North Wellington Real Estate

Buyer Enquiry Over Pricing – not misleading?

March 18 2010 | General Real Estate | No Comments »

Bored on a sunday – go watch some gridiron!

American Football is alive and well in the Northern Suburbs of Wellington judging by these two teams and their supporters who turned out for the annual Thunder Bowl tournament.

Weekly games are played at Raroa Park just South of the Johnsonville CBD on the main road towards Ngaio and Khandallah. Check the American Football website out for upcoming games.

These photos were taken at a game between the Wellington Storm and the Manukau Counties Chiefs on the 13th of March 2010. These two teams represented some of the best American football players in New Zealand.

A touchdown was just missed

March 14 2010 | Local events, news and views | No Comments »

North Wellington Property Market update March 2010

The House Market in North Wellington

Click on the graphs for larger view

The average sale price rebounded to just under the $500k mark after a drop in January. This drop may have indicated sales in the group of homes that were on the market prior to xmas and failed to sell. The lack of fresh homes coming into the market began to place upward pressure on prices again during February. This upward pressure has continued into early March in North Wellington.

The time to sell the average home in North Wellington has fallen sharply from a spike of 38 days in January back to a time frame closer to three weeks (23 days). There has been an influx of new listings into the market place during February and continues into early March but anecdotal evidence suggests that there is still a lack of listings on the market in this area.

The turnover or number of homes sold for the month of February hit an 18 month high at 79 confirmed sales. Driving around the Northern Suburbs there are plenty of sold signs up and feedback from active buyers suggests that well presented listings that tick all the common sense boxes are moving fast.

The Rental Market in North Wellington

Two bedroom rental accommodation is showing signs of pushing up slightly but three bedroom average rents have plateaued and are sitting under the $400 per week psychological benchmark. In the 4 bedroom home rental market, rents have eased by about $20 per week after steadily rising during the preceding 4-6 months.

Average Rents by Suburb

Info in the graphs has been gleaned from the REINZ monthly sales data and tenancy services rent data. While I have attempted to be as accurate as possible, I cannot vouch for any of the information represented and , therefore, won’t take any responsibility for any inaccuracies.

Disclaimer, copyright and use of Market rent data

March 12 2010 | General Real Estate and North Wgtn House Market Trends | No Comments »

Agents and Leaky Buildings – Walking that straight ole line

Where does an agent/licensee draw the line between wanting to please and fulfill their obligation to their Vendor, and the need to provide information and protect their purchaser in a transaction? I certainly don’t have the definitive answer to this question and would love input from industry players and home buyers and sellers. If you have a comment, please feel free…..

This question was posed to me recently,

OK so the REAA Code of Conduct says:

A licensee is not required to discover hidden or underlying defects in land but must disclose known defects to a customer. Further, where it appears likely, on the basis of the licensee’s knowledge and experience of the real estate market(1), that land may be subject to hidden or underlying defects, the licensee must either–
(a) obtain confirmation from the client that the land in question is not subject to defect; or
(b) ensure that a customer is informed of any significant potential risk so that the customer can seek expert advice if the customer so chooses.

(1) For example, houses built within a particular period of time, and of particular materials, are or may be at risk of weathertightness problems. A licensee could reasonably be expected to know of this risk (whether or not a seller directly discloses any weathertightness problems). While a customer is expected to inquire into risks regarding a property and to undertake the necessary inspections and seek advice, the licensee must not simply rely on caveat emptor.

So as a salesperson what exactly do you say if the seller says the property doesn’t have any defects. Let’s say you have a buyer who just arrived from the UK and knows nothing about our leaky home problem – do you say to them “this home was built in a timeframe when homes are known to leak, is most likely built from untreated framing and doesn’t have a cavity system. Oh and by the way it is predicted that 80% of homes built in that era are likely to have leak damage within 15 years of completion” – Monolithic Home Owner

When I received this question, I had the answer straight away but I wanted to give myself space to consider the angles and options. The Real Estate Agents Act 2008 has changed the footprint of expected behaviour in some areas of an agent/licensees real estate work, but in other areas, it has only defined more clearly what the expectation is. Personally, I don’t do anything differently under the new regime except fill out more paper work. My answer prior to the ushering in of the new Act to this particular question is the same now as it would have been two years ago. I have sold texture coated homes in the 1990-2004 era and my company is actively marketing homes built in this era currently, so it is a great question to raise and one that is being dealt with by licensees on a daily basis all around NZ.

