Forum Replies Created
- NHG wrote:2. Changed PM rate with agent from 7.5% to 5.5% (they said they wouldn't do it
);Good work, you must have almost mastered negotiating to get such a drop!
In Victoria, all real estate fees and charges are negotiable so we work with it on a daily basis. New clients are generally the ones who negotiate with me about fees. I figure if they can do it with us, I can do it with our suppliers, printers etc. and I agree it is pleasantly surprising. We've negotiated down costs of print media, marketing tools, training packages and even with Australia Post (<<was shocked that this one worked).
Would love to hear updates from time to time how it's working for you.
Thanks for the update, good to hear you got the result you were looking for.
You're right, it is a good idea to be upfront about your expectations in terms of the communication level with your agent.
Best wishes for the future!
Venetian blinds are notoriously high maintenance, especially in high traffic areas.
I'm a big fan of roller blinds as they look great (Venetians are only nice when they're new) and every property we have installed them in hasn't needed ongoing repairs like the Venetians did.
I found this company online: http://www.justrollerblinds.com.au/
You can engage an agent to lease the property for you and have all the advantages of full exposure to potential tenants. The most popular real estate sites only allow access to agents to avoid property scams (i.e. an ad where the 'landlord' asks for an upfront fee for keys to view the property)
They will charge a one-off letting fee and perhaps a charge for the advertising costs (tax deductible) and they can screen your tenants effectively not only through references, but tenant default databases as well.
Otherwise try http://www.rentfind.com.au/
Marie123,
if you're selling, don't go for the look you want, it's really all about the look the buyer wants. Ask your agent what types of buyers are in the market at the moment, for example in Melbourne's inner suburbs we're seeing a burst of buyers who want to move straight in with everything done.
The shower screen prices do seem quite excessive. At the end of the day, if the saleability and price is not affected by these changes, you may be wasting money. Do the sums before you go any further.
Marie123,
if you're selling, don't go for the look you want, it's really all about the look the buyer wants. Ask your agent what types of buyers are in the market at the moment, for example in Melbourne's inner suburbs we're seeing a burst of buyers who want to move straight in with everything done.
The shower screen prices do seem quite excessive. At the end of the day, if the saleability and price is not affected by these changes, you may be wasting money. Do the sums before you go any further.
NHG wrote:– Shipping ice from antartica to the middle east?
That sounds interesting!
Actually my partner and I are shifting our focus altogether for the next financial year and stepping into transport & logistics as that is his 'thing'.
From a property manager's perspective, I really agree with all of the above and it's great to see a shift in attitudes towards paying good property managers a decent amount.
Whilst API magazine is telling you 8% gross yield is good, is that figure applicable to the area where your property is? If you have a great property manager as you say, they should be able to shed some light on what a good yield for the area is (I'm assuming they've worked in the area for some time) or check with the director of the business, they will be able to shed some light on what a healthy yield is for your particular properties.
Once you've got a handle on a figure of gross yield, work out your net yield goals and ways to achieve them i.e. improvements to the property, planning of future rent increases and pro-active maintenance repairs to keep future costs down (unattended repairs can cause a chain reaction of larger repairs needed in the future).
Your property manager should already be offering you suggestions of improvements that could increase the value of the property and if not… ask them to. It's in their best interests to increase the value of a property as they work on a percentage basis.
Epping has had a fairly decent rental market for years which has dropped recently with the opening of Mernda's housing estates offering affordable housing. The crime rate in the older areas and near the shopping centre is shocking, so I agree with you that sticking to a new estate is the best option if you settle for Epping.
The new estates are looking good, one of my colleagues is looking to move there also. The main pointer I would have for you is check the quality and track record of the builder really thoroughly, I wouldn't recommend Metricon as I've heard too many disaster stories from them of late.
