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Jun 6, 2017
Selling Methods
“What’s this new Open Negotiation all about and is it as “transparent” as the agent claims?” asked a friend of mine considering a property offered for sale using this method of sale. Conceived by some local Perth agents, this relatively new approach to offering a property to the market aims to combine the three common methods of sale typically used in WA; private treaty (for sale and accounting for about 95% of all transactions), auction and tender. It works by inviting buyers to participate at any price and once an initial offer is made, that “base” price becomes the listing price. Buyers submit offers with conditions of their choosing in the lead up to a predetermined date of purchase (a little like a tender) whereby registered buyers then bid for the property either manually via the agent or using a smart bit of tech on their smart phone or device. Buyers are able to make a “take-out” bid (a “happy” price determined by the Seller) at any stage during the proceedings which secures them the property and ends the bidding process. Otherwise, registered buyers simply bid up the price until there’s one buyer left. “Sounds like an auction” I hear you say. The method does require a licensed auctioneer to oversee the process so it is a form of auction, although it does (unlike an auction) allow for each buyer to have pre-agreed different conditions of purchase. Under public auction conditions, the terms of purchase, such as deposit amount and settlement terms, should be the same for all buyers participating. It also differs from the common private treaty “for sale” method of sale by revealing the details of each buyer’s offer to all other participating buyers. Normally, when buyers compete for a property under private treaty, the details of each offer remain confidential, hence the phrase “Transparent or Open Negotiation” used by the proponent of this selling method. There are some advantages of using Open Negotiation including the usually low starting price and the ability for buyers to submit offers with conditions of their choosing. Purists espousing the virtues of the auction method argue that it fails to deliver certainty to the Seller and they do have a point. It could be the winning buyer’s offer that’s subject to finance approval fails to proceed, for example. And it is possible offers are falsified in order to encourage other buyers to participate, but I think that’s unlikely. Auction remains the most pure, transparent method of sale but not all buyers can participate in the process and Open Negotiation neatly fills the gap between a private treaty and auction sale. By Hayden Groves – REIWA President These comments are the writer’s own and do not necessarily reflect the current opinions and policies of the Real Estate Institute of Western Australia
May 15, 2017
Getting Back Your Bond
When taking on a residential tenancy, typically the owner requires the tenant to pay a security bond an amount normally equivalent to four weeks’ rent. The bond must be paid to the government Bond Administrator, a specific government managed trust account. There are severe penalties for those that fail to comply with this provision. An owner who self-managed his properties was recently fined $24,000 for misuse of bond monies. Obviously, the purpose of the bond is to provide the property owner an opportunity to mitigate any losses endured at the hand of the tenant during the tenancy such as damage to the premises or non payment of rent. At the end of the tenancy, either the owner or their agent inspects the property to ensure the property has been left in the same state and condition it was at the commencement of the lease whilst taking into account reasonable fair wear and tear. Often, an outgoing tenant’s view of what constitutes fair depreciation and that of the owner’s differs and disagreement over how the bond is disbursed between them arises. Importantly, if after a bond inspection it is revealed that, for example, the tenant has failed to clean the oven or mow the grass the tenant ought to be given the opportunity to make good. Sometimes, the tenant leaves such items to the owner and is happy to have the costs of making good deducted from their bond. Occasionally however, agreement cannot be reached and the manner in which the bond is disbursed remains in dispute. In such situations the Property Condition Report (PCR) - a mandatory document requisite for each new tenancy - its content agreed to by both landlord and tenant at the start of the lease, is relied upon to determine whether, for example, the carpet was stained during the term of the tenancy. It may have been stained prior but if not noted in the PCR, it is difficult for the tenant to disprove responsibility. Ultimately, the courts decide allocation of bond monies in the event of an unresolved dispute. However, tenants must ensure the PCR is accurate at the commencement of their lease and make every effort to return the property to the owner in the best possible manner at the end of the tenancy in order to guarantee a full refund of the bond. By Hayden Groves – REIWA President These comments are the writer’s own and do not necessarily reflect the current opinions and policies of the Real Estate Institute of Western Australia
Mar 2, 2017
Property Taxes and Pollies
