KnowHow founder Bushy Martin talks about the importance of transparency, and why it is especially important for property buyers, sellers and investors.
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The Business Dictionary defines transparency as a “lack of hidden agendas or conditions, accompanied by the availability of full information required of collaboration, cooperation, and collective decision making.”
In other words, as Maggie Campbell explained in an article about transparency, you need to ‘say what you mean, mean what you say, and do what you say you’ll do’.
This sounds simple, but in practice it proves much more difficult. People and organisations often struggle with consistently following through
on all three elements of this transparency equation.
For me, I would go further to say that transparency is not about providing all of the information, as this would bury people in endless complexity and confusion, but its about providing enough of the right information for another party to make good and fully informed decisions.
Excerpt (transcript): Transparency in real estate
What is real estate transparency? And why does it matter?
According to aph.com.au, Property remains one of the few markets where true transparency doesn’t really exist.
But drawing on examples from Jones Lang LaSalle or the JLL Global Real Estate Transparency Index, that quantifies transparency based on 139 differing variables relating to property transaction processes, regulatory and legal frameworks, corporate governance, performance measurement and data availability, property transparency is a measure of how easy it is to access reliable real estate information in a location, be it a city or a country.
Having access to the right timely transparent property information gives you confidence when making decisions about buying building leasing and managing properties.
So what does property transparency look like?
It starts with the fundamentals of recording, sourcing, publishing and most importantly, being able to easily access the right required information about the supply, demand and cost of real estate and allowing people to compare and analyse this information to make better fully informed decisions.
It’s also about having a clear and consistent property transaction process with standard rules laid out to ensure that real estate and allied companies operate in a responsible and ethical way and then of course there’s all the legal contractual stuff, planning regulations, and building codes for property ownership and land use, along with proper easy to read and understand contracts and any resulting tax implications.
And according to JLL in an article in yourpropertyinvestmentmag.com.au, the availability of current, past and historic and future forecasting trends in market data is “a cornerstone” of real estate transparency in this country.
Now in recent years there has been mounting pressure on the largely unregulated real estate industry to act responsibly. The industry is being held to account to invest and do business in a transparent and sustainable manner.
And add to the mix the massive disruption and uncertainty created by the recent global pandemic, the issue of transparency and trust has been brought into even sharper focus.
During times of such continued and ongoing uncertainty, the need for open transparent processes and access to accurate timely data has become more important than ever.
So as you can hear, there’s a hell of a lot of information you need to access and know in order to make good property decisions – but very few people have the time, money or resources to be able to consider it all.
Interestingly, in the property space, we’ve quickly morphed over the last few years, from having almost no current relevant information, to now being buried in endless streams of complex and often contradicting and confusing data that is very difficult for the average Joe or Joanne property buyer to make sense of in a timely meaningful fashion.
So what ends up happening?
You either go with your gut and hit and hope, which most people do, and this generally results in below par outcomes, or a few smart property buyers engage specialist property professionals to assist in accessing and assessing relevant information to help you make better property decisions.
The issue with property transactions is that they have high emotional engagement and they are our highest cost transactions as our lifestyle and our families future relies on them.
All this in an environment where it is difficult and expensive for an occasional buyer to equip themselves with the current data required to make fully informed decisions.
Buyers are often flying blind and left making big financial decisions based on limited information, so they are left going with how they feel about a property and they often just go with their gut and make uninformed decisions, compared to sellers agents who have all the information about the market and the specific property at their disposal – a clear case of the information asymmetry that I outlined earlier.
So in this high stakes high cost environment, the level of transparency and resulting trust becomes critical to the perceived outcome of the property purchase transaction.
Buyers are left questioning, is this really a good property and am I paying the right price for it?
Now I know I’ve said this many times before, but its worth repeating – when it comes to the importance of real transparency just about everyone you meet in the property sphere has a vested interest in selling you something, because they don’t get paid unless you either sell or buy a property.
And as soon as someone relies on a result before they get paid they’re subconsciously going to have a bias towards getting the result which will cloud their objectivity, whether they are aware of it or not.
