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Agent In Paradise
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@agent-in-paradise
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Post Count: 10
June 27, 2008 - 4:56 am
Wealth Accumulator wrote:
One minute the agents are getting blamed for overinflating appraisals, the next minute they are accused of lowballing. Give them a break – they don't have a crystal ball – they can only go on what the latest trend is in any given area.
The general issue with property is that due to human nature the owners often get emotionally attached to the property – generally causing over valuing in their minds – I know – we did it with our first renovation – we had a figure in mind – got a solid offer in the first 2 weeks – unconditional and held off on the sale because we had worked so hard on the property etc etc. The bottomline was that we ended up accepting $10.000 less than that offer 6 months down the track.
Look for agents that have been around for a long time – they know how it works and that is their life – screw it up and they have no job!
With so called "independent" valuers you will often get a lower value as they have a professional indemnity risk – they can get sued! Especially at the moment with current interest rates rises, low consumer sentiment, low retail sales, higher number of listings etc.
In the end serious buyers will know the market and if the price is reasonable will buy it within the first month of listing.
http://www.lips.net.au
Couldn't have put it better myself. So often we see great offers being knocked back only to see the property sell much later for a much lower price.
Bear in mind that Agents are 'Legally Obligated' to endeavour to acheive the best possible price for a property, and if are found to be doing otherwise, we can not only get sued, but also de-registered. One property sale is not worth that.
In regards to valuers, they regularly communicate with REA's when determining value, the reason being is that the property sales databases that they use to justify values are generally at least 2 months behind in recording sales, whereas agents are on the front line, and generally know what property sold for what on the weekend (the good ones do at least). I regularly get a call from one of our local reputable valuers, and he prys for information and market sentiment etc.  Even valuers aren't immune to getting it wrong.
Agent In Paradise
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June 25, 2008 - 3:07 am
Hi Mark,
I am an Agent in Cairns, and to answer your query, the Northern Beaches is the better area in which to invest, primarily as it is deemed as a higher socio-economic area and as such is in higher demand, particularly from renters. Our Property Manager regularly pleads with us in the Sales Dept. to bring more rentals to the table for him as he has an extensive list of renters he simply can't accommodate. What this means for investors is that they attracting premium rentals, and these are from good quality tenants. There are currently some excellent investment opportunities available with strong rental return and solid growth potential.
If you let me know what your budget / pre-requisites are, I am more than happy to assist you where possible in locating a solid investment in the area for you.
If you would like to have a chat, you an contact me on 0408 977811 or email me at [email protected].
Agent In Paradise
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June 20, 2008 - 2:30 pm
Edmonton used to be a small town, but with the new housing estates being created, it is growing fast. I think you've answered your own question by stating that there are 200+ new properties for sale and 80 + for rent. In real estate terms (as with anything really), it comes down to supply & demand. Yes you may be able to pick up a duplex for $450K, but if there is an oversupply of rentals, can you be assured that you're attracting a premium rental on your investment. The answer is quite simply, No. Not to mention the effect the oversupply of new property available will have on capital growth of your investment.
If you are working with a budget of $450K, there are better options on the Northern Beaches which will provide more solid rental return and stronger capital growth. I'm not just saying that because I'm an agent in that area, but the fact is that currently the demand for rentals in the Northern Beaches is very high which will encourage stronger returns, and the capital growth in the area is stronger due to the fact that it is a more desirable location.  And although there are currently housing developments also being undertaken in the Northern Beaches as well, the demand for the location is stronger and thus is a better option, particularly if you are considering a long term investment. So much so that 3 of my colleagues (including my Principal – with close to 20 years of local real estate experience) have purchased in the Bluewater development at Trinity Beach, and if I wasnt already committed, I would likely do the same.
Another consideration, as mentioned in my previous post is that that the South of Cairns is deemed as a lower socio-economic area, and as such you are less likely to attract the quality tenants that you would on the Northern Beaches. Not to say that the Northern Beaches are exempt from bad tenants, but you have a better chance of securing a good one in a higher socio-economic area. Sounds 'snobbish' I know, but the fact is that you want a quality tenant to look after your investment, and one less likely to default on rent. Your chances of this are improved in the better and more expensive areas.
