Podcast: Mascot in court and how to clinch a deal

In this week’s podcast we catch up with what’s happening at Mascot Towers as owners in the ill-starred building prepare for their day in court.

Specifically, they will be pursuing legal action against the developers of the apartment block next door, construction of which, they claim, undermined the foundations of their block.

Meanwhile they are facing tens of millions of dollars in defect rectification bills to the point where the repairs may cost more than the block is worth.

And the people next door say they have pictures of cracks in the Mascot building before they’d so much as turned a sod.

Then we talk to Scott Aggett a vastly experience real estate agent and ace negotiator with his company Hello Haus on some of the highly developed tactics that have seen him buy and sell 27 properties just for himself.

Scott is a hired gun for people who think they can get the property they want for less, but aren’t sure how to do it. His biggest success?  Saving a buyer $800,000 off the purchase of an apartment in London.

It’s a fascinating interview which includes an insight into the classic error single women make when they are negotiating property sales or purchasers

Listen Here

[powerpress]

As usual these days, our podcast is available as a transcript, interpreted by a computer, then made sense of by a human.

Transcript in full

Jimmy 00:00

I was talking to a lawyer the other day, about a building with a large rooftop. The Owners Corporation claim that there’s efflorescence (that’s salt coming up from underneath the tiles), ruining the tiles on the rooftop and he said they’d spent something in the region of $260,000 on various experts, and lawyers’ fees to take this case against the developer. He said then the developer turned up with their expert witnesses and said that the efflorescence was coming from cheaply-made planter boxes on the rooftop. So, the developer said, “okay, my bad. I’ll give you $9,000 for new planter boxes.”

Sue  00:48

Oh, my god. Did the developer put those planter boxes up there, then?

Jimmy  00:52

Yes, they put them up there. Presumably, they’re saying “okay, yeah, we shouldn’t have put such cheap planter boxes, so yeah, we’ll replace them. Off you go.”

Sue  01:01

Oh, my god. Is the damage still there?

Jimmy  01:04

The efflorescence… You can scrub it off the surface, but those salts (if you don’t cure the problem), keep coming up through the tiles. So, if there is no problem underneath the tiles, then it’s going be okay.

Sue  01:20

Why didn’t they say that before? Why didn’t the other side’s expert witness ever even look at that?

Jimmy  01:25

You wonder. We’re going be talking about defects and court cases, because you’ve been following up on the Mascot Towers’ story. And we’re going to meet somebody who makes a living from negotiating property prices down. I’m Jimmy Thomson.

Sue 01:42

And I’m Sue Williams.

Jimmy 1:43

And this is the Flat Chat Wrap.

[MUSIC]

Jimmy

Mascot Towers, Sue; you’ve done a story for the Sydney Morning Herald, Domain?

Sue  02:04

That’s right. I think we were all wondering what happened to Mascot Towers, because it’s been 18 months now, since all those owners were evacuated from the tower and you kind of wonder what’s happening. I hadn’t heard anything for a while, so I put in a few calls. It turns out that they’re having their day in court, next week, on the 11th of December. The case is finally getting to the Supreme Court, after all this time. It’s the owners of Mascot Tower versus the developers of Peak Towers, which is the building next door. You’d probably remember; they were evacuated because the building was starting to sink, and they said it was because the developers of the building (which is just adjacent to it), had been tunneling down for this…

Jimmy 2:50

Digging down for a carpark.

Sue 2:51

That’s right, for a basement carpark and had tapped into the underground water table and the water had been coming up and so the building had been shifting and wobbling on its axis, which caused cracks everywhere in the building, and even cracks in the membranes of individual bathrooms in the apartments. It was considered too dangerous for everyone to stay there, so they’re all evacuated, you know, with 10 minutes notice or something. It’s quite incredible. Now, they’re going to court and the developers are obviously arming themselves up as well. This week, they released some images that they say show that there were cracks in Mascot Towers before they even started work on Peak Towers. They said they’d taken these photographs, before they even put the first shovel into the ground. Obviously, that’s going to be up to the court to decide, whether that’s right or not. But neither side is giving an inch, I think, in this case.

Jimmy  03:46

I mean, it is possible. All new buildings, or newish buildings, ‘settle’ to a certain extent and cracks can appear. It’s part of the settling process of the building. These cracks might have something to do with the work next door, or they might have nothing to do with the work next door.

Sue  04:06

That’s right and the building is 11 years old, so it’s not really a new building anymore.

Jimmy  04:15

But it does seem that the compelling argument that we all thought about the building next door, is not as clear-cut as some people might have imagined.

