What nobody tells you about buying a house at auction

0:00Coming up in today's property podcast, we're talking to Hannah Hart about all things property. What do you need to do pre-buying? How can you make sure you buy well? As well as what are some of the key strategies to make sure that you walk away from an auction, ideally with a property, but also having not overspent. There's so many tactics that we can learn and Hannah has some amazing ones to share in this episode. Welcome back to another episode of the Property Podcast. This one's proudly sponsored by BNZ because when it comes to home ownership, they've basically seen it all. Whatever your journey looks like, BNZ's got the know-how to help you find your way there.

0:36So let's get into the episode. Today we're joined by Hannah Kumakis. Although Hannah, are we calling you Hannah Hart? Yeah, let's do it. Are we officially Hannah Hart? Yeah, we are officially Hannah Hart. So she is married. She dropped the biggest bomb ever on social media. In fact, you hadn't put really anything about even having a partner, had you? Exactly. And then all of a sudden it was like, dun dun. It was the ultimate hard launch. I honestly highly recommend today. It's so great. It throws people off. They're like, wait, what? It was amazing. I feel like I did a semi hard launch on the curve as well.

1:06Because even though I've talked about it on the podcast, I don't talk about my relationship or post him on social media. So I feel like I did a similar, but yours really took me by surprise. It was really good. I liked yours. Yours was great. And congrats though. It's amazing. Oh my God, thanks. What a bloody exciting time it is, isn't it? We're in Spain at the moment and I was at his dad's birthday last night and we had this big family dinner. And I was just looking down the table like, oh my God, I just love you so much. He wasn't sitting next to me. And I can't remember who had said what about something.

1:39But, you know, you just have this overwhelming, oh my God, you are just the best person I know. And how lucky I am that you love me. How, like, amazing. So this podcast is not meant to be about me gushing about my fiance. say this podcast is so sweet though talking about Hannah's property journey so for anyone who's missed any of the episodes that we've done with her Hannah is the most amazing passionate clever almost obsessive person I would say when it comes to money and budgeting and we had her on the IOU podcast so we're going to link that in the podcast show notes because I learned so much from her and anyone that is not feeling totally in control of your personal finances I really highly recommend then going back and listening to that.

2:22Yeah, we went through so much. It was fun, like from everything from saving to budgeting. See, it was one of my favorite podcasts. It was so good to record and hopefully people have learned stuff from it as well. So much. And you also just are the dream podcast guest in the sense that the amount of research and thought that you put into what you could teach. And I am so excited to talk about property today for that reason. Oh, I'm so excited. But you know, when people take it quite seriously and they're like, I want to teach people something and I really want them to leave this conversation or having listened to this podcast because an hour of someone's time is a lot and you always take it so seriously so I can't wait to dig into your property journey in more detail.

2:59Oh I love it. Property is just so good like literally my favorite topic to talk about so I think anytime I get a chance to talk about it I am here for it. Your property love or your experience and how you originally came to really love this asset class where did that come from and because because you actually have quite a bit of experience in the space beyond even just buying. So can you give us an overview of that? Yeah. So I feel like it started from quite a young age because my dad was an architect. So he had from the early 2000s had his own architectural firm. And so I was always surrounded by property.

3:32They kind of dabbled in a little bit of developments as well. And so I literally from the age of, I think 10, became obsessed with property. And I actually became obsessed with the thought of developing property. So what could you do with the property. And one of my first jobs was actually a property press run. And I would sit there, I'd keep one for myself and I'd sit there and I'd go through the property press and I would tell my dad what I would do with that particular property. This is at the age of like 10, 11. You're a baby genius. I just loved it. It was so much fun. Look, I was homeschooled.

4:07So it was like one of my favorite like homeschooling tasks was looking to see what could I do with that property. And I would look at a property and go, dad, I think this property we could develop it, you could cut it off and, you know, estimate how many like sections you could do from it. And then two years later, I would see someone's done it. And so it was quite like reassuring going, oh, wow, like some of my ideas, obviously they weren't just my ideas or everyone's ideas, but it was cool to see that come to fruition through someone else though. And it was really interesting. I kind of was working at how much money these developers made from property.

4:37And I just fell in love with it. I really loved how it was a tangible asset as well. And so, yeah, from a really young age, I really wanted to have my first property by 21. As soon as I left school, actually even before school, I was working tirelessly to try and save for my deposit for my first house. So, you know, like I mentioned, my first job at the age of, you know, 10, 11, having a property press run, and then all the way up to 18, I was constantly hustling so that I could get a job. So I could get, you know, lots of different incomes coming through, side hustles, which we talked about in the IOU podcast.

5:08But I, yeah, hustled really hard to save for my deposit for my first time. You're going to be like, where are you going with this? But bear with me. You know how Emma Greed lately has been talking a lot about how hard it is to run businesses and what it takes to be a mum and run a business. And there's all these entrepreneurs coming out and actually just being quite honest about the sacrifice and what goes into it if you want a certain level of success. I do think it's important in the way you just highlighted the amount of effort and energy and dedication it took to actually get to a point where you had a deposit and could buy a house.

