In today’s world most goods or services that are offered on the market have a fixed asking price. They are offered for sale without the option to negotiate which is called “bargaining.”.
But it hasn’t always been that way and we seem to have lost the old concept of bargaining and now call it negotiation. It is still the same thing.
Wikipedia defines bargaining as: “Bargaining or haggling is a type of negotiation in which the buyer and seller of a good or service dispute the price which will be paid and the exact nature of the transaction that will take place, and eventually come to an agreement.”
In real estate today that pretty much sums it up though I am not very comfortable with Wikipedia's term ‘dispute’.
Either way the fact is that real estate purchases have always been negotiable. The seller asks a fixed price or puts their property up for auction to the highest bidder. So we’re back to a sort of bargaining again.
But you see there is an important element involved in this. It is called perception of value, and this is the most important ingredient in the practice of bargaining.
It is about the perceived value of a material object. As in Murphy’s Law what the buyer believes is usually at opposite ends to what the seller believes. The concept of value is different for everyone involved in a purchase or a sale. It depends which side of the coin you are on.
There is an old saying that “Beauty is in the eye of the beholder.” And this holds true for anything you want to buy as a consumer.
Would I have paid $120 million dollars for Edvard Munch’s iconic masterpiece The Scream? No. But that is just me. If I had that sort of money I would be sitting happily under a coconut tree with Australian mining-magnate Clive Palmer sipping cocktails at his getaway in Bora Bora.
In the real estate merry-go-round sellers offer their property for sale not just based on its current market value but on the value they place on it themselves. Similarly, buyers will value it based on their own perception. So we are back to bargaining again.
I love a bargain and don’t we all. The problem is that sellers want to make a profit. It is all about money, and money makes the world go round.
------------------------------------------------------------------------------------------------------------------------------------------Tim Mansfield is a 30-year global veteran in the real estate industry and Founder and CEO of Sydney-based buyers’ agents PrimePropertyBuyer. You can follow Tim on Twitter by clicking here.
PrimePropertyBuyer are delighted to announce the launch of their new ‘Silent Sales Service’ for properties that are being offered for sale without marketing or publicity in the media.
This type of sale of residential property can be either directly through the owner, or through a real estate agent. Either way, the objective is to sell the property as quietly as possible without marketing it publicly.
There are many reasons why properties are sold in this way but generally they include financial, confidential, family reasons, inheritance or divorce.
As buyers’ agents we are often contacted by sellers in this situation because they know we are constantly in touch with buyers who have a specific wish-list and may be the perfect match for the property. Our clients are all pre-qualified (we know exactly what they are looking for and where), and they either have cash in the bank or loan pre-approval from their financial institution and are ready to exchange contracts immediately.
If you wish to learn more about this service please visit the link here on 'Silent Sales' or phone Tim Mansfield any day of the week on 1300 536810
Two of my favourite homes in the world are currently on the market for sale by Private Treaty.
These properties are worlds apart as one is located in the Republic of Ireland and the other is in Sydney, Australia. But they have something in common; they are both in the multimillion dollar price range.
The Irish economy collapsed after the boom years of the Celtic Tiger and the effects of the GFC. Property values have halved in most cases and it will take many years before the economy recovers; possibly generations. You can see the terrifying figures showing the nation’s national debt to Gross Domestic Product for 2012 at this link.
Ireland’s woes were nicely summed up last year by Michael Lewis in an article entitled ‘When Irish eyes are crying.”, and I loosely quote “Ireland headed for bankruptcy with its own mysterious logic. In 2000, suddenly among the richest people in Europe, the Irish decided to buy their country - from one another.”
Australia is a different kettle of fish of course where the common misconception is that our great island continent is still “the land of milk and honey”. This may well be true long-term but the current reality is that consumer confidence “ decreased to -2.5% in August of 2012 from 3.7% in July of 2012.” and there is an uneasy feeling among us Aussies of doom and gloom.
The retail, manufacturing and property industries are all in the doldrums and large companies are going bankrupt every other day. The strong Aussie dollar has driven up the cost of exports, and as a double-whammy demand for our mineral resources from China (our largest trading partner) has dropped dramatically.
But the point of this article is not to be pessimistic about the future and I believe Australia has a very bright future. It is about the contrast in property values in the Emerald Isle and Australia and the difference in perception of value.
