What Costs are Associated with Buying a Property?

Buying a property can be a costly exercise!  Did you know that as well as the purchase price of the property, there are some other costs to be considered?  Read on to find out more.

Stamp Duty

Stamp Duty is a State Government tax based on the purchase price of the property.  It is usually around 4% of the purchase price of the property, and is paid just before settlement.  Some mortgage brokers are able to increase your home loan to accommodate this amount. First home buyers may be exempt from Stamp Duty or may be entitled to a rebate or concession. 

Strata searches / building and pest reports

These can be arranged through your Buyer's Agent; they record the condition of the property and alert you to any issues you should know about before to purchase the property, for example the structural integrity of the property, disharmony in the Strata Committee and so on. 

Lenders Mortgage Insurance

This is a charge that is applied to your loan if you are borrowing more than 80% of the value of the property.  It is rolled into your home loan and is not generally a direct cost to you at the time of taking out your home loan.

Buyer's Agent Fees

A buyer's agent saves you time and money across the duration of your property purchase.  A skilled buyer's agent advises on the best properties to purchase based on your needs and goals, and helps you to avoid making poor choices for your purchase. A buyer's agent provides accurate appraisals of properties, preventing you from paying too much for your property, and saves you money on unnecessary building and pest / strata reports.  A buyer's agent prevents you from over-bidding at auction and does all the leg work for you in searches and inspections.

Legal fees

Legal fees are incurred for transfer of title, property and title searches and contract reviews.  Many conveyancers structure their fees as a flat fee for the purchase (including one contract review), and additional fees for additional contract reviews.

Need a hand?

At Melissa Maiman Buyer's Agent, we are used to stepping our clients through the maze that is buying a property.  Click here to enquire about our service.

Tips to Make a Small Home Feel Larger

As property prices increase, many people are wondering how they can do more with less.  In my every-day conversations with clients, room size comes up a lot and I often find myself sharing tips with my clients for ways that they can make a smaller space feel larger, or make a smaller space more functional.

Here are a few tips I'd like to share.

White paint

Painting walls white gives an impression of greater space, while darker colours can make a room seem more closed-in.  White paint also reflects all of the sun's light, whereas darker colours will absorb the light.  A brighter room feels more spacious. 

Storage options

Storage that is not built-in is a great option as it tends to be cheap to purchase and install and you can move it around where you need it to be, for example something that is on wheels can easily be moved between the dining room and kitchen if both the kitchen and dining room are small.

Consider using wall space as storage space by installing built-in draws, cupboards and shelves.  Consider fold-down wall beds in rooms that can also be used as a study.

De-clutter

A regular sort-out every 12 months or so will ensure that you live with the essentials that you need.  You might like to consider storage options for the items that you want to keep, but no longer have space for in your home.

Melissa Maimann is a licenced Buyer's Agent in Sydney. She assists home owners and investors alike with an affordable service that empowers you to make smart purchase decisions. Melissa's service is fast, efficient and accurate. If you need a hand with your next purchase, don't hesitate to make contact.

Landlord's Insurance

Property represents an excellent investment option for most people.  Its value lies in two parts:

1. Rental return

2. Capital growth

In order to generate a rental return, a landlord must take some risk.  The risk that you will be without rent, or the risk that your investment will be damaged. 

Tenants are people, and life happens to all of us.  The excellent tenant who has always looked after the home and paid their rent can come into some bad times in their life and suddenly lose their job, have their marriage break up, fall into depression and so on.  Sometimes the person who was thought to be an excellent tenant is not so excellent, and attempts to terminate their lease are met with retaliatory behaviour.  Almost every landlord will have a story to tell.  And so landlord's insurance exists.  But it's important to ensure that you have the right policy in place because not all policies are created equally.

Here are some aspects of landlord insurance to consider

1. Understand what the policy covers and what it doesn't cover. I suggest selecting a few policies and comparing them all: what do they cover and how much will they pay out against each risk? Some policies will pay out as little as 6 weeks' rent while others will pay out 52 weeks of rent. There's a big difference.

2. Consider a policy that does cover damage by pets. There is ever-increasing demand from tenants for pet-friendly homes, so allowing your tenants to have their pets will increase your pool of tenants. However, you should also confirm that your policy will cover damage from pets.

3. Cyclones and floods: if you are in an area that is prone to this, ensure that you are covered.

Melissa Maimann is a licensed Buyer's Agent in Sydney.  She assists home owners and investors alike with an affordable service that empowers you to make smart purchase decisions.  Melissa's service is fast, efficient and accurate.  If you need a hand with your next purchase, don't hesitate to make contact.

