Harris Partners Real Estate Publication - Issue Sixty Five

9818 2133www.harrispartners.com.au

In this issue of Property News:• What makes a good estate agent?• Suburb Snapshot: Lilyfi eld• Buying off the plan vs existing• Recent Sales

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A good agent will always have the best interests of both the buyer and the seller in mind

Knowing what constitutes a good agent, as both a vendor and purchaser, will assist you in achieving the best outcome for your sale or purchase in a stress free manner. Make no mistake; the wrong agent can turn a stressful situation into a downright dreadful situation. But a good agent can make a stressful situation tolerable and sometimes even enjoyable.

What constitutes a good agent for a seller may not necessarily mean that they would be a good agent for a buyer and vice versa. For example, if an agent is incapable of achieving a buyer’s highest price for a property, the seller’s loss becomes the buyer’s gain. it is therefore very worthwhile identifying separately, what makes a good agent for a seller and what makes a good agent for a buyer.

From a seller’s point of view A good agent will always tell you what

you need to know and not what you want to hear.

Often, this will include the absolute truth about your property and its market value. Whether you do or don’t like what the agent has to say, they possess the courage and fortitude to level with you about the facts.

in some circumstances such as a falling market, the worst thing an agent can do is hold back from telling you the truth. The longer it takes you to move in a falling market the bigger the price drop you need to make in order to catch up to a falling market price.

if you have lots of agents groveling for your business, it can be easy to

overlook that ‘matter of fact, plain talking salesperson’ as not being a good agent. Don’t be fooled by slick talking salespeople because buyers often pull back from them. They think that they are being ‘sold’ a property rather than choosing to ‘buy’ it and this puts them off.

Many people mistakenly think that a good salesperson is a good talker. in reality, a good sales person is a good listener and a great negotiator. The very best agents are great communicators as well. Their communication skills are clear and succinct and they are able to empathise with the home owner when selling their most prized asset. They respond to emails and phone messages promptly. They keep the seller informed about what is happening with buyers at all times.

What makes a good real estate agent?

As a seller and a buyer

Lilyfield

Average House Price $461,199 $769,587 $1,011,249

Average Unit/ Strata Price $381,007 $508,265 $575,095

Sold by Auction 26 26 32

Sold by Private Treaty 104 112 101

Highest House Price $1,000,000 $1,342,500 $1,710,000

Highest Unit/ Strata Price $635,000 $995,000 $1,235,000

2000 2006 2012

Suburb Snapshot

Source: APMDisclaimer Notice: Neither Peter O’Malley, Harris Partners Real Estate, nor Newsletter House Pty Ltd, nor the publishers and editors of articles in this issue, 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. All the information contained in this publication has been provided to us by various parties. We do not accept any responsibility to any person for its accuracy and do no more than pass it on. All interested parties should make and rely upon their own enquires in order to determine whether or not this information is in fact accurate. ©Newsletter House Pty Ltd 2012 Ph: 02 4954 2100 www.newsletterhouse.com

404 Darling Street BALMAiN NSW 2041p: (02) 9818 2133 f: (02) 9810 6432e: info@harrispartners.com.au w: www.harrispartners.com.au

Buy now without putting any money down, profit later… So goes the pitch for buying real estate “Off the Plan”

Putting your name down against an apartment or townhouse in a yet to be built development can be one way to profit in the property market. The major enticement for buying off the plan is that you secure a property at todays price (sometimes with no deposit) and wait for market growth whilst the property is being built.

As the market rises above your purchase price, the profit is yours.

The sales person will often provide charts, projections and promises of how the forthcoming development will perform as an investment.

The reason that buying off the plan is so popular is that some people have and will continue to profit handsomely from this investment strategy.

There are some issues to consider prior to entering into such an investment.

Casinos are profitable. They are profitable in spite of the fact that some people occasionally win. indeed it is the fact that a few win that attracts the many that ultimately lose.

it is the temptation of a potential easy profit that keeps casinos revenue ticking

Off the plan vs existing

Is it worth the risk?

over. And so it is with buying off the plan. Many people who thought they were going to profit actually end up with a loss.

