Above: Managing Director Simon Cohen and CEO Ben Handler of CohenHandler.
MP: Buyer’s agents typically in Australia have not been prevalent – it’s very much an American concept. How does CH differ from other agencies?
Ben: Buyers agents are growing significantly in Australia, the industry is emerging at a rapid rate. We are a firm growing quickly because of the value add for clients in that we are a boutique agency that offers bespoke services. We come with abundant grass-root connections and industry knowledge, and our ability to source and negotiate on- and off-market property on behalf of the client is invaluable. Unlike a real estate agent, who is paid and aligned with the vendor of a property to get the highest price, we are paid by the purchaser. Our job is to ensure our clients get the most value possible in their acquisition.
Simon: We specialise in all aspects of property acquisition and have a broad client base including investors, owner-occupiers and developers. We provide research-based advisory services as well as sourcing, negotiation, portfolio advice and in-house property management. We cut through competition because of our off-market knowledge and our professional network. A good buyer’s agent will know all the property owners in their local “patch, and so we often will have the inside run on a property before it hits the market. This enables us to undercut price and other agency competition. 50% of our stock is off-market. We typically negotiate on 20 properties a week, and inspect around 60 properties per week, whereas a buyer on their own will only have access to the limited amount of stock listed on the internet through domain.com.au or realestate.com.au. Our research based methodology cuts out competition and fast tracks the buying process ensuring the buyer gets maximized value out of their acquisition.
MP: A good example of this is when CH bought a Vaucluse property off market for a client. Can you give some detail on this?
Simon: Yes, we bought the Vaucluse residential property for $8.5m. The very next day, after the exchange, another buyers agent offered us $9.5m to sell to a client of theirs. We retained the property for our client, but it demonstrates the margin that we can buy and sell at when stock is intelligently sourced and purchased off-market.
MP: Does your clientele demographic vary or do you predominantly service high net worth clients?
Ben: We service high net worth experienced property buyers as well as first homeowners, self-managed superannuation funds, investors and busy professionals who see value in our approach and also just don’t have the time to expand and manage their portfolio themselves.
MP: In servicing a broad demographic are you still able to specialize?
Ben: Absolutely. We have offices in Potts Point, Mosman, and Parramatta and we also service the Sutherland Shire, these are all very different locations in terms of real estate and market trends. We have a developed research-based infrastructure in our offices which enables a unique depth and breadth of specialization. This is a major point of difference as often in Australia buyer’s agents are one-man-bands trying to cover too many geographical locations and lacking the specific, in-depth insight required to have a holistic understanding of one particular area. Our infrastructure really adds significant value to our service offering.
MP: How does having focused expertise in these locations benefit buyers?
Ben: We have a firm understanding of the different trends and investment benefits of each of the Eastern Suburbs, North Shore, Western and Southern Sydney markets, we know which is the most suitable fit for our client’s unique requirements.
One of our clients was making her first investment purchase, we identified a property that was positively geared with a substantial cash flow in a high growth area as a stable platform to launch an investment strategy for a multi direct property portfolio. We identified Harris Park as an area that had been experiencing consistent real capital growth at a margin that outpaced inflation. In 2011, the capital growth of apartments in Sydney metro area was 2.2%, compared with 6.7% for Harris Park; and 2013 it was 10.4% and 14.4% respectively. We sourced the property pre-market and our client was very satisfied with the price and return.
MP: You recently had great success purchasing a property at Darling Point. Can you take us through the details of this purchase?
Simon: The client was a returning patron of CH looking to add to her investment portfolio with a 2-bedroom, sub $1m apartment in Sydney’s East. Covering an area of approximately 1km squared, Darlingpoint is an extremely competitive and tightly held location. After vetting a number of properties, the best value to match the client’s mandate came from two off-market properties, of which the most suitable was selected. With competitive auction prices peaking at $1.25m in this late momentum of 2013, strong negotiation was essential to achieve the investment metrics for the client. The key negotiation tactic was to take the hassle and costs of selling the property away from the vendor’s responsibility, such as advertising fees and inspections, as well as the option for a short settlement. As a result, the property was secured on behalf of the client for $817, 000 before auction. The client was very happy with the result, as our services had enabled her to purchase the property substantially below market value.
