The PROPERTY DOCTORS, Sydney Australia Novak Properties
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The PROPERTY DOCTORS, Sydney Australia Novak Properties
EP. 1394 Property Appraisal Scams: Are Sydney Agents Giving You the Truth?
The property appraisal process should be straightforward, but what happens when agents show up with inflated numbers just to win your business? This eye-opening conversation delves into the sometimes murky world of property valuations and how unsuspecting homeowners can protect themselves from costly misinformation.
We share shocking real-world examples of appraisal disasters, including a commercial property owner whose retirement plans were shattered when he discovered his property was worth $1.2 million less than an automated bank valuation had led him to believe. Another sobering case involves consistent over-valuations that left an owner with unrealistic expectations and financial disappointment.
The conversation offers practical wisdom for property owners: develop relationships with multiple agents before you need to sell, request substantiated valuations backed by comparable sales data, and understand that the agent offering the highest price estimate at the lowest commission often delivers the poorest results. We explore why signing lengthy agency agreements can backfire, leaving you stuck with an underperforming agent for months.
Beyond the technical aspects, we emphasize the human element of property transactions. Like choosing a teacher for your child, selecting the right agent creates dramatically different experiences even when following the same process. The most valuable aspect of a property appraisal might not be the price estimate itself, but your assessment of whether this is someone you can trust with one of life's most significant financial transactions.
Ready to navigate the property valuation process with confidence? Listen now to arm yourself with insider knowledge that could save you thousands of dollars and months of stress in your next property transaction. What's your property really worth, and how can you be sure you're getting the truth?
Episode 1394 property appraisals are agents telling them the truth? Stay tuned.
Speaker 2:I'll try it again.
Speaker 1:I'm the ringleader, so let's go Welcome to Morning Minute.
Speaker 2:Oh my God, this is juicy, juicy.
Speaker 1:Yes, our agent property appraisalsams helpful pros and cons. Um, we're going to look at it from the property owner's point of view, but also we'll chuck in a little bit of the agent's point of view. Mark what's your initial thought when, when you hear property appraisals from the right?
Speaker 2:helpful appraisals from the right, helpful, awesome, good until they're not. And then it's almost like I wish I could tell people that are getting their appraisals all across sydney, all across australia, saying, just watch out for these things. So generally they're innocent, they're helpful, 99 of the time it's all good. But then there's the one percenter where the clients go. I didn't know, I didn't know I should have asked that, I didn't know I could have done that, um, so there's, there's a couple of things here today we're going to talk about that. When you do get your agent through for a rental appraisal, for a sales appraisal, you know things to say, things not to do, um, and you know generally, 99.9 percent of the time you're fine.
Speaker 1:It's just that 0.1 percent where I see stuff and I'm like, oh no, you fell for that, you fell for that one yeah, the hardest thing to hear is especially if you go in for an listing appraisal, especially if something's already been on the market and let's just say your pricing is very different to what they were initially told and the owner goes. I wouldn't have done this if that was the case and you can imagine, on a residential sale, commercial sale, just to get the listing live. Sometimes people are decluttering, painting, doing mini renovations um, before they go to market and, most of all, spending thousands of dollars. So that's probably that could be one of the. That's definitely the hardest thing to hear. So, absolutely, let's start with what's the advantages of an owner knowing the property price? What can they do with it?
Speaker 2:oh, look, you're going to get to meet. You're going to get some uh uh, get to meet a great agent which knows a shitload of stuff about their area and your pricing and property and strategy. Um, you know, you're going to get opposite some really experienced people that really know their shit and that's really going to help you with your process. Um, that's cool.
Speaker 1:It's just the parts that I'm worried about that are, yeah, that are not cool when they don't get opposite a great agent well and your risk of not getting opposite a great agent is heightened if you're only interviewing agents to sell your property, potentially just before you're looking to sell and what I mean by that? Let's say if you're thinking to sell in three years time and if you start to get, if you start to build relationships with a couple of key agents in your area. You may pick out five agents three years in advance, get them all in for an appraisal and then you can evaluate how they act in that appraisal and for the years to come. Are they staying in contact with you? Are they helpful? Because then that can give you a bit of a game, yeah, what are they going to be like during the campaign?
