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MARKET UPDATE January 2017

The sales figures for 2016 are fascinating, even DRAMATIC. Despite what anyone says or thinks about the local real estate market, I expect to see big things in 2017.

The basics are still quite good. (Affordability, interest rates, unemployement still relatively low, housing supply). 

There is a definite trend of reduced volumes of sales, quite dramatically however, so this is not a time for sellers to be too bullish. There is undeniable evidence that changed market conditions, sentiment, tighter lending and a lack of price growth now for a long time (Many suburbs sitting at 2006/2007 prices), the Buyers know that they can wait for the right property at the right price. 

THE FACTS: (To illustrate I am using Applecross and Mount Pleasant only). 

Sales in past 5 years- APPLECROSS

2012- 180  (Days on market 164)
2013- 201  (Days on market 146)
2014- 174  (Days on market 109)
2015- 149  (Days on market 105)
2016- 138  (Days on market 132)

In other words, volumes down 32% on the peak of 2013 and 8% down on last year. (Source: Complete Data). 

Sales in past 5 years- MOUNT PLEASANT

2012- 159  (Days on market 162)
2013- 161  (Days on market 121)
2014- 183  (Days on market 100)
2015- 162  (Days on market 93)
2016- 112  (Days on market 111)

In other words, volumes down 39% on the peak of 2013 and 31% down on last year alone (Source: Complete Data). 

WHAT DOES IT ALL MEAN?

I am more excited than ever!- about the opportunity that 2017 presents, as we normally see new buyers and sellers alike jump into the market either now or early in the New Year anticipating a move.

Now more than ever getting the right agent is critical. 

The best agents make things happen, have energy and proactive systems in abundance. 

I expect big things in the New Year as the market settles back into a new kind of normal.

Buyers will buy, sellers can and will sell and everyone realises that the local property market is quite resilient and an excellent long term buy as far as value and lifestyle.

Please feel free to drop me a line to help you get moved in 2017.

How much is my property really worth?

This is the quintessential favourite question for many property owners and buyers and real estate experts alike, and a question which depending on who you talk to, has lots of different answers with potentially huge variations on the values.

All owners of course value or see their property through a set of different eyes to what an independent third person does. This is called the "endowment effect" and is the reason everyone perceives their own pet dog, football team, choice of restaurants/ wines etc. as "special" and the best. Clearly everyone has a view on these matters, and this is always subjective, as it is with the value of a property. Fortunately, some methodology can be applied to assist in determining value.

TYPICAL METHODS CENTRE ON SOME OF THE FOLLOWING:

1) Comparable sales evidence (make sure "apples for apples" comparisons). This is actually the most reliable as long as the sales evidence is recent, and similar in its comparison. Also it is essential that the market has not changed since the comparative sale occurred. NOTE: Scarcity or uniqueness or what we call "WOW FACTOR" can add 10-20% in some cases to what seems reasonable market value. Sometimes, "BRAND SPANKING NEW" achieves the same outcome.

I often smile how some owners will see sales evidence compared to how some buyers see the same properties. Each sees "comparable" properties to suit their own arguments. The main areas to compare are land size, land location, frontage, elevation, views, high side or low side of the road can matter, front or rear, even the direction that the block faces. Then the next most significant determination is the quality and value of the improvements, i.e. the house. Owners rarely allow enough depreciation of dwellings once they are ten or more years old, and buyers usually depreciate them too much.

2) Land value plus improvements- Owners don’t realize that once a house is built on a block, the property is no longer a "house plus a block" but a going concern. It is often the case that vacant land sells for a premium of up to 10% more than what would be paid for an old house on it. This is because the only purpose for a vacant block is to build on, whereas once a house is built, it is unlikely that the property will ever be used as a building block again for 20-40 years, so the buyer is one that wants that exact house and the improvements that come with the block.

3) Comparing to asking prices of similar properties- The worst and most unreliable method as asking prices often have no correlation to sale prices or market value. We have seen homes come on the market for $8.8M and then sell for $6M, we have seen homes take 2 years to sell, and we have seen buyers offer 30% below asking prices. Really asking prices are irrelevant to market value. Sellers and buyers should ignore them. Asking price really means "Wish for price". More and more you are seeing property come to market without a price, as agents and owners realise the value of having buyers focus on the home, not the price.

OTHER SOURCES OF OPINIONS OF VALUE FOR A BUYER OR A SELLER:

1) Neighbours- I believe one of the worse sources of reliability. There is enormous self interest in "wanting" the value to be more. Not reliable or impartial at all.

2) Other agents- As above. Many agents will "bag" other agent listings, especially if there is resentment that they think they should have won the listing or strong competition between some agencies. Often, the "expert" agents have not seen the property in question.

3) Valuers- Can be reliable, often at the conservative end of the scale, and rightly so.

