Emily Wallace is the founder of Emily Wallace Buyer’s Advocate, a business that specialises in buyer’s advocacy for first-home buyers. Emily has a wealth of knowledge in buyer’s advocacy, and is passionate about helping make the process accessible for everyone.
In today’s episode, Emily shares how the recent Reserve Bank changes are impacting property transactions, and just what this means for first-home buyers. Emily also explains the surprising impact that the current rental crisis is having on first-home buyers, and the unique things that are happening as a result.
This episode of The Home Run podcast was brought to you by Lendstreet.
Lendstreet is a leading mortgage broker in Sydney, helping first home buyers achieve their dream first home. They specialise in a wide range of home loans, and they provide free mortgage advice. Speak with a Lendstreet mortgage broker today.
Michael Nasser 0:00
The information contained in this podcast is general in nature and is not to be taken as financial or personal advice. It does not consider your objectives, financial situation, or needs. You should consider whether this information is suitable for you and your personal circumstances before acting on it.
Hi, and welcome to The Home Run, your guide to buying a first home in Australia. On the show, I’ll walk you through the home-buying process from every angle. We cover the steps to take, the pitfalls to avoid, and the answers to all your questions you’ve been dying to ask. No matter what stage you’re at, you’ll learn everything you need to know about buying your first home. I’m your host, Michael Nasser, and I’m a mortgage broker at Lendstreet. And I really love helping people buy their first home.
In our last episode with Kent Lardner, we spoke about some of the trends he was seeing in the market from a data driven perspective. In today’s episode, we’re going to zoom in and see what that looks like on a practical level.
Today, I’m joined by Emily Wallace, the founder of Emily Wallace Buyers Advocate. Emily’s business is a buyer’s advocacy specialising in first home buyers, and she has an excellent podcast called My Millennial Money. In this episode, you’ll hear how the recent Reserve Bank changes that impacting property transactions. What this means for first home buyers, and Emily will share the surprising impact the current rental crisis is having on first home buyers. Let’s get into it. Welcome to the show. Emily, thank you for being on.
Emily Wallace 1:28
Appreciate. Thanks for having me.
Michael Nasser 1:30
We’ll start off by getting to know a little bit about yourself. So tell us a bit about your background, Emily. How did you get to where you are today?
Emily Wallace 1:36
It’s been a bit of a windy road. And I feel like most people do have a windy road to land their career. The short version is my background is actually in education, which is shone through and what I now do, and through a series of events in leaving the corporate world in education recruitment, I landed in the property sector, when I came across a real gap in the market for first home buyers who really needed help, and had gone through the home buying process myself or purchased myself and felt very lost and sad to educate myself, and then educate others on how to do it. So it has been a bit of a windy road to get there in that that’s not the career I initially set out to do. I didn’t sort of finish year 12 And be like, I want to be a buyer’s advocate. But once I learned what it was and how I can help people, that’s where I landed.
Michael Nasser 2:24
And part of why you formed Emily Wallace Buyers Advocate was because you noticed there weren’t any buyers advocates focused on first home buyers. Why do you think first home buyers need specialist support?
Emily Wallace 2:35
I think the very fact that it’s there first is probably the biggest reason how are you supposed to know how to do something you’ve never done before. It’s like anything in life that you do for the first time. I think about people learning to ski like they go into the mountain for the first time to ski they had lesson. When you drive for the first time you have someone walk you through how to use everything in what to do. Whereas it’s very much assumed that you just know how to buy a house and you go solo. So there’s a big gap because first home buyers don’t know what to do. They don’t know what’s normal, or what to expect, and also the sequence of events in the process. So a large majority of our clients are first home buyers who are seeking assistance in doing it for the very first time.
Michael Nasser 3:16
What was the specific reason for first home buyers? I mean, was it just that you could see from your experience at the hand holding? Or was it a passion that you had as well? Or because I guess it’s a first home buyer, you don’t think of a buyer’s agent or a buyer’s advocate. So how did you sort of form that particular conclusion to be first home buyer-focused?
