RADIO ADVERTISING IN 2016

There are a number of agencies advertising their services on radio recently and they are all saying basically the same thing.

We are better at getting your property sold or managing it no matter what area your property is in.

This begs the question “Is that true?”

Let’s look at property management first.

Years ago we had to come to a decision regarding managing property all over Perth as opposed to dealing locally.

From talking to women who came to work for us from agencies with property from Tapping to Secret Harbour, it became obvious that they spent far too much of their time travelling between their managements, time they could have better spent if the homes were within a reasonable distance from the office.

In trying to let the property it also meant they had a choice of one only in that area, a handicap which also afflicts sales.

What is meant by the choice of one is that, if the tenant has chosen that area in which to live and a centralised office has just the one property in that suburb then it is take it or leave it.

Each advert we run for a rental in say Waikiki works for all our available properties in Waikiki, not just the one.

With sales the problem is the same, the choice of one.

An additional problem is local knowledge. A property manager or sales rep who is local will be able to answer far more questions about the area than one from out of town.

So the choice is clear.....always deal with the local agent.

Ross Cutten
Director, Noble Real Estate

How do I know which agent to choose?

It has always been prudent to get 3 appraisals when you are thinking of selling.

The way the appraisals are handled will give some clues as to which person should be the one you entrust your home to.

First is the question of time. Are they on time or late and making excuses? This is your first warning sign.

Do they try to understand your motivations first or is it all about business?

How thorough are they when doing the appraisal... remember this is them at their best or should be.

Quite often you may be unable to differentiate between their presentation material but do they deliver it personally or by post?

Let’s say that so far you are unable to separate them.

Does the appraisal process leave you with the impression they were trying to impress you with awards and numbers of listings or sales or did they seem more focussed on your personal selling problems.

Trust your intuition.

More than anything else that word trust should be the thing you focus on. Who do you trust them and if so why?

Many times it can be because they asked the right questions.

I will trust someone who asks far more than someone who tells.

THE COST OF LAND VS THE COST OF A HOUSE

THE COST OF LAND VS THE COST OF A HOUSE

Source; RP Data

Over the 10 years to December 2011, the rate/m2 on residential land has increased at a significant rate across each capital city.  The compound growth rate over the past 10 years is detailed below for each city:

• Sydney – 5.4%pa
• Melbourne – 11.7%pa
• Brisbane – 12.9%pa
• Adelaide – 14.4%pa
• Perth – 13.7%pa
• Hobart – 16.5%pa

Interestingly, if you compare the compound growth rate for land prices over the period to growth in overall house values it appears that the land component is becoming much more expensive while the value of the house is becoming comparatively more affordable.  Listed below are the ten year compound growth rates for capital city houses:

• Sydney – 3.9%pa
• Melbourne – 7.3%pa
• Brisbane – 8.3%pa
• Adelaide – 7.9%pa
• Perth – 9.9%pa
• Hobart – 9.7%pa

Ross Cutten
Owner/Licensee
Director

MARKET UPDATE 20.04.2012

Market update

20.04.12

At Wednesday’s meeting of the group we belong to called Prominent Agents Network one of my members quoted back something I had said about the market some months ago as he believes it is a good description of his current experience.

At the time I described our market as being like a car with a faulty carburettor. In other words it will accelerate for a while and then just when you think it is a new trend that has started it will switch off.

Compared to 12 months ago there seems to be much more optimism from the buying public and numbers are up at home opens, plus buyers are placing written offers.

However they are still shopping hard when it comes to price so there is no sign of rising values yet but it is more stable.

R.E.I.W.A.  has  just under 14,000 properties for sale (long term average is 12,000, 1 month after the GFC all time high 18,400, May 2011 18,200).

Sales are running at about 2/3rds of the long term average, so we need a drop in listing coupled with a pickup in demand to change values.

The current signs are still positive but it isn’t a trend yet.

Ross Cutten

Owner / Director

Noble Real Estate

BEWARE THE FORECASTERS

BEWARE THE FORECASTERS

Here is a reprint of an article I wrote in October 2008, the month of the GFC.
Have a read and see if there is any relationship to our experience over the past 31/2 years and keep it in mind when the prophets of doom next start predicting the end of the world.

