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RealEstateNews
INFORMATION TO HELP YOU WHEN BUYING OR SELLING | Autumn Edition 2016 |
Win/Lose Transaction
Overprice and undersell
BY PETER O’MALLEY - Author of Real Estate Uncovered
In this
Issue:
page 1
Win/Lose Transaction
Overprice and undersell
page 2
Win/Lose Transaction
(continuned)
Free Copy of
“City of Manningham
Location Report”
Letter from Editor
page 3
How Will You Be Paying
Today?
Secure Your Future
page 4
What’s been the best
investment of your life?
In a rising market, vendors can over-price with
minimal risks in doing so. However, in a normal
or falling market, overpricing often leads to
underselling. The opposite is also true: if you
price at market price, you increase the chances
of selling above market price – even if the
market is falling or flat.
Vendors who list above market price
often languish on the market unsold and
inadvertently turn the best buyers off their
home. The vendors have unintentionally set
up a win/lose negotiation – I will only sell if the
buyer overpays. Naturally, many buyers reject
this equation.
Many home buyers are reluctant to step
forward on a home that has gone stale in the
eyes of the market. Home sellers are better off
withdrawing from sale than languishing unsold
and unloved.
If you price at
market price,
you increase the
chances of selling above
market price.
24 hrs • 7 days a week |
Pre-internet, the vendor that deliberately
overpriced and waited for someone to ‘pay my
price’ had fewer downside risks in doing so.
In the digital age, the advertised history is on
record for all time.
Every property now has a digital footprint.
Buyers can easily access the advertised
history of properties. If your home is overpriced
and unsold after a lengthy sales campaign,
the educated buyers have been gifted crucial
information in the negotiation process.
(Continues on page 2)
03 9840 7700 | hudsonbond.com.au
Win/Lose Transaction
(Continued from page 1)
Buyers are more
accepting of genuine
buyer competition than
they are of a vendor who
is blatantly trying to
‘beat the market’.
Understanding the fundamental (fair)
market value of your property is the key
to a timely sale at the best possible price.
Understanding fundamental value for
your primary asset is simple in theory but
LETTER
FROM
EDITOR
Dear Reader,
Welcome to our 2016 autumn edition of
Real Estate News.
The first few months of 2016 have
provided further evidence that the boom
is over, however we are still experiencing
strong prices for many of our properties.
The general commentary on the property
market has been confusing with many
commentators suggesting that the end
of the boom is the start of a crash.
Nothing can be further from the truth.
Strong demand for good properties is still
present. The current market is a normal
market with fewer bidders per property
than there were in the boom times of
2015. I welcome these market conditions
as they are healthier and more sustainable.
The banks continue to play an increasingly
important role in the property market.
Since the introduction of new regulations
by APRA the banks have become more
diligent with tougher lending conditions for
residential investments and developments.
The recent move by the ECB (European
Central Bank) to drop interest rates
to zero, in what is part of the “global
currency wars”, has pushed the Australian
dollar to higher levels making us less
competitive with our trading partners. If
the dollar remains high the Reserve Bank
of Australia will be forced to lower interest
rates further. If this happens it will surely
fuel the property market again.
Best wishes
Paul Kounnas
Director
challenging in practice. Putting a market
value on something that is emotionally
and financially precious to you is difficult.
The fact that some agents will overquote
in an attempt to buy the listing, combined
with normal market movements, makes
the task of establishing fair market price
even more challenging.
However, the benefit in establishing fair
market value ensures that you don’t
reject the best buyer or, conversely, jump
at the first (cheeky) offer.
Once you have established fair market
price for your home, you need to ask
whether that is an acceptable price to
you. If it’s not, you may be best served
by not listing on the market at all.
If the market price is one that allows you
to comfortably move on, you can then list
on the market for the highest offer at or
above fair market price. You have set up
a circumstance of a win/win negotiation.
Fair market price often creates buyer
competition. Sellers want to negotiate
but buyers want to buy. The best way
to attract the best buyers is to price
accurately and fairly. This maximises
the number of bidders for your home,
ensuring a win for you and a win for the
buyers, who are in competition against
buyers rather than an overpriced vendor.
Buyers are more accepting of genuine
buyer competition than they are of a
vendor who is blatantly trying to ‘beat
the market’.
A failed campaign can haunt you
in the future.
TERRY RYDER, one of Australia’s
leading real estate authorities and author
of hotspotting.com.au with
a remarkable track record of identifying
the next real estate hotspots, has
published a special report on the City
of Manningham.
For a FREE copy of the “City of
Manningham Location Report”
email [email protected]
and we will send you a copy.
How Will You Be Paying Today?
Finance the new frontier
Cheap finance has powered the booming
property market over the past 3 years.
