Most people who are planning to sell their house are often shocked by how much it will actually cost them in real estate commissions alone.  The average commission rate in Perth is about 3%.  Therefore if you take the average selling price of $500,000 that means you will be paying $15,000 in commission.  That is quite a lot of money to lose on the sale of your house.

Commission rates in Western Australia have been deregulated for over 10 years now. This means there is no limit on the maximum commission an agent can charge*. So it’s important to really do some home work and then negotiate a fair commission rate. You can only do this by comparing fees and service offered and to do that you will need to have more than one quote – 3 is probably best, more will not necessarily be more useful.

Agents will provide their estimate of the market value of your property along with their quote. Unfortunately most sellers focus solely on the selling price proffered, often choosing to go with the agent who gives the highest figure, and do not question the agent in depth on the service they will provide.  

Before you decide on the agent you will use, get out into the market place and look at every home for sale in your area that compares with your own. Then, if you are honest with yourself, you will know what your home is worth just as a buyer will also know. Only now is it time to choose your agent based on the service you will receive and the fee you will pay.

(* If you believe an agent is charging unreasonably high commissions, complaints can be lodged with the Real Estate and Business Agents Supervisory Board).

5 Tips for choosing and working with your agent: 

1.   There are lots of agencies in Perth big and small that offer different packages. It is generally true though that the major franchise groups with big brand names charge big fees - image costs money. Some companies    offer minimum and maximum commissions and there may be big savings to be had when you participate in the sale just by showing your home yourself. So, allow plenty of time to research the best option for you prior to going to market. 

2.    Most companies charge up front for marketing and administration costs.  This is quite normal but make sure these fees are reasonable and specify exactly what you are being charged for. For example, there may be an allocation to newspaper advertising, signage, colour brochures and internet advertising

 3.   Find out if the agent you choose will be the one handling every aspect of your sale. Some listing agents have assistants who will deal with potential buyers on their behalf at home opens and may even negotiate the contract. If this is the case, the agent should tell you this will happen. If you are happy with the arrangement, make sure the assistant is a registered sales representative.  This is a legal requirement which you can check at http://www.reba.gov.au/  

4.   Check that the agent’s commission is written down on your listing agreement and that you are clear as to whether or not gst is included. You will be required to initial alongside it so make sure you understand it .

5.    Be happy with the commission you are paying unless you have cause to complain about service. In essence you are paying the agent only when he finds a buyer and negotiates an offer you are happy to accept. That can happen in the first week or it may take 10 weeks. Don’t gripe if it happens on day one – the agent has done his job.

It’s quiet around the traps isn’t it and it’s not just home opens. I do my shopping on Saturday mornings.  No matter how I try to organise my weekly grocery shop on other days I always end up having to buy something on Saturday. I wish I didn’t because it’s busy and I have difficulty finding a parking spot that isn’t miles away. Even when I make the big effort to get there early the crowds are already there – milling around, drinking coffee, having breakfast, browsing the book store or reading papers waiting for the shops to open. I thought most people enjoyed a bit of a lie-in on Saturday mornings but not this lot! 

Last weekend – June 26 – was my son’s birthday, we were having a family get together and, as usual, there were some last minute things I needed.  It was 9:30 by the time I set off and I was inwardly groaning at my own tardiness. But oh joy, I found a parking spot close to the entry. Into the centre I trotted and lo and behold it was nearly empty. Where were they all? Perhaps the minus 0.6 degree morning had something to do with it! Yes, I’m sure that was it – all but the absolute die-hard shoppers were home in bed.   

No such luxury for the guys and girls behind the counters though. It’s business as usual for them whether there is anyone to serve or not.  They’re used to the ups and downs of the trade and they know the buyers will be back sooner or later.  

It’s the same with home opens right now and it’s frustrating when you’ve cleaned and polished, bought fresh flowers and not a single person comes along.  When you’re a real estate agent doing this job all the time you know it is just one of those things but when you’re the seller, and especially if you’re showing the home, it’s depressing. The only consolation is that it is the same for everyone else in your price bracket and your immediate area – you’re never alone even if it feels as if you are. 