A LITTLE CLARITY IN A WORLD GONE CRAZY

Lots of people are expressing their fears in response to the turmoil on the stock exchange and some of the talk has moved to the future of real estate in W.A.
First and foremost is the concern about the “R”word (recession).
While am not an economist I cannot see how this state can go into recession
given the many pluses which exist here.
(Just yesterday I received an email from the Chamber of Commerce and Industry expressing the same sentiment)
Australia has a rapidly increasing population (260,000 in the past year) and W.A. is picking up more than it’s share.
They have to live somewhere and the building of new homes is not keeping pace.
Remember the key to all things financial is supply and demand.
It is also about what people believe and unfortunately many do not read beyond the headlines.
What about the talk about real estate values dropping by 20%, 40%, or similar amounts?
The way I see it every time a new subdivision of land is being produced, each metre of road is more expensive than the last subdivision.
That is due to rising costs of fuel, wages, and producing kerbing, etc.
The same can be said of constructing a house.
Each brick, metre of timber, wages, etc. will be more expensive than one built last year.
So that brings in to play the replacement cost of homes.
If you look at many of the homes for sale today in Rockingham, you will find they are below replacement.
The other factors which help to make Rockingham stronger than other areas is the fact that 70% of Australia’s navy families are based here and they spend there money right here every week.
Add to that the number of families for whom Kwinana industrial strip supplies employment and we have more factors which underpin our local economy.
The events in the U.S.A. bear little direct comparison to Rockingham or even Australia.
In the USA they can unilaterally opt out of their mortgages with no further liability just by returning the keys to the lender.
Here you will remain indebted to the lender if you were to abandon the property.
That is why there are so many homes for sale there.
Traditionally investors have returned to the property market when rents have approached 5% Gross return.
The easy way to work that out is to say that if a property is rented at $260 per then investors have in the past been interested when the price of the property has approached $260,000.
We are getting to that stage with some homes now.
The only way to turn a paper loss into a real loss is to sell.
So if you have the option at the moment it is better to stay out of almost any market place if you are a seller.
If you are a buyer look at buying as soon as you can.
Do not make the mistake of waiting, thinking you can pick the bottom of the market.
Did you pick the top or the bottom last time—odds are the answer is no.
The best definition of an economist I have found is “An economist is someone who has predicted 28 out of the last 3 recessions.
And please keep in mind that the job of a newspaper is to sell newspapers not necessarily to report accurately.

Ross Cutten

Owner / Director

Noble Real Estate

HOW TO CLARIFY YOUR THINKING IN MAKING REAL ESTATE DECISIONS

After 28 years of helping people buy and sell I have found that, in modern times a lot of people suffer from what Zig Ziglar referred to as “stinkin’ thinkin’”.
Real estate salespeople are often heard to lament “Why can’t they make up their minds?”.
Hopefully the following will help, having been gained from a variety of the best trainers in the world as well as my own experience.
My first suggestion is;
Divide a piece of paper vertically with a line.
Put a heading on the left “Lifestyle”
Put a heading on the right “Investment”

The primary reason people get confused is that they try to combine these two without giving priorities.
For example if you are going to invest in a property for some years but also want to retire to the property you may find the best investment property you don’t ever want to live in and the home you would die to live in will be a poor investment.
Once you have the investment vs lifestyle columns sorted you can give them priorities.
As an example, if a retired couple are moving because one of them has health problems then the primary reason for selling is one of lifestyle. Given this, they should give a low priority to whether prices are up or down, assuming of course they can afford the move.
I have seen many couples who are divorcing let the property deteriorate in order to harm the other party without paying heed to the fact they are also hurting themselves. The best approach if they can’t agree on how to split the proceeds is to sell the property while it is still presentable and have the Settlement Agent put the proceeds in a trust account while they sort out who gets what.
Let’s look at some lifestyle versus investment decisions.
Reducing the mortgage so one party can stop work – lifestyle.
Health issues – lifestyle.
Inability to accept current values – investment.
Trying to pick the top/bottom of the market – investment.
Buying a special rural property – lifestyle.
Comparing the current value to the top of the market instead of the difference between what you paid and the current value – investment.
Hopefully this may help someone get to the stage where they can move on.

Ross Cutten

Owner / Director

Noble Real Estate

AN INTERESTING FACT ABOUT REAL ESTATE AGENTS

 

AN INTERSTING FACT ABOUT REAL ESTATE AGENTS

Most of our owners of properties in our rental department are heading towards being better off in their retirement planning than most real estate agents in Australia according to Robert Bevan of Best Practice, one of Australasia’s foremost trainers.
The reason is that 60% of real estate agents have a return of 5% from their businesses after taking out their personal sales and have no assets when they retire.
The next 30% have better returns but still no assets.
How can this be?
I think the simple answer is that they are like the average person in this country....living to 110% of their income.
The other reason is that they often fail to follow their own advice or fail to understand the way to achieve a financially secure future.
My experience is that people trying to get ahead fail to understand some basic principles of securing a comfortable retirement.

The kinds of boring things like
1. Make a plan
2. Stick to the plan
3. Understand that there is a direct relationship between risk and return.
4. One of the key features of any sound plan is to protect what you already have through insuring your income and life.
5. Understand the rule of 72.
6. Decide what you are prepared to give up to get what you want.
7. Never stop learning.
8. If it sounds too good to be true...it probably is.
9. Understand the difference between speculating and investing.
10. Only speculate with money you can afford to lose.

If you ever care to discuss your ideas about the above you can always contact me on
rosscutten@noblerealestate.com.au

Ross Cutten

Owner / Director

Noble Real Estate