That’s ‘cheap and readily available’
finance. Expect finance to remain cheap
throughout 2016; just don’t expect it to
be as easily and readily available.
Cashed-up, ready to buy buyers have
been in abundance to the point that
vendors did not even need to entertain
conditional offers. As the banks clamped
down, firstly on investors and then home
buyers in late 2015, the abundance of
cashed-up buyers began to tighten.
Buyers need to be aware that ‘qualifying’
for a home loan on an internet quiz is not
a loan approval; it’s called marketing. This
marketing is simply a ‘lead generator’ for
the respective financial institution.
Buyers are being led to believe that they
have a binding loan offer from a financial
institution, - when in fact they don’t.
If you are dealing with a mortgage
broker on your finance, note that they
are inherently optimistic about attaining
finance. They have to be; that’s their
job. There are two areas of caution
with mortgage brokers. Can they
actually attain the amount of money the
marketing gimmick otherwise known as
a ‘loan calculator’ claimed? Secondly,
can they attain the finance in the required
time frame?
BY PETER O’MALLEY - Author of Real Estate Uncovered
The banks have become slow and
cautious. No amount of harassment from
a mortgage broker is going to see the
banks by-pass proper due diligence.
Sellers need to be aware of non-binding/
subject to finance offers. A subject
to finance offer is not an offer. It’s an
aspiration from the buyer. If you receive
an appealing - ‘offer, subject to finance’.
Keep the bubbly on ice. There is still a
long way to go!
If you receive
an appealing ‘offer, subject
to finance’.
Keep the bubbly
on ice.
There is still a
long way to go!
The end of the boom does not mean that
a market crash has begun. However, it
does mean that the time where dozens
of “cashed-up (ready to sign a contract)
buyers fighting to buy real estate” is
probably over. And that’s a good thing.
The single consistent factor in global
property markets that crashed has
been easy/excess credit sold to buyers
by banks. Sydney and Melbourne were
both recently named in the Demographia
International
Housing
Affordability
Survey for the Top 5 most unaffordable
global property markets.
The fact that our banks are being forced
into prudent lending is a positive, albeit
with some short term jolts.
Before asking the buyer what will
you pay, it’s better to first ask, how will
you pay?
The first few of months of this year
SECURE
YOUR
FUTURE
“Your dreams
don’t work unless
you do”.
John C. Maxwell
have flown by and we are
already well into 2016.
We sincerely hope you are on your way to achieving all of your 2016 goals.
If you plan to sell your home or investment property in 2016, we would love to
help you achieve the highest possible return on your investment.
Although we are well into Autumn, now is the time to get started!
We have buyers ready to pay a high price!
For a free market appraisal and advice on how to achieve
the maximum sales price on your property, contact
Hudson Bond Real Estate today on 03 9840 7700
What’s been the
best investment of your life?
If you’re like most Australians, probably…
Your Family Home!
But, as much as it might make you feel good that it’s gone up in value, so have other homes,
which means it’s hard to ‘cash-out’ unless you downsize – sell and buy a smaller home.
These days, especially in big cities, thousands of people own homes worth more than a
million dollars. But many of them don’t feel like millionaires. Why not? Because if they want
to ‘get’ that million dollars, they have to sell their home. And then they’d be a homeless
millionaire! What’s the point? We all need somewhere to live.
So, is there is a smart solution?
How might a family home improve your financial future? It’s obvious.
Buy another home! As an investment.
Over the years we’ve helped hundreds of families to buy homes that have collectively
increased in value by many millions of dollars.
The good thing about a second family home is that, provided you structure it right, over time,
a tenant pays it off for you. So, even if it didn’t go up much in value – which, based on past
experience is unlikely over time – you should still have a good asset in the years ahead.
If we’ve got you ‘thinking’, come and have a talk to us about real estate in your area, what’s
happened over the past few years and what the future holds for your area. A chat is FREE
and there’s NO OBLIGATION for you to buy anything.
Before you contact us, however, please answer this question.
When you bought your current home what would have happened
if you could have afforded to buy two?
You’d likely to be sitting very pretty today!
Well, have a talk to us today and see what tomorrow might hold for you.
We look forward to meeting you.
03 9840 7700
| hudsonbond.com.au | 632 Doncaster Road, Doncaster VIC 3108
Disclaimer: It is not intended that the information and opinions in this newsletter be treated as advice professional or otherwise. Paul Kounnas and Hudson Bond Real
Estate do not accept any form of liability, be it contractual, tortious or otherwise, for the contents of this newsletter or for any consequences arising from its use or any
reliance placed upon it. The information, opinions and advice contained in this newsletter are of a general nature only and may not be applicable or appropriate to your
specific circumstances. As there are many pitfalls associated with buying and selling real estate it is important to get professional independent advice.