In recent state and federal elections, many of the policies of the two main opposing parties have not been that different. Not so this time around as West Australians prepare to cast their votes on 11th March. Property related taxes have long been the “revenue play-thing” of successive state governments with (once GST revenue is excluded) these taxes contributing about a third of all state income. It is therefore an important income stream for governments responsible in the delivery of essential services. The problem with property taxes is they rise and fall in line with the free market; less sales transactions equals less transfer duty, less investment equals less land tax. With sales transactions less than half that of a decade ago transfer duty income has also halved given property prices have barely changed over the same period. Property investment is also very soft and aggregation rules around land tax coupled with a 35% rise in this tax over the past three years hardly encourages more investment. Property taxes need to be arranged in a manner that encourages mobility in the property market. The Barnett government’s announcement this week to give seniors (those aged over 65) a transfer duty exemption of up to $15,000 for those “right-sizing” their homes is intelligent policy. A substantial blockage in the current arrangement is the high cost of transfer duty for those seniors who are “asset rich and income poor”. Few feel encouraged to move to more appropriate accommodation when the transfer duty burden represents a full years’ pension at a purchase price of $750,000. The policy will bring to market family homes on larger lots more suited to family groups at higher values bringing the government more transfer duty than that lost to the exemption: a win-win policy. Disappointingly, Labor’s plan around property taxes in to introduce an extra tax of 4% to foreign property buyers. The justification for this is that “the east coast does it.” This is lazy, ill-conceived policy that ignores the current state of the Perth property market. The foreign buyer surcharges in the east is in response to red-hot speculative markets in those states and therefore a necessary move to slow those markets. In Perth, this will stifle already weak growth and affect jobs in the construction sector partly reliant on pre-sale commitments from foreign buyers. REIWA is committed to an apolitical approach to property matters and will back the side that develop policies that support home ownership, addresses affordability and encourages housing diversity. If property matters to you, picking a side this election should be easy. By Hayden Groves –REIWA President
Feb 15, 2017
Women in Property
It would be fair to question my credentials on this topic; for obvious reasons. However, all 19 of my staff are women from a variety of backgrounds and of varying ages so I have at least some daily experiences to draw on. Generally speaking, women are fabulous at selling residential real estate and make the best property managers. Women tend to develop a rapport with a property owner from their genuinely empathetic approach and have a better appreciation of the stresses associated with selling or renting a home. In these early exchanges, women also tend to take time to listen to the home owner and feedback advice that is in tune with their property needs. For a long time, real estate practitioners have had a reputation of resorting to unethical behaviours. Thankfully, for a variety of reasons, this has necessarily changed and on the whole agents now enjoy strong endorsement from the broader community for the fine work they do. However, the remnants of these biases float about from time-to-time with such negative perceptions usually targeting male sales representatives who are seen as being prepared to sell their grandmothers for a quid. Such views are almost always born out of ignorance with such stereotypes fast becoming a thing of the past. Yet if any such stigma remains, it is interesting that it doesn’t appear to apply to women real estate practitioners. And perceptions are powerful motivators. There is a perception that women are more trustworthy, more honest and better organised than men; important qualities for a real estate agent. But such perceptions are, of course, a generalisation and cannot be broadly applied to any professional sector. March 8th is International Women’s Day and in part is a celebration of the empowerment of women across society, including the work force. On average, we still pay women less than men to do the same job, although this certainly does not apply to women in real estate who often take the lioness’ share. In fact, the numbers have more women in real estate jobs than men albeit by a narrow margin. So, in anticipation of International Women’s Day, congratulations to all women involved in real estate, may they continue to grow the professionalism of our industry to the benefit of all. By Hayden Groves
Feb 9, 2017
How Not to Choose Your Agent
When the time comes to sell or lease your property, would-be vendors and landlords increasingly look to the internet to help shortlist agents that might meet their needs. Well established methods of choosing your agent such as noting the more active agents in your area by number of signboards, adverts in the Herald, recommendations from friends and relatives or visiting Home Opens to meet agents remain effective methods. In the on-line space, REIWA offers the excellent reiwa.com Agent Finder; an independent, credible source of finding professional agents. Also occupying the portal space are a myriad of commercial operators that purport to “find the best agent near you”. Conducting a Google search of “Real Estate Agents Fremantle” for example will throw up paid for adverts for www.localagentfinder.com.au, www.whichrealestateagent.com.au and www.openagent.com.au. These “intermediaries” claim they can find you the best agent. The truth is they merely run a portal and a call centre whereby they contact local agents offering them a lead for a property listing in exchange for a minimum 20 per cent of their selling fee. The consumer then contacts the participating agents, chooses one from the list and is astonished to find the agent will be paying a referral fee to the intermediary. Suddenly, the vendor’s confidence in their agent, one prepared to give up a portion of their fee to obtain a lead is undermined. Now working for less money, how hard will the agent now work for me? The main problem here is that successful, leading agents (therefore the best ones) don’t need to use them to get business. Why would they? The best agents get business on their merit and are understandably reticent to hand over 20-25% of their commission to an anonymous commercially motivated intermediary for nothing more than a lead. Consumers need to know that in using these sites, you’re simply not getting access to the best agents just the cheapest and most desperate. These commercial intermediaries are not the vendor advocates they purport to be. A consumer that chooses to pay an advocate to properly and genuinely seek out the best agent for their circumstances is, however, perfectly legitimate. By Hayden Groves – REIWA President