4) The selling agent- Can be biased, have emotional investment in the valuation of the property. Will certainly be able to justify her opinion as to value if any good as an agent.

5) A specific buyer- Only qualified to what she will pay, not indicative of market value. Some buyers are really way off, we often see buyers make offers 10-20% below what we sell them for. We refer to these buyers as "bargain hunters" and are often making low ball offers on properties. I have never met a seller that wants to sell to a bargain hunter. We can pick these buyers by the type of questions they ask. They are more interested in "the deal" than in the home. We find many buyers are 6-12 months behind in their understanding of values, as they pay too much attention to graphs and old sales evidence from a year or so ago, and do not update based on recent market activity. Also, we have sold properties for $500,000 more, or 15% more than a specific buyer was adamant that a particular property was worth on a given day, proving no one buyer (or seller for that matter) determines market value.

6) The seller- Can be biased as they are emotionally attached to the home. Often they will rate erroneous and subjective factors in determining value such as their wants, needs, or even a wish for price that they had in mind. They often perceive certain improvements as adding a lot more value than what it actually does to a buyer.

7) Mates/ friends of seller- As for neighbours. We find in some instances that the friends that are trying to provide support, and may have watched a few too many Foxtel episodes of "How to make a $1M property sell for $1.5M" have strong views of value that do not match current market conditions. The active local agents will always have the up to the minute feel of the market and often be 3-6 months ahead of the papers and graphs on the official websites.

WHAT IS CURRENT FAIR MARKET VALUE?

After the property has been tested in the market for a reasonable amount of time (I think 45-60 days is plenty) and buyers have had a chance to see the property, it should sell. If it doesn’t then there are only a few reasons.

1) Agent is not doing her job.
2) Poor marketing (refer to 1).
3) Price is wrong.
4) Wrong or poor location (refer to 3).
5) Poor market (refer to 1) and 3).
6) Seller is not motivated to sell or unwilling to meet the market.
7) Absorption rate (Too high a supply for the current demand on that particular property type and market segment).
8) Demand for that specific market segment slow at moment. (Some price segments move through different phases through an economic cycle)

Ultimately, the property is worth what a willing buyer is prepared to pay at a given moment, and able to fund ***, persuaded by a competent and skilled negotiator. After having exposure to a fair pool of buyers, that result is called "fair market value". ***NOTE: offers made by buyers that do not have the ability or capacity to fund in this tight market are not indicative of market value.

Preparing Your Home For Real Estate Photography

The following is designed to help you understand the process of photographing your home for sale:

  • The photo shoot should take between 30-60 mins (longer if video is required or interactive floor plans are being done and we do not have existing floor plans or if the home is exceptionally large, even in the case of twilight shoots where we are waiting for the right light, it could be up to 2 hours). 
  • If you have special requests as to certain shots (In or out) please let me know in advance. 
  • I do like the seller to be home if at all possible as we may need to move things around slightly, but it isn’t essential if you can’t manage to be there.

GENERAL OVERVIEW :

The following are some easy to follow practical steps to help you and ensure we get you the highest price by appealing to the best buyers.

WHY THE NEED TO PREPARE FOR PROFESSIONAL PHOTOS?

  • Buyers are time poor and these days everything real estate is about the visual medium of the internet. Presentation and its effects (good or bad) is massive on the outcome. 
  • We have about 8 seconds to catch a buyer's attention in what is a competitive real estate market. 
  • You get one chance to make a great first impression. A great photographer and agent still needs some assistance so that we can as a team can help make your property shine and stand out from the crowd. 
  • Well-presented homes should sell for more and generally a lot faster. Whilst it is impossible to quantify this, it is generally accepted in the industry by real estate professionals, great presentation can easily affect sales price by as much as 10% or more.
  • We all know anecdotally that poorly presented homes will affect buyer’s emotions far less and this logically means more procrastination by buyers (longer on market) and lower offers.
  • We are not allowed to “Photoshop” images if it means there is any form of misrepresentation. Photographers can “enhance” images slightly for maximum appeal, as long as we don’t fundamentally change what is there.

Image enhancement doesn’t and won’t:

  • Stretch rooms to make them look bigger
  • Make pools look clean
  • Make windows or carpets clean
  • Make lawns green
  • Block neighbour homes or power lines etc.
  • Zoom in to views to an extent they are not representative of what the buyer actually sees (With the naked eye)

I hope you get the message. The best photos accurately reflect what is there in a positive and maximum potential way. Buyer always dislike inaccurate photos, and worse sellers (and agents) could be sued if it was intentionally deceiving.

So in a nutshell, it pays you handsomely to do this well, in time and money.

WHAT WILL WE PHOTOGRAPH?

I need a minimum of 4-5 photos even for a land value property or block of land simply as that is how many photos appear on a web page. The rule of thumb that I follow is that if the photo doesn't add value, I won't use it. (The old saying “Less is more”).
For larger homes, typically I usually want 12-20 photos.

