Nov 30, 2023
The Cook government introduced legislation into the parliament this week that seeks to make sweeping changes to the Residential Tenancies Act that favour tenants. Assuming these changes pass into law the following key changes will impact residential tenancies: Tenants will be allowed to keep pets and the property owner will only be able to refuse in certain circumstances. Tenants will be able to make minor modifications to the property without permission from the owner. Rent increases are limited to once annually. The process of bond disposals can be commenced by either tenant or landlord. Disputes will mostly be heard by the Commissioner of Consumer Protection rather than the Magistrate’s Court. Rent bidding will be banned. Overall, the changes are moderate and align with tenancies laws in other states and territories. Importantly, the changes stop short of prohibiting ‘without grounds terminations’, a silly phrase used to describe circumstances where a tenant requests a further lease term after the end of a fixed term and the landlord refuses without giving a reason. REIWA conducted a survey into this particular element of the tenancy laws with an astonishing 61 percent of the 6,000-odd landlords surveyed saying they’d ‘consider selling’ the property if ‘without grounds terminations’ were prohibited. Given a fixed term lease has a clear end date, neither party should anticipate that an additional lease or reversion to a ‘periodic lease’ is assured. You don’t have to give a reason to end a fixed term agreement in any other circumstance, even a marriage! At a time where supply of rental homes are at crisis point across Australia, new laws that actively undermine the encouragement of supply risks further disincentivising the main cohort of property investors; unsophisticated, family investors the majority of whom own one additional property other than their home. Hopefully, investors consider the incoming changes reasonable and will continue to add to the rental pool by investing in residential real estate. Given family investors provide 9 in every 10 rentals in WA, we cannot afford to discourage them.
Nov 30, 2023
Giving at Christmas The National Hotel and St. Patrick’s Community Support Centre held their legendary Long Table Christmas Dinner on Saturday 24th November and raised much-need funds to assist those without a place to call home. A shout-out to Karl and Janine Bullers for their inspiration. You see evidence of homelessness everywhere every day. I hear that Fremantle has a resident population of about 120 rough sleepers. Such is the confronting nature of homelessness that some of us opine that those in authority must ‘move them on’, put them elsewhere to make our lives less confronted. But this just locates the problem elsewhere. Family break-down, domestic and family violence, job-loss, addiction and untreated mental health issues all contribute to homelessness and most of us can’t imagine ever being amongst their number. It has been said we’re all a handful of catastrophic life events away from homelessness. It is not an incurable disease; it is rarely a choice and it can be overcome. There are dozens of organisations whose sole purpose is to help transition the homeless back into secure, affordable housing. Local heroes like St Pat’s do extraordinarily good work in supporting Fremantle’s homeless. Yet St. Pat’s is constrained by funding, they never have enough beds to house the needy and, amongst many other organisations, can only do so much with their small army of volunteers. REIWA members, through the Community REInvest program provide financial help to the Salvation Army’s various homeless assistance measures. So far, REIWA agents have donated more than $1,200,000. Local agents, Caporn Young, White House and Dethridge Groves support this program and I encourage other REIWA member agencies to join. Current government social housing systems mean eligible applicants can wait up to eight years to get into suitable housing. According to various sources, 60,000 households need social and affordable homes in WA, yet despite the overwhelming need for housing, 1 in 6 homes nationally remain underutilised. The state government has pledged to build 3300 more social homes within the next four year which should help but this is really only playing catch up. There are already 8,000 fewer privately owned investment homes in market now than a year ago. For every government-supplied home, mum and dad investors supply ten. Part of the solution to finding affordable homes for those on struggle street is to incentivise these modest investors. How about removing stamp duty for those that commit to buying affordable rental properties or guaranteeing attractive rent returns in exchange for providing affordable rents. Perhaps early access to superannuation with guaranteed buy-back at pre-determined returns into the future. The great work of benevolent groups is laudable, but investors need more encouragement in solving homelessness.