Feb 1, 2017
Top 5 questions to ask before making an offer on a property
If you're looking to purchase property in the near future (or even distant future) we wanted to make sure you're making an informed decision. In this light we thought it best to ask our staff what they thought the most important questions to ask were when purchasing a property. The following are dG Real Estate's Top 5 Questions to ask when purchasing real estate. Are all the improvements on the land approved by the local authority? Love the north facing extension on that home you're about to put an offer on? You could be in for a shock when council forces you to tear down your lovely extension because its an unapproved structure. When was the last timber pest inspection undertaken? Termites. What more do we need to say, they’re good at hiding and can undermine the entire structural integrity of the building. To cover all bases when you make an offer include a 'Timber Pest Inspection' condition. What are the neighbours like? Does the young couple on the corner throw a party every other weekend? Does the local park double as a community yahoo hangout? Asking these simple and straightforward questions can be a good indicator of what you’regetting yourself into. Mavis next door might think her trash is treasure, but that won’t help with street aesthetics. Are there any major developments planned for the area you’re looking to buy in? That beautiful garden may not be so enjoyable to sit in once a major highway goes through two doors down. What will remain in the property when sold? All your books won’t be so easy to read when you must store them in a box! Turns out that book case you thought was fixed to the wall was a piece of standalone furniture and followed the sellers out the door to their new home. We hope some of these have got you thinking about your next purchase and hopefully we can be a part of it! - Team dG
Jan 23, 2017
Why “Now” is always a good time to buy
Should history be a useful indicator of the future, the value of the property you live in today will be worth at least double that in ten years’ time. The quintessential Freo limestone semi will go for around $1.5 million, an Arundel Court flat will fetch around over $500,000 and the ‘80’s brick four bedder in Samson will achieve over $1,000,000. The current flat market conditions makes it more difficult to comprehend how these future values might be realised yet, on average, when looking historically, Perth’s property prices rise by 10 per cent each year and values double every seven years. Sure, you need to choose when to buy and, of course, when to sell. A purchase in June 2007 meant paying the median Fremantle house price of $725,000. Seven years later the median was $823,500 and well short of the anticipated growth rate if following the “double every seven years” theory. The problem is that growth is not linear. If you had bought a year earlier in 2006, the median price was substantially less at $530,000. Ten years on, Fremantle’s regional median house price is $783,750 close to 50 per cent higher. Putting these specific numbers aside, the point is that buying and selling property historically shows some pretty impressive capital gains across relatively short periods of time. Simple math shows capital returns looking even better when holding property for fourteen, twenty-one and twenty-eight year periods. Putting these specific numbers aside, the point is that buying and selling property historically shows some pretty impressive capital gains across relatively short periods of time. Simple math shows capital returns looking even better when holding property for fourteen, twenty-one and twenty-eight year periods. With some very competitive fixed term interest rates available from money lenders at the moment and with plenty of choice out there, making the decision to buy property now with a view to holding it for at least seven years is probably a good one. Make sure you contact your local REIWA agent when it is time to sell in 2026, for if history repeats itself you should sell for about double what you pay today.
Aug 17, 2016
REIWA kicks off local discussion on Negative Gearing
The Real Estate Institute of Western Australia has kicked off a campaign to engage with the WA community as proposed changes to negative gearing are debated. In the lead up to the Federal Election, REIWA is seeking the thoughts and opinions of West Australians who use property to help shape their lives a nd secure their future. As part of the campaign, REIWA will share local research and survey results to ensure a balanced conversation on negative gearing. REIWA President Hayden Groves said that the current debate around negative gearing doesn’t focus on the role property plays in the lives of everyday West Australians. "The proposed changes to limit negative gearing to newly built properties will not fully address the issue of housing affordability," said Groves. "Housing affordability can only be solved with a combination of supply levers and planning and development policy reform. "Rather than tinker with negative gearing, we’ll be promoting the need for broader tax reform where the system is simple, fair and efficient. Changing just one part of a very complex system can lead to inefficiencies and distortions. "Over the coming weeks, we’ll be running a series of surveys with members of the WA public to find out what matters to them in regards to property ownership."