Real Estate and Property Reforms

The Property, Stock and Business Agents Amendment (Property Industry Reform) Bill 2017 was passed by the Legislative Council on Wednesday 7 March 2018.  It represents one of the most significant changes in the real estate profession in a long time!

The aim is to improve licensing and qualifications of agents and provide definition around the roles that can be undertaken at different levels of qualification / experience. 

The changes impact initial qualifications and entry to the profession, progression through the profession and continuing professional development (CPD) requirements.

It is anticipated the qualification, licensing and CPD changes will commence late in 2018.

Some of the changes that we may see are:

1. An increase in the number of subjects that a person will need to undertake to enter the profession

2. Stream-lining of progression through the workforce: the entry level will be a Certificate of Registration which a person must hold for a minimum of one year, and a maximum of three years; a License will require the person to hold a Certificate IV and a License-holder must have industry experience before they can obtain a License; finally, a new category (Licensee-in-Charge) will be created with additional qualification and experience requirements.

3. Continuing Professional Development requirements will be increased and will stipulate a certain number of hours needing to be devoted to regulatory versus elective units.

This is all in the interests of professionalising the industry, increasing consumer confidence in agents and reducing the number of complaints.  It is a very positive move!

Is Property Really All That Expensive? Then and Now.

A recent article has highlighted that, in reality, property is more affordable now than that it was thirty years ago.

Housing affordability depends so much more on purchase price.  Interest rates are an incredibly important factor, as if rental yield, rental vacancy rates, income and lending policies.

As can be seen from the above table, the percentage of an average person’s income needed to meet the mortgage repayments has actually come down over time.  Of course, the sweet spot was around 1995-2000; alas, we often only know the sweet spots in retrospect.  It's certainly more affordable to buy now compared with 1990.

Melissa Maimann is a licensed Buyer's Agent in Sydney. She assists home owners and investors alike with an affordable service that empowers you to make smart purchase decisions. Melissa's service is fast, efficient and accurate. If you need a hand with your next purchase, don't hesitate to make contact.

Ever Considered Rentvesting?

Rentvesting.  It's a new trend in property investment / lifestyle. 

Rentvesting is where a person buys an investment property in an area that they can afford and where the fundamentals are ripe for the home's investment potential, while the person rents somewhere they love, in a home they can afford.  A typical scenario might be someone who wants to live in a 3 bedroom house, but they cannot afford to buy a 3 bedroom house, so instead they buy a 2 bedroom unit in a great area and rent it out, while they rent a 3 bedroom house where they want to live.

Other reasons to rentvest?

Rentvesting can allow people to make savvy investment decisions.  Rather than purchasing the home you want - which may not have good property investment fundamentals - you can purchase a home that represents an excellent investment while you live where you want.

Some people rentvest for tax purposes as it allows you to purchase a home and tax deduct the mortgage interest, cost of repairs and maintenance, levies, council and water rates.  Please seek advice from your accountant as to whether this makes good financial sense for you in your situation.

Purchase sooner.  It generally takes less time (particularly if you work with a Buyer's Agent) to buy an investment property than the time it takes to buy a home to live in.  This means that while striving to buy a home to live in, you lose the benefit of capital growth in a rising market.

Downsides to rentvesting

The main downsides to rentvesting are the downsides of being a tenant:

• Property inspections

• Lack of long-term security: your landlord may later decide to sell, move in or renovate and decline to renew your lease

Melissa Maimann is a licensed Buyer's Agent in Sydney. She assists home owners and investors alike. If you would like a confidential discussion about purchasing your next home or investment, don't hesitate to make contact.

How to Buy Affordably in Sydney

Many people believe that Sydney is not an affordable city in which to buy a home, but did you know that there are several options to consider that can make buying in Sydney affordable for you?

Consider buying established properties

New homes sell for a premium, whereas an established home can usually be purchased for less.

Consider homes where you can add value

Your new home might need painting, new carpet, floor boards to be polished, new door handles, or perhaps even a new kitchen or bathroom.  While this may seem daunting, you can often purchase homes that need renovating for less money than what it costs to purchase a home that has been recently renovated.  The other plus of renovating the home yourself is that you can control the quality of the work.

Homes on main roads are more affordable

Some main roads are not too busy, and it me be possible to install double glazing to cut out most of the noise.

Can you go without parking?