Nov 30, 2023
Why Auction my Property? With property listings across the Perth metropolitan area dropping below 5,000 whilst property transactions tack 25 percent above the five-year average, there’s little doubt that the current ‘sellers’ market’ conditions are likely to prevail for some time. With strong demand for quality homes our most popular method of sale, private treaty, normally attracts multiple offers and because buyers are making offers ‘blind’, it is possible to have a large gap between the best offer and the one second in line. The auction process is different, of course, with buyers unlikely to bid much above a competing buyer. It is reasonable to conclude, therefore, that selling by private treaty could deliver superior outcomes than an auction in the current market. But this is not necessarily the case. In such a strong market, buyers in open bidding competition know precisely what they need to pay to prevail at auction. With private treaty, buyers will often hold back from their maximum price hopeful they’ll get a chance to further negotiate with the seller. The seller may choose to accept the best offer, perhaps unsure if they’ve extracted the best price. At auction, the seller knows they’ve extracted the best possible price from those bidding in open competition once past the reserve. Other benefits to sellers include a cash, usually unconditional contract at auction, a settlement period that suits their needs, a healthy deposit and the delivery of what is the very definition of fair market value. The “no price” marketing strategy in the lead up to the auction day is also beneficial as it captures all possible buyers, including those that may not otherwise consider the property if on the market at a fixed price by private treaty. The “start low, end high” nature of auctions also discharges agents’ fiduciary responsibility of obtaining the highest possible price. The auction process also “shakes the buyer tree” and reveals all possible buyers active in the market. Once past the reserve price, a skilled auctioneer will extract the best possible outcome and if two or more competing and motivated bidders are participating, the end result is likely to well exceed the sellers’ expectations. An auction campaign also gives sellers the chance to extract strong offers prior to auction day as some buyers may fear a ‘bidding war’ on the day of auction. And most properties that fail to reach reserve price on the day and pass-in sell in the days following. To give themselves the best possible chance of selling well at auction, sellers ought to set a realistic reserve price and talk to their auctioneer about having some flexibility around the reserve and how this may work on the day. When selling be sure to ask your agent about all the options when coming to market as there’s benefits with all methods of sale, including an auction. It’s a matter of choosing a method that suits your needs and circumstances and agents should be across the details of all options.
Oct 25, 2023
As a junior sales agent many years ago, I lost a listing to a competitor. The seller’s rationale surprised, telling me, “We really like you, Hayden, and the other guy makes my skin crawl, but we reckon he can get us the best price.” The idea there was a disconnect between being a good person and achieving the best market price was difficult to comprehend then as it is today. Thankfully, the two are not mutually exclusive. The Governance Institute of Australia undertakes an annual survey of Australian society’s perceptions of ethics across the major occupational sectors. Unsurprisingly, nurses, veterinarians, doctors, teachers, ambulance and fire services all rank in the top ten of ethical occupations. The bottom ten are made up of lawyers, politicians, senior executives and fund managers. Real estate agents appear third last with 46 percent of those surveyed suggesting we were ‘somewhat unethical or very unethical’. Remarkably, the militant Construction Forestry Maritime Mining Energy Union ranked higher in ethical behaviour than real estate professional associations. Clearly, the community judge us and those who represent our interests (as President of the REIA that includes me) harshly. With such a poor ethical reputation, it is surprising that many real estate agencies survive as long-standing small businesses. It’s hard to imagine a local restaurant, retail shop or other cottage business that suffered such a poor reputation surviving very long. As a local real estate practitioner and employer, your reputation is everything. Damage your reputation through misconduct in the market and word quickly spreads that you’re untrustworthy. Most local agents enjoy a solid reputation, attract repeat business and have serviced their communities for years. For example, a quick Google search of Fremantle’s top three real estate agencies boasts 418 reviews at an average of 4.6 stars. And ask random folk about real estate agents and the reply is often, “they’re terrible, but mine’s great!”. So, why is there a disconnect between community perception and most users of real estate services? It's noteworthy that during peak COVID in 2020, the ethical standing of agents improved, a result of our sector’s management of rental moratoriums and tricky selling environment. Current market conditions where buyers and tenants are disadvantaged can lead to a perception that agents are acting unethically. Mostly though, it is our fiduciary responsibility to work in our client’s best interest that impacts community perceptions of an agents’ ethical conduct. Being duty bound to achieve the highest possible rent and/or market price for a property in times where supply is tight and demand is high, impacts those on the buying and renting side. It follows that a buyer or tenant can feel ‘forced by the agent’ to pay more and that is perceived as unethical behaviour. Perception or reality, the work of real estate agents requires greater transparency. The community, especially younger people, expects more from us in how we conduct our business. We can find reasons and get defensive about it, but the reality is we need to do more in this space to win the hearts and minds of the communities we serve.