So what’s going on? Frankly, there’s plenty going on - it’s end of the financial year; interest rates are up; we have a new federal government; the global economy is a worry; the stock market is behaving badly; school holidays are here; it’s the soccer world cup; newspapers are reporting softening house prices and it’s cold!  

Goodness, you would think the combination of all of those things would bring the market to a complete standstill however it never does stop. It just ticks over more slowly for a while.    

So, what to do? Well, you either keep going or you get off the roundabout. If you have to stay on it and sell then here are some important issues to take on board -   

1. accept that we are in a buyers’ market when typically they browse one day, stay home another day
2. understand that each day is a new opportunity to sell – that will help you stay positive
3. open for inspection each and every weekend regardless. Open on the right day for your area and at the same time as everyone else
4. forget the $$$$s - concentrate on finding a buyer. Use a ‘from’ price instead of a fixed price to attract real interest (you can always say ‘No’) and trust your agent to negotiate the price up (you can always say ‘No’)

This is the intrepid GM of ANREPS reporting back to any body taking an interest in the homeless in our great State. I'm saying WA but literally there are 1000's of people that sleep rough right across Australia every night.

It was a pleasure to be amongst nearly a hundred others who donated their time and money to the Vinnies cause. Not forgetting all of the volunteers who made it possible.

We were given an insight by some articulate homeless people who were brave enough to share with us the hopelessness of being in their position. They have dreams for the future just like everybody else, so if you meet one of these unlucky people ----- GIVE THEM A HAND UP and feel good about it, you never know, you just might make their dream come true.

Donations were very close to $500,000 around about the sleep out time, which was a tremendous effort. Sadly I didn't raise anything like I was hoping too. Plenty of moral support but not much in the way of change. You can still donate and make my day!! I get told who you are.

I started off by using the word intrepid, perhaps it should have been selfish. I made my bed in the middle of the WACA, all on my Jack Malone. I couldn't imagine a better opportunity to go to sleep in the middle of the pitch and not get arrested as a ground invader. Much smarter than streaking  ..  Yes?

Just one thing went wrong. I bloody near froze to death and sleep wasn't on the agenda until I dropped off sometime after 4.30 am.

I had arranged with Dorothy to pick me up at the WACA gates at around 7am. Imagine her surprise when yours truly was nowhere to be found. She recruited the groundsman for a little search party and toured the WACA grounds on an electric trolley and as it slowly got lighter finally spotted a sheet of cardboard covering a sleeping body about 7.20am. Imagine being woken by someone hopelessly breaking down with the giggles and a guy staring at you stony-faced no doubt wondering what the hell is going on. Oooh was I stiff ............. in the joints

Bloody hell the ground is hard and the cold is cold when you're 75. Still, I would do it all again in a heartbeat if it helps a homeless person.

Money!

How much have you got?

Now, how much have you really got?  No, that’s not a silly question, all too often buyers discover to their frustration that their real worth is considerably less than they thought.

Why? Well, here goes – 

Credit cards

Do you have a credit card? If so, whatever your card limit, whether or not you have a debt on the card, even a small one - deduct the total card limit in $ from your capital. If you have more than one card, deduct each card’s limit from your capital. 

Loans

Do you have a personal loan? Are you purchasing your car with finance? Do you have any other regular debt? If you do, deduct the amount of all debt from your capital. 

Still looking good? Great! 

Job

Have you been in regular work for 12 months? Then get your pay slips ready.Can you show a savings record with the bank or lending institution you plan to obtain a housing loan from? Are you self employed and, if so, can you show tax returns for the previous 3 years? 

