Gosh what a surprise to hear that Alistair Helm is leaving Realestate.co.nz
The official line from Chairman Fairfax Moresby is, quote:
“Mr Helm is leaving as a consequence of management restructure. As both the business itself, and online marketplace have matured, the Board sees now as the appropriate time to review both operational structure and resourcing of the company as it charts its new future”
Certainly a significant restructure??
I would like to say that I personally have enjoyed reading and listening to Alistair over the last few years and wish him the best of luck in the future.
September 04 2012 | Uncategorized | No Comments »
From 1 April 2011 the GST changes for professional Property Investors and Developers are all about ‘use’ and ‘activity’.
Buying and selling of land between GST-registered persons (or businesses) will be rated at 0% for GST. This means the GST will be removed from the sale price of land being purchased from and by a GST-registered person if it is put to ‘use’ as a taxable ‘activity’ (e.g. a GST registered developer is buying a property to do-up and re-sell at a profit from a GST registered vendor)
Under the IRD rules ‘land’ means land, an estate or interest in land, options to acquire land, buildings, fixtures, business premises, ‘not a supply of land intended to be used as a principal place of residence of the recipient of the supply or a person associated with them ‘.
This means if you are GST-registered and selling to another registered person for an activity attracting GST, the transaction will be zero-rated and you will be required to provide evidence to this effect. In other words IRD will need you to advise them in writing of the other party’s GST registration details and a statement confirming that the purchaser’s activity will be using the property for business purposes.
For example: A GST registered vendor selling a property.
1. A non-registered GST buyer purchases the property.
His offer for the property to the vendor is $180,000 incl. GST
The vendor pays the GST ($23,478) to IRD leaving him $156,522 net on the property.
The purchaser is unable to claim back GST from the IRD because he is not registered for GST.
2. A registered GST buyer, who fulfils the above criteria purchases the property.
In theory, he pays the same figure $180,000 (which includes GST) but, he subtracts the GST.
This calculates to $180,000 – $23478 = $156,522
His offer for the property to the vendor is $156,522 plus GST (if any)
Because of the Zero Rating Status of this transaction, there is no GST payable.
With this transaction, the purchaser doesn’t claim back GST from the IRD and the vendor doesn’t need to pay any GST to the IRD.
The net result in both cases is $156,522 to the vendor. He is not disadvantaged by either of the transactions.
In brief the changes are designed to stop avoidance – typically where GST claims have been made by a purchaser but no GST has been paid by the vendor – the changes make this impossible.
(Note: The GST registered Developer can claim back the GST on money he spends doing up the property but when he re-sells the property, he is liable to pay GST on the full sale price received.)
July 22 2011 | Uncategorized | No Comments »
Following on from my blog, Saving with Kiwisaver, I think it worth mentioning the Welcome Home Loan Scheme.
The Welcome Home Loan is offered to first home buyers by three New Zealand Banks, TSB, SBS and Kiwibank and is supported by Housing New Zealand.
It has been created to help first home buyers purchase property giving them the ability to borrow money with little or no deposit.
I won’t go into all the details of this scheme (go to: http://www.welcomehomeloan.co.nz/ to check it out) but basically, for those first homers who qualify:
- they can borrow up to $200,000 without a deposit
- for a sum over $200k the deposit required is 15% of the sum greater than $200,000
For example; If they wanted to borrow $230,000, the deposit required would be 15% of $30,000 which is $4500
Using the same $230,000 loan from the Aussie owned banks,
- a 5% deposit would require a $11,500 deposit (if you were lucky)
- a 10% deposit would require a $23,000 deposit and
- a 20% deposit would require a $46,000 deposit
In Hamilton we are finding, that with the slowing of the market and the general fall in prices, the price range up to $300,000 represents about 40% of the total number of houses selling and under $400,000 is currently about 75% of the market.
There is definitely an opportunity here, for young first home buyers to break into the Real Estate market. We all know that saving deposits has been a great hurdle for young people stopping them from buying houses. Along with the Kiwisaver scheme the Welcome Home Loan may just enable some of them to do this.
Houses at these price levels are usually tired and dated. However, often they can be improved dramatically by the home handyman and their values can be lifted considerably.