We will normally shoot the following;
1) Front elevation (but not always), maybe 2 angles if appropriate
2) Kitchen, possibly 2 angles if photogenic
3) Living spaces as for kitchen
4) Master bedroom and usually some other bedrooms if appropriate
5) Outdoor living
6) Pool if applicable
7) Aerial photo if applicable or views as appropriate
8) Location lifestyle photos if applicable (used sparingly)
9) Laundry only if exceptionally well equipped
10) Entry voids/grand entries
11) Ensuite if applicable
12) Other features/rooms as required
13) I don't usually shoot garages or sheds

THREE HEALTHY PRAGMATIC MINDSETS / AFFIRMATIONS FOR THE SELLER:

A pragmatic mindset to help you accept the reality of what can be a lot of preparation and work, will help get to where you want to go.

EXAMPLES:

1) "I want to sell and move, the quicker I get this over with the less work overall and therefore less stress. It is a predictable process."
2) "This is no longer going to be my home, it is the future buyer’s home soon."
3) "I need to think in terms of the difference between "showing-condition" from "living-condition". Short term inconvenience means a faster outcome and a higher price."

THE A, B, C, THREE BIG TICKET ITEMS:

These items are only going to be touched on very briefly, feel free to discuss personally in detail. All three however do in my opinion provide "good bang for your buck".
A) Carpet- there are good arguments for replacing worn or tired carpets not only for photos but for selling.
B) Paint- as above. Feature walls could be painted out or worn paint patched and entire rooms painted if required. 
C) Hire furniture- I believe in almost all occasions (unless a land value property) excellent justifications and advantages in furnishing empty houses before photographing or showing. I have sold homes that had over 100 inspections "empty" and once nice rented furniture was placed in them sold to the next buyer who asked if they could buy the furniture, and paid the full price for the home.

 THE TWELVE TOP GENERAL POINTS TO MAXIMISE BUYER VISUAL APPEAL:

 1) De-clutter
What we are selling is the spaces, the usability of that space and the future lifestyle of your home to the future buyer. The most important thing we can do to improve the presentation and leave a favourable impression in your buyers minds, is to de-clutter.

  • Take a step back and look at each room individually through a critical set of eyes, try to see what a buyer sees. 
  • De-clutter rooms which may be excessively furnished. They do not photograph well. Most rooms accumulate over the years more stuff than is necessary. The saying is "less is more". Busy rooms look smaller, and less appealing. 
  • Less clutter enables purchasers to envisage how their furniture and belongings will fit into your property.  Ultimately we want buyers to see themselves in your home, as their new home. 
  • It is even worth considering renting some storage space if you do not have sufficient room in your garage. 
  • We will not photograph inside the garage, so that can be a good place to put excess items for the photo shoot. (Buyers will look in here though when the home is open so the storage unit not a bad option as a more general strategy for de-cluttering, or store items at a friend or family member house or even consider a garage sale in advance if time permits).

2) Detail / Clean
Clean always photographs best. If in doubt, best that it is immaculate, it will appeal to the buyers that view anyway. Clean never goes out of style.

  • Cobwebs are a big no
  • Everything in its place
  • Electric cables and extensions hidden
  • Dust should be wiped clear
  • Wet areas should always look spotless
  • Driveways degreased and immaculate

3) External General

  • Remove all vehicles from driveways and do not park directly in front of the house
  • Sulo bins/ garden bags out of site
  • Remove door mats, floor mats, shoes and pet bowls
  • Clean windows, dust free surfaces, vacuum or mop floors
  • Open curtains and blinds and turn off ceiling fans
  • Make sure all light bulbs are working
  • Put away garden hoses, tools, toys and bikes
  • If necessary consider high pressure hosing paving and drives, make sure pavers are free from weeds and ants.

4) Windows
Consider professional cleaners. Windows should be cleaned and sills clean

5) Lawns / Gardens

  • Freshly mulched gardens always look best
  • Weeds all gone
  • Edges neat and trimmed
  • Freshly mowed in last few days before shoot (not too short, green is best). As to lawns generally, green always photographs best. Consider a “shock” or lawn boost a couple of weeks before, lots of water (Within legal watering requirements).
  • Consider repairing patches in lawns. If you have a dog, make sure all mess removed from paths and lawns
  • Make sure all weeds absent for drives (Roundup sprayed on 10-14 days before hand should kill all weeds).
  • Hedges and shrubs trimmed

6) Kitchen

  • Remove photos, magnets, notes and papers from the refrigerator
  • Clear bench tops of food, dish racks and cutting boards
  • Sink empty, if necessary stack all in dishwasher 
  • Remove dish liquids, tea towels, soaps and plugs
  • Put away garbage bins, brooms, mops and cleaning products
  • Add a bowl of fresh fruit or a vase of fresh flowers 
  • Excess kitchen appliances on the bench tops could indicate a lack of storage and bench space. Clear them, ideally nothing other than a nice kettle should be on display, maybe a nice cookbook as well
  • Remove electrical cables, particularly extension cables or risk the appearance of a lack of electrical power points