Getting pre-approval

Seeing a broker for pre-approved finance is your next step so, armed with every scrap of detail about your financial position, make an appointment. Under no circumstances try to conceal debt from your broker. It’s  such a waste of time and the  disappointment is immense when you find the house of your dreams and have an offer accepted  only to have the whole thing fall over because you forgot to mention that other credit card you have stowed away and the bank or mortgage insurer rejects your application.  A good broker will poke around your finances until all is revealed, put your application together and submit it to the Lending Institution of choice.

Now, your pre-approval will have some real value and you can go shopping. 

Caution: Even though the pre-approval will do wonders for your confidence it will still take 28 days for your loan to be unconditionally approved by the bank so, please, don’t feel offended when the real estate agent insists on that time frame.  You and your finances may be in great shape but at this time the bank knows nothing about the property you are buying. Unless you are able to pay cash or contribute a hefty percentage of the selling price, the bank will want to value the house to make sure it is worth what you have offered.  This takes time, the paperwork takes time and it is better to allow the recommended period than to insist on a week or two for approval then be in the aggravating position of having to request extension after extension. It happens all too often. It annoys the hell out of the seller and could mean the contract runs out of time.

Image: graur razvan ionut / FreeDigitalPhotos.net

Thinking of buying an investment property? 5 questions to ask yourself before you take the plunge.  

1. Timing   

Q. What’s happening in the market? Is the market rising, falling, has it peaked or bottomed?    

The time to buy is when everyone is selling and prices have fallen however, we often rush out and buy when the market is on the rise for fear of being forever priced out of it.  Whether you are buying close to home or interstate, find out what is happening in that market. Choose an Independent source to gauge the market – don’t listen only to the ‘local agent’ he/she may not be a rogue but they do have a vested interest. Research, research, research before you take the plunge, talk to your accountant and hang on to the property once you’ve got it. Here are some useful websites to visit -    

http://www.pulseproperty.com.au/    

http://www.bis.com.au/reports/res_prop_prospects_r.html   

http://www.hudson-institute.com/property-investing.html      

Note: to benefit from The Hudson Institute you would have to become a member. It is a financial planning company offering Wealth Creation (including building a share market portfolio and advice on property investment), Wealth Education and Wealth Protection to its members. We have been members since its inception in the mid ‘90s and it is one of the best things we have ever done.   

2. Objectives   

Q. What do you want the property to do for you? Deliver an income, increase in value or both?    

Income and capital appreciation are obviously closely linked and best achieved over the long term. Maximise income by keeping the property tenanted at market value 99% of the time.    Choose tenants carefully and offer a 12 month lease (not longer unless you include a rent review clause and definitely do not plan to sell).  When the vacancy rate is high it may take a few weeks to find a new tenant. Reducing the rent a little may ensure you keep the property occupied – no tenant = no income.  Property trading is not true investment. Traders make money by buying ‘down’ and selling ‘up’  i.e. buy an old (or abused) property in a down market, do it up and sell for a profit. To be successful at this you need time, knowledge of the market and the ability to do a lot of the work yourself. 

3. Type and age of property   

Q. What type of property do you have in mind? A house and land on separate title; a townhouse or villa in a small strata complex; an apartment in a large strata complex? 

House and land   

Like many you probably hold the view that it is the land that appreciates whilst the building on it constantly depreciates - and that is true. Consider though the age and condition of the building. An old house on a large subdivisible block sounds like the perfect investment but it may require very high maintenance yet achieve a low rent return because good caring tenants don’t want to live in it. With this type of purchase it is important to at least have a pre-purchase building inspection; termite inspection and an electrical wiring inspection. I would also have the plumbing checked especially if there are lots of trees and shrubs around as their roots love to find their way into the old clay pipes which become clogged and may even rupture resulting in leakage, an extraordinarily high water use account and subsequent expensive repairs or replacement with plastic piping.  If the block is large with extensive lawns, tenants will not want to pay high ongoing costs for lawn mowing or pruning. It is best to incorporate this into the rent and employ a contractor.  If you are relying on the zoning for future subdivision, check at regular intervals with the council planning department. Rezoning is common and is not always for higher density of the block you plan to purchase.    

