We attended an auction recently where a bid was made at the high end of the advertised Statement of Information (SOI) range, and the bidder asked: “Is the property on the market?”. The agent replied, “we will let you know when it is”.
The reply caused a minor crowd disturbance, but the agent was within their legal rights to reply in this way even though the last bid was at the high end of the SOI.
The Statement of Information (SOI) must include:
An indicative selling price for each property, based on recent comparable sales.
An indicative selling price may be a single price or a price range of up to 10 per cent.
The SOI must not be less than the agent estimated selling price OR
No less than a price in a written offer that the seller has already rejected.
However, the seller may choose to set their reserve price on auction day. The reserve price decided on the day may be above the advertised price. The reserve can be whatever the vendor chooses on the morning of the auction — regardless of the indicative price range. In a competitive auction market, vendors can set reserves higher than the advertised price guide and sometimes this can come as a surprise even to the selling agent.
Reserve prices in the Peninsula often exceed the SOI price range highlighting why the property market is increasingly difficult for inexperienced buyers on a budget to navigate. For example, a house may be advertised with a price guide of $1,100,000 to $1,200,000, but on the day of the auction, the vendor reserve price may be more than $1,250,000.
How does this happen?
Because the seller (vendor), not the agent, entirely decides the reserve price, a spokesman for Consumer Affairs Victoria said. “The reserve can be set as late as auction day and may be influenced by the level of interest in their property,” he said.
Call us at Peninsula Property Advocates to discuss all of your options for selling or buying property and the necessary strategy to succeed in today’s market.
Think of this scenario. Your neighbour has decided to sell up and go north. They get an excellent price for their house – higher than you or they expected – so you decide to sell up and head for the beach whilst the market is surging ahead.
This is very much a real-life experience today in the Covid environment and heated real-estate market, and here’s what they faced.
Weeks 1-2. The agent selection took them two weeks.
Week 3. The agent gave their opinion on required repairs and renovations.
Weeks 4 & 5. They agreed to spend a substantial amount on the property to maximise the return. There were no permits required, just materials and renovation – selection of builder two weeks.
Weeks 6 to 9. Discussions with the builder begin – this is where it got very messy. The builder couldn’t start for four weeks, and there was an acute shortage of supplies due to high demand and the Covid pandemic.
Bank loan processing delays. The banks said they were so busy with a massive backlog of loans that it could take four weeks to approve the next property purchase.
Weeks 10 to 15. Renovation works get underway – massive material shortages builder cant finish job on time.
Weeks 16 to 18. delays in renovation work shortage of tradespeople, painters, carpenters and materials – flooring, kitchen and bathroom fittings and tiles.
Weeks 19 to 20. Covid delays – tools down.
Weeks 21 to 25. The property is finished, and the four-week auction campaign begins – property is listed.
Week 26 house is sold at auction.
Although much of the work was done simultaneously – from the first idea of moving until the auction took over six months.The idea of quickly capitalising on the market became a nightmare for this family, and they often wondered if they made the right decision.
And with the bank loan delays and not knowing what their house would achieve in a market six months down the track – the owners had to wait to sell before looking for their next home in earnest.
We guide you step by step with the sale of your property and ensure you have a complete understanding of what lies ahead.
As Vendor advocates, one of our roles is to advise on agent selection. We meet and collaborate with numerous selling agents in the role, but some real estate agencies and selling agents stand out more than others.
What To Look For In Choosing a Selling Agent
1. Knowledge: A selling agent must be an expert in the local area. They are more likely to be talking to a potential buyer than an “out of towner” and will have a strong feel for buyer depth, potential value and the selling campaign required (auction, EOI, private sale).
2. Communication: How good will the communication be after signing the authority.
Will you now be handed over to a junior agent or the office administrator?
Who is going to stand at the door during opens?
Who is going to follow up leads?
Who will be conducting the auction?
Successful agents don’t work alone and will need help to sell your property; however, they don’t delegate the crucial processes. Understanding who is in the team and who plays what roles should be explained at the first meeting
3. Persistence. – If the property doesn’t sell, what happens then? Are you going to have additional costs such as marketing, etc., and what strategy does the agent have to complete the sale if an auction is unsuccessful.
4. Right agent fit for the property. Some agents specialise. For example, a highly successful agent we have worked with recently only sells apartments. However, he has extensive knowledge built up over a long career and therefore has an advantage over other agents; this resonates with vendors and buyers alike.
5. Great listeners. The top agents are just great listeners. We see the quality agents read their client well and adapt their approach accordingly. They are great at open for inspections and always trying for a future listing. They are fluid thinkers – adaptive and can react to vendors and buyers alike to maximise outcomes.
6. Attention to detail – good agents don’t cut corners – look for an agent that is professional and timely in their communication from the very beginning.
