Sydney Real Estate Buyers Agent

Longer holding period

Fred Haggar — Fri, 20 Apr 2012 00:46:12 +0000

Australian home owners are staying put

A noticeable trend in the turnover of Australian homes has more implications than the obvious.

Home owners are owning their property for a longer period than they did 5 years ago.

The definition “Holding Period” used in this topic is simply the difference between when a property is originally bought and when it is sold next.

It is acknowledged there is a difference in the Holding Period between a free standing house and a strata unit. The actual increase of the Holding Period of a house is 1.5 years and 1.0 year for a unit.

The table below averages the increases of both types of property.

Capital City	2011 yrs	2006 yrs	Change yrs
Hobart	7.0	5.1	1.9
Perth	7.1	5.4	1.7
Adelaide	6.5	4.8	1.7
Sydney	8.4	6.8	1.6
Canberra	7.3	5.8	1.5
Brisbane	7.1	5.8	1.3
Darwin	4.5	3.2	1.3
Melbourne	8.9	8.1	0.8
Average	7.1	5.6	1.5

The two main reasons behind this trend I believe are:

• Affordability.

• Slower value growth.

To a lesser extent, the economical turbulence we experienced in the last 3 years contributed somewhat to a sense of “job uncertainty” (despite the fact Australia enjoys one of the lowest unemployment rates in the OECD) resulting in the mindset “let’s wait till things get better”.

Local reasons have also had an impact on the results of individual cities.

Take Melbourne. It has one of the highest rates of stamp duty in the Land. The Holding Period in both 2006 and 2011 is the highest of all the Australian Capital cities.

Property value growth in Hobart, Perth, Adelaide and Sydney was slower during this period than the other capital cities resulting in a higher holding period and well above the national average.

Owners in these cities decided to hold out for a longer period awaiting the desired capital growth to boost their equity. Mind you, some owners’ expectations of capital growth are deemed unrealistic because of their personal expectations.

The implications are numerous, some of which have long term impact.

Construction of new dwellings
Developers equally hold back on developing some of their land holdings, thus reducing the number of homes for sale. This in turn stabilises real estate prices and bar any external influence, pushes the prices up in the ensuing period of time.

Lenders
Less buyers, less borrowers. In this environment, banks (specially the major ones) start to compete strongly for the lending Dollar but not so if their borrowing cost go the other way due to some global financial machinations. In this case, they tend to lend conservatively, which in turn reduces the number of competing buyers of a property which in turn……..

Real Estate agents
With less willing sellers, selling agents face the fact there are less listings, which in turn forces them to compete on fees rather than service – the latter tends to deteriorate quite fast in this environment. On the other hand, selling agents that have kept their heads above water during a buoyant market, pull out of the industry when the going gets tough or sell out to larger firms. Either way, the industry goes through the cyclical alignment of competing real estate agents.

Others that are affected by these implications are the government’s tax revenue, state and local governments (rates revenue), conveyancers, removalists and other service providers who get involved with buyers and sellers of real estate.

On the positive side, the longer the holding period, the better it is for the likes of builders, renovators, extension specialists, hardware stores, furnishings and home ware manufacturers and suppliers, why? Because these stay-put home owners spend their hard-earned money on improving their homes since they have decided to live in it for longer.

Property valuation by one of the big 4 banks

Fred Haggar — Fri, 02 Mar 2012 23:45:08 +0000

We recently acted for a young family to purchase their first home in Sydney NSW.

After researching 93 homes over a 3 months period, we found the one – marketed by one of the biggest real estate agencies in Sydney.

Though their loan application was for less than 80% of the purchase price (exceeding $1,000,000), our clients’ lender (one of the big 4 banks in Australia) decided to conduct a valuation.

We commenced our negotiations with the real estate selling agent and after few days, it appeared our offer was being favourably considered.

Within 24 hours of the valuation being completed and the unconditional approval getting issued by the bank to our clients, we were advised by the real estate selling agent that our current offer was not acceptable anymore. When we asked “why”, we were told the selling price was now $,$$$,$$$ – exactly the amount of loan our clients applied for.

Too much of a coincidence, you might ask? Well we thought so too.

When we enquired from the selling agent “why” this was now their asking price, the answer was “your bank’s valuer told us this is what your clients have applied for”!

Our clients had to decide whether to pay “more” than the fair market price resulting in additional stamp duty and interest if they were to proceed with the purchase, or instruct us to re-start the whole project.

We believe, we understand and we think a relationship between a bank/lawyer/Accountant/Doctor or for that matter any service provider or seller of goods and their customer/client is “personal” and “private” and “confidential”. We feel strongly about this case and conclude the bank and its employees/contractors broke the rules (may be their fiduciary obligations) by disclosing this confidential information to the real estate selling agent consequently weakening our negotiating position on behalf of our clients.