Townhouse or villa   

A property in good condition should require minimal maintenance. Consider the available parking because a single small carport with no visitor parking may limit the tenant/s and therefore the amount of rent. Check also if there is an active strata company, some maintenance of common property may be necessary. Without a few rules and someone appointed to keep an eye on things, even newer complexes can end up looking unkempt and arguments arise with unpleasant consequences. In a small complex there may be no quarterly levy but a small contribution to maintenance of, for example, the driveway or front verge.       

Apartment   

The good thing about this kind of property is that there is only the interior of the apartment to be concerned about, isn’t there? Yes, but you would own undivided shares in the common property which has to be maintained and to this end you will be obliged to pay levies on a quarterly basis. If the structure is old, major renovations may be needed which could mean that additional funds are required in the form of a special levy. This can prove expensive. The strata company manager is an important cog in the wheel here and there are good and bad as in any industry. Even though you may want no involvement in the owners’ council or any of the business to do with maintenance of building or its grounds you should scrutinise    the financial records of the strata company and if you have concerns, after you have bought, attend meetings or appoint a proxy to attend on your behalf.  

4. Location   

Q. Where would you like the property to be – up to 10kms from the city or in the outer suburbs 30+ kms from the city?    

Many first time investors like the idea of the property being close to their own home so they can ‘keep an eye’ on it.  If this fits you and you live in an outer suburb you can still choose property that is close to amenities and infrastructure such as train and bus routes, shops and schools, medical facilities and so on. It is easier to find, and keep, tenants when amenities and work are within easy reach.  Investment property that is 30+ kms from the city will not appreciate as quickly as a similar    property 10kms away or less because the land value component has greater value the closer you are to the city, ocean or the river.  Nor will it achieve as high a weekly rent and in downtimes it will also be affected to a much greater extent from a drop in the market value and high vacancy rates so be sure to take this into account.   

5. Management   

Q. Do you intend to manage the lease yourself or employ a real estate agent to look after things for you? 

Many investors successfully manage their own property. Provided you treat it as a business and follow the rules you will certainly save an agent’s management fee.  If you are not sure what the rules are (in WA), go to the Consumer Protection website -  http://www.commerce.wa.gov.au/ConsumerProtection/Content/Real_Estate/Renting_and_tenancy/Landlords/index.htm  - and get a copy of their excellent publication Renting Out Your Property - An Owner's Guide [PDF 1.14mb]. Or ring the Call Centre on 1300 30 40 54 to get a print copy. You can also get a Landlord’s pack with all the forms you will need (and some you won’t need - hopefully)  When you don’t want to be involved, there are plenty of specialist property managers around. Most agencies have a property management division. It’s worth understanding that the role often becomes one of people management rather than property management and finding the right Property Manager for your property is important. Biggest is not always best here. It is very different from property sales. It can be a very high turnover department in some agencies as young property managers assigned only to carrying out property inspections find the role onerous and quickly move on.  Continuity is best for all concerned and you will usually find a greater commitment from an individual running their own business with an assistant (or two). Ask for references or an opportunity to speak with someone currently using the service of a property manager you think you would like to use.

Image: djcodrin / FreeDigitalPhotos.net

 

1.   Leaky Taps

Before you offer the property for rent, check all the taps for leaks or any that are hard to turn off (or on for that matter) – outdoors as well as indoors – and replace the washers. Most Tenancy Agreements state that the tenants are responsible for replacing tap washers. Seems fair since they are turning the taps on and off all the time but hang on – few tenants are in a property for several years and if they cop a leaky tap and an order to replace it themselves they may just do that by getting to work with a wrench, damage the tap and/or put the wrong kind of washer in (which doesn’t cure the drip). On the other hand they may try to avoid the cost of repair by screwing the tap down so hard that the seating is damaged. Either way, it can end up with the tap having to be replaced and the ultimate extra cost of a new tap is on you. We recommend that you use a handyman you trust and pay for this yourself 