Remember that nothing comes for free and if it sounds too good to be true then it normally is. And It’s for these very reasons that our Know How team operates on a fee for service basis, because you know exactly what your paying and we know what we’re getting paid, so any savings that result from the property process go into your pocket and we are there as your expert property eyes, ears, arms and legs to both assemble the best available independent property specialists to deliver on your strategy and then keep them honest to ensure that what is being put forward is genuinely in your interests. In simple terms we help you write your life symphony and then act as your life conductor to assemble your life orchestra with the best instruments and best musicians to perform and then deliver your life symphony.
In this context, our Know How team likes to refer to ourselves as the John West of property. Remember that old John West advert where it’s the fish that John West rejects that make them the best? Well our Know How team is exactly the same when it comes to your property – it’s the properties that we reject on your behalf that get you the best result.
After we’ve helped you to craft your dream life style strategy, in conjunction with your finance capability strategy and structure, these then inform the exact type of property strategy you need to adopt.
And when it comes to your property delivery strategy, if we wouldn’t personally invest in a property option then we’re not going to suggest that you do.
Now unfortunately for property investors and buyers, this level of total independence and transparency is very rare and almost unique.
Why do I say this? Because selling agents, buyers agents and a lot of mortgage brokers and other allied property professionals, only get paid when you actually buy a property.
And this is where the murkiness and lack of transparency creeps in and subtly affects the level of objective independence they are giving you in a property transaction and the amount that they are prepared to negotiate on your behalf to truly get the best result.
Unfortunately I’ve seen this time and time again, especially with Buyers Agents. A number of them, and I stress not all, are good at property data and research to find a property that satisfies your strategy, but very few of them are what I would class as good negotiators and consequently they often pressure a buyer to accept whatever price or conditions the selling agent imposes.
Now until recently I believed that our Know How independent fee for service model, where we truly act objectively and transparently in assessing the merits of a property opportunity was unique in the industry – until I met our next Get Invested guest Scott Aggett from Hello Haus.
The pointy end of a good property transaction is how good you or your team are at negotiating the best possible win, win, win outcome.
Remember the old adage that it is what you buy a property for, not what you sell it for, that has the biggest impact on your long term results.
So negotiation skill is a key differentiator. And something as critically important and as subtly complex, as property negotiation is not something you want to leave to an occasional amateur.
And if your like most property buyers or investors that only purchase a property every 2-5 years, then that is exactly what you are likely to be – an occasional, amateur property negotiator who is up against a selling agent that is a professional property negotiator who is negotiating multiple deals every week, so the playing field is well and truly slanted against you.
And for the reasons that I’ve already mentioned, many buyers agents aren’t great negotiators either.
Why? Because often the price you pay for a property determines how much they get paid. When a buyers agent charges you 2% of the purchase price, they have an unconscious bias not to negotiate too hard, as the more you pay, the more they get paid. And even when they offer you a fixed fee to research, find and secure a property that satisfies your strategy, the longer it takes to secure a property, the worse their cash flow so there is always underlying invisible pressure to get a deal done.
Now I need to stress here that I’m a big advocate for good buyers agents as a good one can add enormous value in terms of researching and finding the best property around the country to suit your needs.
So if your looking to engage a true independent and transparent specialist property negotiator, where do you turn? Well up until recently, no one.
But this is where this week’s guest, Scott Aggett from Hello Haus comes to your rescue.
Hear more about transparency, and how it can transform your world, in this episode … and stay tuned for the upcoming interview with Scott Aggett.
Hello Haus:
If you want to get Scott Aggett and his team to assist you in negotiating the best outcome on your next property purchase, reach out to him at www.hellohaus.co
Realty Talk:
If you like what you hear from Scott in our 2 part special in this week’s and next week’s episodes, then make sure you have a listen to my interviews with Scott on Realty Talk
which you can see on https://channels.realty.com.au/realtytalk/, where Scott reveals his tricks to find properties pre and off market at zero cost that allow you to see 40% more of the market.
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Get Invested is the podcast dedicated to time poor professionals who want to work less and live more. Join Bushy Martin, one of Australia’s top 10 property specialists, as he and his influential guests share know-how on the ways investing in property can unlock the life you always dreamed about and secure your financial future.
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