We contacted various government departments (State and Federal) and were advised this matter could be addressed at both levels of Government:

NSW Fair Trading
Clause 19 – item c AND Clause 38 – item 1 in its entirety
read about it

and/or

Office of the Australian Information Commissioner
complaint form

but only if the bank did not respond to a written complaint inclusive of restitution, within 30 days.

Most unprofessional. The bank’s mortgage broker admitted in writing their valuer told the real estate selling agent about our clients’ loan amount AND that he will be escalating this internally so that it doesn’t happen again.

OH! What a relief for our clients!

Asset returns

Fred Haggar — Fri, 27 Jan 2012 23:37:03 +0000

Asset returns for period ending 30 NOV 2011 before tax and fees

Asset class	Quarter	1 year	3 years	5 years	10 years
Direct property	2.2%	9.7%	1.3%	6.1%	9.5%
Overseas fixed income-hedged	1.3%	8.3%	7.5%	8.0%	7.7%
Diversified fixed income	1.3%	8.3%	7.5%	8.0%	7.7%
Emerging market	-5.9%	-17.4%	6.2%	-1.8%	7.3%
Australian small companies	-7.1%	-12.1%	15.0%	-3.6%	7.1%
Inflation linked bonds	3.8%	16.6%	8.4%	6.1%	6.9%
Australian shares-all funds	-3.0%	-6.3%	8.1%	-1.4%	6.6%
Australian fixed income-all funds	2.1%	10.5%	6.5%	7.2%	6.3%
Australian cash	1.2%	5.0%	4.4%	5.5%	5.4%
Global small companies	1.1%	-6.0%	4.3%	-4.9%	1.6%
Listed property-all funds	1.7%	2.2%	-0.5%	-13.6%	1.1%
Overseas shares-all funds	2.7%	-5.2%	-3.9%	-7.2%	-3.3%
Hedged overseas shares	0.8%	2.9%	13.0%	-0.7%
Global property	-2.9%	-7.4%

Sources
Mercer Investment Consulting
BRW 19 Jan 2012

At Property Search 4U, we are regularly asked questions such as:

• What do you think the capital growth rate will be if I buy in suburb A?
• Is the capital growth in suburb B better than suburb C?
• Is the capital growth of a house better than an apartment?
• Where should I invest?
• What should I invest in?
• When do I buy?

These and similar questions do not have a simple answer. Some of the factors to consider are:

• The rationale for buying property (the universal question: Why?).
• Timing of your purchase must be aligned with the objective.
• If borrowing, the ability to service the loan over the next 7-10 years.
• Demographics (current and projected).
• Infra-structure (public transport, schools, universities, shops, hospitals, entertainment, parks).
• State.
• City.
• Region within the city.
• Suburbs within the region.
• Streets within a suburb.
• Type of property.
• Property’s attributes and features.

Rejuvenation through Relocation

Fred Haggar — Tue, 25 Oct 2011 07:15:16 +0000

A business relocation is a major undertaking requiring a collaborative effort. It also presents a great opportunity to communicate positively to both external (clients) and internal (employees) stakeholders.

Project Leader
One person must be in charge. They must have:

enough time to devote to the relocation project;
the ability to be an efficient organiser of people and processes;
experience of setting and working within budgets;
clear communication skills.

Tenants Representative
A competent and knowledgeable agent to find the most suitable property, negotiate the best leasing terms and conditions, submit an effective “Heads of Agreement” and navigate between leasing agents, solicitors, councils and office fit-outs.

Solicitor
Ideally is a real estate specialist to negotiate the details of the lease document to minimise exposure to potential liabilities and advise on the implications of all terms and conditions.

Fit-out contractor
The design and delivery of an efficient office layout – for today as well as tomorrow’s business requirements.

Removalist
A professional company to handle a quick and efficient relocation, minimising both interruption and downtime.

IT and Communication
Engagement of a service provider unless the business has an in-house expertise is important to ensure throughout the relocation process, that the business will be able to fulfill the continuity needs of external (clients) and internal (employees) stakeholders.

Human Resources
Change can be unsettling for some people and this can certainly be the case with a business relocation. Employees’ expectations and concerns need to be managed through regular communicative updates.

Rejuvenation
The relocation also can offer the opportunity to:

develop a document retention policy (in compliance with current statutory regulations) to include off-site storage service thus reducing the current requirement for office space – HUGE savings EVERY year;
clear out old as well as unwanted files and documents, securely;
purge all storage areas of unneeded items prior to moving;
modernise and update office equipment;
review existing suppliers;
maximise the brand and image of the business.