By dropping their expectations and the use of a paint brush, young people can use these houses as the first steps on the ladder to owning, nice homes for their families. They can also live securely knowing that they won’t have to move on, at the whim of their landlord, which is so often the case when renting property.
At the end of the day, your first home doesn’t have to be perfect. You’re using it to get on the ladder to your second and third home. You most likely won’t even own it very long. You’ve got to get onto this ladder early in your life, or you may never own property. To get bigger and better houses which will satisfy your needs latter in your life, most of us have to take advantage of Capital Growth which is associated with Real Estate. You can’t bank on saving the required money from your wages, we don’t earn enough.
In Europe, housing is extremely expensive. Most people never own their own homes, they rent all their lives. Home ownership is monopolised by the wealthy elite. New Zealand is quickly heading down the same road.
April 17 2011 | Uncategorized | No Comments »
Owning property in New Zealand is quickly getting out of reach of many of our young people today.
Saving the required deposits is getting more and more difficult.
The money that is being offered to our graduates coming out of University is hardly what you would call generous. Along with students loans, and the cost of living, the odds seem to be stacked up against our kids. Saving money for home ownership is going further and further down the priority list for many young people.
Mum’s and Dad’s, we must encourage our children to get involved with Kiwisaver.
The retirement aspect of this scheme for many young people may seem a bit too much like forward thinking, however the saving money for your first home idea is fantastic.
When you get involved with Kiwisaver you set it up as an automatic payment scheme and then literally forget about it. It’s a bit like ‘saving when you’re not saving’.
The money you put aside, 2% or 4% of your wages if you are employed, is soon not even missed. Your employer feeds in his 2% and each year the Government gives you $1000. With a bit of luck your providing organisation will invest your money wisely for you and may get a bit of interest as well.
Over a very short time, the balance of your account starts increasing very nicely thank you. You have geared your life around the take home pay from your wages, so the money you have saved is like a bonus.
My wife and I joined Kiwisaver exactly 2 years ago. My wife’s a nurse so her employer matched her 2%. Every month about $200 comes out of her salary. I’m self employed, for the first year I saved $100 per month to match the government contribution. I then increased my contribution to $200 per month.
Believe it or not, after 2 years, we have got between us over $20,000 in our Kiwisaver Accounts.
The point I’m trying to make is, that the money that Beth and I put into this scheme, we havn’t even missed it and now we already have a nest egg of over $20,000.
Now the significance for us is saving for our retirement, goodness knows how much money we will have in our accounts in eight years time when we retire. Maybe $100,000 who knows. We might even go on a swanky trip overseas and stay in a whole lot of posh hotels.
The significance for young people is that after three years this money can be partly used for a deposit on their first home.
Think about this, two lots of 4% saving from your wages, two lots of 2% contributions from your employers, two lots of $1000 from the govt. each year and hopefully two lots of interest earned. After three or four years, you are going to have a sizeable sum of money in your accounts. Except for the government contributions this money can be withdrawn and used towards a deposit for your first home.
This is a very easy and painless way to save money. Remember, its like ‘saving when you’re not saving’.
If you take my advice, everyone should be in Kiwisaver. In the long term, you’ll regret it if you don’t.
April 11 2011 | Uncategorized | No Comments »
One thing that will never change is, that a house is worth more to its owner than it is to anyone else. When it’s time to sell, a lot of vendors initially over price their properties. To get a sale at these levels is often difficult and usually the market has to catch up with their prices before the property sells.
This is all right when the market is busy and prices are rising. However, when the market is stagnant or falling this idea can ruin their marketing campaign.
When asked for a price reduction by their agent they often say,
“I won’t lower the price but ask anyone who’s interested to make an offer. I will seriously consider all offers”
Time goes on, their agent dutifully markets their property but no offers appear. Everyone gets very frustrated.
What they don’t understand is the following.
Genuine buyers (who usually are very knowledgeable about prices, because they have seen everything available on the market) who come to view their property, have expectations of seeing a property that is consistent with the advertised price. When they see that property has not got the features that they are expecting a property at that price should have, they obviously don’t want to buy it. It’s not what they are looking for and thus they don’t want to make an offer.
The right buyers for the property, those who would make an offer, never get to see the house, because the house is advertised out of their price range.