Speaker 1:And not only what are they like, are they still in the industry in three years' time? Like real estate is one of the biggest dropout ratios in any industry. So just to know, they've got that longevity, because we know a lot of time agents who are new to the industry will claim office sales that may not be their sales but are offer sales, which is quite common.
Speaker 2:Yep so I think, I think, um, probably the number one thing would be to get a good cross section, what you just mentioned of agents. So, rather than getting one signing with one, you don't know what the metrics are is that normal? Is that not get a good three, four agents? Um, I love seeing, um.
Speaker 2:I was talking to a client, uh, who hasn't who's bought a property from me off the plan, and she's a little bit helpless at the moment. She's up in the central coast, one hit wonder, and she's been with the agent for seven months and she signed with the first agent that walked through her door. And I'll say, and I said like and she's like, she honestly asked what to do. And I'm like you got to get three, you got to get three quotes. Now, these agents. And she said, well, who do I call? And I'm like see who's doing volume in your area, see who's selling in your area. She's like, how do I do that? I'm like, go on to realestatecom, have a look at your price range and see who's done the most amount of transactions the top one, two and three agents.
Speaker 1:And she's like, oh, okay, so yeah, you know, simple stuff for us, for everyone on one hand, it's harder than it's ever been to find that agent and, on the other hand, it is the easiest, if you know what to look for. What I mean by hardest is with technology. Technology these days, agents can make it look like they're busy, they can create the great website they can. They can just look like they're the best agent in the world. But so it can get quite confusing for a homeowner who's not familiar with the lingo, the awards, um, or the bread and butter. And it can be just as easy because, yeah, you can just go realestatecom and really pinpoint it. But once again, sometimes they've got two or three agents on the ad and you're like, well, who actually did the deal and who was there for the ride? So it can be.
Speaker 2:And I think another thing, the first people really don't know what to ask when they're in an appraisal. Use ChatGPT, just tell it to you know, give you a list of what to ask your realtor or your agent. But to give you an idea, the biggest thing I see, which is baiting with price. And you know people, just you know you often you can't handle the truth. You often you can't handle the truth. You know you don't want the truth. So you know you may think it's worth this amount and you tell the real estate agents it's worth that. That's what you think.
Speaker 2:It's really hard for them to disagree with you on the first moment they've met you. So often agents are actually just agreeing with your price, which is the wrong thing to do. Data doesn't lie. I think you know you need to ask them for substantiation on the prices they're giving you for your home, because if you're misled on price, if that gives you a bum to your price, you could be wasting 10 grand of your money and four months of your time and a whole lot of pain.
Speaker 1:so pricing is really, really important oh, I've had two shocking examples come to mind where people's retirements have been affected on the pricing. One was they used the auto pricing, I think, from com bank. There's an address you can type in. You can become a bank, have a system, put an address in now Now, this was a commercial office Put the address in those systems. Don't really know the difference between commercial or residential. So that system's telling him his property's worth $1.5 million when it was worth $300,000. And he almost cried in front of me because he's like I was going to retire on this. This was what I thought my retirement was. I've used this for the last few years and that's a shocker it's a big bank.
Speaker 2:You know. You think, wow, these guys know what they're talking about. They must.
Speaker 1:But you know they're only as good as the data they're given yeah, and another one was similar, not as drastic, but it was there that it was there, because a lot of people, especially in australia, all their money is tied up in their house, so it was one where they thought it was three million. They even had agent letters yep, three million, three million. But I know sometimes what it's like where an owner just asks for a one-page appraisal for their bank or they just need it for whatever reason, and they're like put it as high as you can, and if you do that three or four years consecutive you're well above the market and from the agent's point of view they may not be as careful with their due diligence because you're not actually selling and sort of where's the harm in it. And so there can be the pros and cons of getting too many appraisals and not asking the right.