5:39because buying a house and having that amount of money is quite possibly the biggest investment and purchase you'll ever make it's a huge amount of money and talking about the struggle to get there and how long it took you and and how focused you had to be on that goal is really helpful because while you look at and I'm for me as well like and and I was also in this position where my parents gave me a lump sum it wasn't even like a third of what I needed but it still really helped me, even though you look around and it's quite hard even now to find people that have done that solely by themselves without help from friends and family.

6:15So I think that that hustle or that determination or the energy it takes to get there has almost been pulled out a little bit, where actually it's like, no, buying a house and getting a deposit is a huge feat. And you started that so young. So it's like, holy shit, I can't believe you did that. Oh, yeah. And I think it was also from a young age. I talked about this on the IOU podcast, but my parents actually set up an account and it was my long term savings. And by the age of seven, money was being put into that only for two years. And they stopped when I was about nine. But then I had to, with my income, put aside 50 percent towards my house.

6:50So you're being taught at the age of such an early age that you're saving for a house. And so I think that's kind of also what inspired me to keep going. once my pocket money ended at the age of you know nine ten and I had to go out and actually get a job myself I still had to put that money aside towards my house and so it was that determination watching that grow can we just go back to the very beginning of your property journey because I do also think the hop skip and jump from one to the other is a real process and it takes a lot of sense to decide when and what is the best way to upgrade if that's what you're doing to get more equity to be able to get you closer to your dream home.

7:29As I mentioned, I hustled really hard and I actually went off to London straight afterwards after school to go off and be a nanny to be able to save as much money towards my first home. By the age of 21, I had saved$80 ,000 myself and I had then gone and put that towards a build. My parents did come in and help me, which I'm so eternally grateful for that they're able to do that. But I still managed to save that$80 ,000 by myself, which took a lot of hard work for as well. $80 ,000. You must have just been walking around like, I am so clever. I would just be thinking I was God's gift to the world if I'd done that.

8:09It was cool. I was like 30 and in debt, 21 with$80 ,000. Oh my God. No, it was great. But I also throughout that time, I traveled. I also then went off to university and I started to become a property valuer. So we'll touch on that later on as well and talk about how that helped me with my journey. But at the age of 21, I actually ended up building. I built in a small rural town two hours away from where I lived. And that building process at the age of 21 was incredibly challenging. I learned so much working with classic builders, working with a company. They were amazing. But man, I learned a lot at such a young age.

8:44And having tenants as well, being a landlord at such a young age and kind of navigating how the tenants were going to treat you, especially a girl at 21. So young. But it was really fulfilling to see that come to light. From there, once you had that house built, how did you then progress? Did you sell that to get another one? Like what was the process from there? I still own it. Oh, amazing. Yeah. The biggest eye opener was learning about equity and learning about how the thing is, with my property that I have, I've managed to pay down quite a bit of the mortgage. And so I have a really strong equity position with that property.

9:20And so I was able to then borrow against that house to then go and buy the house that I'm currently sitting and recording in. It looks beautiful, by the way. Thank you. It was a no money down. It was full equity, which was absolutely incredible. Just means that you're mortgaged up to the hills. We had paid so much money in mortgage. However, it meant that we didn't have to physically pay money because it was all through equity. It's such a good one. And that's exactly what we did with the properties that we own. Me and my friend who bought an investment property, we renovated and we added value to that property.

9:53So when it was revalued, the money in it, we could use to remortgage that amount rather than having to take that money out to buy a second. it's like that refinancing piece which is kind of confusing trying to get your head around but it's essentially that because that property is now worth more there's almost like money in there that you can kind of borrow again so rather than having to put a huge deposit down the bank trusts you and knows that you've got this asset that you're kind of using almost in exchange for a monetary deposit which is so cool it's life-changing I think not many people know about equity and the importance of it obviously there's a lot of things that come into play there's only so much that you can borrow against with your income as well.

10:32So that's something else that you, yes, you could have a lot of equity, but going towards your second, the bank, you've got to look at how much you're actually earning. That's actually a really good point because a lot of people listening may have a home and they may already own one. If you've had a property for three years, generally, and obviously it's different for every person, you'd need to talk to the bank, but most people don't realize how much equity they have in their house and therefore how quickly they actually, if they wanted to go to a second property for an investment or whatever you actually can I would really recommend if you love property and you love this asset class and you're thinking about investing further whether it's like what Hannah's done and and buying a second have a look to see what your options are and just speak to someone because you don't actually have to decide to do anything but for me I didn't realize how quickly I could go to number two which was all because of the equity had built up similar to you.

11:27Can we just maybe talk about the actual decision to buy a home rather than an investment property? Because the first one you bought, you were really aware at such a young age that this was an investment that you wanted to rent out. So different buying a home to live in. Well, I want to touch on really quickly on this investment property that I built in 2021. Also, key date there, 2021. It's actually lost value, which is pretty sucky. The fact that I thought it would be well up there and what, It's like five years ago now, but it's 2021. So unfortunately, it has pretty much plateaued slightly. So I want to touch on rent vesting.