I am more than happy to assist by providing you some options and work as a 'Buyers Agent' for you, and I won't charge a cent for the service (i would be paid by a conjunction with the selling agent). I can provide you with a list of solid investment properties along with rental appraisals so that you can make an informed decision, and as I would be representing you as a buyer, and not representing a vendor as a seller, I would be working for you and could save you money in the process. I did exactly that for freinds of my Brother-In-Law last year and saved them approx $10,000 by negotiating with the selling agent for their first home.  I'm more than happy to assit where I can.
Agent In Paradise
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June 20, 2008 - 12:06 am
In room auctions do have their benefits. Firstly it allevites any concern of bad weather that can affect on-site auctions. As 'arandomperson' wrote, In room auctions tend to have a good atmosphere if done correctly, and as long as the venue is not too far from your location, it is worth considering. If you have the chance prior to the proposed auction date, see if the agency is having any more in-room auctions. If so, it's certainly worth having a look to see how they operate.
Don't be discouraged by the clearance figures under the hammer. What a lot of sellers fail to realise is that an auction that doesn't sell under the hammer is by no means a failed auction. Of course that is the ideal result, but a good proportion of auctions sell shortly after the auction, as some purchasers cannot meet the auction conditions of a cash, unconditional contract. For example, they may require finance approval. The other benefit of auction is that as there is no price, it allows the market to make it's own judgement on value, and a good agent will provide comprehensive feedback to indicate what the market thinks your property is worth. If you don't sell under the hammer, you will have a clear indication of market value, and can list the price accordingly. This will encourage a timely sale as opposed to marketing with a price, and possibly overpricing which will discourage buyer enquiry.
Seriously, in this market I would not recommend private sale. A common problem when selling privately is that potential purchasers will not provide accurate feedback as they will not want to offend you. They will say that they loved the property and at the price represents value etc. However, unless they express immediate interest, it is unlikely that you will hear from them again. It is essential that you receive true & accurate feedback from the market when selling, as this will help you in setting a price consistent with market feedback to affect a timely sale. An agent works a conduit between the market and the seller, and potential purchasers are much more likely to give accurate feedback to a 3rd party (agent) rather than offending the seller directly if selling privately.
Agent In Paradise
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June 19, 2008 - 12:22 pm
HI god_of_money,
You are right in the fact that there is a lot of new development there. The CEC group which has taken a battering on the stock market are offering discounts on their previous market prices to clear some of their stock, but with so much around the area, you would need to be in for the long haul to see any substantial capital growth. Rents up this way are running at about 2% vacancy rates which equates to premium rents being attracted, but in my honest opinion (depending on your budget), the north side is the way to go. Our property manager regularly pleads with us sales staff to bring on more rental stock, as we simply can't accomodate all those wanting to rent on the Northern Beaches (I'm in Trinity Beach). Demand in the southern corridor isn't nearly as high as it is predominantly deemed as lower socio-economic area. I regularly receive buyer enquiry from investors, and a lot of the time people specify that they specifically don't want to invest the south of Cairns. This perception affects the demand for property in that area, and hence will have an effect on the market value, as well as the likelihood of premium returns on your investment.
Let me know your desired budget, and pre-requisites, and I may be able to locate a better option for you.
Agent In Paradise
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June 19, 2008 - 10:34 am
I'm an REA in Cairns, and as much as it pains some owners, prices have indeed dropped. The reason for this is simple. It comes down to supply & demand. Compare your local real estate liftout on a Saturday compared to 5 or 6 months ago and you'll see what I mean (ours in Cairns has gone from 48 pages to 72 in the last 2 months. More people are trying to sell at the moment primariy as a result of interest rate hikes, and the increased cost of living making it harder for some to sustain the mortgage. On the other side, buyers are harder to find, due once again to interst rates making properties less affordable. The level of property enquiry has dropped substantially as a result. In this situation, unfortunately there are those that must sell for less than they would have had to 6 months ago, some are even taking a loss. And it's this desperation that some are forced into that causes the prices to drop.
