A ‘win’ for buyers and for sellers

Real Estate Information

Written by Paul Kounnas | Friday, 20 May 2011

The agent who is entitled to the highest selling fee is the agent who is capable of getting the highest selling price. But this does not mean that the buyer should be the loser.

The only way to get the highest price for a seller is to discover the maximum price any interested buyer is prepared to pay. To do this, the agent has to get a buyer interested in a property by first attracting the buyer to his or her office. This means making it easy for the buyer to come to the office. Being open weekends and outside working hours is ...

the first basic step to attracting buyers.

Most buyers can pay more than they first reveal. It is a good idea to find out what the buyers like and show them homes they are likely to love. Many buyers purchase a home between ten and fifteen percent above what they intend to pay.

The world’s best real estate salespeople know their buyers intimately. A good real estate salesperson, a skilled negotiator, will know more about what a buyer is likely to do than the buyer will know. This is the hallmark of a great negotiator.

After the agent has a good idea of what a buyer will pay and what they will buy, the next objective is to find a home they love. When the heart and the head meet, the heart always wins.

The agent should show houses without focusing on the price. The rationale is to get an idea of what they like before discussing a specific price. The agent also has a moral obligation to make sure that the buyers can afford any home they see.

For all the hype about Open Homes, they are not as effective at helping the agent to qualify the buyers and help them find the home they love. If the agent puts the buyers in a car – offers the buyers personal service – the agent can spend time and get to know exactly what sort of home the buyers will buy.

With a good agent, buyers will find a home they love at a price they can comfortably afford.

Keep It Positive

Selling Advice

Written by Paul Kounnas | Thursday, 19 May 2011

Before putting your home on the market make sure you eliminate the negatives.

First impressions count, so the first few minutes are vital when someone is inspecting your home with a view to buying it.

That means you need to follow the advice of the old song “Accentuate the Positive, Eliminate the Negative”, to ensure that prospective buyers like what they see as soon as they arrive at your door. Assuming you’ve done everything you can to accentuate the positive, with your home clean, tidy and in good state of repair, what are some of the negatives that might still ...

have the potential to turn people against the idea of buying your home? And what can you do to eliminate them?

De-clutter

Prospective buyers need to be able to visualise themselves living in the house. Without depersonalising it totally, leave it as clear as possible so they can picture their own furniture and possessions around them. This doesn’t mean taking everything off every bench top, but clear the decks of unnecessary paraphernalia, put three quarters of your personal stuff away and you’ll be surprised at the difference it makes.

Deodorise

If you smoke or have pets, newcomers to your home will probably notice odours that you have become accustomed to. Put fresh flowers around, open your windows if the weather permits and invest in a few aromatic diffusers for various rooms.

Lighten up

Most people prefer light homes. Before your home goes on the market, consider repainting any dark walls in a light, neutral shade. Make sure all the lights work and trim any trees outside windows. Before an inspection, open blinds and curtains to let in as much natural light as possible – and make sure your windows are clean!

Keep your distance

Many people feel intrusive when inspecting a home when the owners are present. It’s best not to be at home, but if you are, keep a low profile and let your agent show the people around.

Yes, Numbers Can Lie

General

Written by Paul Kounnas | Thursday, 12 May 2011

You can influence the way people dance by the music you play. You can also, just as easily, make numbers dance to your tune.

How is it possible to make the wrong numbers look right?

Let us look at the weekly reported auction clearance rates as an example. The auction clearance rate earlier this month was reported as 61%, but it could just as accurately been reported as 43%. How can this be right?

If you were to count the number of properties sold at the fall of the hammer on the day ...

of auction and divided it by all the properties booked for auction for that same weekend, you will have a correct clearance rate of 43%.

The reported figure of 61% however is also accurate, if you agree with the following reasoning: If you add to the auction results the number of properties sold by private negotiation before the auction, as well as the number sold by private negotiation after the auction, and you ignore the number of auctions that were not reported or withdrawn, you’ll then get a 61% clearance rate. Which calculation is right? Both figures can be justified depending on which numbers you pick to support your argument.

Which figure do you think more accurately represents the true clearance rate?

As you can see, it’s not hard to make the wrong numbers look right. It simply comes down to which way you want the numbers to dance.

Next time someone says to you, “numbers don’t lie”, perhaps you will now be a little wiser with how you wish to respond. You’ll know that their maths may be correct but the problem is they may have deliberately selected the set of numbers that justifies their reasoning and proves their cause.

Auction results can be handy for interpreting market sentiment. They can give us a regular snapshot of the market. But don’t forget that auctions only represent a small sample of the market. Australia-wide, auction sales represent less than 20% of the market.

Australian House Prices – Are they overvalued?

Market Update

Written by Paul Kounnas | Thursday, 05 May 2011

The international Demographia Housing Affordability survey ranks Australian housing as one of the most unaffordable in the world. But according to Glenn Stevens, Chief of the Reserve Bank of Australia, Australian house prices are not overvalued compared to the rest of the world.

Speaking at a business luncheon in London recently, Glenn Stevens was not overly concerned by the ratio of income to house prices in Australia because he does not think the real ratio is terribly high by world standards.

Mr. Stevens said that quite often the ratio quoted for income to price of houses for Australia was wrong. “If you get the ...

broadest measures countrywide prices and country-wide measure of income, the ratio is about four and a half, and it has not moved much either way for ten years. It is actually not exceptional by global standards”.

The ratio quoted by International Demographia, which is more than seven, is flawed because their numbers are based on Australian city prices only.

When you calculate the ratio of house prices right across the whole country as Glenn Stevens suggests, Australian house prices are not overvalued by world standards. RP Data-Rismark has the house price to household disposable income ratio at 4.4 times.

There is another important point that is not taken into account by most research groups, and that’s the high quality housing we have in Australia – compared to the rest of the world we have larger houses on bigger blocks of land, 600m2 – 800m2 – so our houses cost more to construct than a typical 70m2 apartment in another country. We generally get more for our money.

I believe our housing market is behaving rationally and don’t expect any sudden changes in 2011.

Glenn Stevens also said that following the global crisis, householders were more careful about running up debt. “They are saving more than at any time for twenty years or more”.

Market Update March Quarter 2011

Market Update

Written by Paul Kounnas | Thursday, 28 April 2011

The Melbourne median house price for the March quarter was reported as $565,000 according to the latest figures released by the REIV.

This represents a drop of $35,000 from the December quarterly median house price of $601,000.

Don’t be too alarmed by this adjustment in prices or by the headlines claiming that the property bubble is bursting.

The reported December median house price of $601,000 was an aberration which can happen with median house prices.

Housing prices in the Manningham area, and in many other areas, peaked in April last year.

Since then the heat had gone out of the market ...

with less sellers and buyers committing to buying and selling.

It has been 12 months now since the property market has come off the boil, it didn’t just happen in the last quarter. So don’t pay too much attention to the doom and gloom in the media.

When you look at the annual change in prices and map them out on a price graph, you can see that from the middle of last year prices have generally contracted a little and then plateaued.

We now have what I would call more of a normal market without the buying frenzy.