7. Presence: Whether a private sale or online/onsite auctioneer, the successful agents have gravitas – someone you are glad to know and trust.
If you are thinking of selling (or buying) a property, we help you select the best agent for your property, and it comes at no cost.
In our experience so far, online zoom style auctions appear to be achieving the same results as onsite auctions and no barrier to achieving the desired result.
We still like onsite auctions – who doesn’t, with the theatre and the buzz around a freshly prepared property. After all, generally speaking, properties are at their best on auction day – with gardening/landscaping, staging, renovations, all repairs done, upgraded flooring and a fresh coat of paint. An onsite auction is like a party – the property is all dressed up, excitement in the air and great expectations by vendors and buyers alike.
Vendors naturally want to have their properties looking the best on auction day – the stakes are high. We observe that vendors have often lived with the idiosyncrasies of their properties for years. But come auction day – presentation is (generally) exceptional!
And yet, to date, online auctions, forced on agents by the Covid protocols, are working well, achieving the desired results without any market slowdown. Vendors are still encouraged by the good results and progressing to a listing, and buyers are attending and buying, as seen by the high clearance rates over the last weeks.
We also observe that auctioneers tend to slow the procedure down for online auctions, allowing time for people in their preferred environment to make calls, discuss openly with family and friends (on mute, of course!), and carefully consider their next bid.
Do you have a strategy to be successful at an online or onsite auction?
Buyers need a winning strategy to be successful at an online or onsite auction. At ela Property Advocates, we employ strategies to help you consider all the options and improve your chances of success. We help you make good property decisions.
The Melbourne property market is forever evolving – a good example is how agents adapted to online Zoom auctions during the COVID lockdown.
Another dynamic change we are seeing is the effect Baby Boomers are having on the property market. There are over 5.0 million Baby Boomer Australians aged 57-75, one of Australia’s largest population groups. They are cashed up, healthier than previous generations and aren’t heading to the retirement village any time soon!
Many Baby Boomers are financially sound and can help their children enter the property market, and we see more examples than before.
Why do the Baby Boomers need to help?
Bank lending practices have changed, including the tightening of responsible lending regulations.
The new rules have caused a significant impact on young people and first home homebuyers.
Banks more than ever from November 1, 2021 scrutinise income and expenses to determine it is mortgage serviceability.
Reaching up to 20% deposit is a challenge, plus the expense of stamp duty.
Wage growth hasn’t kept pace with property price growth.
Melbourne median prices are rising – in September this year, the median house price in Melbourne exceeded $1 million.
Baby Boomers are in an excellent position to help as they have good superannuation balances, and the value of their homes has risen significantly.
At a recent auction, we were bidding on behalf of a client. We witnessed intense bidding with five bidders, and the successful bidder was a father-son team. We later found out that he would not have succeeded in this highly competitive auction scenario without the financial assistance from his Baby Boomer parents.
I had an interesting discussion with a long-serving successful agent who said he has never quite seen anything like today’s market. He wasn’t referring to the prices being achieved because he has worked through several booms and busts.
What he hasn’t seen before in the buyers he’s talking to is the FOMO (fear of missing out)
He said, “The perception is that if a buyer offers a price in the Statement Of Information (SOI) range, they will own the property. Buyers don’t want to risk going to an auction for fear of missing out and want to wrap up a pre-auction sale”.
“We really feel for potential buyers when we tell them the vendor wants to see it through to the auction and has instructed us not to receive offers. There is a bit of frustration out there”, he said
There are many contributing factors:
Shortage of some stock like good family homes in inner Melbourne
Bank interest rates at a historical low – tempting people to borrow more
It is taking longer today to find the right property
Despite last year’s lockdowns Melbourne is still one of the safest places in the world to live.
Our advice is this :
Don’t jump into the wrong home for fear of missing out
It may take longer and possibly more money but buying the right home is the sound strategy rather than buying emotionally or on price
Have a considered strategy – do your homework and due diligence before auction day
Seek the advice of an expert Buyers Advocate to help with your property search, access to pre and off-market properties and most importantly, understand what you will have to pay.
If you are concerned about entering the market under today’s conditions and need some help and advice, call us at Peninsula Buy Sell Property Advocates. Geoff Briscoe 0419 740 351. Web: http://www.peninsulapropertyadvocates.com.au
Regional living has received plenty of coverage from the Melbourne media during the COVID outbreak. Stories of “mass migration” to our major regional centres give the impression that the opportunities to either invest or be an owner-occupier are limited.
Besides Greater Geelong, Ballarat is our largest and closest major regional city. Ballarat offers excellent infrastructure and is well-serviced with first-rate transport, hospitals, industry, education, the arts, and sporting facilities.
Melbourne’s proximity is one of the main attractions, only 1 hour and 23 minutes by rail or road.