Parking does add to the purchase price of the home.  If there is reasonable parking on the street, can you go without dedicated parking?

Use a Buyer's Agent

Melissa Maimann Buyer's Agent is an affordable buyer's agent solution to help you find your next home.  Different packages ensure that help is available whatever your budget or service needs.

What Exactly Does a Buyer's Agent do?

In many circles, people seem unsure what a buyer's agent actually does.  If we don't sell property, what do we actually do?

There are two parties to a property sale/purchase:

1. The vendor (owner of the property that is being sold) - who is usually represented by a selling agent AND

2. The purchaser - who is often unrepresented by an agent

Most people don't consider SELLING their home without an agent to represent them.  The agent prepares the marketing campaign, confirms instructions from their vendor (client), attracts potential buyers, arranges and conducts open home inspections and private viewings, negotiates the sale price to ensure the highest possible sale price and the best possible terms for their vendor (their client), emphasises the positive attributes of the property they're selling (and perhaps downplays the negatives) and generally acts to ensure the highest possible sale price in the shortest period of time, always acting in the best interests of their vendor, who is their client.

Traditionally, buyers rely on the information that is given to them from the vendor's agent.  Does this seem absurd to anyone??

In any other situation where we have an advocate acting for us - the most obvious one coming to mind is legal representation - do we EVER use the advocate for the other party?  No!  We don't.  Why do we do this in real estate? 

The argument for using an agent to SELL your home is to maximise the sale price, get the best deal etc .... it's a huge amount of money after all.  Likewise, it's a huge amount of money for the purchaser too ... and they DESERVE and need their own advocate, who is on their team, helping them get the best home for the best price and with the best terms and conditions.

Buyer’s Agents are licensed real estate agents and property professionals who act solely for purchasers of property.  A buyer's agent does not sell property or represent sellers in any way.  A buyer's agent prepares a detailed property brief in conjunction with their client, and searches, researches, inspects, evaluates and negotiates the purchase of a property on behalf of the buyer (their client).

In a world where everything is geared towards helping the vendor achieve the best possible price and terms, many buyers are left wondering who is actually looking out for their needs.  This is where a buyer's agent comes in.

At Melissa Maimann Buyer's Agent, I offer three different services:

1. Full Service – This is great for people who are purchasing a home or an investment property.  The service includes taking a detailed property brief, conducting searches: online, off-market and pre-market, inspections, background research, due diligence, negotiation of the purchase, settlement, recommendations for property managers and rent appraisal (investment properties).

2. Property Coach – this service is an affordable buyer's agent service that let's you lead the way, but with full access to all the advice and information you need to make an empowered property purchase decision.  Suitable for home owners and investors alike. More information here.

3.  Evaluate and Negotiate Service - this service is only available to home purchasers.  If you’d like to source and inspect your own homes, you can identify up to six key properties and I'll inspect them, conduct background research and due diligence and negotiate the purchase for you.

Smarter Property Investing

Property investing is on the minds and in the conversations of many Australians.  Property is one of the best options for investment, but it also carries some risks.  

Whether you’re investing for the 1st or 10th time, it’s important to invest wisely as investment mistakes are costly in property.  In fact, almost everyone knows of someone who has been significantly worse off for investing in property.  When I hear their stories, I can appreciate what it was in their strategy that appealed to them (usually a form of get-rich-quick scheme) and where perhaps the same $ investment might have seen drastically different results for those people.

At Melissa Maimann Buyer's Agent, I'm all about helping people be smarter property investors and home owners.

Understand that Property is a Long-Term Strategy ... and it's boring!

Yes!  You read that right.  The best investment involves exceptional due diligence on the property you wish to purchase (ie, use a buyer's agent to do due diligence on the property you're purchasing, if nothing else), effective property management so that the right tenant is selected to rent your home, and then .... nothing!  That's right, if you've ought the right home and have the best tenant in it, you'll have steady rent, no expenses other than the usual repairs and maintenance, your mortgage and rates etc, and that's it - for years.  It's a set-and-forget approach, and it's boring.  This is the best investment.  If followed correctly, in 10 year's time, you ought to have doubled your investment and this is where the fun begins as you'll now have a good amount of equity, no matter what type of loan you had or which lender you choose. 