Sue  04:28

It’s never clear-cut, is it Jimmy? It’s really hard because the owners have borrowed some more money. They’re taking out strata loans, they’re paying special levies. Most of them are living in rental accommodation, because they can’t live back in their apartments anymore. That’s the owner-occupiers and the tenants. They’re all getting some rent relief from the New South Wales Government and they’ve been getting some advice on what to do in this situation. I think the Building Commissioner, David Chandler, has been very sympathetic but there’s not an awful lot he can do because he’s only looking at the future of the buildings and making sure these kinds of things don’t happen in the future. They’ve borrowed so much so far; they’ve just agreed to borrow a further 22.5 million in strata loans, on top of the 10.5 million they already borrowed. They’re saying it’s going to cost about 53 million (the hole), to rectify the building and legal costs and things.

Jimmy  05:22

They must be getting close to the point where they’re paying more to fix the building than the building is actually worth.

Sue  05:31

Yeah, but what do you do? I mean, they’ve also tended the building out for sale and they’ve had a couple of expressions of interest, but they can’t say yet what they are. It could well be somebody offering just to pay for the land (the value of the land) and would demolish the building. I spoke to a strata consultant, Michael Teys, and I said, what is a way out; if they don’t win this court case? He was saying, well, maybe they could apply for permission to redevelop the building, but they would actually have to rectify their building, and then add on to it in a huge way. You have to get council permission to do that, in order to recoup some of the money. He was saying, you know that the council might be a bit sympathetic, (because obviously, they’re in a terrible situation), and they might agree to give them permission. In the same way that other buildings have been retrospectively fitted out and sold bits of their airspace off, they’d sell bits of their airspace off to developers to develop more apartments and recoup some money in that way.

Jimmy  06:34

Which council is it?

Sue 06:36

Bayside Council.

Jimmy 06:37

Oh, right. I assumed in Mascot, it would be City of Sydney, but I guess it’s the council for the suburbs around Botany Bay.

Sue  06:46

That’s right and maybe if it was City of Sydney Council, they might have got a bit more help, perhaps? I don’t know. Bayside Council has been very quiet. I put a few calls into them and I didn’t hear anything back.

Jimmy  07:01

The developer of the building next door; are they a substantial company? By that I mean, are they the kind of company that might say, ‘well, if we lose a court case, we’ll just go into receivership anyway.’

Sue  07:14

No, I don’t think so. They’re quite a big company, so it’s unlikely that they would ‘phoenix’ in the way that you’re suggesting. The developers of Mascot Towers itself actually went into liquidation. This builder is a big builder; a big developer, and they’ve got buildings and projects all over the country, so they wouldn’t want to risk losing those. So no, I don’t think there’s any danger of that.

Jimmy  07:40

I wonder if insurance kicks in; if their building insurance would cover damage to another building if in fact, that was what was found to be the case?

Sue  07:50

That would be a good outcome, wouldn’t it?

Jimmy  07:52

Well, somebody’s got to pay. I know it means that our insurance premiums go up.

Sue  07:57

Yeah, that’s right. Hopefully, there’s a is a good outcome for all the owners in the apartments. One person said that they should have held official building inspections every two years, then they would have noticed any cracks appearing; any changes in the building.

Jimmy  08:12

Who’s to say they didn’t?

Sue  08:15

Well, that’s right. Even if they didn’t, what building actually holds full building inspections every two years? It’s a huge outlay.

Jimmy  08:23

All the government will tell you these days is you’ve got to have a 10-year sinking-fund plan. You’ve got to have a maintenance plan and that has to be updated every five years.

So, every five years is when you would have a major inspection of all the building and the plant to see if stuff is deteriorating faster or slower than you anticipated. But every two years; nobody does that.

Sue  08:50

No, that’s right.

Jimmy  08:53

Alright, that’s interesting. Well, let’s wish them well. Let’s hope there’s an outcome; an equitable and just and fair outcome at the end of this. I sense we’ve got quite a long way to go on it, even now, a year and a half later, as we approach the second anniversary of the Opal Tower evacuation. Remember, that was Christmas Eve two years ago. How time flies, when you’re watching buildings fall down. After this, we’re going to be talking to Scott Aggett, who is a…

Sue  09:24

Former long-time real estate agent in Sydney, so I’ve known him for a long time. He worked in London as well. I think he worked in both residential and commercial property, but he’s set up a new business. It’s been going a little while, called Hello Haus, which is a property contract negotiation agency. He negotiates when you don’t want to, or when you’re not very good at it.

Jimmy  09:52

I’m terrible at negotiation, and I noticed its spelt ‘Haus,’ the German spelling. Why? He’s not German.

Sue 10:00

I don’t know. We’re going to have to ask him.