But interestingly, the press hype may leave potential investors or new residents with second thoughts, so a Ballarat agent we work with shared some valuable insights.
The influx of “city folks” he feels is not as significant as the press states.
Stock levels are improving slightly, but there is still a demand shortage.
Some excellent properties are coming on the market now.
He sees growth in the eastern Melbourne side of Ballarat and around Wendouree.
Local buyers are still dominant, but city buyers are pushing up prices through the sale process – but they are not necessarily prevailing.
By Melbourne price standards, there are some excellent examples of 3 bedroom mid-century homes selling for $375-$575k on good-sized land blocks.
Prices have risen, and whilst rental yields have come down, Ballarat is still achieving a reasonable return compared with Melbourne.
There is still strong demand for rental properties; this agent estimates just a 1.3% vacancy rates – so rental yields may increase as a result.
His summary is interesting – the influx of Melbourne investor/buyers is not as prevalent as the press’s impression. But he feels the Melbourne investor’s interest is pushing up prices that locals must and do meet.
Our thoughts are that Ballarat still offers significant investment or living potential with good demand, growth prospects and a solid rental market.
Call us at ela Property Advocates to discuss investing in regional cities and help you make good property decisions. Call Guy Angwin 0412 022 998 or Geoff Briscoe 0419 740 351. Web: www.elapropertyadvocates.com.
Here’s an excellent summary published by the REIV on the Residential Tenancies Act changes we wanted to share with you written by Gil King, CEO, Real Estate Institute of Victoria
The looming changes to the Residential Tenancies Act (RTA) in Victoria are significant, and it’s critical for landlords to get across them.
Symbolic of the sweeping reforms is a title change for landlords following the 29 March 2021 introduction of the new act. From then, landlords will be known as Residential Rental Providers, and with that new label comes 132 changes to the tenant/owner relationship, including increased cost, obligation and consequences for the owner.
While many of the reforms are reasonable, and indeed are requirements that smart and reasonable investors already obliging on, it’s the volume of change occurring at once that could be overwhelming. The fact that they arrive after an extremely difficult 12 months, courtesy of COVID-19 and its rental moratorium, makes things more challenging for some investors.
Concerned with supporting everyday property investors, the Real Estate Institute of Victoria has prepared a guide to help ensure property owners are up to date on the raft of changes.
Leasing a property: Restrictions will apply on the information requested from applicants. Some restrictions will help to avoid discrimination, while others could hide material information, such as bond history. Talk to your agent about strong reference checks as a counter measure.
Modifications: Renters will be able to make prescribed minor modifications, like fixtures and fittings, without your consent. Consent will still be required for structural modifications, though some requests cannot be reasonably refused, and may need to be carried out by a suitably qualified person.
As a landlord, you have the right to ask for any changes to be restored at the end of the tenancy, and it’s still the renter’s duty to redress any resulting damage to the property. A restoration bond can also be requested to cover the future removal of fixtures for more extensive or impactful modifications.
Property conditions and maintenance: You will need to ensure rented premises are provided and maintained in good repair, and in a reasonably fit condition for occupation. This is irrespective of whether the renter knew about any disrepair before signing the lease, amount of rent paid, or the age and character of the building.
Before March, make sure you get up to date on the minimum standards and guidelines on wear and tear, energy efficiency ratings and ventilation checks, as detailed in the Regulations. It’s also important to look into the ongoing service requirements for appliances such as air conditioning units and heaters.
During the period of the lease, it’s a renter’s responsibility to provide you with notice of any damage or faults immediately.
Notice to vacate: A notice to vacate can still be given for a valid reason, including the property’s sale, change of use or demolition, or if you’re intending on moving into the property. If a renter intentionally or recklessly causes damage to the property, endangers or threatens you, an agent, a neighbour, or contractor, you can provide them with a notice to vacate.
There are substantial changes to these laws and impacted owners should reach out to their property managers to discuss.
Renter-initiated bond claim: Bond claims can now be made individually by the renter or owner. If a bond claim is made individually, the Residential Tenancy Bond Authority must notify the other party, but if no response is claimed, the bond will be paid out to the applicant.
To ensure any property damage is paid for by the renter, it’s important that you work with your agent to ensure end of lease inspections are conducted promptly, and bond claims completed in the required time frame.
Penalties: The new reforms will see some fines more than double, while other penalties will sit at ten and even up to 24 times the previous fine cost.
At the REIV we’re seeking urgent clarity from the government on the compliance program, and how decisions will be made to invoke these penalties.
Timing: Some of the new requirements only apply to tenancy agreements entered into on or after the 29 March 2021
The changes aren’t as simple as picture hooks and pets, as some reports have suggested. They will be significant for the sector and impact renters and owners equally.
Residential Rental Providers, in particular, would be wise to work with their property manager to understand the new requirements to help ensure they continue to get value and enjoyment out of their property investment.