The truth is that most newbie investors think that investing in property should be more work, more exciting, and come with more action.  The reality is that short-term gains in real estate are speculative and risky.  These are not the choices that a strategic investor will make.  Buy-and-flip, subdivision etc - these are all risky options.  Yes, they can work and make you a lot of money: they can also fail miserably.  The primary reason that real estate is a long-term investment option is that it lacks liquidity.  Asset classes that are less liquid are best suited to a long-term approach because they cannot easily be converted to cash.  Hence, the short-term investment approaches are actually at odds with the asset class of property.

Consult Professionals

The vast majority of people consult a professional when they are making big decisions.  We readily, easily and without thought consult accountants, lawyers, doctors, stock brokers, plumbers, builders, conveyancers, mortgage brokers etc.  Buyer's agents are not new in Australia, but awareness of buyer's agents is still growing.  If you’re buying a property - whether to live in or to invest in - at the very least, a due diligence report from a buyer's agent is a very small sum to pay to be sure you're on the right path. 

Understanding property markets takes time.  Sydney is not one market.  Sydney has many markets within markets.  Many people have some knowledge of property and property markets, but this knowledge must be combined with the intimate knowledge of the property of interest.  The market might be brilliant, but the property not so.  Or vice versa.  You'll have a conveyancer look over your contract for sale/purchase ... will you also have a buyer's agent do the due diligence so that you can move forward with confidence?

If you'd like more information on our unique and AFFORDABLE buyer's agent service that lets you lead the way with full access to all the advice and information you need to make an empowered property purchase decision, contact me today by scrolling to the bottom of this page

Housing reforms to help you enter the Sydney market

The State government has announced several measures to improve housing affordability, assisting first home owners to enter the market.  Measures include scrapping stamp duty for certain properties purchased by first home buyers, and increasing the taxes foreign investors in order to reduce competition (and thence prices).

A comprehensive package for first home buyers will abolish stamp duty on new and existing homes valued up to $650,000, and provide stamp duty relief for homes up to $800,000.  In the Sydney market, this is of limited help for purchases in the Eastern Suburbs, but is helpful for certain property purchases in the Inner West, North Shore, and of course for properties further out such as West, North-West and South-West.  It seems that this is the strategy: to encourage housing in the outer-Sydney areas and reduce demand on the Inner-City areas that have no more land available.

Stamp duty on lenders' mortgage insurance will also be abolished.

The surcharge on stamp duty for foreign buyers will double to 8%, and the surcharge on land tax will increase from 0.75% to 2%, making Australia a less attractive place for foreign purchasers to purchase in, reducing competition and potentially lowering prices for local purchasers.

The Government has also changed the foreign resident capital gains withholding (FRCGW) rate and threshold.  Formerly applicable as a 10% tax on properties selling for greater than $2M, now when the

contract price is $750,000 and above, the FRCGW withholding tax rate will be 12.5%.

The government also announced measures to help first home buyers gain an advantage over investors, who the Govt (perhaps erroneously) perceives to be a source of strong competition for home owners.  I do not share this view, because home owners are typically emotional buyers who are willing to pay more for the property they love, whereas investors are rational buyers who place a ceiling on the purchase price, ensuring that the property meets its purpose of providing a certain calculated return.  

The Government has also outlined plans to boost housing supply and infrastructure across the greater Sydney area.  Unfortunately for the people who will live thee, this also means fewer trees which provide natural beauty to the environment in which we live, as as supporting our wildlife and ecology.

Purchasing this side of the budget?

For many people, purchase decisions prior to the budget are fraught with uncertainty.  Yes, there might be changes coming with the budget, however those changes would only impact purchases that occur after the budget comes out.  Most certainly, there are also changes to lending, and in terms of lending, people are much better purchasing now than down the track when those changes come into effect: http://www.reinsw.com.au/Web/Posts/Latest_News/201704/APRA_tightens_lending_rules.aspx.  The push is for a 20% deposit for investors, and for the loans to be principal and interest, rather than interest only.  This will certainly impact the investor market, however the investor market does not drive property prices: it is home owners that drive the prices because they are more emotional buyers who are willing to pay more for the property they love, whereas an investor puts a rational $ cap on the purchase price and walks away after that point.

With the budgetary changes, they will apply all over Australia, not just Sydney.  If the market takes a hit, Sydney is better protected than any other City, and has always re-bounded and risen within a full property cycle (7-10 years).  In the current market, an Eastern Suburbs purchase is recommended as there is always strong demand for rental properties in the east, regardless of what the market conditions are like for buyers; in fact, the harder it is to purchase, the stronger the demand for rental properties, and if interest rates increase gradually, so too will the rents.  In terms of the purchase price, where people are concerned about potentially over-paying today as compared with after the budget comes out – these sorts of fluctuations do even out over the longer-term (7-10 years). 