Jimmy  10:03

Okay, that’s after this.

[MUSIC]

Ace negotiator

Sue  10:11

And we’re back. We’re going to talk to Scott Aggett, the managing director of Hello Haus, a property contract negotiation agency. If the sound isn’t quite as good as just me and Jimmy on our own, it’s because Scott’s dialing in on Zoom from his home in Queensland. Hi, Scott.

Scott  10:30

Good morning, Sue. How are you?

Sue  10:31

I’m really good, thanks. Thanks for joining us this morning.

Scott  10:34

My pleasure. Thanks for having me.

Sue  10:36

We’re really interested in this topic of negotiation and today’s market is really up and down and it’s really regional, and nobody quite knows what’s going on. Is there more negotiation going on in today’s market than there perhaps would normally be?

Scott  10:51

It’s a really interesting question and it’s a hard question to answer. I would actually say to you that there’s probably more negotiation going on now, for the people that know how to negotiate, because they’re trying to use their skills to utilize or find their client or themselves a position that’s favorable. For the less-educated negotiators and people that are probably new to buying property or infrequent buyers of property, they’re doing less negotiation, because it’s really a race and high competition with multiple buyers. I find in those situations, people do less negotiation, and they just put their maximum number on the paper and try and wrap it up as quickly as possible. So, there’s a risk there that people are really overpaying or paying an emotional premium.

Jimmy  11:36

Hi Scott, it’s Jimmy Thomson here. What are the most common pitfalls in negotiations then, apart from just sticking to one price and getting emotionally involved?

Scott  11:49

The ‘emotionally involved’ part is probably the biggest pitfall for the majority of the market. I’d say that’s the number one mass-market fail that most people make. That’s when people will just go head-over-heels in love with a property and they’ll do whatever they have to do to own those keys. An agent can sniff that out a mile away, and they love that opportunity, when a buyer comes along that’s on the hook. Definitely pitfall number one; don’t show your cards in terms of that. I think pitfall number two (probably something that’s overlooked by quite a lot of people and part of the main reason why I set up Hello Haus), stems from negotiating against a lot of single women, and that might be divorcees, widows, young, professional women that are coming through and buying for the first time. What I found that happened a lot when I was dealing with women buyers was that they would outsource the negotiation to a male counterpart. Might be a brother, father, friends, a partner, thinking that possibly the male would have better luck negotiating against an agent than they would have. The pitfall that comes from that is that a lot of the males when they go into negotiating on behalf of somebody else (they do it for themselves as well, but definitely when they do it as a third party), is their take or their approach is that they want to play hardball. I found this over 20 years of doing this on the agent side, is that they’ll come in and they’ll try and bully you into a price. “This is it. This is all I’m going to pay. It’s not going to get any better than that. You should take it, it’s overpriced,” whatever those throwaway lines are. It gets my backup and it gets a lot of agents’ back’s up as well, because it becomes just a peeing contest, really, between two people. It’s not how you negotiate; it just gets the other person’s back up and I think that’s a key pitfall that people don’t realize, and it’s one of the key reasons why I set up Hello Haus, to empower those women to say, “you know what, you can actually either do this yourself, or you can outsource this to someone who can do it better than you or your or your male counterpart.”

Jimmy  13:44

Someone who knows what they’re doing, in other words.

Sue 13:49

That’s so interesting, because women are doing so well in business; in every field. We’ve got a Deputy Vice President in the US now, who’s a black woman and it’s fantastic. Why are we so nervous about negotiating?

Scott  14:04

I think you’ll be better placed than me to answer this one, Sue, but my experience with my mum buying; my sister’s buying over time, as well, and definitely my wife, is that they just don’t like confrontation. There’s a level of trust that they need to be confident to engage in a business relationship with somebody and agents have just got a terribly bad reputation. When it comes to dealing with large sums of money, they just don’t have the confidence there or the trust there and they don’t like confrontation. Is that true, do you think, Sue, with your own personal experience in going through that process?

Sue  14:39

Yeah, that’s probably quite true. I mean, with confrontation, I tend to either go really quiet and grin and menacing, or I go over the top and get really aggressive.  I guess there are lots of guys who do that as well, but it does kind of show. We probably don’t have as much experience in negotiating as well, generally in the world, perhaps.

Jimmy  15:02

I’ll say I think there’s an element there that (and it’s a male factor) … A lot of men, even today in the 21st century, when they’re dealing with women, will be patronizing and a lot of women will click over to an emotional thing, which is “why is this dickhead patronizing me?” As soon as you move into that anger, you’ve brought emotion into the negotiation. Is that fair to say?