Emily Wallace 3:33
Probably the biggest thing is it’s very like for like demographic, a lot of the people that we assist, millennials might be single, as might be couples, and usually time poor professionals who, whilst they’re a first home buyer, a lot of people have this assumption of first time buyer means young. But in Australia, you know, the average first home buyer ages sitting at about 36, not necessarily old, but also not overly young. So whilst it might not be the first thought they have is to get a buyer’s advocate, those who educate themselves and understand, tend to be the ones that engage someone like us. To be honest, it came to me a lot of the time was just like for like people in my late 20s love property. And that was kind of what I’ve been attracting along the way.
Michael Nasser 4:14
And one thing I know you talk about with your clients is unknown-unknowns. What does that mean, exactly?
Emily Wallace 4:20
It’s back to that thing is like, for the first time, how do you know what to expect? Or how do you know all the terminology? And what is what if you’ve never been familiar with it before? So there are a lot of unknowns. And a lot of people say to us, like we don’t know what we’re supposed to know, in this process. They learn a lot. Even with having an advocate involved you still learn a lot because you have to in the process. And if you’re going solo, you’ve probably done a lot of research to figure out all different types of things depending on the purchase. If it’s apartments, things like combustible cladding or body corporate and funds and all these extra things that you’ve never really had to know before. There are so many mistakes that people can make or just things they simply don’t understand. Because it’s all foreign to them. And there’s a lot to know, when you’re buying a property,
Michael Nasser 5:07
Would there be one common sort of unknown-unknown? Or what would be the biggest unknown-unknown, that you come across in your experience with your clients?
Emily Wallace 5:15
The biggest thing I find is people are unsure about the sequence of events. So what takes place? In what order is on the actual journey? When do I get the contract reviewed? Versus when I pick up the keys? And when’s it sold to me? And what are the actual steps of buying a home? That’s the biggest unknown for a lot of people, they kind of have a rough idea of what looks like, but the sequence in order of events and who’s responsible for what in that process, whether it be the broker, the conveyance or the advocate, that journey roadmap is very foreign to a lot of people.
Michael Nasser 5:47
Yeah. And it’s quite complex as well, isn’t it? The journey isn’t a simple one. And having that guidance there, as a first time buyer, where do I go? What do I do? And so, I can understand that? Do you have any recent success stories that you’ve had with the first home buyer that you can share with us?
Emily Wallace 6:02
Yeah, definitely. We’ve helped a lot recently, one that sort of sticks out to me, is a common kind of client of ours. We had a young, professional, female, single, buying on her own. And she basically called up and said, “Look, I’ve spent three Saturdays looking. I know what I want, but I don’t know how to get it. And I want to be able to find things in addition to what I’m seeing online.” So, we went through the process with her. Called it, a lot of the heavy lifting of actually inspecting, because she’s very busy, very time poor person. And we actually ended up doing something that you didn’t think was possible, which was securing a property prior to auction, with no competition because of how swiftly we acted in the process. Now, you never want to rush, your due diligence. We’re very used to the level of diligence required to purchase and also have the contacts to make things happen swiftly. And what happened was, we placed an offer that was acceptable to the vendor, in a very short time period from when the property went online. And it actually wiped out a lot of competition. The feedback from the agent was people couldn’t get their ducks in a row quick enough, they were anticipating the auction, this happened two weeks prior. And simply by the fact that the vendor was just happy to sign the offer and was all good with it, we won the property for her, which she just wasn’t expecting to happen. So that was a great success story of an on market property that we’re able to secure. And she’s very, very happy,
Michael Nasser 7:22
I guess. And that just demonstrates the experience of the process. And you just knew what to do at what point and I guess for the real estate agent that made life a lot easier when it came to submitting the offer, I’d imagine and that whole process being simple for them. You mentioned education, what type of education do you provide your clients? I mean, is it more or less a? Leave it to me? And we’ll do it all? Or, are you guiding them through the journey and actually educating them? Where do you find you spend most of your time when it comes to education throughout the process?
