Newsletter - Inner Circle June 2017
Welcome to the latest news from the Property Mavens team.
While there has been speculation about the growth cycle coming to an end and even predictions of drastic price falls, we see no sign of this coming to fruition. The REA Group’s Property Demand Index shows demand continues to be strong, which will underpin growth. Nationally, demand hit a record high in May, with REA Group chief economist Nerida Conisbee describing the market as ‘almost bulletproof’. Victoria was one of the strongest markets, with demand for houses and units increasing by 5.7% and 3.6% in May to be a huge 33.2% and 21.8% higher respectively than at the same time last year.
If you’re looking to buy, winter is a good time to act. It’s traditionally a little quieter and with less buyer competition there are good opportunities to find the right property at the right price.
We are proud to announce that Miriam Sandkuhler has been nominated as a Finalist for 2017 Thought Leader of the Year in the REB Industry awards, in recognition of her tireless efforts to stamp out underquoting.
New underquoting laws for Victoria came into effect at the beginning of May, with the intention of reducing the incidence of properties selling for hundreds of thousands of dollars or even more than $1 million over the advertised price, wasting the time of many buyers. It followed a crackdown by Consumer Affairs Victoria on underquoting which resulted in legal action against several real estate agencies.
Under the new laws:
• Real estate agents must provide buyers with a Statement of Information including 3 recent comparable sales, an estimated sale price and a median price for the suburb
• Advertised listings must have a single price or a price range of no more than 10%, with words such as ‘offers above’, ‘from’ or ‘plus’ banned
Agents face fines of more than $31,000 for underquoting
• But one month on it is clear the newly introduced legislation is inadequate. Selling agents can manipulate the recent comparable properties to effectively underquote, purely by deciding which property they include (or exclude) in their Statement of Information. Some are using “The estate agent or agent's representative reasonably believes that fewer than 3 comparable properties were sold within 2 kilometres of the property for sale in the last 6 months” option to legitimately avoid showing any comparable property, even though they would have provided comparable sales to the vendor to secure the listing in the first place.
The only solution to stop underquoting for auction properties is to take all of the ‘open to interpretation’ guidelines away and replace it with a vendor’s reserve price – the minimum amount they will accept on auction day. This is no different to the process a private sale vendor would go through when deciding on a listing price.
With prices remaining strong in Melbourne and underquoting still an issue, it’s so easy for buyers to be caught out if they don’t understand the difference between what they want to spend, what a property is “worth” – ie. it’s appraised market value - and how much to stretch their budget to (within reason) under competitive conditions.
A purchase of a two bedroom house we recently made on behalf of our clients Barry and Nicole is a perfect example of how the fast moving market in Melbourne is playing out, and impacting upon buyers.
The price of the Coburg property was quoted at $750,000 to $800,000, with comparable sales of up to 6 months old to support it. But the property was only declared on the market at $830,000 at auction and eventually sold to our client following very strong buyer competition. We determined the price paid as fair market value based on numerous recent comparables that we had sourced, yet there was over $100k difference in it!
The moral of the story is don’t be fooled by the ‘comparable’ properties the agents are using. Independent research and due diligence is still imperative, and if you’re not confident about doing this yourself you’ll need the help of a trained professional, such as a buyers’ agent, to help you.
If this sounds like you, click here to book a time with us discuss your requirements. It’s 100% obligation free.
Just over a year ago we purchased an investment-grade property on behalf of a lovely interstate couple who gave us instructions to buy within 10 kilometres of the Melbourne CBD within a strict budget of under $1 million.
REIV figures show the number of million-dollar suburbs in Melbourne has quadrupled over the past five years to reach 120, and with many concentrated in the inner city, it takes expertise to find more affordable opportunities in this location.
We put our expertise into practice by negotiating the purchase of a two-bedroom house for our buyers for $951,000 - $49,000 under budget - by securing an off-market opportunity that few other buyers were privy to in a popular residential pocket close to amenities.
It was already tenanted upon settlement, so the income stream was immediate. But here’s the clincher: the house has grown in value by up to 13% in just 13 months!
We look forward to bringing you the next growth update on this property.
If you want to invest or buy the right home for your budget, click here to book a time, or call us for a chat about securing your financial independence.
Property Mavens - Smart Property Buying