12:03Just something, if you haven't heard of it before, it was life changing for me. And a lot of questions that I got on my social media was, why don't you just live in that property? For me, I was a student and I only needed to rent out one room. I had a room in Auckland for$180 per week. Cheap as chips. Whereas I knew that I could rent out my home and my investment home for quite a lot more. So there's no point in me living, especially two hours away from Auckland, no point in me living in that property. I may as well rent it out to a family. And especially my heart is the reason why I have an investment property is also that I can provide a healthy home for a tenant.

12:42And that's the only reason why I want to do it because I can see so many rental properties that are so unhealthy for people to live in. And so that's why I was so stoked that I was able to actually provide a family with a really healthy, clean home. But rent vesting is quite revolutionary because sometimes you need to work out, are you looking to buy a home just because you want a roof over your head? Well, actually, it may even be better for you to rent, buy an investment property and have a tenant paying more money than you would probably need to be paying if you were renting. And so that was really revolutionary with this rent vesting term.

13:14And it's meant that I was able to pay off a massive chunk of my current mortgage and my investment property through the tenants. I know a big property investor in Auckland and she rents. She wants to live on the beachfront in Takapuna. There's no point in her buying that property. She's worked out that the mortgage is. And I think this is a lot of people's mindset is, no, no, I have to get that dream property. It will actually be a bit smarter and think, hang on, I could buy so many more properties in a different area. and have them all rented out, be the landlord that everyone needs, be the landlord that is going to provide a healthy home, be that landlord to people rather than you just living in this massive home that you don't really even need.

13:52You may as well rent it. But that, for me, was my decision. And that's obviously very much helped me now. When you first started looking, Hannah, I guess, what did you think you knew? And what did you actually find out as a part of the process of looking and weighing up all of those different options? Well, I feel like I didn't actually quite touch on one quite important part was that I went to university and studied property pretty much. So I studied a property valuation degree or major. And so that really helped me. I actually worked for one year as a property valuer. And so I learned so much about the property market and also about analyzing and literally valuing different properties.

14:30And so I think when I went into it for the first time after working, I was able to have my property valuer hat on and I started to kind of value properties. I think because I'd grown up in an environment where I was taught from a very young age the different types of properties, I was quite aware. But I do want to run through just a few different options and maybe things to look out for in terms of property. This is me coming from my experience and while my property professional knowledge is quite rusty, so don't quote me on this that it's like complete and utter truth, but this is from my knowledge of what I know.

15:01But when we were looking for properties, we really wanted a freehold rather than a cross lease. And freehold basically means you own all of that property rather than a cross lease. It means that you're sharing it with another property. The reason why we want a freehold is because there's so much more freedom really with a freehold where you can go and potentially subdivide. A few things that we learned though along the way, and to be honest, I think I went into it thinking, oh yes, I know everything from my property degree. And my dad, he's an architect and so he knows everything. But man, I still learned a lot learning about flood zones, learning about if you can actually, you know, further develop a property.

15:37Sometimes you can't. You have to read these things in the limb reports. You have to get the property files. I had no idea about this until recently was that you can have trees that are protected trees on your property. And so we looked at this one house. I fell in love with it. We're like, yep, sweet. We'll knock down that. We'll cut down that tree, pop another little minor dwelling there. But no, you can't. It's protected. So there's all these things that I was like, what? I had no idea about until actually being in that journey. It's kind of annoying how you can feel as though you've got quite a bit of knowledge.

16:07And actually, every single property you look at is an individual problem that needs to be solved or looked at. It's not, oh, OK, cool, I've got it. Every single place, it might be the hill, it might be the landscaping around it, it might be the neighbours, it might be the area. there is just so many factors that make a property valuable or not as valuable. Totally. But the thing is, if you're sitting here listening to this and you're going, well, I don't know. I don't know property. I would say the most important thing, if you're just about to go on your property hunt, is get a team of people around you.

16:40And this is from a lawyer to a mortgage broker, to an insurance broker, to a builder. The cool thing is about lawyers, and this is what I only just learned, and I think it may be the same for all lawyers. But when you're on the kind of house hunting journey, property files, I touched on it very briefly. This here includes some really key parts of a property that you need to read. My goodness, I've heard so many horror stories of people not reading a property file and finding out all these things about their property that they had no idea. These things will be pulled up by your lawyer. So if you've got a lawyer, they usually give you like three kind of free passes, I say, where it's basically like you can submit a property like, hey, lawyers, I'm really keen for this property.

17:25Thoughts? They will review it for free. And my lawyers was three times until they actually started charging you. And we were actually up to the third property, the fourth property, actually. And we finally set it on the fourth one. I think that's a really good piece of advice because really for me, I don't know if I would have bought any properties if I hadn't had people to talk to, whether that was lawyers, whether that was property experts, you just, you have to be unafraid to ask questions and you have to get a little team around you to make it feel less stressful. I wouldn't have bought anything if I hadn't had Pete or others to talk to because it was a super overwhelming process and you don't want to go on.

