Cuts to Stamp Duty

Real Estate Information

Written by Paul Kounnas | Thursday, 14 July 2011

First home buyers are now eligible for a 20 per cent cut to stamp duty. The new Victorian stamp duty concession that came into effect July 1 is expected to produce a surge of interest from first home buyers.

The discount in stamp duty applies only to homes valued at $600,000 or less.

The 20 per cent cut will increase by 10 per cent each year to a total of 50 per cent by the 1st September 2014. The savings on a $600,000 home are as follows:

The existing first home owners grant (FHOG) of $7,000 still remains unchanged and is available for all eligible first home ...

buyers purchasing a home valued up to $750,000.

For the purchase and construction of new homes, the First Home Bonus (FHB) is being extended until 30 June 2012. The FHB is $13,000 for eligible first home buyers who are purchasing or constructing a new home worth up to $600,000 in the Melbourne CBD.

If the home is in a regional area the FHB is $19,500.

The total first home buyers entitlements are $20,000 for metropolitan buyers and $26,500 for regional buyers.

The stamp duty cuts are an additional incentive to the existing entitlements.

The activity that may be created as a result of the stamp duty savings may produce significant demand for property at the lower end of the market as it did with the previous first home buyer schemes.

Also as of 1st July, eligible seniors will receive a total exemption from stamp duty for homes purchased to a value of $330,000 and a partial exemption between $330,000 and $750,000.

For full details visit: www.sro.vic.gov.au. 

The Australian Housing Market Won't Crash

Market Update

Written by Paul Kounnas | Thursday, 07 July 2011

On my return from the International Real Estate Conference in Cyprus, I was overwhelmed by the negativity surrounding our property market.

Nothing had changed while I was away except, as one property expert puts it, a ‘psychological illusion’ caused by sensationalist media reports, obsessed with an impending property crash.

Talk of a housing market collapse is just media hype. Yes, there are short term corrections in many parts of our market but this is a typical market fluctuation, following the ...

strong growth in prices we recently had.

Let’s look at the factors that can cause the market to collapse:

1. 1. An oversupply of properties.
2. 2. A recession/depression.
3. 3. Unemployment levels so high that many borrowers could not afford to keep their homes and are forced to sell.
4. 4. Interest rates rising to levels that would force home owners to default on their mortgages.

The reasons why we are not likely to see big falls in housing prices are:

1. 1) We have a shortage of houses not an oversupply. We are not building enough homes to keep up with our ever increasing population growth and demand.
2. 2) We have a healthy economy which is the envy of most of the western world. A recession is not likely in the foreseeable future.
3. 3) Our economy is expected to continue to perform at healthy levels,resulting in record levels of employment.
4. 4) Our interest rates are reasonable. Hopefully the RBA won’t push rates to a level where it would cause homeowners to default.

In addition, the tight lending practices by our banks make it difficult to get finance for developments. This adds to the shortage of housing as well as increasing the cost.

The reality is that housing prices have weakened, but strong fundamentals still underpin Australia’s housing market.

As I have said in a previous article, the market is going through a transition period where some properties will remain stagnant, others will fall and some will rise.

Buyer Databases - Quantity or Quality

Choosing an Agent

Written by Victoria Knox | Wednesday, 29 June 2011

Most agents will tell you they have databases with buyers ready and waiting to purchase. I’ve even had a client tell me that one high profile agent told her that they had a database of thirty thousand buyers!

Unfathomable as this sounds, its actually not the quantity of names on the list that’s so important.

Names and telephone numbers tell the agent nothing about these buyers. Only good agents bother to ask good questions of buyers to find out the what, when, where, ...

and why questions which motivate the buyer to buy.

Databases that include such information are therefore gold mines when it comes to matching a home to qualified, genuine buyers who want to buy now and minimise the stress to the seller who does not want their home on the market for lengthy periods of time.

The key to a good quality database is for a real estate agency to have one central point of contact. This means one number – the agency’s office telephone number and no after hours or mobile numbers on any other marketing or signboards. Each enquiry is logged in the office and telephone numbers are not lost by salespeople running around in the suburbs.