In Hamilton at present, the market is very price sensitive. Houses that have the wrong price on them are soon found out by agents and buyers and are quickly ignored in the market place. Usually if they don’t sell after the initial new listing interest in the first week or so, they seem to be for sale, for extended periods of time. Before they finally sell, their prices progressively drop to the levels which are expected by the buyers.
The unfortunate thing is, that had their prices been right initially, when the best buyers were available, they would have sold for much more than the eventual price, that they actually sell for, four or so months latter.
December 15 2010 | Sellers of Real Estate | No Comments »
As a Real Estate Salesperson I often need to motivate myself. It makes me feel good when I’m inspired by an event or an idea. It helps to keep me going and to keep me on track.
Being a great armchair sportsman, I always enjoy watching the All Blacks doing the Haka, especially before the big games.
I found this interpretation of the Haka which I thought I would share with you. I don’t know who wrote it or when.
It embodies a meaning which appeals to me. A winning All Black Team is a great inspiration and a source of pride for us all.
“We are the All Blacks, of the New Zealand people”
“We stand on this field arrayed for battle”
“At our backs we feel the might of tradition wrought by those who have gone before”
“Over our hearts we bear the Silver Fern, emblem of mana to die for”
“This challenge is now thrown out to you. Take it if you dare for we will not withhold ourselves this day and the faint of heart will surely be lost”
Whiti te ra! Hi!
The maori phrase Whiti te ra! Hi! is translated as
The sun shines! Rise!
June 12 2010 | Uncategorized | No Comments »
I would like to discuss two different scenario’s to illustrate my point.
1. A property is put on the market by a Real Estate Company $20,000 above the current market value.
- the property is caravaned by the Real Estate Company (ie the agents from the company view the property) The agents are not impressed with the price and their feedback is that the property is $20k over market. A negative attitude is immediately generated around the property. After the caravan there are some Agent/Client Buyer viewings but not many because most agents don’t want to waste their own time or their buyers time showing over-priced listings. Agents don’t like showing them because it makes them look inexperienced, they would rather show property which they consider is listed at market value and which they have a better chance of selling. Agent response to the property is poor. There may be a bit of activity from agents from other companies who have not caravaned the property but this soon dies away as word gets around the industry that the property is over-priced
- the property is advertised on internet and in the newspaper. The initial response to view the property is good from buyers and there are quite a few viewings. These are the buyers from the immediate Pool of buyers who are intensely looking at everything new that comes on the market. They want to buy property today. These buyers are very educated about the value of property, they have been in the market and have seen everything available at that time. They immediately recognise that the property is over-priced because they have direct comparisons in their mind from other properties which they have just lately seen. They mostly reject the property because they consider it poor value as compared with others. They actually may decide to buy other property they have been thinking about seriously because now, those properties look good value. (the over-priced listing actually helps sell other property)
- by luck, the vendor does get an offer from one of the Pool buyers. The offer is at market value ($20,000 below asking price) The vendor refuses the offer and won’t negotiate to the required level. He thinks he will get another better offer latter. The deal and the buyer is lost because they go and buy another house. (First Offer Syndrome, the first viewers of a house newly listed, are often the strongest buyers for the property because they are really in the market to buy a house today, they are not lookers or tyre- kickers) No other offers are forthcoming.
- Open homes are started. Once the immediate pool of buyers has been exhausted the only people who are attracted to view the property are those attracted by the advertising. Agents generally don’t bother to show the house until there has been a price drop. The buyers that come to the property are now actually the wrong buyers. They are looking for a property which is $20k better than the one they have seen advertised. They are dissappointed in what they see and consider the house not what they are looking for, consequently they don’t make offers. It is not the right sort of house that they are looking for. The right buyers for the house ( the ones who would make offers) don’t come to look because the house is out of their price range.
- Open homes drag on for months with little success, the vendor is staunch about his price and doesn’t make any price adjustments. The vendor firstly blames the Market for the lack of success, then he blames the Real Estate Agent, then he blames the Real Estate Company. Fewer and fewer people come to visit the house. The vendor gets very depressed and finally comes to the conclusion that his price is wrong. His circumstances now dictate that he must sell the property, possibly the Bank is demanding that he do so. He concedes to a price reduction. In the meantime the Real Estate market has dropped. He concedes to a listing price well below the initial market value. Finally an offer comes in. This is much lower than his initial offer. The buyer knows that the house has been on the market for months and has doubts about paying too much for the property in case there is something wrong with it. He also considers that the vendor must be desperate and refuses to negotiate to a higher level with his offer. Due to his circumstances the vendor now has to sell the property. The vendor has to accept the offer or due to his frustration about the whole process, he accepts the offer anyway, just to get away from the stress that he has put himself under.