18:02It's like, it's not as simple as going and buying a shitty skirt that you regret. It's an enormous, perhaps one of the biggest decisions you'll ever make. And it can be amazing. It can be an absolute blunder. So I totally agree. Having people you can ask and talk to is so, so key. One of the most important people in your team is a builder that can do building reports. And this is one thing that I really recommend. If you're just about to go on the house hunting journey and you're like, sweet, I'm going to go buy a property. I would literally have a buffer of like two to three to four, five K of basically miscellaneous that you're never going to see again.

18:38That money is going to go towards building report. then it's also going to go towards the property files. You actually have to pay for the property files, which is crazy that they can't give it to you for free. But one real quick story, if you don't mind, Soph, we were dead set on this one property, absolutely fell in love with it. And we got a builder to come in and he literally said to me, Hannah, there is about$400 ,000 of work on this property externally that you're never going to even like, it's never going to add value. It's in retaining and it's in like driveway repairs. So you're going to waste 400k on this property and you're never going to see it again so that one and a half thousand dollar building report saved us literally millions yeah you have to spend money to make money or avoid spending money it's so yeah it's such a good lesson it's kind of like thinking about buying a car if you bought a car and you didn't get a mechanic to look at it and actually the brakes are totally faulty and it's going to cost you three grand to fix it if you don't get three grand knocked off the asking price of that car, you could end up just so worse off.

19:42So yeah, that's a really good lesson. Oh, it was crazy. And it's funny because I actually know the person that bought the property and I went and talked to him the other day and he looked at me and just shook his head and went like there is hundreds of thousands of dollars of work that needs to be done in this home. And I didn't know. And we watched him at the auction. We were there. We watched him. He paid$500 ,000 more than what we wanted to pay. $500 ,000 plus here to spend another$400 ,000 on extra work. Whoa. Honestly, getting started in property is like the hardest part for most people. It's the first step that can honestly feel the most impossible.

20:18I mean, I bawled my eyes out for, I mean, several times when I was trying to buy my first property. But the good news is you don't have to have it all figured out before you begin. Exactly. A BNZ home loan partner can sit down with you, map out an actual plan, and show you what's genuinely possible where you're at. Click the link in the show notes to book in with a BNZ home loan partner and get started today. I would actually love to touch on the auction piece because this is something that, yeah, a lot of people don't explain. I think auctions feel fun and exciting. And for us, it was that. We went to an auction and actually I did buy my first property via an auction.

20:54But I now realize in hindsight how incredibly rare and actually also dangerous that can be in terms of it's actually a really dodgy way to buy. a house and and when I say dodgy that's people are probably like that's not true it's more just I mean there's so many factors involved even as an example I was looking at a property over here in London and we were thinking about buying we did the numbers what would we buy for what would we want to renovate basically the property went for I was 250 ,000 pounds higher than what we were going to spend oh that's like 500k New Zealand it's so much higher and the thing is it wasn't worth that it really wasn't and when you're at an auction and you're buying or trying to bid against people who are perhaps um first-time buyers or like what people say mom or dad investors the idea that they're not necessarily putting the finances or the investing first lens over that property they just are buying it because it's their perfect home totally and they're so emotional yeah and you bid so much higher than you what you should have if you are just doing it purely for but the thing is my my opinion on buying property is even if you are buying something to live in to love and to create a home like this this flat would have been for us still using that finance layer and investing sort of like layer on top of it I think is just so important because regardless of if it's an emotional purchase, you still don't want to overpay for something just because it's a house you're going to love and live in.

22:27What did losing at auctions actually teach you about buying property? Because you obviously had a few of those experiences before you bought. Can you share the insights from those experiences? Totally. Well, firstly, I think this is one of the biggest misconceptions that people think is that they go, great, I'm pre-approved for X amount of dollars. fabulous I'm going to go to a million different auctions I'm just going to put my hand out and I'm just going to bid bid bid unfortunately that's not how it works you actually need to be pre-approved for every single individual property that you go to auction for it's so admin isn't it it's crazy it's so annoying because you go and you get all excited and then it's almost like trying to turn up to a marathon and you haven't pre-registered and you haven't got your little sign your little like thing your number that you've got to run with you can't just be like well I've trained and I'm fit and I'm ready to go like let me in the race that's amazing i love this came up with it 100 thank you so much that's really good it's powerful no i um there was one property i fell in love with but the bank would not give me money for it they would not approve it and man it was a blessing because i was like begging them going like please give me the money insurance were not giving me insurance another thing another really important thing you really really important you need to call up your insurance company anyone just call up hey i'm think of buying this property.