Oct 12, 2023
Real Estate's Role in Housing Supply The Australian Housing and Urban Research Institute's (AHURI) annual conference is a crucial platform for addressing housing and urban planning policies, primarily supported by government funding. Surprisingly, the real estate sector has remained largely on the sidelines of AHURI's efforts. This is somewhat perplexing, considering that real estate represents and plays a pivotal role in approximately 97% of all homes in Australia. Real Estate's Limited Participation In a gathering of roughly 80 speakers at the conference, only a handful of real estate agents, including myself, were in attendance. Instead, the majority of speakers and participants hailed from the not-for-profit social housing sector, dedicated to supporting marginalized Australians who struggle to find stable housing. Housing as a Fundamental Right Stable and sustained shelter is a fundamental human right. Even as the housing market is a capital asset class, every Australian deserves a place to call home. Currently, about a third of Australians own their homes outright, another third hold mortgages, and the remainder rent. It's essential not to forget the approximately 160,000 individuals, as of the last census, who are without a home. The Global Housing Supply Challenge Participating in an international panel discussion on rental markets and systems, a common theme emerged — there's a significant housing supply problem. In the United States, there is an estimated four million home shortfall to meet demand. In Australia, we are projected to be 110,000 homes short within the next year, given the current pace of construction and migration trends. Rental Market Dynamics Our rental market is primarily supplied by ordinary Australians, with the majority owning a single investment property. However, this group of property owners has been facing challenges. Since the peak of COVID-19, investors have had to deal with rental moratoriums, rising mortgage costs, increased maintenance and insurance expenses, substantial changes to tenancy laws, higher land taxes, and criticism from various quarters. Reevaluating Housing Policies There appears to be a shift away from relying heavily on individual investors to supply rental homes. With the current supply crisis, there is an urgent need for housing policies that actively encourage investors. The Role of Government Housing While there's a call for more government housing, these should primarily serve those genuinely unable to participate in the open housing market. It should not be the ambition of ordinary Australians to receive taxpayer-funded housing. Build-to-Rent (BTR) Sector The BTR sector is often considered the "supply saviour." However, it primarily caters to investors looking for appealing returns on investment. They deliver high-end lifestyle rentals in premium locations, but affordability remains a challenge for many. Supporting Property Investors It's imperative to acknowledge the contributions of everyday investors, often labelled as 'mum and dad' or unsophisticated investors. They play a significant role in supplying rental homes in Australia. Let's stop undermining the individuals who provide much-needed homes to the market.