Project
Commencement should be at least 9 months prior to lease expiration. It is vital to allow enough lead-time to increase the amount of leverage between the various options, resulting in substantial overall savings. It is recognised that after labour cost, occupancy is the second biggest.
Regular meetings to be attended by the relocation team EVERY time.

Existing premises:

date of hand-back;
contractual make-good obligations;
list and communicate to all parties associated with the business e.g. staff, customers, suppliers, government (federal, state & council), associations, white/yellow pages, Australia Post, banks, accountants, lawyers, website, stationery and much more.

Review – Commercial Lease

Fred Haggar — Tue, 25 Oct 2011 01:36:33 +0000

Some of the preparatory steps a lessee should consider before renewing a lease:-

1. Establish a property strategy with a reasonable time to implement it. Do not wait until the last 3 or 4 months before the lease expires to consider the affects of your strategy.

2. Assess the impending tangible and intangible costs to relocate. Tangible costs would include making good current premises, office fit-out, IT structuring, staff dislocation plus a myriad of other costs. Intangible cost in the main would be the impact on customers.

3. Ask yourself some hard questions including:

Do I need the space I am currently leasing?
Should it be more?
Can it be less?
Can I reduce space used to store documents by outsourcing to an off-site document storage facility?

4. Do not depend on your existing lease option (if you still have one).

5. Establish a fair market rental for your premises. Research, research and research the market’s factors:

Location.
The Dollars per m2.
The type of outgoings (statutory and operating) and their cost per m2.
Total size of the premises.
Productivity per m2.
Zoning.
Use of premises.
Condition.
Style.
Transport.

Now you are in a position to renegotiate your lease knowing with confidence what your options are.

Buying property in NSW

Fred Haggar — Mon, 29 Aug 2011 05:05:16 +0000

The standard “special conditions” in a NSW real estate contract of sale unlike the rest of Australia are clearly biased towards the vendor . The purchaser in fact is in a “no man land” situation and that is why I feel real estate buyers in NSW are penalised.

Example:

The purchaser requiring settlement on a specific date and includes it as a condition in their offer.

The vendor agrees to the condition in writing.

The exchange proceeds with a 66W Certificate (waiving the purchaser’s entitlement to a cooling-off period).

One business day before the agreed settlement date, the vendor writes to the purchaser stating they cannot settle as agreed.

Other than serving a “14 day notice to complete” on the vendor, there is not much else the purchaser could do. Pulling out of the contract would cost the purchaser their deposit and possibly more if the vendor elects to pursue their expenses and costs including chargeable interest per each day of the dispute.

What penalties/costs would be incurred by the vendor if they rescind on the contract? Nothing!

Months of searching for the right property are wasted. The purchaser now have to start all over again, not to mention having to re-apply for finance, and Thousands of Dollars of expenses incurred in the process: legal, pest, building and strata inspections and other due-diligence reports.

There might be some rationale behind this one-sided approach to penalties etc… being if settlement is delayed through the fault of a purchaser then the vendor is likely to incur additional interest on their existing home loan. The corollary to this is that a purchaser does not incur the same additional interest because their home loan has not been drawn down until the actual settlement.

This one-sided approach does not take into consideration the vendor might not have a home loan nor the possibility the purchaser is renting while seeking to find a new home.

What do I think is required to bring real estate laws in NSW to the 21st Century?

Treat the purchaser as equal to the vendor.

A long shot but in the meantime, if settlement date is absolutely critical to the purchaser’s needs, they:

Should insert a “special condition” in the contract requiring the vendor to pay the purchaser similar penalties that would have otherwise been paid by the purchaser if they do not settle as agreed;

Should insert a “special condition” in the contract whereby they have the option to rescind on the contract without any penalties and be refunded the full deposit should the vendor not settle as agreed and after having being served with a 14 day “notice to complete”.

Land tax

Fred Haggar — Fri, 05 Aug 2011 07:43:17 +0000

As a buyers agent engaged by investors to locate and buy suitable properties for them, we often ask the question “will land tax affect your decision to invest”?

While buyers budget their buying costs, interest payments, property management fees, council rates, water, strata levies and maintenance, there remains one other and sometimes ignored cost that investors do not budget for, namely the NSW land tax also referred to as investment property tax.

Australian land tax began back in 1910, when a land tax was introduced by the Commonwealth Government.

Times have changed, yet most Australian state governments are still collecting this tax despite the changed circumstances from its original intentions.

NSW investors need to be aware of the possible applicable land tax when buying property.

Land tax is calculated on the combined value of all taxable unimproved land you own, above the current threshold. This includes land owned jointly with another party.

Naturally, any purchaser of NSW real estate should be seeking advice from their accountant, legal advisor and/or financial planner or at least visit the office of state revenue site.

When considering ongoing property costs, land tax needs to be factored in and planned for, especially if the investor is planning to purchase more real estate in the future.