Emily Wallace 7:50
That’s a great question. It does vary client to client. Probably the biggest thing I spend my time educating upfront is expectations of value and area. So a lot of buyers do come to us, and they’ll say I’ve got $800,000 in this area. And I’ve seen a couple of properties sell a bit higher than that. But I really, you know, only want to spend 800, like do you think it’s possible? And a lot of the education, the beginning is, what does your money actually buy you and what can you realistically expect? In the home buying process, regardless of using an advocate really, you need to understand what your money looks like in the area that you’re looking for. And I say to people, when probably a good tip for listeners is going back through sold data, three months worth of sold data, just look at realestate.com and sought by most recently sold with the parameters of what you’re looking for in the area. And ideally, you’d want to see a minimum of three sold results in the last three months of properties that you would have bought within budget within area had you been ready. I do spend a lot of time on that upfront, because there is no point going through the home buying process. If a lot of people say if you want champagne on a beer budget, like you’ve really got to be realistic about what money buys you. And then from there, it becomes education-specific to the property itself. The area, council planning around that, if it’s a apartment, you know, the detail at the body corporate, does it look good? If not, why not? There’s a lot of nuances in each property that would require education to make an informed purchase. And then from there understanding, you know, what is the dollar value? What should your maximum be in the purchase price of this property? So it’s a continual cycle of education through the whole process.
Michael Nasser 9:32
The current trends and what we’re seeing, so we’re in a bit of an interesting time right now. There’s been some big changes from the Reserve Bank in terms of interest rates, and we’re also in bit of a rental crisis. In your dealings with first home buyers, what trends are you seeing based on these factors?
Emily Wallace 9:46
It’s a really interesting one. Of late and you know, for reference point recording late 2022, recently, I’ve seen a lot of mums and dads buying investment properties that their son or daughter will rent back from them because they simply can’t get into A, the rental market or B, the housing market. So, I’ve actually made a few purchases just in the last couple of weeks where mum and or dad live in a different state. They’re prepared to put their money into a property down in Melbourne, on the preface that looked the argument of apartments as an investment is a whole another conversation. But they are buying typically apartments for their son or daughter to rent back from them. So they’ve got security of where they’re living. I’ve never seen that before. It’s a very interesting trend.
Michael Nasser 10:32
Emily, you’ve mentioned that people are accelerating their buying plans based on the current rental crisis. Can you talk us through that a little bit more?
Emily Wallace 10:39
I think with the way the rental crisis is going at the moment, people are accelerating their buying plans, because they’re looking at what they’re paying in rent per week, which is drastically shifted, it’s really spiked quite quickly. And they’re looking at that dollar value in mortgage repayments per month and going hang on a second, maybe there’s a better way. Or maybe we can actually get in to the housing market and secure our own property. So I have had conversations with a number of prospective buyers who are really elevating that plan to bring forward their home buying goals. Maybe they’re sacrificing a little bit of travel, because everyone all of a sudden wanting to go overseas and travel more or maybe it’s a wedding that they’re slightly delaying in order to have the funds towards the deposit, or a lot of education now around parental guarantors when it comes to loans.
Michael Nasser 11:26
Took the words out of my mouth.
Emily Wallace 11:27
Yeah, we love parental guarantors. So, understanding that that’s even possible. Number one, and then leveraging that number two to get into the market, rather than paying a ludicrous amount in rent seems to be a trend at the moment. And I think that will continue so long as the hype or the rental market, that’ll be well into 2023. And beyond, I think with the rate of immigration, and even just interstate change as well of people changing states.
Michael Nasser 11:54
I guess that points to the rental crisis that you’re noticing down there. And I guess what’s that looking like? What’s that piece sort of shaping up to be at the moment?
Emily Wallace 12:00
Yeah, the rental crisis is pretty bad. It’s basically what the buying market was in late 2020, early 2021, where you had 30 people lining up to get into an open home, and you had multiple offers, people are offering larger amounts of rent, they’re offering longer leases, anything they can do to win the landlord over to take their application. The problem we have, particularly in the inner city of Melbourne, where I’m based, is we’ve got a lot of tourism, returning a lot of immigration returning, even just working holiday visas for a year, and they want somewhere to live for 12 months, you know, a share house or even a shared apartment. And so the competition isn’t just your local little community, it’s actually becoming much bigger than that. And it’s putting a lot of pressure on the rental market.