In summary, on the one hand, yes the budget will likely bring changes, however the lending policies concern me more as it’s harder for people to get a 20% deposit, whereas they’d more easily forego say negative gearing in a rising market (I don’t believe prices will fall).  The option that some consider is investing in shares which are more liquid than property, but over-all, property out-performs shares in the long-run.

Melissa Maimann is a licensed Buyer's Agent in Sydney. She assists home owners and investors alike. If you would like a confidential discussion about purchasing your next home or investment, don't hesitate to make contact.

Are Buyers' Agents Driving Prices Up?

A recent news article suggests that it is actually buyers' agents who are responsible for pushing up our housing prices!

A buyer's agent is a licenced real estate agent who works for the buyer, rather than representing the seller.  A buyer's agent gives advice on properties and property types, helps you work out a budget, searches for suitable properties that meet your brief, inspects those properties for you to save you time, helps to evaluate the property - including suggesting a fair price for it - and negotiates the purchase so that the buyer doesn't have to.  The buyer can be as involved as they would like to be - inspecting as many properties as they like - or they can just inspect and consider the handful of properties that the buyer's agent has identified as being totally suitable.

Buyer's agents are becoming increasingly popular, and this is related to our busy lifestyles, the time and cost required to fully investigate and consider properties of interest, perhaps a lack of market knowledge and the demands of work / family. 

Not to mention, the average person takes at least 12 months to find a property, whereas a buyer's agent generally reduces the search time to only 2 months.  Ie, with a buyer's agent, a buyer can buy 10 months sooner, on average.  Considering the way prices move in the Sydney property market, a property will go up far more in 10 months than what it will cost to engage a buyer's agent, making a buyer's agent a very cost-effective option for savvy buyers.

However, in recent times, there has been much discussion about the manner in which buyers' agents structure their fees, and in particular, question over whether the fee structure actually plays a role in pushing prices up.  This is of course a major concern, because first and foremost, a buyer's agent has a fiduciary duty to the buyer to do the very best by the buyer.

Generally speaking, buyer's agents charge a % commission of the purchase price.  This commission is usually 2%, but for lower priced properties, this commission can be as high as 3%.

This means that as a buyer's agent, I get paid more as the purchase price increases.  Ie, I am best served by having you - the buyer - pay more. 

But wait - that's not why you would engage my service!  You would engage my service because you want to buy a property at the best price, not the highest price.

In my business, I have only ever charged a set fee for services.  This fee is generally in line with 1% - 2% commission equivalent, except that it is not a commission-based fee: rather, it is a fee that is established up-front and a fee that does not change with the purchase price.

The other challenge with a commission-based fee structure is that the buyer's agent is only paid if and when a property is purchased.  Herein lies the second issue: if I can get a buyer to buy quickly, I am paid sooner.  This is also not consistent with a buyer's agent's fiduciary duty to the buyer.  The buyer's agent is meant to be advising on the best property for the client's needs and ensuring that the property is a good purchase - and purchased at the right price.

A commission-based structure - where the buyer's agent is not paid unless there is a purchase - and where the higher the purchase price, the more they are paid - does not reflect the duty owed to a buyer by their representative.

The only fair and honest solution is a fixed fee that is paid regardless of the outcome.  Ie, a fee for service.  We pay a fee for service for all other service businesses: we do not pay our solicitor only if we win our case; we do not pay the accountant only if we get a tax return of $x amount; and we do not pay the vet only if our pet is cured.  We pay a fee for a service provided, we do not pay for a result.  Similarly, a buyer's agent service can be viewed as a fee for a service, where the result or outcome is a by product of the service.

A fee-for-service buyer's agent model ensures that meeting the buyer's needs is in line with the buyer's agent's remuneration.  This is the fee model I use here at Melissa Maimann Buyer's Agent.  The fee may be scaled according to the property type, the ease or difficulty of the search, or any other parameters.  This fee is established and known ahead of time, and the retainer ensures that the agent is remunerated even if the buyer chooses not to proceed with a purchase.

Buying Off the Plan?

As a buyers agent, people often ask me if I recommend new / off the plan, or established properties.  I will generally recommend established properties most of the time.

Although off-the-plan purchases can offer some significant cost savings and inducements, often times, this approach does not pay off in the long-term.

