Asking price, price by negotiation or auction. It's confusing, right? What should people be doing or what should you be doing?

Matthew Dawe, Mortgage Broker and Financial Adviser here. And I'm here with Jason from Ronovationz. Welcome, Jas.

Jason: Thank you, Matt. Thanks for having me.

Matthew: Jason offers a one-on-one coaching and is hands-on with properties and helps buy wealth. So, I thought I'd have him along to give his insights.

Jason: Wonderful.

Matthew: So Jas, asking price, price by negotiation and auction. Why is the agent or why is the vendor selling with those methodologies?

Jason: Well, I guess it comes down to the recommendation of the agent. And quite often when it's like a negotiation or an asking price, maybe that also indicates that it's been a failed sale. So, might have started as an auction campaign, didn't get to the price, didn't sell, obviously. And now, this is phase two of them trying to sell the property.

Matthew: Asking price, if you were approaching a property that you're interested in with an asking price, what would be the things that you'd be thinking about or what would you do?

Jason: Sure. First of all, I'd largely ignore what I'm being fed by the agent. Their job is to try and get you interested in the property. So, they're gonna tell you the things that you wanna hear. What I'm gonna do is I'm gonna do my own research. And most of this is gonna be based around vendor analysis, like a good property at a good price. It's not advertised. It's how well you can negotiate or buy that property. So, what I'm more interested in is what the vendor's circumstances are. What's their motivation? And there's a few clues that you can look at the pictures. But more importantly, I don't look at property from a screen. I actually go and see it in the flesh, because that way I get to see, is the property staged? Is the vendor living there? Was it a rental before? Who the vendor might be? Because they might have some family photos. So, I'm just trying to build a picture and a profile because that'll help shape how I can approach the negotiation.

Matthew: Yeah, very, very cool. And what would be like some ultra hot tips or tricks or how would you make an offer? What would you do?

Jason: Yeah, well, look, a lot of people that look at comparative sales and they think they look other comparable properties sold for X price. Maybe I can buy it for an X price. Now, it's good to have that information on hand because it's available everywhere now. But I'm not gonna base the value of the property on that, because what we don't see behind those sales is the reason behind why somebody sold. Like, you might see somebody selling a property that was significantly cheaper than the average suburb. And the reason could be because the bank was about to sell it if they didn't sell it. So, they had no choice.

Once again, going back to understanding the vendor analysis. Now, that's good ammunition to have because I will start at that end. And in a negotiation, your first offer, you're not trying to buy the property. What you're doing is you're fishing. You're trying to get a reaction and hopefully, you'll get some indication as to what the vendor's price is, really.

Matthew: Yeah, absolutely. It brings us to price by negotiation. Why would somebody be selling with that method or how did those circumstances come about?

Jason: Usually that's starting to earn. In this phase of the market, that's indicating it could be a stale property. Like it's been on the market for some time. They haven't had the level of interest. So, sometimes what you see is you see properties and they change from asking price and then they might have price by negotiation.

Matthew: I noticed. Yeah.

Jason: I mean what the agents they're trying to do is, they're trying to just stir up interest. So, they're trying different methods and they don't necessarily know what's going to work. So, they're just trying different things all the time.

But the good thing now is that with technology, like with realestate.co and with TradeMe, when those changes happen, you get notifications. So, a lot of that hard work's being done for you. You just have to keep on top of it all.

Matthew: I saw those. Yeah. And what would be some tips, tricks, or how would you make an offer with price by negotiation? Anything different, just kind of asking price or same sort of thinking?

Jason: Yeah, you definitely start at the lower end. Look, I don't understand what the average suburb is commanding for that particular type of property. And I put an offer, and that's gonna be on the low side.

Now, the most difficult thing is that sometimes, as people presenting an offer versus buyers, we're scared that we might offend the person. And that may happen. But the point is, you put an offer, the worst they can say is no. And the best is that they say no, and they come back and tell you, hey, well, actually, no, you need to be in this price range. So, that's what I'm trying to do is a start on the lower end.

Matthew: Yeah, totally. Absolutely. Okay. And auction. This was probably the most scary one for people, especially with high pressure situations.

So, why are they selling by auction, do you think?

