Market Update December Quarter 2011

Market Update

Written by Paul Kounnas | Wednesday, 01 February 2012

Median house prices across Melbourne rose by 1.9% in the December quarter. According to median house data released by the REIV the Melbourne median house price is now $550,000, up $10,000 in the last three months.

The doom and gloom experts who predicted a crash in property values in 2011 got another year wrong. What we experienced instead was a year of controlled price adjustments.

Some experts are predicting that the market may have bottomed out. However the positive data from one quarter is not enough evidence, particularly with median house prices which historically can often swing wildly from quarter to quarter. We have to wait ...

and see what happens with the economy over the next three to six months.

Some believe the property market in 2012 will return small positive gains on the back of the recent interest rate cuts.

The performance of units and apartments during the quarter also had a small increase, mirroring the house market.

The continuing uncertainty about the international economy means our property market will remain subdued. Once the right polices are implemented overseas we’ll see consumer confidence lift and so will property prices.

Home Truths About Advertising

Selling Advice

Written by Peter Lees | Tuesday, 24 January 2012

Open homes, auctions and vendor paid advertising, are a great benefit to real estate agents but of very little benefit to home sellers and buyers. These add ons are part of the up-selling technique, a little like the ‘do you want fries with that?” of the real estate industry.

Take for example, Vendor Paid Advertising. Vendor Paid Advertising is worth millions of dollars to the real estate industry. A look at the profit and loss statement of some real estate companies would show that ‘advertising’ appears as ...

an income item not (as most consumers would believe) as an ‘expense’ item.

When I first started in real estate, the concept of an owner paying the cost of advertising and still paying a commission was to say the least, highly unusual.

Industry trainers however, discovered that if you could convince a seller to go to auction and also convince them that open homes were somehow needed, that maybe you could make an argument that advertising was needed and then - who was to pay? It is interesting to look back on those days.  When agents were paying for newspaper advertising, ads were only a single column and photographs were rare. Now that sellers are paying, ads are HUGE.  Do a larger percentage of these houses get sold? Of course not!

More and more sellers are waking up to the reality that newspaper advertising is unnecessary.  I wonder if we will see many companies that have become reliant on the income for selling advertising rather than their income for selling houses, closing down?

With more than 95% of buyers now using the internet to search for property, print advertising will become like a dinosaur, extinct.

Take this as a prediction:  A home owner paying for advertising in the newspaper and also paying a commission will cease to be common practice in the very near future. 

Your Money or Your Life

Selling Advice

Written by Neil Jenman | Thursday, 19 January 2012

Sellers – don’t pay a high personal price. 

The other day, a friend took me to see a house for sale. The asking price was $2.2 million. It was a spectacular home but it had been for sale for more than a year.

So why had no one bought this home?

The answer can be found in five words, which we told the agent, “The price is too high.”

Sheepishly, the agent agreed.

“It’s probably worth about $1.7 million,” said my friend.

Again, the agent agreed. But it got worse (at least for the owners). ...

When the home was first placed for sale, they had been offered $2 million. They refused. In doing so, they fell into the common home selling trap of dismissing an early offer. Often, the early offers are the best offers – as many sellers painfully discover months after the buyers who made the offer have gone.

Where is that two million dollar buyer today? Living happily in another home where the owners accepted their offer. And those owners are also happy because they moved on with their lives. They won financially and personally.

There is a problem facing many sellers today. They don’t realise, often until they’re in a lot of personal pain, that there are two prices when selling a home – a financial price and a personal price.

Think about it – why do people sell real estate? It’s not, as most people believe, primarily for the money. No, people sell because of what they can do with the money. They all have a personal motive.

They money is secondary to the personal needs, goals or dreams of sellers.

Far too many sellers focus far too much on just the money. Indeed, they become so fixated on the money that they barely remember the personal reason they are selling. In doing so, they lose financially and personally.

Back in the days when I was selling real estate, a delightful elderly couple asked me to sell their home. They were Yugoslav immigrants and although their English was poor, they made one point very clear. They had a high financial goal for their selling price.

But what about their personal goal? Why were they selling? They wanted to move close to their grown-up children. When they showed me photographs of their grandchildren their eyes brimmed with tears.

Unfortunately, the property market was falling. I could not find a buyer willing to pay the price they wanted. There were several offers, but each was firmly refused. Out of respect, I didn’t push them. I just kept trying; but I was trying to do the impossible.

Weeks turned into months and still their home was not sold.

And then the elderly man died.

A few weeks later, his wife came into my office. She wanted to rent out her home while she went to Yugoslavia to visit friends and family. She planned to be gone for a year. She gave me the keys and said goodbye. I never saw her again. As so often happens with close elderly couples, she was to die in a few weeks.

Her son came to see me. It was time to sell the home once and for all. We discussed the price and he said “My father was stubborn. You sell it for the best price you can get. We trust your judgment.”

Within a few weeks the home was sold – not for the price the elderly man had wanted but for the best available price in the current market.

The family thanked me. The last time I saw them was the first time that I saw their children. And then it occurred to me – the elderly couple hadn’t lost financially with the sale, they had lost personally by not spending more time with their grandchildren. They placed a few thousand dollars ahead of their personal goals. They put their money ahead of their lives.

From that day onwards, I would not hesitate to tell sellers to put their personal goals ahead of their financial goals. If their price goals were too high, I’d tell them.

I’d do my utmost to persuade them to be sensible about the price – especially in a falling market where the price being offered today (even though it was lower than their asking price) would be even lower tomorrow. And, as the weeks went on, the price would keep getting lower. It was my duty to tell them to take the best offer, quickly, and sell.