First and foremost, you should ask yourself why the developer needs to make such cost savings and offer such inducements if the property is so good.  Next, you need to ask yourself: if these cost savings and inducements are necessary for you to purchase the home, what will you need to discount to a future buyer, in order to sell the home?

Contrast this with an established property - and you rarely find the vendor offering cost savings and inducements to the buyer.

The best property to buy is the one that is hotly contested.  The one where you can hardly squeeze in the front door of the open home, because there are so many people in there.  The one that sells prior to auction for a great price: that is the sort of property that will appreciate well, and the one that you will eventually be able to sell - for an excellent price.

Many investors and home buyers make costly and regrettable mistakes when they buy a property off the plan, particularly when their decision making process was influenced by inducements and cost savings.

The best option, in my professional opinion, is to buy a home that you can see, feel and learn about: a property that has a history.  With an off-the-plan property, you never really know what it will end up like.  Will there be building defects?  How significant will they be?  Will the fittings and fixtures be in accordance with what was agreed? In one case, the property ended up being short of a bedroom, and there was nothing the purchaser could do about it!  The developer had the right to modify the plan, and they exercised that right.  In many other cases, significant and costly building defects negate any cost savings and inducements offered.

The best advice I can give any property buyer is to source independent and objective advice from a licensed, independent buyer's agent.  NB: there is a difference between a buyer's agent, and in independent buyer's agent.  An independent buyer's agent works solely for you, the client.  They are not employed or engaged by a developer to "sell" their stock, and they do not work with a selling agent.  They are paid directly and solely by the client - to maintain their Independence and impartiality in the property purchasing process.

5 Tips for Finding your Perfect Home

Here, I share my very best tips for finding your perfect home.

1. Write down your wish list

Be as detailed and thorough as you can be.  List every little thing that's important to you.  Next, write a number from 1 - 10 next to each item, with 10 being absolutely critical (the home just couldn't be your home without it), to 1 (being non-essential, or something that can easily be changed). 

2. Divide your list up

Convert your list from #1 above into two lists: one list will have your number 7 - 10 items; and the other list will have your number 1 - 6 items.  Review the list to ensure that the 7 - 10 items really ought to be in that category.  These items will become your non-negotiable deal-breakers, whereas your 1 - 6 items will be your "nice-to-haves".

3. Bring your list with you when you inspect properties

If you walk in the home and you like it, pull out your list.  Rank the homes according to the non-negotiables and the nice-to-haves.  As soon as you identify that a home does not have a non-negotiable items, move on.  Don't give it a second thought.  Your new home simply must have your non-negotiables .... otherwise they're not non-negotiable.

4. Get a second opinion

You've found a home you love, it has all your non-negotiables and many of your nice-to-haves as well.  You're feeling really positive about this home becoming yours.  Get a second opinion.  The best second opinion you can get would be from a buyer's agent - or else it might be a friend or relative.  They trick is to have a completely impartial and independent opinion on the home.  Maybe it looks and sounds amazing, but the levies are incredibly high, or there's structural damage, or there's a new development going up that will obstruct the view .... all these things must be considered.

5. Does it measure up?

Bring your tape measure.  Yes, really.  Measure up the main large items you're going to be bringing with you to your new home, and ensure that they'll fit in the space provided.

How do you know you need a buyer's agent?

Some people believe a buyer's agent is really only used by people who are buying prestige properties. Nothing could be further from the truth!  Buyer's agents help people locate off-market properties, negotiate purchases, bid at auctions, evaluate properties, inspect properties, manage all the communication with the agents and generally make the purchasing process easier and simpler.

you might need a buyer's agent when:

• You're in a rush to move - you have a deadline such as you've just sold your home and need to purchase to avoid renting

• You're pregnant or have a young family and it's just too hard / uncomfortable to get out and about to all the inspections

• You work very long hours and cannot take time off during work hours to inspect properties during the week

• You feel unsure about your negotiation skills

• You've been looking for more than 6 months and just haven't found anything you like

• The properties you're interested in all go for more than what your budget will allow

• You need help and guidance to know what parts of Sydney would be good to purchase in

• You have a deposit and pre-approval

A buyer's agent will generally see you purchased well before you would otherwise purchase, and also ensure that you're armed with all of the relevant facts about the property that you're interested in.  The fee paid is a small investment in your future, particularly in a market that is going up at such a fast rate - can you really afford to take 12+ months to find a property when a buyer's agent will shorted your property purchase to 2-3 months?

Underquoting: is it still happening?