When it comes to using databases, quality follow up beats lists of possibly erroneous names and numbers any day. And buyers really appreciate an agent who will contact them when a home comes on the market which may satisfy their particular needs.

This after all, is good old-fashioned service, which is what a good agent should provide.

Failing At Auction

Selling Advice

Written by Peter O'Malley | Thursday, 23 June 2011

A question that many people don’t ask is what happens at auction if a cashed up emotional home buyer and a bargain hunter are the two bidders for your home?

The answer is the emotional home buyer will stop one bid above the bargain hunters last bid. Due to the fact the bargain hunters last bid is likely to be well below the seller’s reserve price, the property will then be passed in to the emotional home buyer.

The emotional homebuyers have just been alerted to the fact that they were about to pay more for the ...

property than anyone else in the open market is prepared to pay. In this situation, if the emotional home buyer was prepared to pay $50,000 more than the bargain hunter, the seller stands to unwittingly lose up to $49,000, as a lack of competition stalls the auction. This is the practical reality of public auctions – they require multiple bidders all prepared to pay above the seller’s reserve price to work. The romantic notion that 10 bidders will turn up to bid at every auction is more fiction than fact.

Let’s say the seller hangs tough though. The auctioneer will sometimes disclose the sellers reserve to the market/crowd, usually in the form of the vendor bid.

The emotional home buyer cannot believe their luck – the reserve price is lower than they were originally going to pay for the home.

And the sellers are then told by their agent what a great result and how lucky they were to sell on the day in “this climate”.

Only the emotional buyer knows that the public failure of the auction drove the final selling price down. The seller will never know and the agent does not want to know.

As a seller determined to achieve the highest possible price, the one thing that you should never do is let your interested buyers know what offers you have received. Why? Because the focus for the interested buyers becomes outbidding the competition by $1000 as opposed to focusing on the highest price they are willing and able to pay.

As a seller determined to achieve top dollar, you want to know the highest price every buyer will pay for your property not the highest bidder.

9 Reasons Why Auctions Get Lower Prices

Selling Advice

Written by Paul Kounnas | Tuesday, 24 May 2011

Despite the boom in many areas, almost 80% of home sellers are turning their backs on auctions and benefiting. But there are still many sellers who don’t realise, until it’s too late, what happens to them at auction.

If someone is trying to talk you into selling by auction, then before you sign anything, read the following nine reasons why auctions will NOT get you the highest price for your home.

1 Starting Price:

One of the basic principles of price negotiation is to ALWAYS START HIGH. It seems as if the price goes up at auctions, but that’s only because it starts low. When you start ...

low, you can get stuck low.

2. Reserve Price

This is the lowest price a seller is prepared to accept. There is no procedure at an auction for determining the highest price the buyer will pay. Only the highest price of the losing buyers may be known because they stop bidding once they reach their limit. But the buyer who is the highest bidder often buys at less than his or her limit.

3. Repels Buyers

Research shows that more than 90% of buyers do not like auctions. The highest paying buyers may avoid the auction.

4. Inconvenient

One of the basic rules of marketing is make it easy for people to buy. Auctions do not make it easy. They make it hard.

5. Bargain Hunters

Investors, developers and property dealers often buy at auction because they all know that auctions are one of the best places to find cheap deals. But they almost NEVER sell at auction. You will not find many real estate agents selling their home at auction either.

6. Comparative

By making the negotiation public instead of private, buyers have an advantage over the seller. Instead of having to offer their highest price to win the auction, buyers only have to outbid the buyer below them.

7. Deception

To persuade sellers to auction their home, agents will talk about high prices. And then to get buyers to come to the auction, the same agents will talk about low prices. The sellers end up selling for less than they were told they could get, and the buyers often end up paying more than they were told they would pay.

8. Sells to the Wrong Market

To attract buyers, agents will market the home by advertising it at a low price, much lower than what the seller will sell for. This attracts buyers who want to buy at the low price. The agent will then say to the sellers, “This is what the market is telling us.”

9. Failed Auctions

When a home does not sell at auction it is labelled a failure and buyers will offer lower prices. They are easy prey for bargain hunters. 

These are just some of the seasons why we believe auctions get lower prices.