2.   Blocked Gutters

Gutters are another owner/tenant issue. In my opinion if your property is surrounded by tall trees, you should pay to have the gutters cleaned out each year. Tenants won’t initiate this and are rarely instructed to do so meanwhile the gutters happily fill up and no-one notices until there is a problem. Ignoring clogged up gutters means that rain water can’t escape via the downpipes as it should so it runs back under the eaves causing those nasty brown or mildewed patches or allowing water into the roof space from whence it may seep through and stain the ceiling. The cost for an average house is currently around $150 – cheaper than having to repair a damaged ceiling 

3.    Blocked Drains

This one is quite clear cut. If blocked drains are caused by tree roots getting into the system, the owner pays however when there is a collection of hair from the shower or grease in the sink, the tenant pays. Similarly with toilets – excessive use of toilet paper or other material flushed into the system from inside – the user (tenant) pays; outside e.g. tree roots or fractured pipes – the owner pays.

ANREPS First Again.

We have trialed QR Codes and have had such positive feedback that as of June 2010 ANREPS Real Estate will be using QR Codes on all of our For Sale signs. 

Most phones come with the barcode scanner application on them.  If yours doesn’t have this application and you want to download it onto your phone go to:

http://www.mobile-barcodes.com/qr-code-software/ 

Depending on which phone company you are with, there might be a small fee involved.  It is definitely worth having this application on your phone as other industries in Perth are starting to use these codes for different promotions.

Help support a great cause, Vinnies CEO Sleepout in Perth happening on June 17th. Our General Manager Tony Wiles has joined this cause along with many other CEOs and Managers in Perth to help raise funds and awareness for the homeless in Western Australia.

They will be camping out on June 17th from 7pm until 7am.  They are only allowed to bring there sleeping bag and warm clothing.  No comforts of home or alcohol will be allowed on the night.  The participants will be supplied a card board box to sleep on and given 1 cup of coffee, a bowl of soup and a roll.  This is what most homeless people only get if they are lucky enough to get into a soup kitchen.   

Check out the website for more information  http://www.ceosleepout.org.au/perth/index.html.   Any donations for Tony Wiles our General Manager or any other of the managers/CEOs would be greatly appreciated.   To make a donation for Tony please follow this link https://www.ceosleepout.org.au/perth/ceodonate.html?ceo=668&.

So you’ve got an offer on your home and the contract is running along smoothly.  You’ve been busy racing around getting your house packed up for the big move.  Two weeks left until moving day and you get a call from your agent to make an appointment for a final inspection.  You shrug it off, say to yourself, ‘no worries, everything will be fine’, and think no more about it.  Now that’s where the problems can start. 

Most sellers consider that the ‘Final Inspection’ is just a routine look around by the buyer and usually occurs a few days prior to settlement.  However, it’s designed for buyers to double check that everything in and outside of the house still looks and works the same as when you accepted their offer.   In quite a few cases something does go wrong and even if it’s only minor it can cause everyone a few headaches and sometimes cost the seller time and money fixing things up. 

Here are a few tips on how to prepare & survive a final inspection and come out of it smiling on the day.

1. Do your own final inspection on your house at least 2 weeks before the settlement date.
2. Walk around your home, inside and out, with the buyers shoes on. Buyers are super critical at final inspections. It’s their last opportunity to reassure themselves that they made the right decision to buy your property.
3. List everything you notice and fix the problems straightaway. Most common problems are burnt out light globes, keys missing for windows and doors, leaking taps, fans not working, unhealthy looking gardens, reticulation not working, blocked gutters, etc. Buyers want to be especially sure that anything of electrical, mechanical or plumbing nature is in good working order. They will want to turn on taps, open windows, test the hot water and so on - even the blinds should open and shut properly.
4. If you find a major problem talk to your agent or settlement agent for advice.

Following these tips could end up saving you a lot of money.  Don’t let the final inspection cause a delay in settlement or you may be up for penalty fees.