A recent news report speaks to ongoing underquoting by agents who are finding clever - and at times underhand - ways to underquote.

I think it is fair to say that underquoting is still occurring.

But what is happening elsewhere?

There are increasing reports of agents simply not providing a price guide at all.  "The vendor is waiting for feedback from the market before setting a price guide." "We'll provide a price guide a few days prior to the auction once we have a more accurate understanding of market feedback." And so on.  This is also a bit underhand, in my opinion, since most (?? all) agents provide a price guide to the vendor when the vendor signs an agency agreement with the agent ... What vendor signs up with an agent who says, "I really have no idea what your home is worth, Ms Smith.  How about you spend $8,000 marketing the property and a few days before the auction, I'll let you know what it's worth."  It simply doesn't happen.  All that buyers want is to know what price the agent and the vendor believe the property will sell for - so that they can adjust their expectations of value and continue to investigate the property - or move on.

Buying in Sydney: is now a good time to buy?

In a word, yes.

Stock levels are down by 30% - 40% at the present time, compared with the stock levels that we've had for the past two years.  While some would say that it is definitely a sellers market and that buyers should beware, there is another view.

The property market in Sydney continues to climb.  Capital growth has been around 7% for the past year.  While it might be costly to enter or trade in the current market, the reality is that time is ticking by.  The property that you're holding off on buying is only going to go up - and you're missing that capital growth!  There are few asset classes that increase by 7% per annum - that's not taking into account the rental yield - with very low risks (if purchased well).

In 6 months, 12 months, 2 years, we're still going to be lamenting that Sydney prices are so high - but they're only going to keep going up.  Do you really want to stay out of the market waiting for the impossible to happen?  Buy when you are able to - if you can't afford to buy where you want to live, then consider rentvesting.

Our stock levels are down, and vendors are doing well.  You could also be doing well - by holding a property that is increasing in value at this crazy property time.

Investing in Commercial Real Estate

When we consider buying property, the two main options are residential properties and commercial properties.  Residential properties that those that people live in, whereas commercial properties are those where people carry on a business, eg a shop, restaurant, office etc. 

Sydney residential property prices are high (though in my humble opinion, reasonable considering these are the prices that people are willing to pay .... we thought they were high in 2015, 2014, 2013, 2010 as well).  Anyhow, these "high" Sydney prices are causing some people to consider other forms of property investment.  And this is where commercial property offers some significant advantages - and also some things to be mindful of.

Capital growth

Capital growth is virtually guaranteed in an A-Grade residential investment property.  It is not always guaranteed when purchasing a commercial property.  The capital growth of a commercial property is tied to its lease.  A vacant commercial property has little worth; a leased commercial property - particularly one with a good tenant and a long lease - is far more valuable.  When a commercial property is not tenanted, it may be months - and in some cases years - before a new tenant is found - so selling during this time may well mean selling for a loss.

For this reason, the capital growth potential of a commercial property is not as reliable as a residential property, where tenants are generally much easier to find and value is easier to establish.  Demand for residential property is always there - perhaps the property will be vacant for 2 weeks or so - but this is not the same as a commercial property that might be vacant for many months. 

The other factor affecting capital growth is that in many parts of Sydney, supply of housing is limited and demand is assured, and this maintains the property's value.  This is not always the case with commercial property because business is risky and businesses go broke all the time.

Demand for residential property is constant - everyone needs a place to live and emotionally, we have a need to love where we live.  Commercial property is different: we don't need to love our work place, demand is only there as long as the business is there, and capital growth for a commercial property is usually reliant on economic growth, rather than population growth. When the economy is in a growth phase, more new businesses start up and this increases demand for commercial premises and supports capital growth.  On the other hand, commercial property is more vulnerable during an economic downturn than residential property (because people need a home regardless of how the economy is doing).

Rental yields

Rental yields for residential property can range between 2.5% and 5%, whereas commercial property is generally 5% - 10%: significantly higher.  In essence, the risk of uncertain capital growth is offset by the increased rental yield.  The cash flow derived from the rental yield can be used to wards a deposit for a future property purchase, whereas had the investor purchased a residential property, that property would almost certainly be negatively geared, at least for the first few years, meaning no positive cash flow to contribute to a future purchase (although there would be equity).

Deposit

Banks are often much more reluctant to approve loans for commercial property investments, and often a 30% deposit is required.  The is in contrast to residential property where often only a 5% or 10% deposit is required. 