23:44Here's the address. Will you insure it? And if so, how much? You need to get the approval of the insurance company and then send it over to your bank. They need to see if it's going to be insurable because it may be a property that isn't. There was a property that I fell in love with and I got really emotional about it. I got really attached. However, there was unconsented work and a lot of it. When you say unconsented work, they had essentially gone and added a garage or an extra bedroom. And if you buy a house that has unconsented work, it's almost like inheriting that problem. So in the same way, if you're married to someone and they're in heaps of debt and then they die, you inherit their debt.

24:20It's not, well, they did it, not me. It's your responsibility at that point. And it's also dangerous because there was one carport that was changed into a garage. Because it's unconsented, there's a lot of insurance issues as well. Say if a fire happens and it's in an unconsented laundry or an unconsented bathroom, there's a lot of implications. you don't really want to buy something that's unconsented why the reason is why have they not got it consented because if it's unconsented why don't they just go to the effort and consent it that means there's probably a red flag it probably means it can't be consented for um a lot of the times people just can't be bothered they're like oh i'm just not going to get it consented for however it's a really big red flag when you do see a property that's got unconsented work so highly recommend making sure that you are checking with the real estate agent they will tell you they have a legal obligation to tell you these things.

25:11Another thing that's really important that we came across multiple times is that it's quite sneaky, but if you find an issue with the property, say you hire a builder to come through and do a building report and they find a big issue, the agent is legally obligated to tell everyone about that issue, which is quite good because we found a lot of issues with our properties that we were going to auction for and it meant that an email was sent out to everyone and it was actually publicly listed, hey, one of our potential buyers has found XYZ issues. And the handy thing was, is one property we went to auction for, we didn't get a building report.

25:46Why? Because we heard through the grapevine, someone else got a building report and we knew, a little bit sneaky, we knew that if they got a building report and they paid their$1 ,500, it had to be relayed to us. Sure enough, the morning of the auction, we get a call saying, hey, we've actually found a massive issue with this property. come urgently before the auction, come see it for yourself. And sure enough, they had literally knocked down a wall to show us this massive leak in one of the bathrooms. Whoa. But anyway, let's go back to auctions because this is a really important topic. Auctions in New Zealand are really hard to kind of avoid.

26:20A lot of people say avoid them. Every single one of the properties that we fell in love with went to auction. We went to auction three times. Yeah, we bought this property at auction. we actually bought forward an auction and I want to talk about this as well this is quite a interesting interesting topic when you bring forward an auction it's kind of like you kind of feel like you're playing a board game and you're like oh I've got a one-up if you get pre-approval and you're like actually I really freaking love this property it's like absolutely amazing I'm confident in the amount that I want to spend I think I'm going to offer this amount let's just talk about a one million dollar property like oh my gosh I love it so much I know that this property has only just been listed.

27:01If I bring forward the auction and if I offer the owners$1.1 million, if you offer the owners a good amount of money and they're like, actually, I really want to take this money, you then bring the auction date forward by a significant amount. It's usually like three working days after your offer. So in one instance, on a Monday, the property was listed. I fell in love with it. By Friday, we had put forward a pre-auction offer. Now, usually to get financing, a lot of people need to sell their property. Ah, yeah. And so what they need to do is that they need to sell their property. It's conditional.

27:39The banks have not given them an unconditional offer per se. We then offered an amount of money. They loved it. And so we brought forward the auction, which means we kicked out a whole heap of people that were waiting to sell their house, which is a bit rats. It's a bit sad. But it also meant that you were kind of a one-up because you were like, actually, they're still waiting on a house sale. They don't have pre-approval. We've got pre-approval. We're going to run with it. It's a little bit risky because you could offer them$1.1 million, right? They may have been sitting there going, if I get$800, I'm going to be stoked.

28:13The reserve for the property may have been$800. You've just offered them$1.1. Because this is the thing with an auction. You have no idea. Yeah. You could put your valuing cap on and go, oh, I think it's going to be worth, you know, 1 million, 1.1. But literally they could have happily accepted on auction day in three weeks time, they could have accepted 800. That is such a good point. I don't know if this is the same in New Zealand or what you experienced, but in the UK, they've been putting properties up for way less than what they actually go for because it gets way more interest in the auctions.

28:44So lots of people show up thinking, ah, this is within my budget. And then it goes for like I experienced£250 ,000 more than that. And that's definitely a tactic to get more interest. So it'd be so interesting to know what's the percentage of houses that are up for auction that the reserve is higher versus lower than what they would accept. Oh, 100%. But basically what you're saying is you can bring an auction forward and you were in a position where you could do that. And so there's so many positives because there's lots of different people who may have come to the auction and paid more, but because you bring it forward, they're not able to.

