Dads and property

Dads… every professional bidder’s nightmare, and often a Buyer’s Agent’s challenge when it comes to overriding their best-intended (bad) advice.

A father’s support always comes from a good place, but often it can threaten an inexperienced buyer’s chances of success. We see constant examples of this in our travels and it is one of the hardest reprogramming exercises to tackle.

Why is this?

Children often turn to a parent as they navigate adulthood, and when it comes to commercial decisions Dads are often called upon. They are usually the person who has been a pillar of support and a trusted provider throughout a young person’s life, so when a new specialist challenges the reliability of a Dad’s advice, the consumer can be left feeling quite bewildered about who to turn to, and which opinion to take on. 

A father’s guidance and life experience is invaluable in many regards.

Problems can arise for the consumer however when the Dad’s advice is outdated, peppered with cynicism, or worse still, wrong.

We encounter these problems often.

Just this week I witnessed a trifecta of Dad blunders. The first was a result of a typical cynical-Dad approach. Their son and his partner had set their sights on a superb house in Melbourne’s inner-west and the agent had competitive interest and an attractive offer already placed on the property. Making the buyers aware of the level of potential competition and the way in which the negotiation would be handled within the agency was the Agent’s best attempt at providing the buyers with clear insight into the likely chain of events. The property was scheduled for auction but the pre-auction offer determined a sale would ensue prior. The agency protocol in such situations is for a boardroom auction to transpire the day following an acceptable offer being received in order to enable the competing buyers a transparent opportunity to bid on the property.

Dad had limited regard for such a process and believed that the agent was playing games. It was a far-fetched theory, because an agent would be most unlikely to initiate a transparent boardroom auction process prior to a vendor’s auction day if they didn’t have a genuine offer on the table. It just didn’t make sense. The advice their Dad gave them was to time-stamp a lower offer and advise the agent that the offer would expire at 6pm that evening.

“Tell him to take it or leave it” was Dad’s advice.

The offer was ignored (justifiably, as it was lower than the existing unconditional offer), and the agent sent out the sms alert to all interested parties later that evening advising them of the boardroom auction the following evening. Realising that they needed support from someone more familiar with the process, the buyers reached out to us. Fortunately for them we still had time to act.

Had they ignored the sms, the property would have been promptly sold to another party.

Knowing when an agent is bluffing is important, but knowing when a property is about to be sold is critical.

Another blunder related to finance. Clients of ours were experiencing the typical bank approval hurdles in this tougher lending climate. Unlike the days of old where a loan applicant would make an appointment with a Bank Manager, wear their finest clothes and front up to the bank to create a good impression, times are different now. Loyalty to banks, relationships with Bank Managers and tenure of operating bank accounts mean nothing when it comes to an applicant’s loan application success.

Lenders facilitate a loan approval process via a strict series of stage-gates. A credit score is determined, equity or genuine savings are required, an applicant’s source of income is considered and their ability to comfortably service the debt must be demonstrated. Regardless of how long they’ve banked with the institution or how well they’ve dressed when they’ve met with a banker, their loan application will purely be assessed on its merits.

Dad felt otherwise. He suggested that the delays were ridiculous and advised his children that he would take them into a CBA branch to meet a senior team member on the basis that he’d banked with CBA for over twenty years.

Forfeiting a well-constructed loan application in the face of a pending settlement with this type of approach could drastically diminish a buyer’s ability to settle in time. The potential impact could result in loss of deposit and a recession notice being issued.

Suggesting a lender should bend the rules based on tenure of banking history is naive.

The third Dad-blunder we witnessed related to auction bidding. Every buyer has their reasons for paying a strong price when an auction’s competition levels drive the price tag well beyond a level of recent comparable sales in the area. Sometimes the reason is entirely personal and the scarcity of such a property, combined with the predicted infrequency of another similar dwelling hitting the market in a suitable time horizon lead a buyer to stretch harder than they otherwise would.

But when a Dad is bidding out of competitive spirit more than strategic support, problems can arise.

Especially when two or three Dads are fighting it out.

Long after our upper limit had been exceeded by other bidders, three Dads fought it out and created a new record for a charming four bedroom house in one of Melbourne’s South Eastern suburbs. The lack of stock during this cold Winter period was indeed part of the issue that the hungry buyers faced.

Arguably the successful buyer could have waited until market conditions enabled more selections for her to choose from in the warmer Spring months, but her Dad’s spirited bidding potentially secured her a property that a valuer may query if her Loan to Value Ratio is precariously high.

A common misconception is that valuers accept every auction price as market value, but this isn’t the case if a valuer has reason to believe that spirited bidding between two competitive bidders was lacking sensibility.

Whether it be Dads, Mums, friends, sisters, brothers or others lacking current property experience, sometimes the advice of a well-meaning person can make a mess of things for a buyer.

Determining who to source help from and being clear on how to distinguish between moral support and technical advice is key.