When is a problem a problem?

When does a leak become a Syndrome? Is it fair that a perfectly good home that isn’t leaking be tarred with the same brush as a neighbouring home that leaks profusely? All buildings have the potential to leak if not maintained. When does the potential to leak become greater than the fact that the house doesn’t leak?

Some interesting questions….

Fact and Opinion

I feel it is important to define fact from fiction. A potential leak is not a leak

There seems to be much emotion and subjectivity mixed with the facts surrounding this issue. An example from the quote above, “it is predicted that 80% of homes built in that era are likely to have leak damage within 15 years of completion”. This is not fact it is opinion. It implies that owners of homes in this era are a helpless audience and have no active role in maintaining and protecting their own investment. This in reality differs from owner to owner.

There are houses of this era I drive past everyday that are showing the signs of cladding problems – cracking in sheeting joints, big water bubbles in the paint layer, . Some of these homes haven’t been touched by the owners for years. Potential water issues? Definitely! I have to resist the urge to knock on the door and say to the owner, “get your house sorted out buddy or its going to hurt you!”. Other owners, meanwhile, work to actively maintain their investment, regularly checking for problems and getting them fixed smartly.

I’m certainly not wanting to downplay the issue because I believe that it is a serious problem and I also believe that it won’t go away any time soon. It is an issue that needs to be treated with respect, and the owners of homes that have leaking issues need to be treated with care and compassion. I have seen first hand, the stress that envelopes people living in a home that has water, rot, and mould issues.

But I have found that dealing with houses from this era on a daily practical level has given me a chance to overcome for myself, the hype, emotion, and sense of powerlessness that surrounds the words Leaky Building Syndrome. I have had the opportunity to view many examples of homes that have leaked, and others that appear perfectly maintained and showing no signs of leaking what-so-ever. I have come to the opinion that every house is unique and needs to be treated as such rather than branded.

It isn’t just construction technique or the type of cladding system, it can be architectural design, placement on the site, the skill and care of the builder, the skill and care of the paint applicator, and the level of site exposure to wind and weather patterns that can allow the ingress of water.

What do I say to buyers?

When marketing a texture coated property of this era, I make known to buyers that some properties in this era have leaking issues. I also strongly suggest that they find out the facts for themselves. I inform them that it is important to pay for an exhaustive builders report with moisture meter testing on any home they are looking to buy. I also suggest that it is a good idea to check the Council records.

I try always to keep in mind that I am not an expert in the construction industry, and thus, have no place making statements about the soundness or otherwise about a particular property. I am there to market the home for sale and secure an unconditional offer, not defend the house when it is bagged by visiting buyers.

Agency protocols

Luckily I work for a reputable agency. Having given much thought to this issue, my company has put protocols in place which seek to ensure that the correct disclosures are made and both licensees and buyers are protected. When an agency agreement is signed with a vendor at the time of listing, the paperwork asks for disclosures from vendors about their property. Any disclosures made are in writing and are shared with all staff who may be involved in the selling or marketing of the property.

It is also part of our office policy that every sale and purchase contract that is written up should have a builders report clause added. If the buyer then decides not to carry through with the builders report that is on their own head. The contract would then be evidence that a builders report was offered. Along with the sale and purchase agreement, another form is filled out by the licensee and buyer that gives the licensee the chance to provide any disclosures regarding known defects in writing to the buyer.

We also have a transaction sheet that is filled out on every property sale. On this sheet, conversations are recorded with specific focus on the offer of builders reports and LIM reports to buyers along with any other statements that are made about the house including things like potential capital gains suggested, potential rental returns mentioned, boundaries, and building soundness etc.