Michael Nasser 12:45
And I guess in terms of the rate as well, I mean, are you noticing much of a difference there for first home buyers with the rate increase? And what changes are you seeing there?
Yeah, I think the rate increase is there’s two sides to it. Number one is for people who already bought who probably didn’t consider the rate rise as strongly as they should have or when as informed as they should have been. And they’re sort of considering, did we buy the right thing or you know, did we buy at the right time? Not necessarily our clients as such, but more generally, even just in friendship groups and things like that. That’s the conversations I’m hearing. And then the other side is those who are looking to buy, they’re very cautious. They’re very aware that this rate raise could continue. And they’re watching their borrowing capacity, and they’re forecasting further rate rises to make sure they’re not blowing out their budget not spending their maximum, which is very smart. But it is making them more conservative in putting offers forward or putting their auction and limits to a certain point as well. So that’s seen the market even out a little bit which has been actually quite welcomed.
Michael Nasser 13:41
It’s very interesting that people could be accelerating their buying plans at the moment based on like the rental crisis and what the RBA is doing, do you have any tips for first home buyers who may be in this position?
The biggest thing I think if you are pushing to get into the market to beat the whole rental crisis, is understanding if buying a property to reside in is the right decision. So a lot of people don’t necessarily consider rentvesting, where you rent where you live, and you invest where you can afford. Sometimes, particularly capital cities are a great example. Let’s take a ballpark figure of 600,000 that might buy you a two bedroom apartment in Melbourne, but it might buy you a house on land somewhere in Queensland or Adelaide. So I think the question there is what do you actually want to do in goal. A lot of first home buyers, they actually are just living in the property for the first 12 months and then planning on flipping it to an investment so your actual your outcome is an investment property you need to think about that. Others feel they’re forced to buy, and others just haven’t even considered their options. So I think my advice more generally would be, understand your options and understand your limits when it comes to buying a property and don’t buy out of desperation. The rental crisis, yes, it’s difficult, but you can’t just be buying for the sake of the fact you know that’ll do because that will come to hurt you in the long run.
Michael Nasser 15:00
And I guess that’s part of the education piece that you take your clients through.
Emily Wallace 15:03
Yeah, correct. Even at discovery call level where we’re just having a general chitchat about their circumstances, it’s very much, are you aware of rentvesting as a strategy? Are you aware, the long term goals of your property plan? What does this purchase then mean for the next purchase? You know, what does that look like? So, yes, definitely an education piece around the full lifecycle of property.
Michael Nasser 15:23
To speak bit about how the purchases are currently occurring. In recent years, we’ve seen a lot of auctions in Melbourne, where you’re based, is that changing at all? And how are you seeing the sort of the sale type of change from the last, say, 12 months?
Emily Wallace 15:34
For sure. We’re definitely down on stock more generally, which means our percentage of homes on market is lower. And then in that we’re seeing less properties actually go to auction, whether they are scheduled for auction, and they sell prior because vendors are very open to taking offers prior. Now they’re a bit scared about auction day, whereas they used to be so excited because you know, let’s put five or six hands up and let’s see what happens. Now, it’s like, if we’ve only got one or two, and we lose one of the buyers, like how are we going to get a good result? So, the way it shifted is not necessarily a huge reduction in scheduled auction numbers, it’s an increase in property selling prior to an auction that actually can be registered, depending on how the data is collected, it actually can be noted as a private sale result. So, we’re seeing that a bit more. And we’re certainly seeing private sales pop up because they’re less pressure. However, it does blow out the days on market, in some cases, which people can go you know, what’s wrong with it? Why hasn’t it sold? So yeah, it’s a bit of a catch 22 in that strategy, as well, but certainly a lot selling prior to auction.