When it comes to property management further down the track in this area be extremely thorough when choosing an agent, I'm sure someone will have a different opinion but to me it's historically an area where agents are focused on sales, sales, sales and use very young PMs who are using the position as a side step into sales.
If your contract is 'subject to finance' (which it should always be when you're getting finance) and you can prove clearly you can no longer finance the purchase… you're in the clear to rescind.
I'm a big fan of Harcourts for their property management procedures & focus. You can search for Perth offices: http://www.harcourts.com.au/Offices
I'm sure there are plenty of others out there as well so don't forget to compare to other agents, but it's a start.
South Morang, Doree, Bundoora, Watsonia, Preston… I think you'll find with some serious research on those areas a rental property is a hard push when you look at the demographics.
I've lived most of my life around these areas, so I'll give you my ideas on the areas:
South Morang – High demand for rentals but in general low quality tenants. If you had a really well presented 3 bedroom property and marketed to a family you may do well if you can find one for that price that will still receive a good return. On a plus – the introduction of the new train line has made the suburb more accessible.
Doreen – Don't even consider it unless your main aim is capital growth. There has been a lot of growth in the area with a new school opening, restaurants and shops being built but there isn't much of a market for rental properties with only 6% of the population renting their home, so expect long vacancy periods between tenants.
Bundoora – Always had a healthy rental market, medium population of students can attribute to this. The last few years have seen the crime rate increase however which has driven a lot of people out of the area.
Watsonia – A lovely quiet suburb. I'm surprised this one hasn't got the attention it deserves! There are plenty of houses needing a little TLC with large block sizes. The suburb has been known for quite a few years as family friendly with a lot of retirees still residing there. The rental market is healthy for young families, we currently manage a huge property needing a lot of cosmetic work that is still getting a great return for the owners.
Preston – As a property manager I detest Preston properties due to the demographic of low-quality tenants and painful vacancy periods. It is definitely a future growth suburb in terms of development in the future and the land sizes can be great, however stay away from Northland Shopping Centre area when buying to avoid being right next to the commission houses.
Whatever you do, ensure you research, research, research and compare the suburbs. Then do a little more research, and go with the suburb that offers you something that matches your investment plan. If you don't have a plan… get one.
Another thing to consider is vacancy rates and how the rental market is performing… According to newly released RP Data figures, Hobart's rental listings have increased by 19.2% compared to last year. SQM data shows a double up in vacancy rates since last year with some localities up to 4%.
Whilst it's not all doom and gloom, it may be another factor to negotiate with and keep in mind when looking to lease the property money WILL need to be spent on good advertising.
Also… don't rely on a rental appraisal from a selling agent unless it comes from their property management department. Also do your own research as to whether that rental matches up to what is achievable, then work with the most conservative figure. If the agent says $420-$460 per week and similar properties in the area are $400-$420 per week – base yourself on achieving $400. That way anything higher is a bonus.
KeyStrategies wrote:What are your thoughts on the commissions charged by Agents and Property Marketing Companies?
Marketing and selling properties OTP is extremely time consuming and difficult in today's market, often involving setting up an on-site sales office that is not paid for by the developers. In this case I believe high commissions are necessary as the selling agent needs to recover the costs of set up. If however a financial planner or investment group (not a licensed real estate agent) is paid these kinds of commissions then I agree it may be far too much.
But we don't get the whole picture here… how much are the properties? Where are they located? Are the developers desperate to sell the last percentage to gain finance? Any of these factors could justify large commissions to anyone who finds a buyer and refers to their sales department. Tip – never buy a property though a group that is not licensed!
I can only comment on commissions charged in Victoria as I am not fully aware of interstate fee structures (i.e. who pays advertising etc.). Our charges are 2.2% including GST (which is fairly standard for metro areas) with vendor paid advertising. Any negotiation from there depends on the property's value and whether they have been a long term client etc. but at the end of the day the time and effort in selling a property in such a tough market shouldn't be underestimated.