Scott  15:15

Yeah, that is and I also think another extension of that, Jimmy, is that women are much better communicators about their emotions than men and if they find a property they love, they perceive that it’s easier to read that they’re seriously interested in a property. They’re possibly conscious of the fact that they’re exposed a little bit more like that. So yeah, it’s an interesting thing that came out of it. Definitely, that’s a pitfall in terms of sending a male in to do the job for you who’s going to get aggressive and try and outmaneuver or outmuscle someone in a negotiation, which just doesn’t work. Skilled negotiators don’t get emotional. They can keep it at an arm’s length, they can listen (they’re very good listeners), listen to the other side, take a view of where their stance is going to be, and then apply what they need to get the optimum result for their client or their position.

Sue  16:18

It’s interesting, you kind of think immediately of the Julia Gillard speech, ‘I will not be lectured to by this man.’ That was kind of cold and calculating and reasonable and rational and you kind of think, well, yeah, that is the that is the right approach, really.

When we get emotional about property, that’s really hard. Because you’re looking and looking, and it’s really difficult, this market, when there’s not so much supply, so you find a place that fits you, and you do immediately fall in love with it. Are there any kind of ways that you can stop yourself doing that? Should you just kind of look at it all the time as an investment or, stop imagining yourself living there? Are there any tricks there?

Scott  16:57

It’s really difficult to do and it depends greatly on what you’re buying that asset for. If you’re buying a property to live in, and it’s going to be your forever home, then it’s very difficult to put yourself at an arm’s length, and treat it as just a financial decision rather than a lifestyle choice. So that is really difficult to do. I try to get people to look at it as a long-term investment for them. I also think that the pitfall a lot of people fall into is that they fall in love with a property and they’ll just block everything else out and they won’t consider the external factors that may be negative for a property. I try to put a warts -and-all perspective or play devil’s advocate and say, “okay, well, you know, what about this? How does this impact on the value of the property or your enjoyment of it? Is this going to be difficult for you to resell it? Do these things, potentially hold back a capital growth?” So, I try to give people a big-picture view of it and get them to see more property, to be better educated. Once you see more property, and you don’t just kind of fall in love with the first couple that you see, you start to find the negatives. I think you’re a bit more wide-eyed going into it. It’s a challenge, definitely, in terms of switching off that emotional part and just focusing on the numbers; purely numbers.

Jimmy  18:10

What other things can you negotiate on, besides price?

Scott  18:14

Well, terms are the big one. Deposit size; it differs in different states, how you’ve got to buy in terms of the contract that you enter into, but the first thing would be a cooling off. It might be a couple of days, or five days or 10 days. Second key one that comes up is ‘subject to finance,’ so whether you’ve got to get an evaluation done, or you’ve got to get written approval from a lender, so, subject to finance is a big one. Deposit size; whether it’s 5%, or 10%. Settlement dates is another key one. It could be very appealing for you to settle very quickly for a seller and that will add weight to your offer and make it a stronger one. Or, it might be that they’ve got nowhere to go, or they want to (for example, at this time of year), stay for Christmas. In a lot of the negotiations I’m doing at the moment, the vendors will say “well, we just want one final Christmas here with the family.” Especially true because the borders have been down. I had a negotiation in Paddington last week in Sydney and we gave the client (the seller), what they wanted, which was three and a half million dollars. We didn’t really negotiate in terms of the price, because we knew that they wanted their number and they weren’t going to budge from that number. We wanted it on a certain date in early January and they wouldn’t accept that. It had to be in March because they wanted all of January and part of February to have friends and family from Melbourne to visit them one final time. All these little things; you’ve got to ask questions. I really call it kind of almost like a roadmap for me.  I do what I call a ‘discovery call.’ I’ll call the agent and I’ll ask lots of questions like this. What is important to the seller? What timing was going to work best for them? Is it price or terms that are more important, or is it a balance of the two?

Just try and work that out and then put all that together and wrap it all up in one offer, that you know is going to be appealing to the vendor to give power to your offer that you’re putting forward.

Sue  20:13

That’s good, because I suppose us normal vendors and buyers, we wouldn’t really think of all those things; we’d just concentrate on price and when the settlement’s going to be. We’d never actually think of all those other elements as well.

Scott  20:26

You can understand how important it is to a seller, that if they’re away, or it’s going to be a problem time for them to settle. if you could just buy another two weeks and go and take an Airbnb in the interim, or whatever it might be, that might be a short- term pain for you, but it might just make your offer stand out on paper; that it works seamlessly for the vendor. In a rising market, you just need to remove as many speed humps as possible from your offer, and just make it as clean as you can for the seller.