Jason: Auction? It's an unconditional sale. And obviously auctioneers, they love that because once the deal's done, it's done. With price by negotiation or asking price, usually this comes with a whole lot of conditions. And not all the time do those conditions come through. That's why a lot of people do favour auctions. Also, auctioneers charge a fee. So, there's a bit of a money incentive as well that goes on. And in Auckland, the majority of properties that come to market, they do go through an auction campaign. That seems to be the trend.

Matthew: You think they use it to educate the vendor a little bit as well?

Jason: Oh, absolutely. Yes. Because I think whenever where anyone's selling anything, we've got this wishful price. And what the auction does is it actually shows the vendor of the market. The auction environment is highly pressurised. And that's sometimes when buyers can overpay. And that's when vendors can also reduce their asking price or their reserve quite dramatically as well.

Matthew: I like it from a transparency point of view. You know, yes, it's high pressure, but there it is there. Everyone can see what's happening. The vendor, the buyer and agent, it's all out in the open. So, that's a good thing about it.

Tips, tricks at auction.

Jason: You know, doing auctions is a skill, right? And the reason why most people avoid auctions is because you don't know the rules of engagement. I'm a bit fortunate. I mean, I do auctions two, three times a week on most weeks. It's something that you learn with practise and it's psychological warfare.

My tip at auction is always start the bidding, be in a position where you can see the room. A lot of people that hide at the back of the room, you want to see the room so that you can see who's bidding against you and people can see you as well. The hard thing is, is that being able to control your body language, because obviously if people can see you and you've got your arms folded or you're looking particularly nervous, then that's not gonna help your cause.

So, it's a little bit of play acting. Watch a few auctions, go to a few auctions and just get the general vibe for it. Don't just turn up at auction thinking, oh, I wonder if I can win my property today. Because if you go there with that kind of mentality, a whole lot of things can go wrong.

Matthew: And I know what you're not saying is that there's a lot of preparation, which goes into not only the practise, but also the particular property that when you are turning up, you've done a lot of work already to decide that you would be bidding, for example. So, you're going in prepared.

Jason: Yeah. You've got to do what you do diligence upfront. If you're doing building inspections and solicitor checks, you've got to spend some money. Whereas on the other side, if you're negotiating, you can have those as conditions and spend the money after.

Matthew: I just wanted to chime in just quickly. We're going a little bit over time with the strength. You've got two parts of your offer. You've got the speed of it and the strength.

Jason: Yes.

Matthew: And people quite often underestimate the speed. Speed can secure a property before anybody else has a chance to buy it. That could be true in either each one of those methods and the strength of it. How many conditions there are in the offer as well can be a key factor.

Jason: Yes.

Matthew: That's great. Thanks so much for your time today, Jas. And what do you do? Do you have an offer? How do you help people?

Jason: My offer with people is I work one-on-one with people. In today's day and age, what people don't like is information. In fact, there's too much of it. It's actually the execution. And with property, it's very nuanced. So, what I offer people is often you have clients coming to you. They get finance. Fantastic. They get a pre-approval. Now, they don't know what to do with it. So, I give people option that you can have a one-on-one chat with me. Doesn't cost you any money. I provide that free of service. And it's not about just trying to get everybody to become a client, but it's actually giving some people some direction because the last thing I want is for some to get properly wrong.

So, I offer a one-on-one free strategy session. You can bring a property to me. You can talk about your situation. You can talk about your ideas. You've got one hour in which we can do in person or on video, should I say. And if you want to take that up, you can reach me at jason@ronovationz with a "z" .com or drop me a line on 021 410 150.

Matthew: Yeah. And I know speaking from experience, Jas, the amount of value that, then your brain and that you offer clients is massive. Like, there's a lot there.

Well, hey guys, thanks so much today.

Matthew Dawe Mortgages. That's me. We also help clients get pre-approved, negotiate interest rates and provide help and guidance along the way. We also offer free strategy sessions where you can discuss your situation and we'll give you some strong concrete feedback at the end of that session.

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Thanks so much for watching.

Thanks for your time, Jas.

Jason: Thanks Matt.

Matthew Dawe
Mortgage Broker | Financial Adviser
Phone: 027 321 4287
Email: mortgages@matthewdawe.com
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