by Grant Wakelin
The golden rule of real estate - Location, Location, Location.
Location matters. The most important factor when investing in real
estate. That hasn't changed – probably never will. But location has
also been the golden assumption of real estate agents too – local
knowledge, local presence, local people. You have to be there. I
am here to tell you it's irrelevant now.
Today's a classic example.
After finishing a Board meeting – via Skype, I am sitting in a wine bar in Wellington on a Monday evening – they have a cooking masterclass upstairs so I have it to myself – enjoying CBDfree wireless. I exited the hotel I am staying at for the evening because they wanted to charge me for wireless access – when will the accomodation sector learn?
Anyway, here in last hour or so, while enjoying a glass of Central Otago Pinot I have:
Finished the negotiations between an overseas owner and a local purchaser of a house in Taupo
Provided all the background details and facts to prepare an offer for a lady moving into a retirement villa in Lower Hutt.
Got the signed contract for the purchase of a Tauranga property back from the purchaser/s (one in Auckland the other in England) and reviewed it with the current Auckland owner.
Chatted through the details of an offer with a lady in Christchurch who is buying an apartment in Auckland for an investment. She appreciated the direct, straight forward feedback and will sign the offer tomorrow. The developer will be happy that's the third contract we have delivered in the last week. Oh, by the way – we have never met him.
Reviewed an offer for another apartment in Auckland with the purchaser, got it signed and arranged to present it (remotely) tomorrow to the owner. We haven't met either of them either.
Debated the acceptance, or not, of an offer for a Patea property with an Auckland owner – outlining the pro's and con's.
Responded to an email from a gentleman in a central Asian country who works for a real estate portal, has seen our success stories and wants to learn how it all works and if it is relvant to his country (yes it is).
Answered the query from some guy in Chicago who apparently works with a bunch of “serious money investors” and wants me to send a pitch deck. Looks a bit shonky to be honest (a word he will not understand I am sure).
I haven't checked junk mail yet – so have yet to respond to the Nigerian emails promising lots of money (not).
No car trips, airplane flights, or wasted time travelling to and from appointments.
Oh, and the wine was really nice.
Real estate is not about being local it is about providing service, expertise and skills. With the internet making data freely available why restrict yourself to the local choices? Get the best service, the best expertise, the best value for money wherever it is located. Location is irrelevant in that decision now.
Dave said:
I disagree. how can you possibly know what a property is worth in CHCH while you are sitting in a bar in Tauranga. stats and property guru are good to a point but if you don't know your area then you don't know if the market is going up or down, you don't have a pool of contacts to make the deal happen. in short you do not have any knowledge and that is part of what people pay for and expect from a professional.
Posted 8 th August, 2013Grant Wakelin (Author) said:
Hi Dave
Thanks for taking the time to read and comment.
Obviously we can agree to disagree. The old school agent justification was all about local knowledge and that the only person that had that was the local agent - a justification that is very quickly becoming outdated and inaccurate. To address your points:
With respect identifying and determining whether a market is rising or falling is based on sales evidence - not the opinion of a salesperson. The salesperson in fact is trained to always say “its a great market”.
A pool of contacts is not restricted to local people - we certainly use very good people all over the country to assist in transactions and find them readily accessible.
The argument that local presence gives premium information falls over when you consider that traditional (local) agents will often provide a wide range of opinions on what a property will sell for when appraising it.
Indeed the requirement when evaluating a property with a CMA these days is to be objective and have sales evidence to support your recommendations. This requirement was introduced into law because of concerns that agents were just using opinion rather than objective facts.
I think the comment that we have no knowledge is a little harsh and inaccurate.
The most important information when determining the value of a property is objective sales evidence. This is available where ever you are. Individual opinion has its place but because it is inherently biased and limited (in that it is only the experience and knowledge of that one person) it is only a component of the complete picture.
Posted 8 th August, 2013