As a major development comes close to completion, it is common to see a number of the properties put to the market at once. Many of the investors (speculators) are attempting to exit for a quick profit. The market is flooded with near identical stock at the one point in time, driving prices down.

if you do plan to purchase off the plan, it is wise to hold the property for at least two years after completion. This ensures that you are not trying to sell out when there is fierce seller competition. The larger the development, the more people there will be trying to exit on completion and vice versa.

The DeveloperBuying from a reputable developer is

paramount when buying off the plan. The big question is what guarantee do you have that the finished product will be of the same standard as the display unit? What avenues of appeal do you have under the contract if the property has defects or you are unhappy with the standard of build?

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Letter from the editor

Dear Readers

Welcome to the February edition of Property News. in this months edition, we examine Off the Plan purchases. it is a common investment strategy fraught with risk. We examine some of those risks and how to avoid making errors during the purchase.

in general market terms, the early signs for 2013 are conflicting. Buyer enquiry is extremely strong, but only a few transactions took place in January in the inner West marketplace. February will more than likely see a lot of transactions as buyers, sellers and agents identify where the market is at and move forward with their lives.

if one were to wait for the market to crash as a buyer, or the market to boom as a seller, then you would probably sit on the sidelines and do nothing in 2013. Rental enquiries remain strong, particularly for units close to the CBD under $600 per week.

All the best

Peter and the team at Harris Partners

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Identify the right agent when selling or buyingContinued from Page 1

Unsolicited sales calls from people selling products and services you don’t need or want are annoying. Direct marketing is hard work for a salesperson. There is abundant rejection and abuse to deal with, along the path to finding that elusive prospect who responds, ‘it’s funny that you have just called. Yes. i am interested.’ A good real estate salesperson looks past all these difficulties and is not afraid to contact any buyer on their data base who may be interested in buying your house.

The best salespeople don’t wait for business to walk in the front door. They walk out of the door themselves to look for business. A proactive agent who vigorously prospects and follows up on all prospective buyers is more likely to engage the right buyer for your home than an agent who solely relies upon prospects walking in or phoning up from their advertising.

A good agent is your eyes and ears in the market place when you are selling. You rely upon their experience, intelligence, knowledge and enthusiasm to drive your campaign. Sometimes things can go wrong, such as a buyer withdrawing because of an adverse pest and building inspection report. But the best agents are not rattled by such setbacks. They remain calm in the face of adverse situations. if you feel that your agent is losing control of the campaign, you need to take action quickly.

By the same token, if your campaign has experienced some setbacks which are not the fault of your agent, then continue to support them and work together to foster your best interests. The last thing you want to do as a seller is put panic into the mind of an agent. it will only work to a buyer’s advantage.

Finally, the best agents are skilled negotiators and adept at obtaining the best possible price and terms for their clients. As a seller of real estate, it’s imperative that you accept that the best possible price and terms may not always be the price and terms that you want. But so long as your agent delivers you the best possible price and terms that the market currently offers, then they have done the job you engaged them to do well.

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From a buyer’s point of viewBoth buyers and sellers desire the

same things in an agent – constant feedback, professionalism, integrity, honesty and competence. Where buyers and sellers fundamentally differ, is usually on price. Naturally, a seller wants top dollar for their home, but a genuine buyer will want to purchase the house for the lowest possible price that they can.

The kindest thing an agent can do for a buyer is to point out when the buyer is being unreasonable in what they are proposing to offer the vendor. The owners are not going to take a silly offer seriously, so why would you risk damaging any good relationship you may have with the seller by making one? Good agents will let buyers know if the seller is likely to be insulted by a low offer and take a personal mindset against them. However, if you are the only buyer putting in an offer on the property, the seller would be sensible to negotiate with you if they want to sell now.

But, if you are insulting the owner with low offers in a competitive situation, the owners may look upon other fair minded buyers more favourably. This could then impact negatively upon you if and when you raise your offer to more realistic levels later, should you really want to buy the house.