Oct 5, 2023
The current real estate market in Perth is presenting unique challenges for buyers. According to REIWA, there are only 4,895 properties listed on reiwa.com, the lowest number in a decade. This limited supply, combined with increasing demand, is driving up prices and making it tough for buyers to find their ideal family home among the 2,289 available homes. Perth’s current market for available property Comparing REIWA’s report to 5,131 four weeks ago and 8,117 this time last year highlight’s the challenge of purchasing a property due to availability. With further analysis of the 4,895 listings, 1,196 of them are blocks of land and 1,410 are units, making it particularly tough to find an appropriate family home from just 2,289 homes across Perth. Property prices inevitably increasing With supply so constrained whilst demand continues to rise, prices inevitably increase impacting affordability and making buyer conditions especially difficult. No doubt, it is a sellers’ market with these conditions likely to prevail until we can get more supply into the market. Real Estate agents’ buyer databases are bursting at the seams but because we act for the seller, agents will encourage their clients to expose their property to the widest possible market to achieve the highest price possible through competition. A Seller's Market That means a marketing campaign designed to attract as many buyers as possible, leading to dozens of groups through the home and multiple offers made. If buying by private treaty, most agents won’t declare an asking price for fear of adding a ceiling price to the process that could prove below market sentiment – a definite ‘no-no’ when discharging your fiduciary responsibility. This adds to the buyer challenge when competing, fearful of paying too much but not wanting to pay significantly more than the next best offer. Buying in a competitive market Buyers need to be well prepared. Have your finance; if needed, pre-approved and up-to-date, be clear on your preferred settlement date and research your preferred buying areas to gauge likely market values for homes suited to your budget and needs. There is no point thinking you can snag a bargain in this market so if the likely market price is say $1M, don’t think you can buy it for $950,000. Sign up for email alerts on the major portals and when finding something that looks promising, call the agent don’t just email them. Build rapport with the agent; if they like you, they’ll be more inclined to want to help. Ensure you arrive at the first home open early or if you can, try and get an inspection prior. Don’t be disheartened if attending a very busy home open thinking ‘I won’t get this one’ because there will be others thinking the same thing. It is not uncommon to have dozens of buyers through a property, plenty of interest, yet no offers. This ‘groupthink’ mentality can work to your advantage if you’re aware of it. When making your offer, put forward your best offer early in the negotiation, remove unnecessary conditions and propose a generous deposit. In this market, buyers will get very little chance to negotiate hard if competing with others. Tips for Buyers: So, what can buyers do to try and get an advantage in such a competitive environment? Be Well-Prepared: Ensure your financing is pre-approved and up-to-date, determine your preferred settlement date, and research market values in your desired areas. Utilize Email Alerts: Sign up for email alerts on major real estate portals to stay updated on new listings. When you find a promising property, don't hesitate to call the agent, as building rapport can be advantageous. Early Attendance: Arrive early to the first home open and consider requesting an inspection before the open house. Stay Optimistic: Don't be discouraged by crowded open houses. Many potential buyers may attend, but it doesn't guarantee immediate offers. Understanding the “groupthink” mentality can work in your favour. Strong Offer: When making an offer, present your best offer early in the negotiation, minimize unnecessary conditions, and propose a generous deposit. In a competitive market, buyers have limited room for negotiation.
