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Presented by Chris Greenwood MPRE MSc BEng The Real Estate Market Today

Presented by Chris Greenwood MPRE MSc BEng The Real Estate Market Today

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Presented by

Chris Greenwood MPRE MSc BEng

The Real Estate Market Today

I WILL NOT LIE TO YOU!

Your Property

100 % of the SUCCESS of the sale of your property Mr & Mrs Seller, will be determined by your SERIOUSNESS to sell.

Your Seriousness to Sell

Your seriousness to sell will be determined by 3 factors.

1. PRICE2. TERM3. FEE

The Pricing Pyramid

Overpriced

Market Price

UnderpricedNumerous Buyers

The Right Buyers

No Buyers

Few Buyers

Selling Price

Do’s & Dont’s of the Pricing Pyramid

Pricing to Sell• Marketability is improved by pricing

realistically.• To the buyer price is the most important

negotiating factor.• Price compensates for a property’s shortfalls

and inadequacies.• Demand and not time sells houses – realistic

pricing creates demand• Initial marketing time is crucial.• Buyers buy by comparison and elimination.• Buyers compare price and value for money.• Buyers can easily obtain market related

information and are well informed.

Do’s & Dont’s of the Pricing Pyramid

DO:• Combine a realistic asking price with initial

demand.• Maintain negotiating advantage with realistic

pricing.• Avoid over exposure from unrealistic pricing.

DON’T:• Eliminate buyers by outpricing them.• Chose and agent only on promised price.• Spoil your chances of making good impressions

on buyers by overpricing.

Do’s & Dont’s of the Pricing Pyramid

Over valuation can affect a prospective sale!• Prospective buyers can be lost• Offers are eliminated.• Market activity is reduced.• Property can become ‘stale’ on the market.• Your home may be used by agents to help sell

realistically priced properties.• Your sale may become urgent then what offers do you

accept?• Marketing time and seller inconvenience is extended.

Remember BUYERS BUY BY COMPARING YOUR HOME TO OTHER

PROPERTIES CURRENTLY ON THE MARKET.

Value V Price

• Agents use the term Price of the home.• Its about value not price.• Separate a price from value.• Value is determined by the conditions of the

market place.• Let the property professional's talk with you to

determine the value of your property.• Then we can discuss the price of your property.

1998

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2004

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2011

200

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10% BankNed 10Yr 8.5%6% Inflation12.50%2007 PeakBubble

Compound Growth Rates

Overpaid

R10

00’s

1990 1995 2000 2005 2010 2015 2020 2025 2030

Sanlam 60 Year “ Real Estate”

Double Dip Recession

42 Months

Recovery18 Months

June 2008

June 2009

June 2010

June 2011

June 2012

3 Years

June 2007

Recovery7 – 8 Years90 Months

Double DipSexwale warns about the tough times aheadHuman Settlements Minister Tokyo Sexwale said South Africa could be "headed for another recession".Sexwale told the 12th international housing and home warranty conference at Cape Town's International Convention Centre yesterday that, with South Africa's trading partners Portugal, Italy, Ireland, Greece and Spain in a "huge amount of sovereign debt", a second recession was looming."We hope and we pray that the world does not go back into another recession because we expected that this recession would be a 'V' or a 'U', but it is threatening to be a 'W', " said Sexwale.A W-shaped recession, or "double-dip recession" is one in which an economy experiences a recession, comes out of it, but slides back into recession again.The government has long maintained that South Africa is emerging from its recession, and last month Finance Minister Pravin Gordhan said there was only a 40% chance of a "double-dip recession" happening. But, according to media reports from last weekend's global finance talks in Washington, US, International Monetary Fund managing director Christine Lagarde warned that the global economy was in a "very dangerous place".European financial websites reported yesterday that Greece is more than R3-trillion in debt, much of this owed to European banks, and will probably default on its loan payment in the next three months. The European Financial Stability Facility would then need to find a reported R17-trillion to support the governments of France, Spain, Portugal and Italy as they bailed out their own banks - or the world would face a second recession."It is very frightening to hear world bankers saying that the world economy has entered into a very dangerous phase," Sexwale said."If a bank makes that statement, you have got to sit up because banks are very, very careful in what they say."South Africa and other developing economies were unlikely to recover from a second recession quickly, he warned."Long after industrialised nations in North America, the Eurozone and Asia have left the hospital, many of us will still be lingering in intensive care. There are many developing economies that will not come out of this that easily," he said.He also warned about climate change, and said the US government had to "come on board" the global drive to combat global warming.Calling for a minute of silence for Kenyan environmental activist and Nobel laureate Wangari Maathai, who died on Sunday morning, Sexwale said "cities are threatened"."Cape Town may not be there in the next 100 years, Durban, cities like New York."If we continue to emit negative gases into the sky at this rate, the biggest impact is on human settlements. Whatever we plan, climate change may negate."He also said the government would not be able to build free houses for the poor forever."There has got to be a cut-off date. We are discussing that. But you can't cut off the poor right now, particularly in the current national economic environment. We can't sustain what we are doing for a long time," he said.The private sector would have to contribute, and that was why Sexwale would launch the "each one, settle one" campaign at the Johannesburg Stock Exchange on Thursday.The campaign would ask "captains of industry" to "empty their pockets" to build houses, Sexwale said.