Relocating your business – Services

Fred Haggar — Fri, 05 Aug 2011 06:34:42 +0000

Some of the services you need when relocating your business:-

Relocation Consulting
Unless the business includes employees experienced in and able to dedicate 100% of their time to the relocation project, the business should consider outsourcing this project – a critical one to the ongoing success of the business.

A consultant will work with you to manage the complexity of the relocation and provide the expertise in technical services and support, necessary to implement the most effective relocation solution for your business.

The following key steps are the basis for planning a relocation:

Review facilities.
Pre-project planning.
Assemble project team.
Define scope of relocation.
Identify special requirements.
Establish master relocation schedule.
Hold regular coordination meetings.
Space planning.
Filing system analysis.
Communication & change management.
Coordinate technology integration.
Select commercial or specialty relocation companies.
Prepare relocation guides.
Staff workshops.
Supervise throughout physical relocation.
Oversee deficiencies and fine-tuning.
Asset management planning.
Assist with facility decommissioning.

Key Benefits

Specific expertise in relocation management.
Single point of contact for all project coordination.
Seamless project delivery.
Proven methodologies.
Professional staff with diverse skills.
Large and small project experience.

Physical Relocation Management
Management of all aspects of the relocation project is paramount to ensure a seamless transition to the new facility. Drawing on expertise and relocation methodologies, will enable you to coordinate all the relocation-related activities and maintain firm control over the project, ensuring the relocation is managed effectively and delivered on time and within budget.

First-Time Strata Owner

Fred Haggar — Fri, 05 Aug 2011 05:59:08 +0000

Are you a new strata owner? Well here are some terms to get you started:-

What is the Owners’ Corporation?
The corporation is comprised of all the owners in a strata title scheme.

What is the executive committee?
This is a number of owners (or their representatives) who are elected at annual general meetings of the owners corporation to act on behalf of all the owners.

What are the responsibilities of the executive committee?
The committee oversees the daily maintenance, action items approved at annual meetings, liaise with the strata manager regarding the operation of the owners corporation, and where applicable, deal with problems which arise during the year in which they are elected.

How is the amount of levies determined?
Levies are determined by the owners corporation at the Annual General Meeting.

Who issues and collects the payment of the levies notices?
The appointed strata manager, usually quarterly in advance.

What is the sinking fund?
It is a portion of the levies retained to finance major expensive repairs. It is recommended there are sufficient funds to cover standard and unexpected capital expenditure items.

What happens to payment of the levies invoice?
All levy monies are deposited in the scheme’s individual trust account. The owners corporation determine the allocation ratios into:-

Administration Fund to pay for but not limited to regular grounds maintenance, common area facilities, annual Insurance premium of the building, strata manager fees, postage and stationery, minor building repairs, legal fees, pest control (of common grounds), electricity and water usage for common areas, caretaker/on-site Manager (if applicable);

Sinking Fund to pay for but not limited to repainting, roofing replacement, guttering replacement, driveway repairs, fence installation, major plumbing repairs, resurface pool (if applicable), pool/shade cloth installation (if applicable), capital expenditure items such as lift upgrade.

A Buyers Agent and A Selling Agent…Opponents?

Fred Haggar — Fri, 05 Aug 2011 05:18:38 +0000

With more and more real estate buyers using the services of a buyers agent, I often get asked does a selling agent feel about a buyers agent?. Other questions that come up:-

How do selling agents perceive your service?
Do they see you as the enemy?
Will they deal with you?

To the contrary, the professional selling agents actually value our service because they know we are an independent agent and like them we work exclusively for our clients (the buyers) and they also know our clients are qualified buyers and have:-

A concise budget – relevant to their needs.
Defined their property’s specifications – the “Musts” and the “Would like to”.
Short-listed up to 5 suburbs where they want to buy.
Realistic expectations.
A clear understanding of the market conditions and the price range of their planned purchase.
A time frame to buy i.e. made the decision to buy now.
Arranged finance.
Appointed a legal representative.
The ability to organise through their buyers agents all the required due-diligence services.

In a typical situation, hurdles a buyer might encounter which without the services and the support of a buyer’s agent (and which affect the selling agent) include but are not limited to: -

The buyer’s anguish caused by the buyer’s lack of knowledge of the fair market price.
The buyer being told by family and friends “you are paying too much”.
The buyer has to arrange finance.
The buyer gets cold feet due to misinterpreting an inspection or strata report.

When transacting with buyers agents, the selling agents know their written offer is real and once accepted the deal will go through expeditiously to the satisfaction of all parties involved, with less likelihood of it falling over because of the buyer’s agent comprehensive market research, objectivity and emotional detachment.

After all, both types of agents are committed to their respective clients to deliver the optimum result in the shortest period of time, hence they know it is a win-win outcome.