Sep 28, 2023
Selling your home is akin to a first date — those initial moments are crucial. Just as you'd dress to impress and mind your manners, your property should radiate charm and care when it's time to list it for sale. The Power of Small Improvements In the process of getting your property ready for sale, it's often the seemingly minor tasks that hold significant sway. Those "I'll get to it someday" jobs around the house? Now's the time. Building that garden bed, freshening up the front fence, fixing the side gate, or bidding farewell to that old couch are prime examples. These tasks fall into the "small but impactful" category. Why Small Tasks Matter Addressing these minor tasks is essential for achieving a swift sale at the best possible price. Buyers notice these details too. A rusty downpipe, for instance, can appear as a major issue to them, potentially hinting at overall neglect of the property. The Balance of Renovation However, it's crucial to strike a balance. Beware of overcapitalising on costly renovations like bathroom and kitchen upgrades. Depending on your property and location these investments might not yield the desired return. On the other hand, a charming Fremantle cottage could benefit from such improvements due to the strong demand for turnkey properties in popular areas. General Guidelines for Presentation While specific recommendations vary by property and situation, some principles remain universal. A clean, tidy, and well-maintained home is your strongest asset. "Present it like you don't live in it," as one client aptly put it. Key Tips: Neutralise Interiors: Paint over bold wall colours to create a neutral canvas. Declutter: Store away trinkets, family photos, and personal items to create a spacious feel. Clear the Fridge: Remove magnets and children's artwork, maintaining a clean appearance. Consider Stylish Furniture: For vacant properties, renting tasteful furniture can significantly enhance the appeal and expedite the sale. Focus on Paint and Landscaping Don't underestimate the power of a fresh coat of paint and well-kept gardens. These relatively simple improvements can yield a substantial return on investment and attract prospective buyers. Professional Guidance Lastly, consider consulting a qualified home stylist. While it involves an investment, their expertise can be the difference between exceeding your selling price expectations and no sale at all. Property Preparation Checklist In the world of real estate, presentation matters. Before listing your property for sale, consider these essential steps: Minor Repairs: Address any minor repairs and maintenance tasks around the house. Neutralise Interiors: Paint over bold wall colours with neutral tones. Declutter: Remove personal items, trinkets, and excess family photos. Kitchen and Bathroom: Evaluate whether a renovation is warranted, considering the property's location. Landscaping: Ensure the garden is well-kept and attractive. Furniture Staging: For vacant properties, consider renting stylish furniture. Professional Advice: If uncertain, consult a qualified home stylist to optimise the presentation. A well-prepared property stands the best chance of attracting potential buyers and achieving a favourable selling price.
Sep 20, 2023
This week I attended the Australasian Auctioneering Championships, hosted in Auckland. The best auctioneers from across Australia and New Zealand fought it out ‘theatre-style’. An amazing event with the very best auctioneers moving through extraordinarily difficult bidding sequences that, thankfully, auctioneers don’t normally encounter. Christchurch based Ned Allison taking home the 2023 major prize with a stunning call of a very complex bidding sequence. I’m an advocate for the auction process as a method of sale for several reasons. It remains the most transparent selling process with all buyers able to see competing buyers, with the auctioneer bound by an ethical REIWA code of conduct, bringing fairness to the process. Buyers also usually have the time (unless the seller accepts an offer prior to the auction) to view the property several times, undertake all necessary due diligence, and be ready to buy on auction day. The benefits to sellers include cash, an unconditional contract, a settlement period that suits their needs, a healthy deposit, and the delivery of a price that is the definition of fair market value. The “no price” marketing strategy in the lead-up to the auction day is also beneficial as it captures all possible buyers, including those who may not otherwise consider the property if it were on the market at a fixed price by private treaty. the auction process ‘shakes the buyer tree’ In short, the auction process ‘shakes the buyer tree’ and reveals all possible buyers. If the property is being sold under an executorship arrangement, or the market price is difficult to determine, then auction may be the most appropriate method. And of course, let’s not overlook the X-factor an auction brings which, through fierce competition, sometimes delivers an amazing result well above expectations, one that can be hard to replicate with other methods of sale. Auctions may not be for everyone of course, it’s important that Sellers understand the process and feel comfortable with the strategy. Some sellers can sometimes feel under pressure to ‘meet the market’ on the day of auction if the highest bid is below their original reserve price. The lead-up to the auction day can be stressful too with multiple home opens and inspections during the weeks prior. Some buyers remain deterred by the auction process too; either too nervous to bid or unprepared to buy without certain conditions being met, such as finance approval for example. However, more and more these days, many buyers appear to be welcoming the transparency of the auction process over the blind, confidential negotiation of a Private Treaty sale. Be sure to ask your agent about all the options when coming to market, as there are benefits with all methods of sale. It’s a matter of choosing one that suits your needs and circumstances, and agents should offer you that choice and confidently explain your options.