Sue  20:54

Well, that’s great, because if I were buying property, I don’t really tend to think of the seller beyond thinking of them as someone who wants the best price. I don’t kind of tend to think of them as a human being who has a family and has relatives over in Victoria, they want to see. I guess you as an independent person can come in and see the personal circumstances of both the buyer and the seller.

Scott  21:17

This is why you deal with somebody that’s got experience in that regard. I’ve bought and sold 27 of my own properties. I’ve been a vendor.

Sue 21:23

Twenty-seven? Goodness me!

Scott 21:25

27, I’m up to, and I’ve handled thousands of transactions as an estate agent, or on the buying side for clients as well. That gives me a unique perspective of the nuts and bolts of a deal. Definitely a big part of it is the vendor’s situation and what’s going to be appealing to them. I’ve even had clients, when I’m representing a seller, that will turn away an offer because they don’t like the person.

Jimmy  21:51

Living in their house!

Scott  21:54

Yeah, exactly. I’ve lived here for 20 years, and I don’t want a young bachelor in here. We want to sell to another young family that look like us 20 years ago, who are going to enjoy the house, which is silly as a seller, because whoever’s got the most money is going to set them up financially. Some people just aren’t driven by the money; they’re driven by the emotional part of it.

You’ve got to ask those questions when you’re buying and work out who you’re dealing with, and put an offer on the table that meets their needs.

Sue  22:20

In what circumstances might you find you really need to negotiate?

Scott  22:25

Always! It’s a contact sport for me, so everything’s a negotiation in life. I think where you need to negotiate is definitely around fixtures and fittings in the property. Whether certain things are going to be included in the sale, and that might be a washing machine or a dryer. It might be some inbuilt speakers or a television that’s on the wall. It could be some custom-made furniture that’s built-in. Things like that are really important; to know upfront what’s included or what’s not.

Sue  22:55

That’s a great tip, because when we moved into our apartment, we arrived at night, and we flicked on the light switch, and they’d taken all the light bulbs.

Scott  23:05

Some people just go way too far on that scenario. I sold our family house two weeks ago and I enjoy my art. We had of course, TVs in all the living rooms and master bedroom and they were all wall-mounted. I had two artworks that were fed through electrically through the wall, and they were all lit up. The buyer that came through on, say, three separate occasions, saw the artwork (the lit-up artworks) and the TVs. They never made any requests whatsoever for us to patch any of those holes. When we moved out, we had a white-glove professional clean. Property was spotless, but it had holes in the walls where the TVs came out and had all the hooks on the walls. They wanted us to patch it all or they wouldn’t settle, so I said to them “well, that’s great, but you needed to say that 30 days ago.” Just to be fair, I chipped in a small amount in cash to help them patch the holes and rest of it, but I didn’t want to be involved in organizing all that at the last moment. They were talking about delaying settlement and I had a simultaneous property purchase all lined up, so it creates so many problems if you don’t negotiate these things upfront and into the sales contract. Fixtures and fittings are one thing. We touched on deposit sizes and settlement dates. They’re crucial, to make sure they work and the settlement dates are really crucial at the moment because of the banks, because of the lenders. Some lenders aren’t picking up files for 21 days. I’ve heard even longer stories than that from different brokers across the country. Depending on what lender you want, if you’ve got a four-week settlement or six -week settlement you’ve agreed to, if the bank is not even going to pick up your file for 30 days, likely that you’re going to be in breach of your contract and risk falling over on that deal and losing your deposit, if you can’t settle on the date that you’ve agreed to. You need to understand going in if you’re borrowing money, how long is it going to take for the lender to be able to come to the party and fund the deal, and match your settlement times accordingly, so you’re not under any pressure financial pressure. 

Jimmy  25:16

Are there other any telltale signals in the other side of the negotiation, that you’re either being too tough or too soft in your negotiation?

Scott  25:19

If you’re too soft in the negotiation, it’ll be over and done within seconds, because you’ll just overpay and they’ll snap it up. That’s an easy one and you just get walked all over. What I find if I come across too hard, or with agents (or if buyers did that, to me when I was an agent), is that you’ll just find an agent will get their back up and be very short with you in their responses. That never gets anybody anywhere. If you’re trying to control the negotiation, and you’re trying to be a bully, then you’re definitely being too hard and you’re not going to get what you want. The art of a successful negotiator is to make both sides feel like they had a win. That’s a real skill, to make that happen. The best outcome for me is to have the agent feel like they’ve sort of won the negotiation, or they were in control the whole way through and for my buyer to feel like they were in control, and they got a good result for it as well. When I’m negotiating on behalf of buyers, it’s about making the agent feel like they’re in control and this is a real, practiced art, that’s taking me a long time to develop.

