Price your property to move! Price it right, right from day one. - JOHN SDREGAS

Did you know that you have a much better chance of selling your property quickly if you price it to meet the market in the first weeks of the market campaign?

This strategy is much more successful than pricing it on the highest price and hoping that someone might pay that ‘premium’ price.  You should always be careful of an unscrupulous agent promising you an unrealistic price. They may want your sole mandate so they might be telling you what you want to hear.

By overpricing your property you could lose the crucial stage of attracting your genuine buyer in your initial market exposure, you will also help to convince buyers that other fairly priced properties are a better buy, and most importantly you will end up showing the property to the wrong group of buyers.

If your property is worth $1.5m but you decided to put it up at $1.8m, you are now trying to compete against fairly priced properties that are worth close to $1.9m. How can a $1.5m property compare itself against a $1.9mproperty? This is an unfair comparison and naturally your property will not be looked at because it has been shown to the wrong group of buyers- buyers expecting to buy a $1.9m property.

You want to capture the right buyers and interest them in your property, otherwise you may have missed out on a sale.

The three major factors that will determine how your property should be priced are, from the property’s condition, the current real estate market and economy, recent transactions in the area and current properties available for sale.

With a general market slowdown in progress, it is even more important to make sure that you price right from the start. Your benefits are more rewarding and less costly. You’ll have your property sold faster, because it’s exposed to more qualified buyers, your home won’t lose it’s ‘marketability,” you will achieve higher offers because it’s closer to the market value, your property will generate competing offers because it’s well priced and all agents working on your property will be enthusiastic about presenting your home to buyers, because of being priced right.

Don’t miss out on potential buyers due to overpricing your home.  It is too easy to get emotionally involved in the sale of your home. Having a skilled and experienced agent to guide you through a thorough market analysis will help you look at your property realistically and get it priced right from the start!

Auctions And The Three Card Trick - By Peter O'Malley

Public auction involves multiple bidders competing against each other to secure the one item – in this instance residential real estate. This is the simplistic theory of auctions.

In order to get home owners to sign up to an auction, agents use the equivalent of the 3 card trick. They tell home sellers that auction is a 3 phase selling process. You can sell prior to auction, at auction or after auction. It is a normal part of the course to fail at auction and call that a part of the process in determining market price.

The auction system is all about conditioning the seller down to a price where the property sells within the shortest time. Agents in behind closed-door training refer to auctions as “the fastest and best conditioning tool”.

The reason agents push auctions in weak markets is because the transparent bidding process gives the owners a “reality check” if they need it. When the auction publicly stops below the reserve price, the buyers are telling the sellers the price expectation is too high, as opposed to the agent.

The agent’s true motive in selling auction campaigns is because the process works the sellers down in price. If you doubt this, then ask the agent why all auctions start below the reserve price? Less than 50% of auctions achieve the reserve price, causing the seller to pass the property in or drop the reserve price during the auction.

Properties that are passed in at auction then enter phase 3 of the auction process. Any hopes of achieving a high price are dashed as many buyers view properties that fail at auction as damaged goods.

If you sign up to an auction envisioning a crowd in your backyard ferociously competing to secure your home, be aware – your agent may have different ideas. Instead of signing up to an auction, you may have fallen for the 3 card trick.