The idea being that the licensees in our company have some measure of protection and evidence if ever a question was raised about the details of a transaction. Having these office protocols makes licensees conscious of what they are saying and doing when they are marketing a property.

Helping Monolithic homesellers

On the other side of the coin, agencys are employed to market and sell property. We have a duty to the homeowner to attempt to achieve the satisfactory sale of the homeowners property.
What steps can practically taken by owners of monolithic homes built in the 1990-2004 era  that are looking to sell?

BEFORE PUTTING YOUR HOUSE ON THE MARKET

Did you do enough homework when you bought your home? Did you get a builders report or check the Council Records? If not, start there.

Start with an physical examination of your home by an expert.

Pay for an exhaustive building report on your property to be conducted by someone who has the skill and experience to know what they are talking about. This report has to include moisture meter testing and should be conducted by someone with training in the equipment. A visual inspection of your property is not enough. Don’t bury your head in the sand or hope that no issues will be found when a prospective purchaser has a builders report for themselves. In this way, you will have a view of your home that is facts based. If issues are raised, get them dealt with by an expert who will provide you with a written guarantee or warranty of their work, who has a good history of similar work, and who has their own public indemnity insurance. If major work is required, make sure the correct paper work is filled out and you receive the Council tick off at the end with an E2 Code of Compliance or whatever else is needed.

Once any remedial work has been completed. Have another building inspection completed. Yes, a second one! This is an independent assessment of the work completed, and if not showing any major issues, a tool for helping to sell your home. Make this builders report available to your real estate professional to pass on to potential purchasers.

Pay for a LIM report

If you don’t know what is on the council files for your property, find out before you put your home on the market. This is a good exercise not only for peace of mind. This information is a good tool to help your real estate professional sell your home. Land Information Memorandum (LIM) reports have become more important as a part of a buyers due diligence when buying  a property, many solicitors insist upon their clients getting a LIM report. Most home owners I have come across don’t want to pay for this report themselves and consider this to be something that buyers should pay for as part of their homework.

Information is Power
The ideal situation would be for all homesellers to apply and pay for a Building Inspection and a LIM on their property prior to selling, and to make full copies of this available to purchasers. Homeowners do themselves a double favour by paying for these reports themselves. Not only are you demonstrating a willingness to be open and transparent, you are providing some important selling tools to your real estate agent/licensee. This will impart greater confidence in the soundness of your property to prospective purchasers and will make the selling process quicker and easier. You may also find that you will secure a higher selling price as a result. I have seen many situations where multiple offers have been presented on a property with the highest offer being subject to the most buyer conditions and, therefore, eliminated from the running with unconditional offers being accepted at price points sometimes tens of thousands of dollars less. Making your LIM and builders reports available, may be enough for these buyers.

There is so much more to this topic, but this is a start. Not sure if I have answered the question completely.

Please feel free to comment whether you agree or disagree with my take on the subject…

Required Reading

Consumer Build Website

Department of Building and Housing

Weathertightness E-news

http://unconditional.co.nz/blog/greater-disclosure-of-leaky-homes-advocated/

March 06 2010 | General Real Estate and Home Buyers and Home Sellers | 9 Comments »

Real Estate Agents and Commissions – An insiders glimpse

Having spent over a year writing blogs via the realestate.co.nz website and having clocked up 79 posts with unique visits now heading firmly toward 10,000, my stream of fresh ideas for posts that are relevant, insightful and original has waned to a trickle. In an effort to find topical subjects, I turned to the analytics provided by the blogging platform to find the keywords or topics that readers have used most in their search for information. The subject of real estate commissions came up over and over again. And why shouldn’t it?! The industry has been strangely silent on the subject!

Taboo Topic

For some reason there seems to be an unwritten rule within the real estate industry that you don’t talk about commissions in a public sphere, so having decided to write a little of my learnings from my ten years at the real estate coal face, I approach the subject tentatively. Please, before I begin, let me say that these are my own thoughts and opinions, they don’t necessarily reflect the thoughts and view of other players in the industry or even of the colleagues in my office.