Sue  26:27

You haven’t thought about going into Middle East politics or anything, have you?

Scott  26:30

Jared Kushner beat me to it.

Jimmy  26:33

He’s got a bit of a track record in real estate as well, I believe.

Scott  26:37

He’s a slumlord, I watched on Netflix.

Jimmy 26:39

Yeah, he sure is.

Sue  26:41

What was your best, or what was your hardest negotiation?

Scott  26:44

Look, there’s been tons of hard negotiation. The beauty about being in negotiation and why I love it is it’s a contact sport for me. I really, really enjoy the battle of it every day, but every negotiation tends to be different. The vendor circumstances are always different; their price expectations vary, the sellers’ energy or immediacy changes in every deal. The agent you’re dealing with in the middle can be good, bad or ugly, so it varies so much. There’s plenty of hard deals to put together. Probably the best deal I did in the last couple of years was… Thank god for my parents-in-law. They were trying to buy a property, moving from Christchurch to Mermaid Waters to be near us and their son and they spent six months looking. They probably looked at 50 houses on my advice, to understand what the market was. Then they disappeared down to see their daughter in Sydney, and I found a property for them off -market. I managed to buy the property for them and save them 15% below the target price that they set me, so that’s a significant amount of money in terms of them retiring and having cash up their sleeve. So that was definitely the most rewarding one.

Probably the biggest win I’ve ever had… Last year, I had a client ring me and say, can I buy a property for them in London? I said, “okay, yeah, sure, I can try,” and they said, “okay, great. Well, it’s actually from my best friend, and she’s ready and she’ll take your call now. It was eight o’clock at night on a Monday night. I rang the client in London, who was her friend, and started breaking down what I needed to do, and it was buying a very expensive home for about 6 million dollars, or 6.5 million dollars. I ended up having to sleep in the spare room and negotiate through the night with the agent and I saved her $800,000 that night. That was a big deal for me and incredibly rewarding for her as the client. She was prepared to pay $800,000 more than what we ended up buying the property for. I had no idea of the market, no idea of the asset, no idea of what was happening in the general economy and finances in central London at that point, but my skill set is winning the negotiation. I could ask the right questions, listen for the responses, be a really good listener to understand where the pain points might be to put the deal together, and then where to push really hard to get the best result. That equated in a huge saving for her, which was really rewarding.

Sue  29:23

Great! Is that the biggest amount you’ve ever saved somebody, $800,000?  I would think there wouldn’t be too much more you could save!

Scott  29:31

A lot of money.

Jimmy  29:32

I’m wondering, with your skill set and your ability to read people, are your friends ever prepared to play poker against you?

Scott  29:42

Well, what I do now, Jimmy, is I don’t meet any clients face to face and I don’t see any property that they’re looking to buy; only online. So, it’s very difficult. I definitely can’t do the poker face part of it because I just don’t physically meet anyone anymore. I’ve designed that I can do this all from home and raise the kids around that while I’m negotiating and having fun for work. In terms of the negotiation part of reading people, my wife knows when I’m trying to negotiate something, and my kids do as well. So yeah, I’ve got a long way to go. They can read my poker face!

Jimmy  30:22

Who do you think are the worst at negotiations? Remember when we spoke about women; single women? Is it young men or older women? Is there somebody who you go ‘just as well, you came to me because you’re probably going to screw this up.’

Scott  30:39

I definitely don’t think women are bad negotiators. I mean more so that they outsource it to someone because they don’t want to do it themselves.

The worst negotiators are people that are emotionally involved in the property, because it says it on their face.

They won’t be capped at a certain price; they just will pay whatever it possibly takes to own the property. That’s, that’s the worst one and that’s probably the most common one. The second one we discussed is being a bully in negotiations; trying to take control of it, when you don’t know what you’re doing and you’re uneducated in that space. I think that’s a really bad negotiator. And the other ones, I would say, are retirees. They tend to be pretty bad negotiators from my experience and that’s because they are at a point where they don’t really love confrontation, the baby boomers. They’ve got enough money that they don’t really care… It’s not don’t care, but they can afford it. They will pay an extra 10 or 20, or $30,000, because they’ve got the money, and they just want the property. They’re pretty bad negotiators in that regard and so are first home buyers, because first home buyers think they know it all. They’ve never done it before; they tend to put really unrealistic expectations on the deal. Often, they’ll just get frustrated and just give up straightaway, because they just haven’t got the stamina like other people that have been through this process through their lives and fight to get what they want. First home buyers typically are pretty bad negotiators as well.