Both of these properties are on the market now at over US$10 million, but one of them is priced at over five times that amount.
Which one is it? Post your answer in the comments box below.
Humewood Castle. Wicklow. Ireland
Reception rooms: 10
Separate cottages: 6
Land: 427 acres
‘Altona’ Point Piper. Sydney. Australia
Private jetty, pool and boathouse
Land size: Approx. 2 acres
If you are in the super-league of buyers and are interested in either of these properties (I know them both personally) let me know and I will act for you as your Buyers’ Advocate and get you the very best price.
~ Tim Mansfield
PrimePropertyBuyer is currently seeking applications from experienced Buyers’ Agents (or experienced real estate agents) on a fee-sharing basis to handle genuine enquiries from home buyers and property investors. Exclusive territories in Sydney include the Lower and Upper North Shore & Beaches, Inner-West & West, City, Eastern Suburbs and Sydney South-West and South.
The buyers’ agent segment of the property industry is growing exponentially. In New South Wales alone business growth in this niche sector is booming as more and more people become aware of the benefits of engaging an independent agent to act for them (whether they are buying or selling). There are roughly 50 buyers’ agencies in the whole of NSW compared to nearly 18,000 real estate selling agents. The math is straightforward.
Our favourite saying is: "As the seller of a property will engage an agent to negotiate the highest possible price, why shouldn't the buyer engage one to negotiate the lowest?" and this makes a lot of sense.
But the business doesn’t end there. We also act independently as Vendor Advocates, we offer an Auction Bidding service, and act as Mortgagee Advocates for leading banks & lending institutions.
Sound like your dream job? Do you have the experience, reputation, local market knowledge and contacts to grow your own territory? Can you handle and close enquiries coming directly from our website which go straight to you at your own email address?
Please note this is not a franchise system. There is no entry-fee or license fee up front. We just want to select the best possible people to work exclusively in their own area.
If you tick all the above boxes please read on:
What we require:
- You have a full current NSW real estate agents license (please note a Sales Certificate only is not acceptable).
- You have a home office, an internet connection and your own vehicle.
- You are happy to work for yourself six days a week and after hours if necessary.
- You are ambitious, have a strong ethic for hard work and a real desire to succeed in your new independent role.
- You have demonstrable experience as a real estate agent within your own area.
- You have a proven reputation for honesty and integrity within your own community
What we offer:
- The opportunity to earn uncapped commission on your sales. It’s up to you, but with commission splits of up to 80% of fees you can earn well over $200,000 a year.
- Example: Just one purchase a month of a property at $500,000 would bring you in $8,000. And if a client purchases a $2 million dollar home your commission is $32,000 (in just one transaction).
- One-on-one training in the specialist niche industry of buyers’ agency and the systems and best practices we use. If you are already an experienced selling agent this will be easy for you; you now act in the buyer’s interest and not in the seller’s. You don’t need to make any changes to your current license but you need to act only for buyers (you cannot do both at the same time under current NSW legislation).
- It’s a lot of fun and an exciting job! You will be advising buyers (or sellers) using your years of experience in real estate transactions. You act exclusively for your client and only for them. Your job is to get them the best possible price and protect their interests. It is a very satisfying and rewarding role and you do it in your own time and from your own home.
No-one said this is an easy business or a quick road to riches. You have to work hard at it to be successful and there can be lots of ups and downs. But if you have the ambition and the experience you will succeed!
If you are interested in a role for any one of our exclusive territories as a Buyers’ Agent for PrimePropertyBuyer please send us an email message about yourself, your experience, your real estate agents license number and the area you are interested in to email@example.com
Please don’t telephone us at this initial stage. Just write to us and we will get back to you as quickly as possible. We envisage the selection process will take until the end of October 2012, so please don’t be disappointed if we don’t reply immediately
We look forward to hearing from you soon.
"As the seller of a property will engage an agent to negotiate the highest possible sale price, why shouldn't the buyer engage one to negotiate the lowest?"
~ Tim Mansfield
In a recent article entitled “How to keep your valuables safe when you open your home for inspection” I covered the issue of risk in the ongoing and endless debate about whether a property is best shown to prospective buyers through open or private inspection.
There was a great response to this article (always a pleasure for authors), which included comments from real estate agents, buyers, sellers, landlords and tenants alike.