Let me begin with the basics

There is a distinction between Real Estate agents and salespeople (now called licensees under the new Act introduced in Sept 2009 ). Most people who market real estate in New Zealand are NOT agents. An agent is someone who holds a qualification that enables them to carry out agency work on their own behalf. A salesperson (licensee) is someone who holds a qualification that allows them to carry out real estate agency work for and on behalf of an agent. Agents start on their own and if successful, hire additional salespeople to work for them. In the majority of cases, the real estate person you come into contact with buying or selling a house is a salesperson.

When you enter into an agency agreement, you are contracting yourself to the Agent NOT the salesperson. The commission you pay when your property unconditionally sells, goes to the agent. The agent then pays the salesperson a percentage of the commission based on the individual employment contract the salesperson has with the agent and the part they played in the selling process of your home. Most salespeople work on a commission only basis, with no base salary or wage. NO sales, NO pay!

When an owner signs up their house for sale with an agency, the agency calls this house for sale a listing. When a salesperson lists a house for sale with the agency they work for, they become known as the Listing agent for this house. When a salesperson sells a house for sale from the stable of listings on the agency books, they are classified as the Selling agent in this instance.

Commission Splits

In very broad terms, the full commission amount that is paid by a seller can be separated into four distinct pieces.

Agency share + Lister’s share + Seller’s share + Government’s share (GST)

The percentage that each of the parties get from a selling fee can differ from agency to agency and even from salesperson to salesperson within the same company! If you were to make a general call, an old school style of agency may operate on a 35%+27.5%+25%+12.5% split or similar.

Agency Share – In most realestate agencies in New Zealand, the agent will provide a workspace for the salespeople, pay part or all of the office overheads including reception and admin staff, stationary, office landlines, internet connection etc. They will also often contribute to the branding part of any advertising that is carried out by salespeople. Some agents also provide a base level of advertising including print media, signage, and website exposure that can be shared out between salespeople for promoting office listings. This is all paid for from the agency slice of the commission.

User Pays

There has been a move within the industry especially over the last ten years towards user pays. Affectively what this means is that the agent is prepared to spend less of their share on the items mentioned above, and expects the salespeople to take the costs on themselves or pass them onto the seller (vendor). The slide towards salespeople shouldering the cost is usually balanced by the agent taking a smaller share of the commission and giving a greater share to the salespeople. The Remax system is an example at the extreme end of the scale. In this system, the agency takes a very small portion of the commission but charges all the overheads including the advertising bill and office space, to the salespeople they employ. Understandably, this became known as the rent-a-desk system. Salespeople employed under this system pay a monthly fee for using the space in the local office. There are variations on this theme and again, it can vary from salesperson to salesperson within the same office. Eg Salesperson A works from home and only uses the local office for meeting clients and signing contracts and thus, pays a minimal monthly fee to the agent. Salesperson B has a dedicated work space at the local office and uses the office internet and landline, and therefore, pays more to the agent for that privilege.

Lister’s Share – Most real estate companies try to encourage their salespeople to list houses by offering a higher share of the commission. The listing agent will spend much time behind the scenes coordinating the marketing, script writing, sign erecting, photo taking, and communicating with the seller and this higher share of the commission reflects this extra energy and time spent.

Sellers Share – If you buy a house, the salesperson who introduced you to the house will claim a portion of the commission. If the listing agent also sells the house personally (as opposed to any other salesperson working for the same agency), they qualify for two slices of the commission pie being both the lister and the seller.

Govt Share – With increases in GST being proposed, you will be paying more to sell your house because the government wants a bigger slice.

Why mention all of this?

It can be helpful to have an understanding of how the process within the agency works when you meet a salesperson and start talking commission. You are thinking about the full sum you are going to have to pay to get your home sold. The salesperson on the other hand, is thinking about the percentage that he or she will personally get from the sale. As you can now comprehend, this slice can be much smaller than the full amount that you pay and can vary dramatically from salesperson to salesperson and agency to agency.

How is the commission calculated?