- The marketing campaign for this property has been a nightmare for the vendor. His inability to recognise the market value of his property has cost him a huge amount of money and also a considerable amount of unneccessary stress. His life and his future plans have been disrupted for months. Opportunities that were once available to him have now perhaps been lost.
2. A property is put on the market by a Real Estate Company at the current market value.
- the property is caravaned by the Real Estate company. The agents from the company are impressed with the listing price and feel that it represents the current market value. A positive attitude about the property is immediately generated, agents can see the possibilty of making some money out of the listing. The pro-active agents go back to their offices and start phoning potential buyers suggesting that their clients view the property asap because it’s a good buy. Urgency is immediately generated to view the property before other people do.
- the initial response to the property is very good. Agent/Client Buyer viewings are very good. These are the buyers that the agents know and who they have been working with. Usually also, these are the buyers that the agents know they will make their commissions from. Buyers coming from the immediate Pool of buyers are all very well qualified and are coming with agent recommendations. They are also very educated buyers and they recognise immediately that the property has been listed at a fair current market value. The investors amongst them start doing their sums about possible renovations etc and about whether or not they can make money out of purchasing the property. The home buyers amongst them start getting emotionally attached to the property and look for local schools and whether or not their furniture will fit into the property etc.
- in the best case, multiple offers may be generated on the property. This means that there are multiple buyers for the property at the same time. Competition for the property is created. This is a fantastic situation for the vendor. Now the agents can say to all the interested buyers that:
“it’s no good coming in low with your offer, you will have to come in with your top dollar, otherwise someone else will beat you in the competition. You won’t get a chance to negotiate”
Some times in this situation, one or more of the buyers are so keen to buy the property that they make offers over the asking price, just to try and make sure they are the winners of the competition. All good agents should strive for competition. We do so because we know that, this is when we get the best money for our vendors and that, it is also when we look our best operating as sales people. People love telling their friends how they got over the asking price for their properties and how good their agents were at selling their property.
- the property sells immediately, with a possibilty of a price over the asking price. Having open homes sometimes is not necessary, as the property sells before they are programmed into the marketing campaign. The vendor is over- joyed with what has happened. He hasn’t had to suffer months of open homes and the disruption they cause. The sale process has happened quickly and without fuss and stress to his family. The project he wants to go onto suddenly now is achieveable because he has an excellent sale price for his house.
A fact worth mentioning is that, in a rising market the market can sometimes catch up to an over-priced listing. On the other hand, in a falling market the over-priced listing gets further and further away from the current market value.
I have been an agent in Hamilton for many years. I have seen these two scenario’s played out many times.I have seen people ending up loosing their houses to mortgagee sales because they havn’t been able to accept the value of their homes. I have seen people get huge sums of money over the asking price because our Company has generated competition for them. At the end of the day, a house is only worth what someone wants to pay for it. Agents can’t force buyers to buy houses. It is no good talking houses up in advertising because you are immediately found out when people view the homes. A house sells when a buyer and a seller agree on a price without bias. Real Estate agents are looking for fair market prices for both buyers and sellers. That is when we are doing our jobs correctly. Agents want people to respect and take their advice. I’m not going to give poor advice, I want people to continue doing business with me.
What road do you want to go down, scenario 1. or scenario 2?
Look at the market, look at your competition, choose an agent you trust and listen to his advice. Remember he’s the expert.
January 17 2010 | Uncategorized | 2 Comments »
If you are a first home buyer, this article may answer some of your questions.
1. Obviously you have to pay for the property. If you need to get a Mortgage, you usually need a savings history with your bank and between 10 and 20% of the cost of a house in savings.
2. You must be able to prove to the bank that you have a regular income so you will be able to service the mortgage. You would normally need a secure job which will provide you with this income.
