another property through another agent, ring me. I’ll give you the data. I’ll tell you what I believe it’s worth. I’ll give you some comparable sales. I’ll tell you, give you my opinion, because in turn, I know that, again, there’s going to be no short-term gain for me, but in the long term those people, I hope, will come back to me if I keep in touch with them. They’ll say, “This guy really helped me. We want to get him in to appraise our home,” when they’re ready to move up the ladder.
Daniel: Okay. Everybody who buys a property wants a bargain when they’re buying property, and this could be a tough question. Over the years, how have you seen people get those bargains? What are some of the things people have done to get great deals?
Matt: I think great deals, when people get great buys, it’s probably from properties that haven’t been marketed well. I’m a big believer in print media. I believe that bargains happen when the property isn’t given the exposure that it should be given.
Matt: If I’m opening a property, I’ll know if I upload a property onto the Internet and I’m getting very little feedback on it straight away, within two hours I’ll think there’s not something right here. I’ve made an error somewhere.
Daniel: The buyers are watching the Internet, aren’t they?
Matt: That’s right. So, if you’re not really getting the feedback pretty quickly, I’ll know that I’ve got to quickly tweak something, because something’s not right. I’m a big believer in print media. I believe that half of our inquiry comes from the Internet and the other half is very much Manly Daily local business. Not many people move off the beaches. Most people move within 5Ks of where they already live unless their circumstances change. Their children get bigger or they have a baby or they downsize. Most people are moving within our area.
Daniel: Obviously, you want to find distressed sellers. If you’re trying to get a bargain, then that obviously makes sense, and that’s one thing. What you just said, that’s not something I had thought about is to find properties that are badly marketed.
Daniel: Would you also say private sellers would be good ways? If you see something that’s not with an agent?
Matt: Private sellers are usually, in my opinion, generally a little bit unrealistic. They put a little bit of a higher. Again, it comes down to that process. I mean, somebody privately selling their home doesn’t do it for a living and may not necessarily know the correct strategy to get the highest price. I feel that most private sellers probably go the old way that we used to sell real estate, which is putting it on at a higher fixed price and they come down. Whereas the new strategy is to, I suppose, encourage competition to drive the property north or upwards. I am a big believer that properties that are not marketed very well, ultimately do suffer because they’re not attracting the buyer pool that they should.
Daniel: How do I find a property that’s not marketed well?
Matt: You can pretty well look in the . . .
Daniel: I’m in your competition.
Matt: Well, that’d be nice. I think there are some properties that have smaller ads in the Manly Daily. I’m a big believer that if something’s more than a million, it should have a half page ad. It deserves it. You see in our area, there are two supplements to the paper. There’s the colour, black and white, or the colour, non-gloss and then there’s the gloss section. It’s funny in people that I survey believe that the cheaper properties are in the non-gloss supplement and the more expensive properties are in the gloss colour. Why wouldn’t you put your property in the gloss colour and spend the $1,500 ad to give your property that exposure?
Daniel: Especially with something selling for a million dollars.
Matt: It doesn’t make a lot of sense to me.
Daniel: Okay. And finally, what kind of market are we in now? What’s happening?
Matt: I think we’re in a mixed market, and what I mean by mixed market, there are some great results being achieved out there, and we’ve had some really good successes in the last couple of months. But in turn, I think that there’s not a lot of confidence out there at the moment. Buyers tend to sit on their hands a little bit more. Two years ago where we might have had, being contract givers, we might be issuing six to ten contracts on a property, we might be only issuing three to four. Again, you’ve got to be highly skilled in working with those people to getting them to where you need to go get that property sold.
Matt: So it’s a very mixed market. I think there are some great results, but there’s some average results being achieved, too, at the moment.
Daniel: Can you get your crystal ball out now and tell me what’s going to happen over the next 12 to 18 months?
Matt: I’d love to know. But it is a crystal ball, and look if we knew, I wouldn’t be sitting here now.
Matt: Look, I think that it’s going to be a tough year, this year, but I believe that there are signs of it recovering a little bit more. I believe that by the end of the year to early next year there’s going to be a little bit more confidence out there. Hopefully, we’ll have a better year next year.
Daniel: Okay. Matt Brady, thank you very much for sharing your story with us.
Matt: Thank you.