Archive for November, 2009

Gimme the lipstick , the make up too !

 

 

There can be no doubt about it; most of the “businessmen’ are far too clever for the shareholders and investors in their organisations, especially the smart and sharp ones involved with Hanover. I am astounded, amazed even, to discover that the shareholders are considering another offer from the company with serious intent. An offer that sees some 25% clipped off the value of their investment, the only benefit to be had is to be had by someone other than shareholders!  Bruce Sheppard probably had a point when he suggested that shareholders were essentially too ill informed/incompetent to be allowed to make decisions and needed “minders’.

He’s probably right. 

Therein lies the problem for the government, of whichever persuasion, our investing public is generally financially illiterate, actually incapable of informed action. Most people with a dollar to invest, and I include myself, are unable to extract much sense from the deliberately obscure prospectus documents and company returns and so are totally reliant on translators/advisors, usually commission driven. Who could forget the advisors directing traffic to Bridgecorp and others as they slowly sank to insolvency, being paid up to twice the common commission rates for the service – pretty well everyone I wager . Not only can the sharp practice boys rely on our illiteracy, they know we have the memory span of worms. 

It didn’t happen in Real Estate. Even under the much maligned 1976 regime the public was well protected and the Agents/salespeople acted by and large with transparency and honesty. Added to that, the public is generally well informed in matters real estate and well able to make informed decisions. Crucially, the public can make risk assessed investment decisions and be comfortable with them.

Bubbles, booms, price increases, the public preference for bricks and mortar as an investment are not the result of tax inequalities or incentives, any number of countries with capital gains taxes are evidence of that. People invest in real estate because it is a very smart and safe thing to do – when the same can be said for the share market, finance companies and industry, people will invest their savings there.

It is worth remembering that whilst a large part of the inheritance of a generation has been vaporised recently, real estate held up well and will continue to do so.

Simply , when investing in vehicles other than real estate is the more attractive option ,that is where the money will flow but it will take infinitely more than tax fiddling to put lipstick on a hag.  

 

 

November 24 2009 | Uncategorized | 2 Comments »

Brave New World ??

 

 

From today there is a new legislation in place affecting the sale and purchase of residential real estate and defining the processes that must take place for a transaction. 

The overall intentions of the Act appear to be the maximisation of consumer awareness and protections in conjunction with the establishment of universal minimum levels of transparency and understanding on the part of those consumers. Good Real Estate Agents and Salespeople will find little change beyond some extra paperwork and bureaucracy . It is apparent that there will be in increase in the costs of sale and of the business of real estate. 

At the time of listing , homeowners must be given an “Approved Guide” , sign a disclosure form acknowledging receipt of the guide , that they are aware a “cooling off’ period applies, any rebates/discounts/referral fees the agency expects , that they experienced no pressure and finally , legal advice could be sought. 

Then a homeowner can sign a listing form and appoint an agent , such appointment can be for a maximum of 90 days. Any extension to the listing requires the entire process to be repeated. 

A very similar process with different disclosure forms and guides will apply to the purchasing of a home. A heightened responsibility of disclosure applies to the vendor and his agent . 

A significant penalty regime is also now instituted , sufficient to ensure increases in litigation , I expect that we will see the emergence of ” professional ” litigants and other miscellaneous claimants . There is to be some  2 million dollars spent on an advertising campaign launching this new regimen and no doubt there will be all sorts of expectations created . 

I remain confident that the business of real estate will continue much as before , in truth there have never been many ‘rogues’ as such ,the problem was tremendously overstated. The eventual size of the real agents fidelity fund and the absence of claims made against it compared to all the claims suffered by the lawyers fund probably bears that out . Roll on 2010 !

 

November 19 2009 | Uncategorized | No Comments »