Cashed up would-be homebuyers continue to proceed with caution

 By Micahel Yardney

We Australians can be an impulsive lot.
Particularly when it comes to home loans and whether we choose to fix interest rates or take our chances with the going variable rate of the day.
More often than not, a large percentage of homeowners jump on the fixed rate wagon when it’s too late; just after the Reserve Bank starts pushing rates up to keep inflation in check.
Recently though, it would seem many mortgage holders are fearful of missing out on the apparent generosity of the banks,  who are offering some enticing fixed rate deals.
According to a recent article in the Sydney Morning Herald, a growing number of homeowners are being lured into fixed rate mortgages despite some analysts predicting we are still in for at least another one, if not two rate cuts over the next six months.
The Australian Bureau of Statistics reports that the number of fixed loans grew from 10.6 per cent to 11.1 per cent prior to last year’s November rate cut.
While mortgage broker AFG reveals that 19.2 per cent of loans they arranged on behalf of clients in December were issued at fixed rates, compared to just 8.2 per cent of their business six months earlier.
So is this a case of strike while the iron’s hot?
According to CommSec economist Savanth Sebastian, “It’s more about ensuring you can purchase a place within your budget and within your limits,” he says.
“While the risks are to the downside [for rates to fall], I think the fixed rate market has already priced in a couple more rate cuts,” he says.
“In addition “even though the Reserve Bank may well cut rates again, the banks need to pass these on.
So the fixed market is looking very attractive, not only do you need a couple more rate cuts [for variable rates to match fixed] but you need it all to be passed on as well to justify where the fixed market is.”
Should you fix?
Indeed, many experts are suggesting that now is a good time to consider fixing your home loan if you prefer the certainty of knowing what your mortgage commitment will be from month to month and the good night’s sleep that goes with such knowledge.
The fact that Aussie home owners are so eager to fix their rates is not surprising really, given the continuing economic uncertainty and what we saw with interest rates rising in quick succession immediately after the 2008 Global Financial Crisis.
“We saw straight after the GFC how rates rose, it certainly would have caught some home buyers that were on the edge in terms of repayments, so at least this way they can sleep easy,” says Sebastian.
Home buyers proceeding with caution.
As for the state of the housing market at present, ABS data reveals that the number of new owner-occupier housing loans rose by 1.4 per cent in November while the value of loans rose by 2.2 per cent.
Interestingly though, would-be buyers are not necessarily racing out to snap up the first property that comes along, with many new home loans not being drawn down by cautious types who simply want to get their finances sorted “just in case”.
No doubt some are concerned about the state of the world economic situation and closer to home, reports of unemployment figures starting to once again rise, but surely people who have the means to buy (and hang onto) a property right now can recognise a buyer’s market when they see one?
People are scared and when people are scared they tend to become paralysed into inaction.
It will be interesting to see what the next round of stats show
With the banks recently raising interest rates out of step with the RBA and increasing uncertainty about further rate cuts, I imagine more borrowers will be fixing a portion of their loans to give themselves some certainty about future cash flows.
I know I’m considering it.
At our upcoming National Property & Economic Updates, award winning finance strategist Rolf Schaefer will be giving his views on what’s ahead for the economy and interest rates – click on here now to get full details and reserve your place

What Will 2012 Hold For Property?

Written by Paul Kounnas 

Confused is the word that best describes the real estate market at the moment – at least as far as the media and many gurus are concerned. There are so many different views on where the market is heading that meaningful analysis seems impossibly hard.
Sure, the market is flat and properties have lost some value in recent months. But that just means there are more buying opportunities.
Despite the worst predictions, in the past year Melbourne dwelling values fell just 5.8% according to the latest RP Data figures. Even though prices may remain flat for a while and some properties could fall further, there’s absolutely no reason to expect a crash as the media would have you believe.
There are only four things that could make our property markets crash: Recession, High Unemployment, High Interest Rates, and Oversupply.
Recession, although a possibility is unlikely in the face of our current resources boom. Rather than high unemployment we are seeing a shortage of skilled labour necessitating an increase in immigration. High interest rates are not going to happen any time soon as we have just had a reduction and may yet see another.
Property oversupply also won’t become a factor as we have a national shortage.
HSBC’s Chief Executive Economist, Paul Bloxham, points out the dwelling price to income ratio has remained stable since 2003 at between 3.5 and 4.5. He is forecasting growth in disposable income per household of around 5% per annum over the next few years on the back of strong employment and wages growth – a pointer house prices will grow at this pace.
The fundamentals for a strong medium and long term market are sound as Australia has a strong economy, full employment, rising wages, affordable interest rates and a growing population.
“Historically property prices go up in small booms, catch their breath and sometimes even drop before moving up again.”
“In reality, potential short term problems only underscore the importance of sticking to the basic rules of property investment. Look for property at the right price, in the right location, with the right rental income.”
“This market provides opportunities below intrinsic value as a hedge against further falls.”

Auctions Get Lower Prices – Peter Lees

Homesellers tempted to auction their homes should remember 4 words AUCTIONS GET LOWER PRICES. Never mind what you read in the papers, auctions are a financial minefield for consumers. Despite the booms in many areas, thousands of home sellers are turning their backs on auctions and benefitting. But there area still thousands of sellers who don’t realize, until it’s too late, what happens to them at auction. They get a LOWER price, that’s what happens. If someone is trying to talk you into selling by auction, then before you sign anything, please read this.

NINE REASONS AUCTIONS

GET LOWER PRICES

1.     THE STARTING PRICE

It seems as if the price goes up at auctions. But that’s only because it starts LOW. It’s like starting the day with a massive hangover and saying that you are going to feel better as the day progresses. That’s not a good reason to get drunk every night. Avoid drinking and avoid the hangover. You start the day in good shape.

2.     RESERVE PRICE

The reserve price is the price at which the home can be sold. It’s the lowest price a seller is prepared to accept and that becomes the central focus of the auction. If you are trying to get the highest price, do NOT make your lowest price the main focus of the sale.

3.     REPELS BUYERS

Research shows that more than 90 percent of buyers do NOT like actions. It makes no sense to use a system of selling disliked by most buyers

4.     INCONVENIENT

One of the BASIC rules of marketing is: make it EASY for people to buy. Auctions do not make it easy. They make it hard. Many buyers see that a home is for auction, and if the date doesn’t suit them, they don’t even bother to enquire. The buyers that are lost in this manner are often buyers who would have paid thousands of dollars more than the auctions final selling price.