Speaker 2:I don't think you get too many, but if you don't ask the right questions, then you can really dig yourself out and also I think, um, sometimes people signing up to an agent, sometimes people sign up to an agent for I've seen six months, nine months on an agency agreement which means you cannot use any other agent. So some people have bought, they've signed up with an agent for six months. They're not happy after two or three months They've got no other alternative but to stick with the agent. So I think a really important thing when getting an appraisal from agents and when you're with is knowing how long the agreement they want is for. And you've got to be real honest with these guys and say look, you know, in case we don't sell, we in case want to use someone else. You know when, when getting an appraisal, there's some really good home truths here. Guys, you got to stick, you got to stick to you, otherwise it's a setup for potential pain. You've got to be careful.
Speaker 1:Yeah.
Speaker 1:And then as Lisa says you've got commissions that come into play, so sometimes they'll one. They can make it worse by telling you the price you want to hear. Then they look appealing with the commission and it's a bit of a trap owners fall into, where they just think, oh, they're going to give me the highest price and they're going to be the cheapest equals more money in my bank account. And quite often the cheapest equals more money in my bank account and quite often that ratio equals no money in your bank account. So you it's almost like any industry or service where your louis vuitton bag the highest quality, the highest price, or do it like cars.
Speaker 1:You've got those level um of industries when it comes to fees, very similar to cars. You're always going to have the top agents, which are necessarily some of the most expensive, but not always. Sometimes it's quite from reasonable to most expensive. And then you've got sometimes the less active agents, sometimes the newer agents can be at that lower percentage and that that then it can be almost um a luck of the draw. Sometimes a fresh agent can come in.
Speaker 1:They get two active buyers and they do get a great price and it does go well sometimes with that agent, the journeyman, who's been doing it a long time, doesn't get consistent, consistent sales but knows enough that when two buyers are there they can make it happen. But it's when things go wrong that when there aren't two buyers, there's only one or there's no buyers, what do you do there? So, um, fortunate, a lot of some owners don't get stuck when they sort of go that who tells me the highest price and offers me the lowest fee ratio? But you almost need that plan B if you do go down that path of not having an agreement for six months, or I think the normal REI New South Wales agreements quite handy where it's only sort of 60, 90 days. So it does give you a bit of that out sort of 60, 90 days.
Speaker 2:So it does give you a bit of that out and I think when people Michael are asking about, and for people that don't know, when you're asking an agent over for an appraisal, it's a bit of a segue to the whole shebang. You know what I mean. So, even though the question is, I want to know what my property is worth, the actual answer that comes out on that, on that, is quite detailed. So your agent will talk about that. They'll talk about comparisons. They'll talk about what it will take to sell a marketing strategy strategy. They'll talk about marketing dollars. They'll talk about duration, how long to be on the market. You know, auction, not auction. There's a lot of things. So, even though you're saying I just want an appraisal to want a price, there's a lot more and they're the home truths today that we wanted to talk about.
Speaker 1:Yep, and, just like school teachers, we're not all the same. There's some really good teachers that you learn from and there's well said. I think that's the best analogy to let people know it does make a difference who you pick to sell your home and appraise your home yeah, that experience and and and I love what lisa always says that, um, it's how someone makes you feel.
Speaker 2:So you can go through the same process and you feel an absolute. It was, it was just one awesome experience. Or you can go through that and just think, oh my god, I'll never do that again, particularly with that person. So I think when you're in an age of appraisal you know, appraisal of a price, sure, but I think you're almost appraising the agent as well. He's thinking, you know, are we going to dance? You know.
Speaker 1:Exactly as Lisa just says be unforgettable. All right, thank you very much, everyone. Have a good morning, have a good one. Thank you, bird, see ya.