Sue  32:13

When you negotiate against another negotiator, is that even harder, or is it smoother, because you  both understand the rules?

Scott  32:22

It’s exactly the latter; it’s much better. The almost ideal scenario for me when I’m negotiating for a client is to deal with another really good agent. You’d think it’s the opposite of that but we get to where we get, straight away; really quickly. There’s no gray area; it’s black and white. There’s normally no aggression. They know what my role is, and what I’m bringing to the table and what my end goal is, and I know exactly what their end goal is. Good agents will say to me- in this process, multiple people have said this over the course the last couple of years and good agents that I’ve dealt with- “my client, my seller will sell wherever they want to, and it’s up to them, and your buyer will pay whatever they want to and it’s up to them. All we can do is do our best and if it doesn’t work, we’ll just move on.” It’s just it’s a much simpler process and cleaner process.

Jimmy  33:16

Something that’s just occurred to me and it’s a fairly fundamental question; how do you get paid?

Scott  33:22

I get a $2,000 upfront retainer, which stays in place until we secure a property, so if we miss a couple for whatever reasons, then I don’t charge any more on the upfront retainer. When you found the property that you want to buy, I ask you to set me a target price, which is your maximum walkaway price. So that’s my line in the sand that I’m working towards. If I can secure the value of the property below that target price, I take 15% of everything below that number. For example, if you find a property that’s on at $1 million, and you want to pay 950 and I buy it for 930, then I charge you 15% of that $20,000 that I saved you, so $3,000 plus that upfront $2,000 retainer. Typically, my fee ends up being around $5,000. If I’m charging you $5,000, typically, I’ve saved you 25,000 below the target price you set me.

Jimmy 34:13

So, it’s literally a win/win.

Scott 34:16

I do all the work; I remove the stress. I get rid of all the emotional part of it, so there’s no risk of overpaying. The way that I describe my services is that I’m an insurance policy; that you pay the least amount possible. I don’t go in there guaranteeing you that I’m going to save you X dollars, because I think that’s irresponsible to say that I can guarantee a set figure that I’ll save, but I guarantee you that you’re going to secure the property at the least amount possible. I think that’s worth its weight in gold because people just have that peace of mind that they know that they bought it for whatever they had to pay and not a cent more than that. And what it typically means is they end up saving 10s of 1000s of dollars in the meantime, but I just don’t like to harp on that part of it.

Sue  34:58

Sure, so they get peace of mind but anybody negotiating against you; be afraid, be very afraid! Oh, that’s fantastic. Thank you so much, Scott. I’ve learned so much from that.

Jimmy  35:12

Makes me want to sell our house just so we can see how it works.

Sue  35:18

I certainly won’t send Jimmy in to negotiate for me.

Jimmy  35:21

I’m the worse negotiator.

Scott  35:22

Sue, don’t come in if you’re going to be that ‘angry Sue!’

Jimmy  35:27

I’m a bit too fond of the surrender tackle.

Sue  35:32

Oh, that’s fantastic. Thank you so much for joining us, Scott. I really learned a lot from that.

Jimmy  35:37

Thanks Scott, bye.

Sue  35:40

Well, that was interesting, wasn’t it? Who knew that women could be so chicken about negotiating themselves and then handing on to people who are really hopeless?

Jimmy  35:49

Like I said during the interview, I don’t think it’s so much that women are chicken; I think it’s that  they feel they’re being patronized, usually because they are. A lot of women will respond emotionally to that cultural norm and as Scott said, getting emotional is the last thing you want to do during a negotiation. You’ve got to be cool and calm and focused

Sue  36:20

And dispassionate.

Jimmy  36:21

Are you any good at negotiating, Sue?

Sue 36:22

No.

Jimmy 36:24

I’m really bad at it, except when I play Monopoly. In Monopoly, I’ll say, “okay, I will buy Mayfair off you for 500 pounds,” and the other person goes, “I see, okay.” “420?”  “No, you can’t do that!” I say “410.” “No, no, stop!”  I usually win, apart from when I’m playing your niece, who is a Monopoly fiend.

Sue  36:49

We found her once, sitting on her money. She was hiding her money, so we didn’t know how much money she had, which was cheating really… It’s not really technically cheating, but it’s kind of sneaky.

Jimmy  37:01

Yes, sneaky. Negotiation; I can’t remember ever having negotiated a wage raise. I go in and say, “I need more money,” and they either say “yes” or “no.” And if they say “no,” I go, “okay.”

Sue  37:20

Or you say, “I want more money, or I’m going to resign,” and they say, “bye, there’s the door.”