3. Go to your bank or to a mortgage broker to find out how much money you can borrow. Brokers are good to deal with as they have an overall picture of the lending institutions available to you. Your bank may not be the institution which has the best deal for you, considering your circumstances at that particular time.
4. Now you know “how much you can spend”, have a look for a suitable property. Compare all the houses in your price range with one another. Consider your needs and wants and select the one that suits you best. To determine a fair market price for the property, you compare the price of the one you like with other similar properties. Find out what other properties in similar areas have recently sold for.
Vendors of properties which have just come on the market are usually harder to negotiate with, as opposed to vendors whose properties have been longer on the market. If you are the only interested buyer at that particular time you can perhaps come in a bit lower than asking price and try to negotiate the price down. If you are in competition with another buyer you will have to put your best price forward.
5. Select a Real Estate Agent you like and who you feel you can trust. A good pro-active agent will help you find a property. It may not be on the market today, but it might be listed next week. Give your needs and wants to your agent, he will phone you as soon as he sees something that is suitable.
6. When the right house comes up make an offer. Your agent will help you to do this.
The first thing you do is to negotiate a price, subject to certain conditions. Your agent will do this on the standard, Sale & Purchase Agreement form.
Your conditions may be:
(a) Your Solicitor approving the contract subject to Title and to Form and Content of the agreement.
(b) Subject to a satisfactory LIM report from the council.
(c) Subject to a satisfactory Builders Report, from a builder of your choice.
(d) Subject to you getting the necessary Finance from your lending institution. (They may require you to get a Registered Valuation of the property)
7. Once a price has been agreed on, the house is said to be Sold Conditionally.
8. The agreement will give you normally between 5 to 10 days to satisfy your conditions.
This means that:
(a) Your Solicitor will check-out the Title of the property and check that the agreement has been written properly.
(b) Your Solicitor will have a look at the LIM report, he will discuss it with you. You can then approve it if everythings OK.
(c) Your Builder has inspected the property and has given you a satisfactory report on the property.
(d) You have got the necessary Finance. (Your lending institution has approved your loan)
9. If any one of your conditions can not be satisfied, then the agreement can be cancelled and you have no obligation to purchase the property. Once all your conditions have been satisfied your Solicitor will declare the agreement Unconditional and from that moment you have secured the property. You then pay your Deposit, this is normally between 5 and 10% of the purchase price, to your Real Estate Agent who deposits it into the Real Estate Companies Trust Account. The money usually stays in this account for 10 days before it is released to the Vendors Solicitor.
10. The balance of the purchase price is paid on Settlement day which is normally 3 to 6 weeks latter. Once settlement has taken place you own the property and you get the keys for the property. You can then arrange to move into your new home.
This is a typical scenario, there are many variations to this process. Each situation must be considered separately and acted on appropriately. It is important that you have a good relationship with your agent and that he keeps you fully informed at each step of the way.
December 23 2009 | Buyers of Real Estate | No Comments »
Selling in a reasonable time frame is every
genuine Sellers aim, second only to selling for the
highest possible price.
Yet, most salespeople agree, that the hardest sale to make is the one that comes along in the first days of marketing. Inexperienced Sellers are often unaware of the mechanics of the marketing process. They think that if Purchaser One is prepared to pay $ in the first week of marketing, then Purchaser Two will pay $plus next week. They say things like:
“if the first advert brings in this sort of response, what will the second one bring?”
as if price increases incrementally with time.
It is important that Sellers are aware of the processes that are set in motion when a property first comes on the market.
A property attracts the greatest amount of attention when it is first presented on the market. All Purchasers that have been looking for their ideal home for weeks and months converge eagerly on a new listing.
These are the “qualified” Purchasers – the ones who have done their homework, know exactly what similar houses in similar areas are selling for and thus know what their money will buy. (as an aside, this is when new listings that are overpriced, clearly stand out to knowledgeable buyers as, being overpriced)
New listings attract numbers and numbers generate competition. It’s competition that creates the climate that nurtures the highest offers. This is the time when a Purchaser who falls in love with a property will be afraid that someone else will snap it up before they do. The longer a property is on the market at a given price, the more the sense of competition fizzles out and the more likely subsequent Purchasers are to feel they have plenty of time to make up their minds.
The feeling that time is on their side gives Purchasers the psychological edge.