27 September, 2011 The Sunday Times

Consumer Confidence

Consumer confidence levels improved across all income and population groups, reveals the FNB/BER Consumer Confidence Index (CCI) which shows that having slumped from -3 index points during Q4 2012 to a 9 year low of -7 in Q1 2013, the CCI rebounded to +1 in  Q2 2013.Middle and high income consumers are notably more optimistic about the outlook for their household finances and less concerned about the appropriateness of the present time to buy durable goods compared to low income consumers, according to the index.The rise was larger and the actual levels remain higher for middle and high income consumers compared to the low income group (earning less than R2 000 per month).Middle and high income consumers are notably more optimistic about the outlook for their household finances and less concerned about the appropriateness of the present time to buy durable goods compared to low income consumers, according to the index.According to Sizwe Nxedlana, chief economist at FNB, Q2 2013 level of consumer confidence is still well below the post apartheid average of +6 index points, signalling a significant moderation - but not a collapse - in household spending.Nxedlana says the index is typically a good indication of consumers’ willingness to spend or use credit, while disposable income growth and their access to credit determine their ability to spend.“The improvement in the CCI in Q2 2013 suggests an increased willingness among consumers to spend and helps to explain the improvement in retail and car sales in recent months.

08 August 2013

Determining Real Value

• What did you pay.• When did you buy.• How much do you owe.• Bank valuation.• Municipal valuation. N.B. Completed 2007 escalated by 40%

• Comparative Market Analysis. N.B. Consumers no homework

• Replacement costs. N.B. 40% cheaper to buy than build.

• SARS price!• Sellers opinion.• Agents opinion to obtain mandate.• Buyers Highest Price.

Boom and BustThe Real Estate Market

History

Low

Medium

High

20052006

2007

2010

2009

2008

2011

2012

2013

2000

ForeignersBanksSellersAgentsPressBuyersExchange RateMandela’s ReleaseEtcEtc

Sellers expectation in the real estate market

Stock MarketOil PriceCredit ActInterest RateForeignersZimbabweNew Bank LegislationBanks No CashANC Youth LeagueDebt LevelsBlack ListingsIncompetent GovernmentAuctionsEtcEtc

1. Wishing Price2. Asking Pice3. Replacement

Price4. Market Price5. Municipality Roll6. Bank Price7. Credit Act Price8. SARS Price9. CMA = Priced to

SellPrevious 90 Days of Sold Properties

The first offer could only come 180 days later

Second wave of credit crisis = Commercial default.

Negative Equity.

R900k bond = +-R50k net income per month

Recovery?Excessive optimism Excessive optimism

Excessive pessimism

Over Bought

Over Bought

Negative N

ews

Pos

itive

New

s

Some Buying

Credit and Cash Dry Up Bulging Inventories Production Slows Prices Slip A Little Worry Buying Dries up More Lose Confidence Layoffs Begin More Worry Savings Build Put Off Buying

Excessive FearPanic TimeWE ARE HERE

Smart MoneyBuys/ Invests

StatisticsTotal Sales Per Price Band Source – SAPTG October 2011

StatisticsAverage age of ownersKnysna Central Source – SAPTG October 2011

StatisticsGrowth and ActivityAverage Property Price Knysna – Source LIGHTSTONE OCT 2011

StatisticsGrowth and ActivityNumber of Property Sales – Source LIGHTSTONE OCT 2011

StatisticsGrowth and ActivityTotal Value of Property Sales – Source LIGHTSTONE OCT 2011

TERM• Statistics show that the average buyer is stalking

the market for up to 293 days before he or she makes a decision in buying.

• The buyer of today is a highly educated and knowledgeable property purchaser.

• He has all the tools available on Internet to even know more about the property, and area he wants to buy in than the owner or even most of the Agents.

• He is spoilt for choice as Knysna for example has in excess of 700 properties on the Market.

• It is fact that about 87% of people are selling for less than there asking price. In 2004 only about 33% of sellers were not getting what they set out for.

• This is due to the fact that we have extremely knowledgeable buyers in the market place.

FEE• If the rule for buying real estate is Location

Location Location then the rule for hiring an agent is Skill Skill Skill.

• The higher the skill of the agent, the higher the price you will get. The lower the skill the lower the price. Cheap agents get cheap prices that’s the way it is.

• Think of it this way Mr Seller if an Agent is prepared to give his or her money away, how much quicker will they give your money away when they have to negotiate. You see we don’t give our money away and we don’t give yours away either, that’s the way it is.

THANK YOU!