Michael Nasser 16:34
And you mentioned strategy, too, I think, now more than ever, that strategy is critical in terms of how to approach that negotiation, again, speaks in hand as to why buyer’s agent or why I say buyer’s agent, because I’m based in Sydney, and in Sydney, we say buyer’s agent. But I know in Melbourne buyers advocate is a more broader term, right? So just in case people get confused as to I’m saying, agent, and you’re saying advocate that they are one in the same.
Based on what you’re currently seeing, do you have any predictions for what we might see in the future with the property market down in Melbourne, in particular?
Emily Wallace 17:01
My view on it seems to change a little bit depending on what I’m exposed to. And what I hear and see from all around Melbourne, really. The biggest thing is, we don’t have enough housing, like not only are we in a rental crisis, for not enough housing, you know, there’s 30 applicants to every one property. But then we have an affordability crisis in buying in those areas as well. And there’s not enough stock available on both sides. So, until construction well and truly catches up with the deficit, we kind of have at the moment, I can’t see how the market would fall on its head. Housing is essential shelter is number one, it’s not like it’s gonna go out of fashion because you need it. So it has evened out, construction still needs to catch up a bit more. But I think it’s not going to be a crazy, crazy market in 2023. It’s probably just going to float along and just be sort of as expected. I think this sort of level of what we experienced in October, November, I think we’ll continue through to next year, hopefully a bit more stuck on the go. But I sort of liken it to a domino effect. If a seller doesn’t have anywhere to go, because they can’t buy back into the market, they hold their property, they’re not going to sell. So we need more stock to actually create that momentum that people have somewhere to go and somewhere to buy so that people are enticed to sell. We don’t have that right now.
Michael Nasser 18:20
What does that mean for the trends that you see for first home buyers and what they should be considering for next year? You had started to mention that. But was there anything further that you’re seeing with regards to these trends for first time buyers next year?
Emily Wallace 18:30
I think the biggest thing is there’s a couple of avenues for first home buyers and first home buyer price point territory, like I touched on earlier, it does seem to be the apartment market or even villa units, that sort of thing. Investors selling out of those markets. First home buyers do have an opportunity to get into a certain figure which is great for offloading their investments and to be privy to that. But also being aware of what you can actually have access to in terms of grants and concessions and reductions to gear yourself up for the purchase as well, you might be able to get in sooner than you think. But then on a more wider scale looking at potentially house and land states, if you are someone who’s considering going further with the urban sprawl, I don’t personally look too much into that market. I’m not really across it in depth, because we are more of an inner city operation. But it really seems to be either by upwards, so either the high rise or you buy outwards, which is a sprawl and getting familiar with the lifestyle associated with both of those things will set you up for a good decision.
Michael Nasser 19:28
And I guess you’ve alluded to where your preference would be staying there about the asset selection. And that’s like you mentioned it as a conversation in its own right for yourself, like what’s the more preferred method? Is it up? Or would it be outwards some if you’re a first time buyer, what would you be thinking in that regard?
Emily Wallace 19:43
I think it depends how much location plays into it for you. Obviously, the emphasis on location has changed as our times have changed. And so if you can have more accommodation to compromise on location, then you might find yourself in the sprawl aspect. If your lifestyle is based around the location, then you might have to sacrifice some accommodation in the form of an apartment. But to buy an apartment, well in a boutique block with some sort of appeal rather than a, you know, massive high rise, where you just one of many would always be the preference. But a lot of it comes down to the common debate of location versus accommodation, and you’ve got to work out what matters to you most. And that will direct you one way or the other.
Michael Nasser 20:22
Location versus accommodation? I’ve never heard of that reference. Can you explain that to me slightly? What is that?