Some commented on the need for separate theft insurance cover at open home inspections (and who should pay for it), some on the security issue, and others about the need for transparency by all concerned,
But having distilled the excellent feedback from the article (like enjoying an aromatic cup of tea and then musing about what is left over), the crux of the debate inevitably came back to the old question of, “What is the best method of showing your home?”
Personally I was trying to avoid a hot potato debate on this subject for the simple reasons that it is never-ending and I am supposed to be doing better things.
Here is my personal opinion. If I was selling my own home today there are some rational arguments that make the decision clear to me:
- Why would I invite multiple strangers into my home if there is a risk of theft involved?
- Why allow myself and my family to feel that our privacy has been invaded?
- As the seller I prefer to show my property at times that suit me and not my real estate agent.
- My mother-in-law, bless her soul, (who I agree is an expert on multifarious issues and does read my weekly column) pointed out the deal-breaker.
She argues that only about two out of 10 viewers who show up at open inspections are genuine buyers. The rest are either neighbours or tyre-kickers whose favourite hobby at the weekend is viewing other people’s properties. This is bad news for the seller and for agents, as they are time-wasters. On the other hand the ratio for private inspections is much more in the seller’s favour, given all are genuine.
It’s hard to argue with that kind of logic.
I spent many years as an agent opening hundreds of homes for property sellers. It worked for me at the time, but maybe times have changed and I have become wiser.
And real estate agents argue that they need to “get maximum exposure and as many prospective buyers through the property as possible” at open inspections.
But the reality for agents is that controlling 10 or 20 groups at an open inspection is like herding cats. And that is not to mention the nightmare of trying to follow up on them all to find out who is a genuine buyer or not.
One of my favourite books is Mark Twain’s Huckleberry Finn. There is a passage in it that I loosely quote: “When I was 14 I thought my father was an ignorant fool. But when I reached the age of 21 I couldn’t believe how much he had learned in seven years.”
Enjoy your cuppa and think on the above points when you read those tea-leaves!
Tim Mansfield is founder and principal of Sydney-based buyers' agency PrimePropertyBuyer.
The age-old real estate adage of “You make your money when you buy, not when you sell” is as true today as it ever was.
As human beings we often ignore this tip and fall into the trap of buying without doing our homework first. The problem with this is that you may do exactly what the seller is hoping you will do – pay a price above the market value of the property.
The economy, market forces and other factors make it difficult to calculate the time it will take to recoup the cost of a premium you have paid, but even if you paid 10% over market value it could take two or more years.
Astute home buyers and investors do extensive research before they make a decision to buy. They will have established a market value in their heads, carefully balanced out the pros and cons, put their emotions to one side and made an informed decision on the maximum amount they are willing to pay.
There is an important element called “potential” involved in property purchases. It is not just what you see physically when you inspect a property but also what you believe can be done in future to improve it. This forms part of what adds value for you as a buyer and is particularly important when you decide to sell.
There are three key questions that buyers always need to ask:
- What is the seller’s motivation? The answer to this question helps to understand the urgency of the sale (or not) and impacts on the price the seller is willing to accept at any given time.
- How long has the property been on the market? This one helps to understand the reasons the property had not sold. Is it overpriced? Does it have major defects? Or has it just gone stale and the seller is now open to any reasonable offer as other buyers have shied away?
- What is the market value of the property? Doing your own research helps establish a value in your own mind based on recent comparable sales and current listings in the same area.
Of course the decision to purchase a property needs to be finely balanced between the buyer’s needs and wants. We would all love to own a home with a swimming pool, but do we really need one?
If you are a property buyer and have ticked all the above boxes before you purchase you will have the satisfaction of knowing that you are ahead of the game for years to come.
If you are time-poor or feel you don’t have the experience to buy a home or investment property yourself, engage a buyers’ agent. They have many years of know-how in successful property transactions and will take the stress and strain away from you. Their job is to act independently for you in your best interest and get you the best possible purchase price.
In New South Wales buyers’ agent fees vary from agency to agency but generally they charge an amount ranging between 1% and 3% of the purchase price. Every case is different and depends on a number of factors including the scope of the buyer’s brief (wish list), the resources involved, the geographic location, market conditions, etc.
The fee paid for a successful purchase should be regarded as an investment and it is always money well spent.