Jimmy  37:24

Yep, I’ve had that. Negotiation is a real skill. When you’re negotiating over the house that you really want, or a house that you want to sell, it’s really good to have somebody who’ll come in and do it all; get you the best possible deal. He makes money and you save money. It’s a win/win.

Sue  37:47

Yeah, it does sound a good business opportunity, doesn’t it?

Jimmy  37:51

It does. When we come back, we’ll have this week’s Hey Martha’s. That’s after this.

[MUSIC]

Hey, Martha!

Jimmy

And we’re back. Sue, what’s your Hey Martha this week?

Sue  38:06

Well, this week, I went to see some new apartments and they had been specially built for people with disabilities. They were really impressive. I’ve never seen any apartments like them before. They had really interesting features; you could lift or lower the height of the kitchen bench and the height of the oven and the fridge. You could raise or lower the height of the vanity in the bathroom. You had lots of cupboards that you just pulled out with, you know, maybe one finger (very light touch). They had voice -activated commands. You could say ‘open door’, and the door would open or close door. They had a button and if you had any problems, you could speak on an intercom to somebody in another apartment to say that you had an issue, and could they come and help you. It was pretty amazing. It had very wide doorways, obviously for wheelchairs. It was incredibly impressive, because when you think there are apparently around 5000 young people with disabilities in Australia, who are living in residential aged care, because there’s nowhere else for them to live with 24-hour care. Apartments like these, if there were more of them, would give all those people, the chance to live independently and with dignity.

Jimmy  39:32

Within a community and with their peers and in their age group, which is huge. I mean, it must be so depressing, if you’re a young person. It’s depressing enough for people who find themselves in wheelchairs for whatever reason, to then have to live in an aged care facility because that’s the only facility that has the baths and access. These apartments, they’re not care home apartments. They don’t have carers there, do they?

Sue  40:09

They’ve been bought by Summer Housing, which is a not-for-profit housing organization that looks after young people with disabilities. It’s just 10 apartments in a stack in a regular apartment building, and they’ve bought an extra apartment and that’s an apartment for a carer, who’s going to be there 24/7, in shifts. Different carers, so that they’ll always have someone that they can call if they’ve got an issue. It’s a great idea and of course, they’re then part of a community of people who are able-bodied anyway, and everybody’s kind of mixed together. And the developer, Mirvac, the guy there said to me, “well, every community should be a strong community made up of a diverse group of people.” That means people with disabilities, it means LGBTQ. It means all sorts of people. It was really heartwarming to see. I chatted to a guy who’s in a wheelchair, who’s a Paralympian and a world champion of his sport, Bocce. He was just overwhelmed by these apartments, saying, “wouldn’t it be fantastic if we had more?” Wouldn’t it be great if the federal government or each state government said to developers, “if you’re developing any complexes over 100 apartments, you have to have 10% for people with disabilities or something? That would be great. What’s your Hey Martha this week?

Jimmy  41:44

I apparently will be having cocktails on the rooftop of the Infinity building. Is that the right name?

Sue 41:53

In Green Square, yep.

Jimmy 41:55

That’s the big building with a hole in it. It’s Crown?

Sue 41:58

Crown Group.

Jimmy 42:01

I do like a bit of architecture and I do like a bit of engineering, and this is one of the more interesting apartment blocks that’s been built in recent years. People say it’s a building with a hole in it. It’s basically two towers with a bridge section across the top. But even so, it does look like a big O, sitting in the landscape. It has a rooftop, and we will be there at some point this week. I’m really looking forward to it.

Sue  42:30

We should take a couple of pictures and put it on the Flat Chat website.

Jimmy  42:34

Yeah, we will. Talking about the website and thinking ahead to next week, we’ve discovered a service that I wasn’t even aware existed. It’s a legal assistance center, like the Redfern legal service and they provide free legal advice for strata residents, owners and tenants. So, we are going to be talking to them on the podcast next week and we’re going to do probably two or three stories about them on the website, in the interim. I had a chat with the people there and it’s a gap in the market. In fact, I was talking to David Sachs, who’s with Sachs Gerace, strata lawyers, who’s one of our sponsors and a good friend. I said, “David, do you feel threatened by this free legal service?” He said “Absolutely, not. Totally not.” He said, “look, people come to me, and they say, ‘I’ve got a problem,’ and sometimes the problems are big. Sometimes they’re small, but they matter to those people. I say, ‘Well, this is my fee. and they go, ‘no, no! Jimmy Thomson gives advice for free, so you should too.’’ These people do give free advice, so I’m looking forward to talking to them in the next week’s podcast and on the website after that. Okay, Sue, thank you again for bringing your expertise to the table.  And thank you all for listening. We’ll talk to you again soon. Bye.