Emily Wallace 20:27
To me, there’s two key things in property, it’s the location that has the appeal, or the accommodation that affords you a home that you really love. For some people, if they spend a lot of time at home, they would rather, let’s just say $700,000 buys you an 80-square meter apartment, inner ring of Melbourne. And the same dollar value buys you a five bed, two bath with a land element about 60K’s out of Melbourne. The debate becomes which one is more practical for you? Is that the location of being close to the city and amenity that you really value and therefore you’re willing to sacrifice and just have a two-bedroom apartment? Or, do you actually need large accommodation, the same amount of money, but you’re much further away from amenity or the CBD at the centre point, people start to think which way would my money go? Like how far can I stretch it? And can I get a balance of both? Can I be in the middle ring? Maybe in something that’s like a townhouse for the same sort of price point. It’s a very common debate that people grapple with. I would always personally go for location because you can’t change that. Accommodation. You can work with it. But everyone’s individual in their choice with that.
Michael Nasser 21:31
I’d like to close out today’s conversation by getting two general tips for our listeners. The first one is, if you had a million dollars to buy in Melbourne, where would you buy?
Emily Wallace 21:39
At the moment, I think I would probably try and plant it somewhere around the Chatham higher area. It’s a growth area, it’s still a bit underrated. And that’s ideally where I’d put it at the moment. And if I could something that I could rent out and add value to it’s probably lands you maybe a half block out there. But it would do well. Lots of good schools, lots of shopping centres.
Michael Nasser 22:01
And you mentioned a growth area like I can imagine a grown man, it’s getting bigger, but how would you define a growth area?
Emily Wallace 22:06
In that context growth? I mean, around the growth of the median price point there. It’s been really underrated for a while and I still believe it’s got good growth in it. So more so about the dollar value, there’s not a huge amount of development happening there. It’s more so a recognised area that’s growing.
Michael Nasser 22:20
And last of all, what’s your number one tip for a first home buyer trying to get into the market?
Emily Wallace 22:25
That’s a great question. Probably the biggest thing is don’t start looking without knowing what you have to spend. Seek out a broker get that pre approval. So many people go too soon. And they underprepared. And they get their dream property taken away from them from someone who is prepared and ready to sign that document. So you can never be too prepared, get in touch with a broker or for brokers, I love brokers, and start getting that pre approval underway before you go house hunting.
Michael Nasser 22:54
And I guess that probably brings it back to that success story. You mentioned in the first part of the interview, where you had obviously had that it all been done and you submitted the offer and you’re successful straightaway. And you probably didn’t process broke someone else’s heart who probably wasn’t as prepared as you were at that particular point in time. So great way to wrap up the conversation. If people want to get in touch with you or learn more about you what’s the best way that they can find you.
Emily Wallace 23:15
I’m typical millennial, I’m very active on Instagram. So if you just search Emily Wallace, I’m on there or just search emilywallace.com.au, that’s the website and has all the links to all the external things that I’m part of. The Instagrams probably the main source of truth.
Michael Nasser 23:28
I’ve actually had a look at your Instagram, you got some awesome things on floor plans is how to interpret floor plans or how to determine what’s a good floor plan or not.
Emily Wallace 23:35
We get feedback every Friday for our little floorplan Friday segment. And it’s more just about creating ideas of what do people like and what they don’t like and in a floor plan because it’s always a good concept when you’re thinking about buying a home. I love doing that every week.
Michael Nasser 23:47
Yeah, and I enjoy what I’ve seen that too. And I think it’s great. Thanks for sharing that. No worries. Thank you so much, Emily for your time today and all the insight. It’s been really great having you on today’s show.
Emily Wallace 23:56
My pleasure. Thanks so much for having me.
Michael Nasser 24:00
You’ve been listening to The Home Run, your guide for buying your first home in Australia. This podcast was produced by Lendstreet. Lendstreet is a mortgage broker and home loan specialist that helps first home buyers find the right loan to meet their needs. We know applying for loan can be overwhelming and complex. So we hope guidance support first homebuyers through the process from start to finish. To find out more, head to our website, lendstreet.com.au. We’ve also put a link in the show notes. To make sure you don’t miss an episode of The Home Run, be sure to subscribe to or follow the show in your podcast app. And while you’re there, please leave us a five star review. It really helps others find the show. I’m Michael Nasser, and we’ll be back next episode covering another step on the journey to owning your first home.