5.     BARGAIN HUNTERS

Investors, property dealers and bargain hunters all know that auctions are one of the best places to find cheap deals in real estate. It is well-known that deceased estates and mortgagee sales are often sold for a “song” at auctions. Auction agents try to justify this by saying, “look at the banks and government departments. They use auctions.” But sale is more important than price.

6. COMPARATIVE

If two or more people want to buy the same home, the worst thing you can do, from a negotiation point, is to allow each person to SEE what the other is offering! Instead of offering their highest price, each buyer will only offer a SMALL amount above what the other buyer offered.

7. DECEPTION

To persuade sellers to auction their homes, agents will talk about high prices and then to get buyers to come to the auctions the same agent will talk about low prices. Most times both the seller AND the buyer are deceived. The sellers end up selling for less than they were told they could get, and the buyers often end up paying more than they were told they could pay.

8. SELLS TO THE WRONG MARKET

To attract buyers, agents will market the home by advertising it to “start from” a low price. This is supposed to attract buyers and indeed it does. But it attracts the wrong buyers who want to buy at the LOW price NOT at the price the seller wants. Many of these buyers cant afford to pay much more than the price advertised and so on the day of the auction, there will be a crowd of buyers all wanting to buy at a low price.

9. FAILED AUCTIONS

When a home does not sell at auction – and thousands don’t – it is labeled a “failure’. Buyers think something is wrong with it; and many will offer LOWER prices. Like a wounded animal with vultures circling, failed auctions are easy prey for bargain hunters.

Is Now A Good Time to Buy Property? By Paul Kounnas

Like most people, you're probably confused by the daily bombardment of mixed messages about the state of the property market.

Are you finding it difficult to make sense of the conflicting information?

Well don't. The market is going through a transitional period where some properties will remain stagnant, others will rise and some will fall.

There are no apparent signs of home sellers so desperate to sell that they would give away their properties at a 30% discount, which would then trigger a collapse in the housing market. In Australia there are less than 1% of mortgages in arrears, which is considered low by international standards.

We are also currently seeing the signs that the market is beginning to stabilise after the slowdown we experianced during the past twelve months.

Paul Bloxham, HSBC's Chief economist for Australia and New Zealand, and a former RBA economist, believes that the prospects for the Australian economy are strong. Paul Expects house prices to "track sideways' in the short term and then rise in line wth household disposable income - we expect that housing prices will continue to grow at a modest pace over the next few years. We view the risk of a sharp fall in housing prices as very low."

This is a year of opportunity for the astute property investors, who can see through the maze of mixed messages. They will do very well as they take advantage of long term opportunities presented by the current market.

If you a selling and buying in the same market this is a good time, particularly if you are upsizing.

Can you remember back 10 years ago? How cheap were properties then?

Don't be the one looking back in a few years time saying "I wish I bought back in 2012 when property was cheap."

Old Versus New by David Kerr

If there's one topic property investors rarely agree on, it's what makes a better investment: old or new?
Proponents of buying 'old' argue that established dwellings are typically more affordable and can be renovated to create equity, whereas those buying 'new' argue that this is outperformed by the tax incentives that new properties deliver.

Confused? Here are the arguments for both sides of debate, but remember there is no right or wrong answer, regardless of which corner you stand on! Old and new properties both have distinct, unique advantages and what counts as an investor is that your decision matches your individual strategy and goals.

Reasons to buy New
1. Tax Depreciation
If you're an investor, one of the big advantages of buying a newly constructed property is that you can claim depreciation as a tax-deductible expense. This includes the depreciation assets in the buildings and the cost of the building itself, as well as wear and tear on fixtures and fittings in the property. The newer the property, the higher level of depreciation.

2. Better Quality Tenant
Brand new properties tend to attract a better quality tenant, which means a higher rental income and fewer headaches for the landlord!

3. Less Maintenance
Unlike new homes that require little maintenance, owners of second hand properties are often faced with immediate maintenance issues. The cost of repair in older homes can significantly inflate ongoing expenses.

4. Warranty
As a purchaser of a new property you are protected for a number of years against major building defects by home warranty insurance, which all builders of new homes in Australia are required to carry.

Reasons to buy Old
1. Equity
There is little opportunity to add value to a new home, whereas the investment made in an old home can grow in the future should you choose to renovate or extend.

2. Affordable
It's often said that you get more house for less dollars buying a secondhand home than when buying a new one. For entry level investors, old properties can have the advantage of an affordable price tag.

3. Unique Appeal
Older homes often have great features that can't be replicated in new homes. A well maintained period - style home, for example, will reap rewards in capital growth down the track.

4. Established Sales History
There's little guesswork in buying an established property because you'll be able to trace back the property's appreciation and find out how the suburb has preformed. This can help give you the assurance you need that you're buying a good property.