The best agents won’t let you know details relating to how many other buyers there are and what their offers have been. They will negotiate with each respective buyer on their merits, without disclosing

the owner’s hand in the negotiation process. This can make it difficult to find out if you are the only buyer for the property.

if you are negotiating the purchase of a good piece of real estate with a long term plan in mind, it will reward you both financially and emotionally if you are successful in buying it. To risk losing the right home in order to try and save $10,000 or even $20,000 through negotiation is just silly. in fact, if the price you are being asked to pay is the fair market price and you can afford it, you should pay that price. A good agent will tell you this, but if you still continue to negotiate the seller down in price then you may miss out on the home.

A good agent should always have a pretty good idea about what the fair market price for a property is. if you are negotiating a sale with someone who is asking an above market price for their property, a good agent will help you negotiate a fair compromise for both parties. An inexperienced or incompetent agent will give up and simply walk away from the negotiation. This then leaves the buyer needlessly looking for another suitable home, whilst the seller is possibly damaging the price of their home through over exposure to the market.

A good agent will always have the best interests of both the buyer and seller in mind when negotiating the sale of a property, with the focus being on achieving the best possible price.

Continued from Page 2 Making a profit as a developer is

tough work. if the market conditions are unfavourable, costs need to be cut to ensure profi tability. it is best to research the developer before you buy. Being part of a class action against a developer in fi ve years time is not much fun.

A trick of the trade is for the developer to sell a few properties within the development to associates, family and friends at an infl ated price, to create an apparent market price. These paper trades are then used as the basis of value for the unsuspecting Mum and Dad investors that come along. in assessing the merit of a property off the plan, consider whether the value of subject property stacks up in the broader market. if your sole valuation method is based around sales in the one complex, you may have walked into the developer’s web.

Flagship developments will always aim to set new benchmarks in the market place. it is up to the individual buyer to determine where fair value ends and marketing hype begins. in fairness, developers have a difficult time making a profit. Many magnifi cent world class residential towers have been built only to send the developer broke in the process. it is sad when a quality developer loses their entire wealth putting a world class project to the market.

in the case of off the plan development and selling, it is not just a case of buyer beware, it is also seller beware.

Ensure that everyone you take advice from is independent of the developer. No matter how innocent a professional referral from the sales person or developer may or may not be, always use independent

financial advisors, valuers, mortgage brokers and solicitors. The sales person is paid a lucrative commission by the developer, therefore they are not independent either. The salespersons advice and reasoning could well be sound, but you must have it verifi ed by an independent person.

Considerations…Many people are attracted to buying

off the plan because they don’t have to pay for the property today. That’s fi ne, so long as you could afford the property today. in theory, if you were unable to pay the mortgage today on an off the plan purchase, do not buy the property. Prior to buying, do all your sums on your existing circumstances. Don’t factor in pay rises or selling certain assets at certain prices to fund the purchase.

Empty nesters can fi nd an off the plan purchase appealing. They can secure their next residence today and sell in a leisurely time frame. Off the plan purchase for an empty nester makes sense because they are less likely to attempt to profi t on settlement with all the other speculators whom are trying to sell out.

Funding the purchase is the major consideration for empty nesters when buying off the plan. if settlement occurs in two or three years time, you cannot sell your main residence today to lock in at current market prices because you will be left homeless in the interim.

On paper, the plan is to sell the primary residence as completion and settlement nears on the off the plan purchase. in the few years between the purchase of the

property and the forthcoming sale of the primary residence, the market may have moved. if the market has risen, you win. if the market has dropped, you have lost.

Locking into a purchase at today’s price and selling another property tomorrow at an unknown price is a risk that must be considered.

When it comes to buying off the plan, tomorrow does come. And it catches many people by surprise.

if the off the plan property purchase being considered were completed, how would the price compare with other similar properties currently on the market. Are you paying a premium price? if so, it’s important to identify what features you are paying a premium for and decide if it is worth it.

Buying off the plan and successfully making a profi t is possible, but it takes good luck and/or professional expertise to do so. If you lack professional expertise, consider buying existing bricks and mortar rather than an apartment in a model on the showroom fl oor. It’s safer.

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Off the plan vs existing

It is up to the individual buyer to determine where fair value ends and

marketing hype begins.