A final thought: "As the vendor will engage an agent to negotiate the highest possible price, why shouldn't the buyer engage one to negotiate the lowest?"
Tim Mansfield is a 30-year global veteran in the real estate industry and Founder and CEO of Sydney-based buyers’ agents PrimePropertyBuyer.You can follow Tim on Twitter by clicking here.
The property market in New South Wales is overcrowded with real estate agents struggling to get a piece of the pie, and they are squeezing each other out of business.
Figures from the Department of Fair Trading (Real Estate Section) in Sydney for the end of May 2012 show there are 17,364 current licensed real estate agents in NSW.
When the property market is practically stagnant as it is at the moment and real estate agents are suffering you have to ask the question “How on earth do they survive?”
Perhaps more to the point “How do they survive in the downturns?” and live to see another day?
In 2012 so far the evidence of trials and tribulations for real estate agents is there to see all over Sydney with mounting mergers and acquisitions to share debt or overheads in businesses’ valiant efforts to avoid going under. This is particularly true of Sydney’s eastern suburbs, where agents have always enjoyed astronomical commissions on residential sales in wealthy suburbs like Darling Point, Point Piper and Vaucluse.
Of course you could argue that recent sales of multi-squillion-dollar waterfront homes have fallen back from $50 million plus to $30 million because of the GFC, the strong Aussie dollar, the European economic crisis and the simple fact that everyone is scared to death about what will happen in future.
So where does all this leave NSW real estate agents? Their best efforts to make even a reasonable living are mostly stranded now like whales on a sad beach. Their songs of past success floundered by an apathetic property market where people don’t know whether to buy or to sell.
When whales are stranded on that lonely beach there is a way for them to survive through help from others.
Here is that help if you want it and are prepared to listen:
- Stand out in the crowd. Don’t sit back and wait for business to come to you. You have to draw attention to your company, your brand or yourself as an individual.
- Do anything you can that differentiates you from your competitors. It doesn’t matter what it is; the point is to do it. It may be red balloons outside your agency window, a snake-charmer in the front yard of your open inspections; or just give a red rose to every lady you meet during your business day (this works wonders).
I can’t quote names or places, but I am going to tell you how I once did it with the help of others.
Some years ago I met a senior property executive for a coffee to have a talk about the real estate industry, which was in bad straights at the time but moving up from 8am on the property clock heat meter.
We discussed how to differentiate a new brand. By our second cappuccino we had agreed on how to make the new business really stand out in the market, but there were huge risks involved.
This is what we did:
- We agreed to concentrate on a single niche market (do what you know best and don’t offer a wide range of options).
- We decided to specialize in the sale of prime waterfront homes in Sydney’s eastern suburbs (you can’t be any expert on everything).
How did we do it?
- A lot of courage, and a big financial risk.
- The first thing we did was to re-name a 10-metre cabin cruiser that already belonged to the company, and we called it “Waterfront”. It was berthed nearby our new office and hosted up to 12 guests. Then we invited prospective waterfront property buyers to see their dream properties from the water on Sydney’s glittering harbour and disembark for guided inspections of the homes we were selling. I should not say this, but “Boomerang” comes to mind.
- We convinced the local municipal council at the time to put all their property records for the area into a digitised format that we could use for direct marketing campaigns to waterfront owners. It was the first time ever in Australia that this was done, from old ledgers to the new digital era. Then we transferred this data onto a PC and used the information.
- We engaged a well-known aerial photographer who was a specialist in waterfront homes in Sydney’s eastern suburbs, and together we published a high quality book showing these properties from the air. This had never been done before.
- We distributed the hard-cover book personally by hand to every single waterfront home that was included in it for free. Of course we had branded it with our business name, but it was not directly about us. In fact we didn’t even include a contact telephone number in it, just our logo.
Publishing the book alone cost about $30,000 in those days. We recovered the investment in six months and established our brand forever in premium residential property. This brand is now one of the best-known in the world today.
The glossy book that we gave away (which was my baby and for which I nearly lost my job then because of the cost) has been much loved by thousands of people over the years.
We didn’t need to knock on the doors of some of the greatest homes in Australia to list them for sale. We were already inside sitting proudly on their coffee table, and we are still there today.
- Concentrate on just one speciality.
- Think outside the box.
- Don’t do what everyone else does.