About a year later, I was involved with an almost identical elderly couple. Although they had what I knew was an excellent offer, they stubbornly held out for about ten thousand dollars.

I looked at them and thought, “Will they have ten thousand dollars in assets when they die?” And then I couldn’t help myself, I told them what I was thinking. They smiled and told me that yes, of course, their assets would exceed ten thousand dollars when they died.

I leaned forward and said, “So, why don’t you use that money now and take it off the high price you are asking and get on with your life?”

Their faces lit up. It was so obvious. They laughed and agreed. In doing so, they put their lives ahead of their money.

If you’ve got your property for sale and no-one’s buying it, then it almost certainly means that your asking price is too high. Sure, it’s easy to blame the agent and, yes, most agents aren’t that good at negotiating.

But one thing’s for sure about all agents, they all want to make sales. Yes, there are a lot of “crunching” type agents (especially with auctions) but there are also lots of meek agents. And many of these agents don’t know how to tell sellers to accept the best offer and get on with their life.

In my experience, all sellers – once they make the decision to accept the best offer – never regret selling and getting on with their lives.

It’s often a simple choice – your money or your life.

Put your personal price ahead of your financial price and you’ll probably make a great discovery.

You’ll win both personally and financially.

Selling Under The Radar

Selling Advice

Written by Peter O'Malley | Thursday, 08 December 2011

What is selling under the radar?

It’s when you sell your property without any marketing or open inspections other than selected buyers being handpicked and introduced by an agent.

Is it the best way to sell your property for the maximum price? The answer is “it depends”.

It depends on the circumstances and context of the sale. Under the Radar selling is not a recommended universal selling strategy for all properties. But when the scenario arises to do so, the results can be fantastic. ...

Going to the open market is most often the best strategy for the majority of properties. Under the radar selling works best in 3 scenarios.

1. The first being the property has previously undergone a marketing/auction campaign that has failed to produce the desired result. A property that is left languishing on the market is a poor look. Buyers begin to ask that dreaded question, ”What is wrong with it?” In this situation, withdrawing the property and getting an agent to handpick buyers is quite often the best way to go. It protects the value of the property and avoids it being turned into a lemon.

2. The second scenario where under the radar selling can deliver a great result is when, the agent has a buyer that really needs and wants to buy, but has been unable to find anything suitable. They may have sold their property and are working towards a deadline; they maybe time poor and frustrated after missing out on a number of properties or have unique criteria of what they desire in a property. In a lot of cases, the agent will get a sense of whether these buyers are prepared to pay the right price to secure the right property. To finalise the property search, the buyer will quite often pay a premium market price.

3. Thirdly, sellers of unique properties can be well advised to sell under the radar. Why? Unique properties often appeal to unique buyers. Unique as in the features they require in a property. Unique is a greatly misunderstood word in real estate.

Unique is neither positive nor negative. It is neutral. Unique does not mean the property is worth more or less, it is a rare kind. Many have made the mistake of equating unique into priceless. Often the property can be priced right but have no takers. The right buyer, one who would see value in the unique features of the property may not be active in the market. It is a simple matter of waiting for the right buyer to enter the market.

Many people who are interested in selling hold off due to the process of selling rather than the act of selling. If there were a buyer ready to go, they are more than happy to sell. The thought of risking advertising money, stress, time and the energy of monitoring a campaign forces the sale onto the back burner.

If you are thinking of selling and like the idea of quietly waiting for the right buyer, give the team at Hudson Bond Real Estate a call on 03 9840 7700. It could be the quickest, ‘no fuss’ sale you’ve ever had.

Instant Reaction

Selling Advice

Written by Paul Kounnas | Wednesday, 07 December 2011

Selling in the current environment can be stressful. What the seller really wants is an instant reaction from the market place.

“Good, bad or indifferent, let us know where our home sits in the market, but we don’t want a protracted campaign. Once the offers roll in, we can then decide whether we are going to stay or sell.”

The good news is the internet has made selling real estate as close to instant as it is ever likely to be. Yes, even in a flat market.

Once your property is listed ...

on the main media websites, the agent’s respective site, emailed to the databases and a signboard is erected, you will have covered 95% of the potential market in just a few days.

Based on the marketing and the perceived value being offered buyers decide to inspect or not inspect.

What comes next is an instant reaction.

A reaction to how the market views the value proposition of your property within the current market. They are assessing your home against the other homes that are currently listed on the market.

Given the internet is so powerful and dominant in its reach, embrace early interest, don’t resist it. The opposite is more confronting than early interest.

No reaction is still an instant reaction, no interest is feedback.

It is feedback that you may not wish to confront, but it is feedback. Buyers vote with their feet. If they are not turning up to enquire, turning up to inspect or turning up to offer, they are providing you with feedback through silence. This is the hardest feedback to accept because nothing gets said. The buyers whisper to themselves that they prefer the one down the road and move on – whilst you wait.

If you are on the market and buyers are not expressing any interest, you need to“read the play.”

Once your marketing is set right and buyers have visited your home, if you still don’t have an offer or two to consider, either the agent cannot sell or the buyers are finding better value elsewhere.

Very rarely does a seller that spends month after month resisting the market feedback suddenly find a buyer at the desired price.

Pricing to sell is putting a pricing strategy in place that will attract buyers and bring the campaign to a rapid conclusion. Price attracts or repels.

As a seller, you need to set your pricing strategy with an agent that you trust to negotiate the best possible price for you.