29:19but at the same time, there's a huge amount of risk in the sense that you could overpay for a property because you don't know what the reserve is. And I want to touch on one really important thing. When you go to auction and it hasn't been brought forward, you can start the auction at whatever you want. You could start it at$450 for a million dollar house and people will laugh at you, but you could start it literally wherever. And basically people will just slowly start bidding until you hit reserve. When you bring an auction forward, the amount you have offered is the opening it's on the market which means boom it can sell right then and there that is now the new kind of reserve um so we brought forward an auction um no one really knows who's brought it forward so it's quite interesting you're looking around the room who brought it forward so we're standing there going ha ha ha it was us um and you know you've got these people we did color heaper people we went from i think nine people down to four um different parties we sadly lost out uh when i say sadly no i'm not sad because it meant that we've now got this property but it went heaps more than what we thought.

30:15But bringing forward an auction is really powerful. Funnily enough, the property that I'm currently in, that property that we renovated, was an auction brought forward, not by us. And so that was really stressful being on the other end of having an auction being brought forward. It was a Friday. We viewed the property on Friday morning. Friday afternoon, I get a call saying, hey, I know you've just viewed it. Actually, we've got an offer and this property is going to auction on Tuesday. now the reality of getting pre-approval for a property because remember I only just viewed it on Friday morning to go to the bank to go to insurance that usually takes you know it takes a few days they will try their best to get it through to you because if they know an option it's been brought forward it was the biggest stress ever because you're like oh my gosh this property's been brought forward like we've only just viewed it what's our thoughts on it so we scrambled finally by Tuesday morning we got approval of everything everything was all tick happy days and we went to auction on Tuesday afternoon and we won.

31:13We ended up winning. It was such a low pre-approval offer and my husband ended up bidding against another buyer and they bidded quite a few hundred thousand dollars more than what the pre-auction was paid towards and yeah we ended up winning. So it was quite interesting being on one end where we brought forward an auction we lost but then the other end someone else brought the auction forward and we won it. What were your biggest learnings from that? Would you advise, I guess from the whole you've been prepared for three auctions at this point what would you say the biggest takeaways were and would you approach any differently if you were looking for another property now the biggest learnings from auctions is you need to know exactly the amount that you're going to stop like 100 you're not like oh it's just another cat one one thousand dollars more another five another ten's fine no you need to sit there and you go actually what amount am i walking away we've literally walked away from an auction it was still going we just walked away well you actually left mid auction we left yeah we're like it's it's ridiculous it's literally laughable it was hundreds of thousand dollars more and so we just left we didn't even end up bidding there's so many strategies and um and tactics because it's literally there's a mind game with auctions i'm pretty sure my husband uh won it through a mind game it was amazing so incredible to watch and yeah auctions can be really intense as well so bring someone else along with you my gosh we left those three auctions where we lost just in tea i was in tears i was so distraught really Oh, it was terrible because you really thought, especially the one we brought forward, we were convinced we were going to win it because we were like, we brought it forward massively.

32:40How can these people get financing? And we found out people had to go through third party lending and financing just to get approval to be there at the auction on that day. Another really important thing that I want to touch on before we move on is auctions. You buy unconditionally. Now, really, really quickly, unconditional means the hammer goes down, that property is yours no matter what. You have to have the financing. It's so scary. It means you have to pay. It's so final. 10%. It is. It is. It's yours. Whereas if you have a price by negotiation, it can be a conditional, which means you can go, oh, I'll buy it on condition that X, Y, Z.

33:18So it's really important. You know, when that hammer goes down, that property is yours no matter what. And you need to have the money. I actually would really love to hear what that mind game was that your husband did and how you won. Oh, this is, I think people will love this. So I think one thing is that I never really showed my true cards to the agents as well, because I think if you go, oh gosh, I see this property worth, you know, one point, I'll pay 1.500%. And the agent's sitting there going, well, you know, my buyer only really wants 1.3. Sly, let's get the reserve up there. The agent's going to be like, hey, actually, this person's like confident they're going to pay 1.5.

33:51Let's bump up that reserve. So you don't really show your cards, like, you know, especially to the agent. But then also, you know, you need your agent on your side. however the agent is acting, not for you, for their client. So you also have to bear that in mind as well. They're trying to get the most amount of money for their client. So that's also really important. You can also get a buyer's agent that can help you out. A lot of the auctions I went to, they had buyer's agents bidding for them. And that was really daunting because you had a guy in a suit who was very confident. Now, in terms of the actual auction mind games, this is quite fun, but we held off on bidding at all until we were like we were it was pretty much nearly final the hammer's about to go down and then we started to bid really yeah yeah it was insane people had started throwing around different amounts and it was slowly creeping up at what point did you jump in was it literally like final call or like how did that work so i'm sure we're deep dark secrets here but no so with my husband I was actually there I had landed I landed in Beijing I was in Beijing and I had one hour to get wi-fi in Beijing got wi-fi and I'm sitting there with patchy wi-fi listening and my parents were watching my husband and they said it was the most nerve-wracking thing ever because the hammer's going down to say sold and then he puts his hand up to bid and to enter into the auction and this kind of gives me goosebumps so it was in real life they were in person and then you tuned in online yes yes yeah yeah i'm like shocked did someone tell him to do this or did he was it intuition he's just insane he's just the most incredible person there was actually the guy that obviously put the auction forward and he was he was there there was another guy and they were bidding against each other they were kind of playing a little game but my husband just sat back and just watched and it wasn't until the guy that put the pre-oction offer forward he decided to back out he was like this is a bit too much for me and so it was only left with one guy and the hammer was going once going twice going three times and the hammer's going down and my my husband puts his hand up and he starts to bid did he yell i would have been so stressed out no no no just just hand up and he was very very confident this is um tips that we like we got through agents as well and you gotta be really confident as well we would also like you know We'd dress up nice, we'd go to the auctions and you make sure that you looked like no one's going to beat you.