7 things people forget when buying a home

There is so much to think of when buying a home.  Loads of searches, meeting agents, inspecting properties, back to searching and more searching, then more inspections and so on.  It seems never-ending!  But in amongst all of this busyness, is also a stack of things that many buyers forget.

1. Loan pre-approval

It is often neglected right up until the day before the Auction.  A typical loan pre-approval can take a few days to complete.  I liken it to going shopping knowing how much money you have to spend: if you don't have loan pre-approval, you can't possibly know how much you can afford to spend, and you are not in a position to purchase.  It's free to engage a mortgage broker and get pre-approval.  It's a bit of paperwork for the reassurance of knowing your budget.

2. Selling costs

People who need to sell before they can buy, often don't factor in the costs of selling and subtracting those expenses from the sale price.  Costs include agent's commission, marketing and home styling, to name a few

3. Stamp duty

Stamp duty is a tax levied on most property purchases in Australia.  The amount will vary, but is generally around 4% in NSW.  It is paid on - or just before - settlement.   Your mortgage broker will factor stamp duty into your budget. 

4. Costs of moving in

Some homes require some minor renovations or modifications before you can move in - these costs need to be factored in.  There are removalist costs, perhaps cleaning costs, perhaps storage costs and of course the cost of your time.

5. Lender’s Mortgage Insurance

If you’re borrowing more than 80% of the house’s value, you’ll usually need to pay Lender’s Mortgage Insurance (LMI).  Your mortgage broker will advise you.  It is generally added into the mortgage, so it is not a separate cost, but you will pay interest on LMI if it is included in your loan, so you will end up paying even more in the long run.  it is still; a great idea to have LMI if it means you can get into the property market, or if it means that you may have a second deposit available for another property purchase in the near future.

6. Conveyancer / property lawyer's fees

These can be around $2,000 for reviewing the contract for sale/purchase and for advocating for you through your property purchase.

7. Professional representation from your own buyer's agent

A stitch in time saves nine.  While there is a cost associated with a buyer's agent service, it will generally save you much more in terms of negotiation of the purchase price, avoiding costly mistakes in your property purchase, preserving your mental and emotional state and of course freeing up your time for other income-generating pursuits (or simply having fun).

If you need professional representation through your property purchase experience, contact me today.

Exhausted buyers make poor buying decisions. Learn how to avoid the trap.

For many property buyers, exhaustion, dismay, disillusionment and despair are all too common. 

Months of searching reveals:

• Properties that sell on the first open home

• Properties whose open homes are cancelled without any notice because the property has been sold already

• Doom and gloom stories shared by other house-hunters who you meet on your property search travels

• Lies, scare tactics and under-quoting from agents leaves you wondering who you can trust

• Missing out at auctions time and again

• Endless hours spent online, enquiring with agents, inspecting properties - but no result

For buyers who can really empathise with the above comments, the risk of making a poor purchasing decision is high.

Our auction clearance rates are climbing steadily as we approach Spring.  In fact, by some reports the auction clearance rates are the highest they've been in years, for this time of the year.  Bad news for buyers.  It means that even more will miss out - and risk buyer fatigue and make poor purchasing decisions.

The risks of buying the wrong home are many:

1. Cost: buying the wrong home and realising it later may mean another sale and purchase in the not-too-distant future. Buying and selling are both costly.

2. Cost: buying the wrong home and realising it later may require you to renovate your new home to make it more suitable: again, if this cost was not factored into the purchase, it can add way more cost than you had budgeted for.

The very best way - and by far the cheapest way - to avoid buyer fatigue - or prevent poor purchase choices is to engage a buyer's agent.  Why?

1. A buyer's agent will keep you in check: they will provide feedback on properties that is impartial, not emotional. If the property is not right, it will be ruled out, quick-as-a-flash, without your emotions becoming involved.

2. A buyer's agent helps you to accurately assess a property, warts and all, including an estimate of the fair price for the property. This can mean you don't go for a property that is likely to sell for more than you can afford; and that you don't pursue a property that is a "dud".

3. A buyer's agent will help you establish a robust list of true needs vs "nice-to-haves". This means that the searches will be far more focused and the whole property purchase time will be shortened.

4. A buyer's agent will give great recommendations for all of the property professionals you may need

5. A buyer's agent will ensure that you have your finance and deposit ready before the search begins

6. Engaging a buyer’s agent will cost a small fee or a percentage of your home’s purchase price, but it may save you thousands in the long run.

If you are tired of looking, frustrated by the market and generally "over it", I'm here to help you.  Contact me today.