7) Bathrooms / Laundry

  • Clear bench tops of toothbrushes, soaps, razors and plugs
  • Remove shampoos, soaps and cleaning products from showers
  • Remove rubbish bins, scales, bathmats and laundry baskets
  • Close toilet lids, remove toilet brush and spare toilet rolls
  • Put out fresh towels, folded and hung neatly on rails 
  • Make sure glass and mirrors are spotless remove all non-matching towels
  • Remove any cat litter trays

8) The Study / Office

  • Tidy up study desks
  • Invoices/statements placed neatly away in drawers 
  • Book shelves neat and organised

9) Bedrooms

  • Make your beds with your best bed linen and thickest pillows 
  • Remove books, tissue boxes and jewellery from bedside tables
  • Remove portable fans, heaters and rubbish bins

10) Pets

  • Contain pets in the garage or out of sight 
  • Pet beds and food bowls out of site

11) Carpets
Professional cleaners will give the carpets a great freshen up, and will make carpets smell clean too. (A side benefit)

12) Swimming Pool

  • Remove pool toys, skimmers, pool blanket and Kreepy Krauly pool cleaners
  • Pool clean/ skimmed, water sparkling
  • Pool bottom cleaned

CHECKLIST FOR THE DAY OF THE PHOTO SHOOT:

1) Please have pets “managed” or absent for the photo shoot
2) Have floor plans available if we have them and if not already sent to agent in advance 
3) Sweep and mop floors
4) Turn on all interior lights
5) Kreepy Krauly out of pool and site a few hours before shoot (we don't want water marks in photos).
6) Please remove pool cover if the pool is to be a feature
7) Have water blade and water features running
8) Pool fence if glass is clean
9) All cars hidden/out of front shot
10) No Sulo rubbish bins/kids toys in front of house shot
11) No garden hoses visible
12) All kitchen and bathroom benches cleared
13) Fridge magnets and all fridge paraphernalia gone
14) All light bulbs working (warm colour preferred)
15) Turn off TV and put remotes away
16) Remove all toys, portable fans, game consoles
17) Make all beds. Solid colour bed spreads photograph better than patterns
18) Tidy/hide all power leads/cables. All newspapers and most magazines hidden
19) Hide the portable gas heater if it is movable
20) Remove exercise bikes/treadmill and exercise gym equipment unless a purpose gym room
21) Lawns mowed Leaves raked up
22) Curtains open, let the home breathe
23) Decks or pavers cleaned/mopped/scrubbed
24) De-clutter books, games, tissue boxes
25) Remove all personal items. (Excessive photo collages or mantle pieces covered in personal photos)
26) Ensure bedside lamps are working
27) Remove posters/stickers from walls
28) Clear away all clothes
29) Remove washing from clothes line
30) Bikes hidden away
31) Kid’s bedrooms everything away as it should be
32) Kitchen sinks and benches cleared

Thank you.
I hope the above has been helpful and useful. I look forward to helping you get sold in the minimum possible reasonable timeframe with the best possible outcome.

Ian Barnes

It makes sense to trade up in a down market!

It makes sense to move in a down market!

Did you know that if you are trading up, you are better off moving now rather  than waiting for a market to recover? That is a fact. Let me show you why!

HIGHER PRICE EXAMPLE 1:

1)      Your home is worth now $2M or 20% less than earlier on (say it was circa $2.5M before)= $500,000 less.

2)      The one you want to buy is now $3M or 20% less than earlier on (say it was $3.75M before)= $750,000 less

3)      The gap was $3.75M less $2.5M which is $1.25M

4)      The gap is now $3M less $2M which is $1M

 

You are better off in this example by $250,000 selling in a down market if trading up. (20% of the difference).

 

LOWER PRICE EXAMPLE 2:

 

1)      Your home is worth now $1M or 10% less than earlier on. (say it was circa $1.1M before)= $100,000 less.

2)      The one you want to buy is now $1.5M or 10% less than earlier on (say it was $1.65M before)= $150,000 less

3)      The gap was $1,650,000 less $1,100,000M which is $550,000.

4)      The gap is now $1,500,000 less $1,000,000 which is $500,000.

 

You are better off in this example by $50,000 selling in a down market if trading up. (10% of the difference).


And that doesn't take any account for savings in stamp duty either.

 

So to discuss further how you can take advantage of the current market conditions, please call me or email me and I will be delighted to meet up. It is part of the service I provide to you as the local real estate expert.


As always, please feel free to give me a call if I can assist with any real estate matters.
Thank you.

 

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