Purchasers feel they can afford to offer less with more chance of getting a bargain. It’s not hard for them to work out that a property is getting stale.
A property starts to go stale once all the ‘qualified’ Purchasers have inspected it. Those who come on the scene subsequently are new to the market-place and have yet to work out what their money will buy. Naturally, new Purchasers are unready and unwilling to commit themselves until they have done their homework.
In the final analysis, the Sellers two main aims are not separable. They are two sides of the same coin. Selling for the highest price usually means getting serious about that early offer. Sellers who fall victim to First Offer Syndrome often regret their early refusal to negotiate when they discover further down the track they end up settling for less.
October 16 2009 | Sellers of Real Estate | 2 Comments »
The Reserve is set, usually a day or so before the Auction, this is a Sale Price which is confidential to Vendor/Agent/Auctioneer.
The Auctioneer introduces himself and the Agent who has been handling the Auction to everyone in the room.
He talks of how the Auction will be run, as per the guide lines set by the REINZ
He describes the property by pointing out its main features, talks of any other relevent information about the property and talks of the Settlement date stated in the ‘Terms of Auction’
He indicates to those in the room the Registered Telephone Bidders, if any.
The Auctioneer calls for an opening bid from the floor. If no-one responds he may close the Auction down or he may place an opening bid for the vendor himself. This is normally about 10-20% below the expected market price.
Low bidders are welcomed as they provide the platform for further bidding. The Auctioneer will encourage bidding, initially at, as larger intervals as possible in order to move the bidding towards the reserve level. Bidding will be encouraged until it naturally stops, even if the Reserve Level has been passed. The Reserve remains confidential and is not declared.
When bidding stops the Auctioneer will seek advice from the Vendor, he will pause the Auction.
If the reserve has not been reached he will go back to the floor for further bids.
If the Reserve has been reached and permission has been received from the vendor, the Auctioneer will declare the property ‘on the market’ He will call for further bids and he will stress that when the gavel comes down the next time, the house will be sold. All interested Bidders will know that this is their last chance to purchase the property.
Conditions of the Auction:
The house will not be sold until it has been declared ‘on the market’
Phantom bidding for the Vendor is illegal and is against the ‘Rules of the REINZ’.
Bidding will be encouraged in progressively smaller amounts until the Auctioneer feels that there is no more money left in the room for the property.
The Auctioneer may bid for the Vendor, he will declare openly to everyone in the room that he is “bidding for the Vendor” He will only bid to get the amount on the floor near to the Reserve Level, he will not bid after the Reserve has been reached.
The Auctioneer and the Floor Walkers will talk to the Vendors and to the Bidders during pauses in the bidding.
Any disputes about the bidding will be corrected by the Auctioneer immediately and bidding will be re-started.
Discussion with the Vendors will be about the level of bidding, how close it is to the reserve, if they would accept a lower Reserve Level and if they want to declare the house ‘on the market’
Discussion with Bidders will be about their highest bid, how close it is to the amount that the Vendor will accept for the property (not necessarily the Reserve Level), whether they are prepared to increase their bid.
If the highest Bidder is prepared to increase his bid to an acceptable level to the Vendor, the Auctioneer will go back to the floor with this bid and call for further bids. He will inform everyone in the room that the property is ‘on the market’ If there are no further bids he will count the property down, going once, going twice he will bring the gavel down on the rostrum and sell the property by declaring it SOLD.
The successful Bidder pays 10% Deposit:
The successful Bidder then immediately pays 10% of the purchase price as a Deposit for the property. This deposit is held in trust in the Real Estate Companies Trust Account where it stays, until it is released to the Vendors solicitor.
If the Property is passed in:
If the highest bid is not at a sufficient level for the Vendor to sell the property, the property will be ‘Passed In’. The highest Bidder then has the exclusive right to negotiate with the Vendor after the auction in the Auction Side Rooms. If the negotiation is not successful, once the highest Bidder has left the Auction building, other conditional interest, that the agent may have for the property, can be informed that the property has not sold and can be encouraged to make conditional offers for the property.
The property will then be put on the market at a price, this price is often at the Reserve Level of the Auction. The property will then be marketed as a normal exclusive listing by the Real Estate company.
July 27 2009 | Buyers of Real Estate and Sellers of Real Estate | No Comments »