Blog

Unethical agent get slap on the wrist

An agent who sold an elderly woman's property to a friend of his brothers for hundreds of thousands below the true market price escapes with a slap on the wrist.

?

In 2008 the agent sold the property for just $135,000 which sold just 3 years later for over $491,000.

After investigation from Consumer and business services (formerly OCBA) they decided not to suspend the agents license despite finding the agent guilty of unprofessional conduct. The only penalty on the agent was a $14,000 fine for unprofessional conduct.

At a time when the Real Estate profession is doing all it can to improve training and education, and legislation is becoming more and more cumbersome it is dissappointing that when there is a flagrant abuse of a clients trust that nothing is done about it.?

Fortunately in this example the Public Trustee reversed the sale and ultimately sold the property for $491,000 so the victim received the proceeds of the sale.

Property spruiker found guilty of fraud

A Western Australian property investment spruiker has been found guilty in a WA court after it was found he had taken $1.2 billion dollars from his clients and used the money to pay off debts and credit card bills.

It was alleged the man ran a property investment scheme between August 2007 and March 2009 which lured potential investors in by promising returns of 20% or more.

Although in some cases he made regular payments back to the investors it was just part of a ponzi style investment scheme and ultimately led to his bankruptcy in 2009.

When partnering with an advisor to assist with investing your hard earned money it is essential that you have a thorough knowledge of the process and trust the credentials of your advisor.

If it appears that someone is offering you something that appears too good to be true then it probably is.?

If we use Warren Buffet one of the worlds richest men as an example he has managed to get a return of just over 20% per over the last 40 years and this has resulted in being one of the richest men on the planet.

If you are offered excessively large returns it must be understood that there may be risks associated with those returns.

My suggestion would be when choosing an investment advisor is to make sure they have the qualifications and experience to back up their claims and deal.

Also i have found that you are much more likely to develop a strong and fruitful relationship when you deal with a local rather than someone who doesn't understand your requirements or the local market.

No fixed price deters buyers

A recent poll taken by PRD Nationwide has shown that 95% of buyers were deterred by properties which did not include a fixed asking price and often overlooked those properties during their property search.

The poll attracted 450 respondents from across Australia however was the majority were from Queensland and New South Wales.

The poll found that three quarters of respondents where 'greatly deterred' by properties which did not include an asking price with a further 20% being 'slightly deterred'.

Only 2.5% of respondents were 'definitely not deterred' by the practice.

According to PRDnationwide research director Aaron Maskrey agents could ultimately be 'missing out on potential purchasers by not advertising a selling price or selling range.'

Median unit prices approaching median house prices

Not sure if anyone has noticed but difference between Median House Prices and Median Unit prices is steadily narrowing in Adelaide. What does this mean and why do we care?

?

The Median House price in Adelaide is now at $385,000 down 2.5% on last year whilst the Median Unit price is now at $325,000 down 2.26% down from last year.

Before you get all doom and gloom it is interesting to note that the average annual growth over the last ten years for Houses is 10.36% and 11.31% for units. This really is an exceptional return considering when most people talk about properties doubling in value every 10 years this only represents a growth of 7% annually.

So what does this mean for investors? Should they buy a House or a Unit.

There are pros and cons for both options however one thing to consider is the land appreciates and buildings depreciate. This being said if you are looking for the long term you may get better capital returns by investing in Houses with a greater land content whereas if you are looking to minimise your tax this may be best be achieved by Units where there is a greater building content.

My preference would be ignore the market and statistics and look at the deal. If it looks like a good deal then buy it.

Trying to pick the market based on what has happened in the past is a difficult game to play.

How to market your subdivided property

When completing a subdivision there are only 3 alternatives approaches which can be adopted

1.Land Only

2.House & Land

3.Completed House

In practice it may be difficult to sell a vacant block of land because many potential purchasers may not be experienced with the building process. They may have concerns about what type of house they can fit on the block, which builder they should use to build the house and how much it will cost for their completed home. As a result of these concerns many potential purchasers may consider it too risky and may decide to buy an existing house.

To alleviate these concerns your Real Estate Agent may suggest that you market the block of land as a House & Land Package. A House and Land Package involves 2 contracts, one for the house and one for the land. These contracts can be signed at the same time or separately.

The advantage of this for the purchaser is that plans will have already been drawn up to suit that block and an indicative price will give the purchaser an idea of whether their new home will fit within their budget. The purchaser then has the flexibility of changing the plans and renegotiating the price directly with the builder.

The advantage of this method for the property owner is that they are still only selling the block and do not have any involvement with the house contract. The prospective purchaser deals directly with the builder regarding any changes required to the building plans. This method is likely to result in a much quicker sale of the block as the purchaser will be much more informed and more likely to make the decision to purchase the block and build at a later stage.

The final option is for the property owner to build the house and then sell as a completed home. This is the most desirable option for the purchaser as they can see exactly what they are getting and as a result they are likely to pay the highest purchase price.

However the downside for the property owner is that the risk of the project may increase as there will be significant costs associated with building and the timeline of the project will be much longer. This exposes the property owner to the possibility that the market adversely changes during this time or the property owners financial position may change resulting in the possibility that they cannot complete the project.