Why I don't charge 1.1% and no one should: because it's not worth my time and I have a policy of exceptional service – you can't offer exceptional service for discount rates, it's just bad business practice. A lot of agents are discounting at the moment, but they work on volume – sell asap for whatever price is closest to the vendor's aim.
Regional and outer Melbourne agencies charge more for a few reasons – distance between the property and their office, average days on market for properties are higher and less buyers in the market makes for harder work. We sold our house in a rural area a few years ago and paid 3.9% plus advertising of $2000 on a $450,000 property. Houses in the area were averaging 120 days on the market at the time and most agencies were charging 2.5%… But I had a deal with the agent that if it didn't sell within 120 days they would pay advertising. The agent had it signed sealed and delivered within 3 weeks. Did we pay too much? Maybe. Did we get exactly what we wanted? Yes.
When selling, it really is quite simple… The market is rough at the moment so whilst paying more commission may seem undesirable, keep in mind – you are not the only client the agent has, so if you're paying minimal commission expect minimal results from most agents. Sad but true.
The real estate industry in IS heavily regulated despite what some may say. We must adhere to a strict code of conduct and take in thousands and thousands of pages of legislation to ensure we meet all requirements in our everyday jobs. We are actually bound by legislation to act in the best interests of the seller at all times – with huge penalties for not adhering to this.
There are 'cowboys' out there – but I'd argue that is just like any other industry. The problem with real estate is that it so heavily impacts on people's lives when they have a bad experience or have been lied to by an agent.
Within the industry there is currently a huge push by a majority of agents to clean up the public view of the industry by being more transparent. I for one am on the bandwagon big time – because I was brought up to be honest with people no matter the consequences (i.e. possibly losing a listing to an agent who quoted an unrealistic, higher figure) and I've found I get a positive response.
I could blab on about how the article is using international examples for local industry performance but it's an opinion piece… Everyone is entitled to an opinion.
I agree with you KeyStrategies, it is about people recognising the role of an agent.
If you want sound financial advice – go to a financial planner and also refer to your accountant.
If you want a real estate agent to find you the best deal as a buyer no matter which agency the listing is with – get a buyer's advocate.
If you want advice on selling and market trends – go to a real estate agent with a good reputation…. and ask the right questions, see this post for examples https://www.propertyinvesting.com/forums/property-investing/general-property/4344370Here's a classic about an apartment I managed:
This client had been with our agency just over 10 years and believed we were doing such a good job with tenants he would never need insurance. Despite the fact we'd sent out information on the reasons to have insurance (damage of contents etc.) and information on companies who provide broad coverage for low premiums, this client never took out a policy.
We'd recently leased the client's apartment to a highly recommended tenant for top market rent and all was looking good… until a water pipe burst in the building at 3am on a Sunday morning (2 months into the tenancy) and flooded 4 apartments in the building.
The pipe was 'common', it serviced the building and is under the maintenance of the Owners Corporation. The tenant called us and another resident had arranged the building's emergency service to attend to stop the water flow. The carpets were soaked in 20cm of water, the bathroom vanity & skirting boards in the kitchen were damaged and the tenant's bed and furniture was ruined to the tune of $5000 for replacement. To top it off, the tenant could not reside in the property for 8 days as the carpet had been lifted to be dried. The tenant was extremely understanding and flexible and rather than leaving it to us to arrange alternative accommodation, she had made arrangements to stay with a friend until we could get her back in the apartment.
The tenant allowed me to inspect the property every day to check on progress and I took the owner through the first day. It was quite alarming how much damage was done – the bathroom ceiling was cut out for access to the pipe, the ceiling in the bedroom had a large crack down the centre and all the carpets were lifted to allow large fans to dry the underlays.