36:20You look like I've got money. I'm buying this property. Exactly. You have to. That's the thing. That's why everyone wears suits and everything because you want to show like, yeah, I'm going to win this. You should just back out now, pretty much. There is a strategy that if you're like, oh, I've got a lot of playing room here. Say if you're like, I'm literally$100 ,000 less than what my cap was, you could jump quite drastically. so say your first opening like when you're entering into the auction you could actually jump up by like 50k or 60k usually they're jumping in tens and it could be like holy that was a big jump and it's kind of a mindset of like oof okay that was a lot can i but can i even start adding on another 1 000 5 000 10 000 so that's a strategy if you've got a bit of playing room there yeah it also says like i've got a shitload more than this so like we can play this game but i'm gonna win because I've got way more money.

37:11I love this. This is so juicy. Another strategy is, you could be annoying, and this was my strategy, but I don't think we ever really used it. You could be like 861 ,943. Oh my God, that is so classic, Hannah. That's so Hannah. I know, I know. That's so me. No one, everyone's like just racking their brains being like 850. Well, I forgot the whole number. Literally. The poor lady that's sitting there typing them in. Yeah, I think honestly, to sum up everything is act confidently and also stand at the back of the room. Really? And watch everyone. Watch everyone. We didn't do that until the last one.

37:44Also, being on the phone and talking to someone also makes you kind of, I don't know, feel like you're a bit more important. Oh, I like that. So you're sort of like, I'm half here. Yes, exactly. You don't really care. But yes, Soph, I want to hear yours, though. Okay, so we basically got told that there's a really low chance we would win this house. So I had tempered my expectations hugely. And the reason was because it's so hard to win at auction, especially if there's a certain amount that you're willing to pay. because you just have to be so dead ass about it. We just said to each other, we've got to be so strict on this.

38:14So even if it's getting close, it's a no. We have to walk away. So like you left and actually got up and left the auction, this first one that we went to was the only one and it was online. So I had the beauty of not being in person. If I'd been in person, I would have been sweating bullets. I feel much more confident on the phone. And so I was doing it on behalf of me and my friend that I did it with. He was also dialing in from overseas like you were. and then I had Pete who was helping me with the whole process he was also on the phone so I sort of felt like I had my little team of people helping and we discussed it beforehand what was our tactic going to be and what we did was because we had no idea what the asking price was but I knew what our absolute we can't go above price was so we basically started quite a bit lower than where we were going also realized very quickly I was the only one there so I was bidding against the the option yeah so we got there and I we had no idea how many people were going to be registered we tried to find out beforehand but we didn't get told and so they're like and we're bidding for this property and they read it out and I'm kind of like oh my god is this me is this me you know like I was so my whole brain just like shut down it's like I don't know what's happening and then I was like shit this is me okay I think they set the first price out because they knew that I was the only one on the call so I didn't really understand what was happening at first and And then I was like, let's say they sell it at$300.

39:35And I was like,$320. And then they'd be like, cool, we've got$320. We're going to$325. And then we kept going like that for a while. And because I was the only one, the auctioneer sort of pulled me aside. And this guy was like, look, I'm just going to let you know we're really far off the asking price at this point. Like, where do we go from here? And I was like, oh, okay, I could go to$350. But I was taking the approach of I don't have a shit ton of money here. And I'm not going to be going way above. so like I could go to 350 and he and I basically what I got out of the guy was he said look there's no way he's going to go for any lower than 400 so like we're going to have to get closer to the 400 mark essentially what that told me was okay 400 is probably the reserve and he's not going to go lower than that but I didn't want to show my cards that like that was really easy for me to get to 400 so I was essentially like okay I could do 380 and they were like look yeah cool we can say 380 but like I don't know if that's gonna go anywhere and I was like okay well like 390 you know he was like yeah um look I'm we're gonna have to probably get it to 400 and I was like okay well like I could get it to 400 but that's that's kind of as high as I can go so I just I don't want to and I said look I'm I I don't want them to sell for less than they they want to but if it's going to be much higher than that I'm just being really honest like I'm gonna have to tap out so I was playing the game a bit by making it seem like I was at my absolute limit at that point but the reason I did that was because they needed to feel like they were getting something out of me and I needed to feel like I was giving something back and then anyway I ended up being like okay like you know I could go to 405 or whatever the number was and he was like cool 405 final offer going once twice sold and then we got it and I was like oh my god we got it we got it for less than what we wanted wow amazing it meant that the money that we had sort of in that buffer could go towards the renovation because that was the whole approach for us was like we need to buy well and buying well means we have to be under this amount but i wanted to know from you like using these almost tactics it's a game but like the guy who was selling it he'd owned it for 30 years and he bought it for something like 40 000 like it was crazy how long he'd held it for and it was insane the return that he'd had on that over that time But then I went into this massive guilt trip spiral.