MP: CH also offers in-house property management – what are the benefits of this service?
Ben: We essentially work for the client as the portfolio manager. We take the upmost care to ensure as little vacancy as possible, and that if the tenant ceases paying rent, that the client is fully protected. It’s a streamlined service which enables accountability: unlike other agents, we have to be accurate in our rental appraisals when acquiring a property for a client because we’re the ones managing it and having to deliver the forecasts we provide to our clients. The same client who we bought the Darlingpoint property for also enlisted us to manage it for her. Our open inspection for tenancy attracted 60 interested parties and leased for $850 per week which equated to a gross yield of 5.41%.
MP: How financially valuable are CH’s negotiating abilities?
Simon: Its not just negotiation, it’s the integrated services we provide in their entirety that add the most value to a property acquisition. As a buyer’s agency we are able to cut through competition, source off-market stock, work our connections, and considerably undercut costs. Our last purchase was a 3-bedroom terrace in St Peters, a fiercely competitive market. Our client was happy to pay $1, 050, 000 for the property. The agent was ‘under quoting’ at $900. 000, and in our opinion, along with several other agents, it was worth $1, 050, 000 – $1, 075, 000. We informed the agent to have his client at the office as we were coming in with a signed contract. When push came to shove, we verbally offered $950,000 based on their quote price. We then turned up to their office with $982,500 on a signed contract with a 66W. The agent took that into the boardroom with his client. After several minutes he came out and asked me for another $20,000 to do the deal. We asked for the contract back saying that we would not increase the offer, and then he smiled, shook my hand and said, “Congratulations you just bought the property.”
MP: CH had another success story with the recent negotiation on a property in Seaforth. Can you elaborate on that purchase?
Ben: Our client required a 4-bedroom residence with double garage, pool and garden, as well as open plan living. The format was expected to optimize capital growth whilst also being a primary residence. The client was very enthusiastic to review a short-list of off-market properties in the area. Particular off-market stock was pipelined from the strong grass-roots relationships developed with real estate agents in the local area. Despite being off-market, the vendor was preparing for auction, with high expectations due to a similar property across the road a few weeks prior selling for $2.3m. We were able to ascertain a strong interest by the vendor to sell before auction as a negotiation leverage and our bid of $2,050,000 was well received. The vendor’s urgency was driven by the party’s interest to be a competitive bidder at an upcoming auction for another property. It was a very successful transaction.
MP: Clearly CH is a buyer’s service for savvy individuals, do you also service property developers?
Simon: If developers want confidential representation in the market place they will come to us. Also often times we will come across off-market development site opportunities through our network of property owners, which is extremely valuable intel as sites in Sydney are increasingly hard to find.
MP: As well as providing the buy-side service does CH also assist clients to sell?
Simon: Yes, the CH Sales Advisory service is a full turnkey solution for anyone wishing to sell their property. Our service incorporates an independent appraisal of your property to substantiate pricing. We offer sensible, researched advice on the most appropriate marketing and advertising strategy, on selecting the most appropriate selling agent in your area, and advice and representation regarding the negotiation of agent fees. CH will also advise in relation to the choice of Auction or Private Treaty as a method of sale.
MP: Research really seems to be a key aspect of the CH approach, do you provide a service as a stand alone service?
Ben: Rigorous research underpins CH’s expertise and execution strategy. We endeavour to produce and develop market intelligence specifically catered to the direct Australian property buyer. We publish through our website our own Market Guide, “The Buy Side”. Along with publishing CH field reports on monthly purchases and sales, we also upload useful and interesting reading material, such as, ‘Macroeconomics from the Banks’, ‘ The Future of Green Building’, and ‘Purchasing an Apartment to Rent on AirBnb’ – all of which have an impact on the market and influence on our clients’ circumstances and portfolio.
MP: What holds for the future of CH?
Simon: We strive to be Australia’s most innovative and result driven property investment group. We want to grow our brand and services to allow buyers to invest anywhere across the globe. We’re continuing to build a dynamic and positive team of people who think outside the box and drive optimal results. Our agency strives to innovate, embracing and driving change so that we remain agile in the ever-changing market. We love what we do, it’s perpetually stimulating and rewarding, and we’re really excited about CH continuing to grow, in Australia and abroad.