I had arranged the Owners Corporation to see to all repairs to be included in a building insurance claim. Problem was, the building insurance policy does not cover contents, so the carpet (drying, cleaning, replacement) and tenants damaged furniture was not covered in the building insurance policy even as resultant damage.All in all, the damage bill that was not covered by the building insurance was as follows:
– Rent reimbursement to tenant $400
– Reimbursement to tenant of travel expenses $170 (not required, negotiated as the owner wanted to keep such a good tenant)
– Carpet drying, cleaning and re-laying $1,200The total costs incurred were $1,770… Compared to the landlords insurance policy we had recently offered… $259 with no excess on water damage.
Thankfully the tenant is not chasing the landlord via the Tribunal for compensation for replacement of her goods, she has conceded she should have got her own insurance. Whilst there is no specific reference to this type of situation in the Residential Tenancies Act, it is likely some compensation would have been awarded to the tenant via the Tribunal. this would not be covered by a building insurance policy, but the landlords insurance policies we work with would cover it.
All in all, the situation was resolved without the tenant being released from her lease or having a rent reduction (the property is now not in a slightly damaged state which the client does not want to repair) or compensated via a VCAT tribunal and the client has now agreed to have insurance for the future…
I'd also recommend Harcourts. I used to work for them and they have excellent procedures, training for staff and a policy of strong customer service across the network.
If you've got your mind set on doing it yourself and its your first time, best to find someone who has done it before and get some in-depth advice.
I understand a lot of owners want to save on selling costs by not including a real estate agent, but unless you know your state's legislation regarding property sales it can be fraught with danger.
There are a few basic points to consider no matter where you are located:
- How have you decided your selling price? You could even arrange a few agents through to give you their market value and expectations based on their sales in the area to gauge whether the price you want is realistic.
- What type of sale works best in your area? Some locations are auction orientated and therefore achieving the best price by private sale may be difficult
- Where and how will you advertise your property? Private sellers don't have access to major real estate sites so it is important to find an online advertiser who will gain good exposure for your property in a market where a majority of buyers go online to find property, but there are a few sites out there now gaining momentum for private sellers.
- How will you find buyers? Relying on advertising alone can extend the amount of time the property is on the market. Good agents have a database of qualified buyers in your area.
- How will you qualify your buyers to ensure they are not time wasters?
What are your reasons for selling your home privately? If it is to cut down selling costs, I would suggest that if you find a great agent in the area you're likely to get a higher sale price.
Just read some of the posts on this forum and you'll see people like buying from private sellers because they feel that getting a lower price is easier. This is something you'll need to keep in mind if you go ahead.
I really admire your thinking Cintaku, but do agree with the above comments and will summarise to… Your thinking is ahead of the times.
Correct me if I'm wrong, but it seems your idea would be for high quality properties for owners to occupy. In Melbourne there just aren't enough in the market at the moment to drive prices with emotional buying. Right now in Melbourne we're seeing mainly investors in the market – not interested in quality as much as a low price and high returns.
Believe me, I sometimes want to scream walking into these new townhouses and apartments that can be best described as 'dog boxes' as they're so tiny. But they're profitable.
We have turned down management of some of these 'ugly' Melbourne houses you refer to because they're essentially money pits in terms of maintenance for the owner and utility bills for the tenants. It would be lovely some were knocked down and replaced with quality housing… but would it be affordable to attract tenants? Or profitable for the owners?
If you could find a viable market for these types of properties, have a cost effective build that won't compromise quality and be able to pick up a property that is being sold on land value only (due to the house being dilapidated) you might see a profit. But you'd have to be lucky… and luck is not something to sink $1M into.
I do hope you keep us posted on your findings!
Agree with the above… JacM has hit the nail on the head in terms of renovating for rentals.
In terms of finding out what the market responds well to, ask multiple agents. Once you get the same pointers from different agents, you'll know what works. It's also good to ask if they have examples of renovated properties they've sold/leased quickly or for a record price in recent times.
If the property is in Melbourne or inner surrounds, please feel free to let me know and I can give you the first set of ideas to compare to other agents' tips.
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