“The one who follows the crowd usually gets no further than the crowd.”
~ Albert Einstein
Tim Mansfield is a 30-year global veteran in the real estate industry and Founder of Sydney-based buyers’ agents PrimePropertyBuyer. You can follow Tim on Twitter by clicking here.
Article originally published on 2nd July 2012 in Property Observer at this link
Greeks have narrowly voted in a pro-bailout party that wants to stay in the Eurozone by accepting the harshest possible economic conditions for years to come, rather than getting out and starting again on their own. The European debt crisis over the past few months reminds me of the story of the Dutch boy who put his finger in a hole to stop a leak in a dyke. He was lucky because eventually some passers-by helped him and fixed the leak. If they hadn’t found him the dyke would have burst.
And the situation reminds me too of events leading up to the Wall Street crash that lead to the Great Depression. Financiers managed to reverse the downward plunge by buying as many shares of stock as they could, but the house of cards came crashing down as people panicked in October 1929.
In this case the European solution has been cash bailouts and buying government bonds. But buying bonds is just the same things as increasing debt. Someone eventually has to pay it back.
Where has it all gone wrong, we ask ourselves. In Ireland, Portugal, Spain and now Greece the same thing has happened. Countries are like dominoes collapsing one by one.
Do we blame the banks for their profit-taking over the years, or their customers who took advantage of easy loans to live lives they couldn’t afford?
————————————————————————————– Tim Mansfield is a 30-year global veteran in the real estate industry and Founder and CEO of Sydney-based buyers’ agents PrimePropertyBuyer. You can follow Tim on Twitter by clicking here.
I first worked in the property business selling villa plots on the island of Menorca in the Spanish Balearic Islands. I was 18 years old then and full of teenage enthusiasm. It didn’t work out. The company went bust and I lost my job. I was devastated. I had worked so hard.
Not long after I met the owner of a big real estate agency in England and he said “Come and join us.” He gave me a one-way airline ticket from Menorca to London to start my new employment. They collapsed within a year and I lost my job again.
When I was twenty years old I got another job with a company in London named Marcus Leaver and they wanted to start a business in Spain. It was very cold winter that year in England and I spoke Spanish so I grabbed it.
The year was 1974 and General Franco was still the Dictator in those days. The Australian Embassy in Madrid at the time needed a new office and they engaged me to find one for them. I never did but became great friends with the Ambassador at the time.
Marcus Leaver went bust in Spain; so I joined the British Army for a while, did my bit and left for the lucky country in 1982.
In the late 80’s I was Sales Manager at Andrew Gibbons Real Estate in Sydney’s Double Bay. Our crowning glory in those days was the sale of the famous Point Piper waterfront home Paradis Sur Mer (also known as Toison d’Or) for $19.2m. I later worked for Colliers International and set up their Prestige Homes & Holdings Division. Here is a quote from an article written then "Tim Mansfield, of Colliers, is confident that come September, when the spring flowers bloom, people will put their property on the market again. Trouble is they have to buy somewhere else."
Years later I worked in Dubai as Sales Director of a well-known property development company. What happened? They went bust after the bubble burst there in 2008.
I have failed many times in my life but I am not a failure. We all fail at one time or another along our path in life. We all make mistakes and that is part of being human.
My own failures are where I went wrong in life . . . like stepping stones along the way. You can fail on your own, or you can fail with the help of others when you go through life.
If you are blessed by having a family; a wife and children that you love and they love you, hold onto them forever.
You can go bankrupt; you can nearly starve to death and live on cold and windy streets under lamplights. Even then you can retain your dignity.
Life is not all about money. It is about your kindness to others without judgement. It is about words of encouragement to keep them going. It is about holding another person’s hand in yours, and a hug or a kiss that makes you feel that special bond that holds us all together.
At the end of the day who can judge better if I failed or not? Those that helped or those that put me down along the way?
It is only me who can be the final Judge. I am the one who knows the real things that I did to help others in life and never said . . .
There are three things you can do. Nothing else really matters:
- Help others
- Never give up on your dreams
- Don’t let people put you down
Article contributed by Tim Mansfield, a 30 year global veteran in the real estate industry and Founder and CEO of Sydney-based Buyers’ Agents PrimePropertyBuyer at www.primepropertybuyer.com You can follow Tim on Twitter by clicking here