If you feel that the the property is worth more than the appraised value, I encourage you to consider an auction campaign when selling. The reason is that no price is attached, and a good agent will provide you market feedback on the price of the property. After all, it's the market that truly determines the value of a property, not the seller, not the agent, but the person who buys the property. Don't be discouraged if you notice properties that don't sell under the hammer. The fact is that if the property doesn't sell under the hammer, the seller will have a good idea of the market feedback which gives them the necessary tools to set the price right after auction, and in turn will ensure a timely sale. The statistics speak for themselves with approx 85% of auction properties being sold within 45 days as opposed about 68% of private treaty (selling with a price) acheiving the same.
However, when considering an appraisal, be aware that some agents will over appraise in order to secure your business, then will work on you to reduce the price to affect a sale. This can be very dangerous for a seller, as it overprices the property at the most important time of selling – at the beginning, and potential purchasers will disregard the property as a result. By the time the agent has encouraged the seller to reduce the price to where it should have been, the property will be deemed as 'stale' on the market, and it is much harder to generate the level of enquiry that is needed to affect the sale, and particularly in this tight market, this can be catastrophic to a seller (particularly a seller that NEEDS to sell).
My advice is to have more than one agent appraise the property (at least 3), and don't discount the one that is the lowest because it's not what you wanted to hear. Chances are, that agent is the most genuine and has provided an honest appraisal to reflect the current market conditions.
It's a tough reality at the moment, but statistics on sales activity backs this up.
The other cosideration is that if you are selling in today's market to purchase another property then you will be doing so in the same market conditions, so the perception of 'loss of value' is relative when it comes time to buy in the same market conditions. So if this is the case, don't be too concerned in the drop in the market.
Agent In Paradise
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June 19, 2008 - 7:04 am
1st step: Do your homework on the area you are purchasing in, check realestate.com.au for property in the are and make comparisons from there.
2nd step: Get the agent to email a comprehensive photographic record of the property.
3rd Step: Review the contract from the agent. Look for any 'Special Conditions' or Easments & Encumberances, then check with your Solicitor / Conveyancer for clarification.
4th Step: Check with the local council to see if there are any developments either commenced or planned that may have an impact on the property.
5th Step: Engage a Building & Pest Inspector (not the one the agent recommends – choose an independent contractor), not only will they let you know of any potential problems, but if you let them know that you haven't inspected the property, they would likely assist you with some first hand local knowledge and would let you know if the property represents value in its current condition and location.
6th Step: If all is good, GO FOR IT!
I've sold property to clients sight unseen, and always try to highlight the good and the bad points. By doing this, the clients leqarn to trust me and are happy to proceed. If your agent seems a bit sheepish when questiones on a concern of yours be very wary, as unfortunately, it's no secret that there are rogue agents in the industry (who give us all a bad name).
Hope this helps
Agent In Paradise
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June 19, 2008 - 6:48 am
If you can establish a good relationship with an agent in the area you wish to purchase in, they should be able to assist you with no fees (I know I do). When I assist my clients, I receive a commission from my seller (If I sell property on my books), or arrange conjunction sales with other agents that have property that is suitable.
If by chance your interested in Cairns property, let me know, I'd love to help
Agent In Paradise
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June 19, 2008 - 6:22 am
I would have to say tiles.
When conducting inspections on properties with lino, the feedback from potential purchasers is definately for tiles over lino & carpet. Granted I operate in Far North QLD so the climate has a lot to do with it, but particularly if your property is tenanted, you can be sure that at some stage it will require replacement. Sure tiles may cost more, but the cost is a tax deduction which can be offset on your income.
hope this helps
Agent In Paradise
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June 19, 2008 - 5:58 am
Hi patriotsoldier,
From the front line, I can tell you that yes, there has been a decline in the market, no doubt about that, but if you are a cash buyer, there is probably no better time to secure investment property. Interest rates, costs of living etc have had an affect on property values, and some sellers are offering considerable discounts in order to beat the banks in some situations. If you are looking to purchase on finance, i would be wary as there is uncertainty in regards to future rises in interest rates.