41:53I was like, this could have been his total retirement money. And here I was playing so hardball. And I don't know, I just went down the spiral feeling really guilty about it. I don't know if you had experience with or how you sort of reconciled from a moral standpoint what is right and fair. I think honestly it is a give and take really. And I think your strategy is the perfect strategy when an auction doesn't sell. It's already on the market, which means it's about to sell. So for your case, that's actually the perfect strategy is going, hey, like you don't want to show your cards and be too confident because they're going to, the auctioneer will know, oh, you've actually got heaps more money and they're trying to get their client a bit more money as well.

42:32You don't know their circumstances as well. They may be absolutely desperate. They have to sell today. Otherwise, if they can't sell for another few weeks, they're going to be in more debt. It is very hard, I think, morally. But in terms of our circumstances, it was already, you know, the reserve had been met, which means they were just cheering every single bid that we put our hand up for. They weren't worse off. They were much better off. So, you know, the people that we bought this house from were stoked that we paid$150 ,000 more than what they accepted because they thought when they accepted it, they took on, I guess, the risk that no one else was going to bid, that that could have been the amount of money that they would have accepted.

43:12So they were happy. So I guess I didn't experience personally, you know, what you went through, which I can imagine is also really difficult from that kind of moral perspective. Before we wrap up, one of the things that someone said to me to make me feel better about the auction that I won was also remember they don't have to accept it. Like someone doesn't have to accept your offer. If they wanted more than that, they could have decided not to accept. So there is, yes, there's a game and yes, there's morals that come into it. But ultimately it's like selling shares or selling anything. There's always a buyer on one side and a seller on the other.

43:43Every time you sell something, there's a different intention or someone's getting something different. And you kind of have to do what's best for you and be comfortable with that rather than then also lump yourself with thinking about the person on the other side of the transaction because it's just too much. I was just going to say, auctions are an absolute beast, but stay strong, though, and know exactly how much is your cap and your limit as well. learn about these different strategies. And yeah, there's so much more that we can talk about. So I think these are the perfect podcasts. I remember I listened to so many, I even listened to so many of the curved ones as well, when I was going through the process of buying, because I was just hungry to learn more, learn more about tips and tricks, learn more about what to look out for.

44:25There are so many things that we can talk about. So I think definitely, let's have another conversation so we can really elaborate more on these tips and tricks. Before we wrap up this podcast, I would love to throw back to you, Hannah, and say if you were to say there's three key foundational learnings from this conversation that you hope people remember, what would they be? I think the best one that we talked about quite a bit was having a really good team around you. Those people are so key because they could actually save you so much money. So number one, have a really good team around you.

44:54Number two, have some buffer money. Have some money that you're like, you know what, I am actually going to spend this money on a property that I'm maybe not even any win. So make sure you have some buffer money. That's really important. And I think the third one, which was so much fun that we got to talk about this today, was auction tips and strategies. Like learn the strategy that's going to work for you. Re-listen back to this podcast over and over again. Yeah, no, I've loved this conversation. Thank you, Hannah. I actually just think you're one of the few people that I almost feel like I could jump on this podcast with zero prep and still learn so much.

45:26Yeah, the energy that you bring to these conversations is unmatched. So thank you. And we will do another. Totally. And stay tuned for how I blew my renovation budget massively, despite being a budgeting girl and my tips and tricks. My gosh, spent nearly$250 ,000 when I thought it was going to be$100 ,000. So make sure you definitely listen to the next podcast because it's going to be a wild and wacky one. Thanks so much for listening to another episode of The Property Podcast. If you've got something out of this one, hit follow wherever you're listening so you never in this a future episode. And if this one's got you thinking, okay, but what do I actually do now?

46:03That is completely normal. Most people go back and forth for a while before they take the next step to buy something. But you don't have to figure it out alone either. And that's the best bit. BNZ have home loan partners who do this every day and can support you through every stage of the home buying journey. You can book in for a chat. There's no pressure. You can just talk it through. And sometimes one conversation is what actually turns thinking about it into actually doing something. We're so thankful to BNZ for helping empower this property podcast so that people like you can feel a bit more confident in taking their next step.

46:32Okay, quickly, the Curve was created to empower and educate you about investing, but we are not financial advisors. Our platform exists for educational purposes only, and it doesn't provide personalized investing advice for your individual needs and should not be relied upon to make an investment or financial decision. And always remember to do your own research before making any investment or financial decision. We're here for any knowledge and support you need, but the final call is always yours. And thanks for being here. You got this. Yeah, we know you got this.