The majority of realestate agencies in New Zealand charge commission as a percentage of the gross selling price of the home in question. This commission sometimes also has a nominal dollar amount added to set a base level of commission payment. GST is then added. A commission charge on a listing form from an agency may look something like this….”The commission fee payable is as follows, first a basic fee of $500 plus 4% of the sale price plus Goods and Services tax (GST).”

Some companies use a tiered system to calculate commission eg 4% of the sale price up to $400,000 then 2.5% on anything above that.

A flat fee?

The last five to ten years has also given rise to flat fee companies who charge one single all inclusive amount.  Many of these companies are known as discount agencies. Often in an effort to present budget marketing packages to the marketplace, they cut corners on other parts of their business. This type of agency doesn’t appear to have much longevity. There have been plenty of start ups that have crashed and burned because they lacked the understanding that successful property marketing isn’t simply about profits and expenses. It is about people. Especially the people who are employed in agency sales teams. Nothing beats a solid history of successful selling, local knowledge and experience, a friendly, positively motivated, vibrant sales team that has some personality, and the networking that naturally takes place over many years when an agency is active in their local market.

Fixed fee structures haven’t been as popular as a way of calculating commission for a couple of reasons. There is no monetary incentive for a salesperson to get a higher price for the home sellers they represent. And maybe this is  unpopular because a percentage sounds a lot smaller than a dollar value that can be in the tens of thousands

A change in the playing field

Regardless of how the commission is calculated, the recent ushering in of the Real Estate Agents Act 2008 has changed the playing field for all agencies in operation in NZ.

By law, licensees are now required to give you a) an accurate indication of the likely selling price of your house and b) an estimate of the amount of commission you will pay in actual dollar terms based on this selling price. The new law has been drafted in an effort to make professionals working in the real estate industry more accountable and make the processes more transparent. No longer will real estate salespeople be able to hide their commission charges behind complicated percentage figure calculations. Though many salespeople in the real estate industry see parts of the new law as potentially problematic, the fact remains that we all have to work within this new law until it is again reviewed. Because salespeople now have to talk in dollar value terms when discussing commission, it will be much easier for sellers to compare agency offerings and there will be more of a focus on commission in terms of value for dollars spent.

In general, I personally think this move toward greater transparency is a great step forward.

Are salespeople valuers?

The part of that process that I struggle with is that there is now an obligation on salespeople to effectively be property valuers with little or no training given. To quote from the new Code of Practice…

9.5 An appraisal of land or a business must be provided in writing to
a client by a licensee; must realistically reflect current market conditions;
and must be supported by comparable information on sales of similar
land in similar locations or businesses

My issue with this piece of the law has to do with being legally obliged to take an educated guess at the likely selling price of a house. This is all well and good when the property in question is fairly generic in an area with lots of similar homes and plenty of sales stats to use. But appraising a property that is unique from its neighbours, has few comparable sales in the area, or has structural defects that may affect its value (eg leaky building syndrome) becomes very difficult. This piece of legislation is untested so far, as is most of the new Act, and the real estate industry is watching and waiting with baited breath as to how the newly appointed Authority will rule when complaints are made and cases are tried in Court. I’m not alone with this view, check out Steve Koerber’s blog on the subject. Now back to the topic at hand….

What does the commission include?

To be able to get an accurate picture of what it is going to cost you to sell your home, and to be able to accurately compare competing agency offers, you need to get a handle on what the salesperson and/or agency is prepared to provide as part of the commission. Is there a base level of print media advertising provided or are you as the seller expected to foot the total bill?

Vendor contributions (or vendor paid advertising) are separate from the commission and go towards advertising costs.  With agencies moving towards providing less base level advertising, either the salesperson has to pay for the advertising or they have to get the owner to pay. There are a decent number of educator/trainer/motivators moving around NZ on the speaking circuit making money from salespeople by teaching them ways to get a higher commission percentage and greater vendor contribution from the homeowners they have contact with.

As a seller, are vendor contributions compulsory? No, they aren’t compulsory but you may see it as valuable in assisting the sale of your property to purchase advertising upgrades or add ons. If you had the chance of getting another $10,000 in selling price for the investment of $500, it is good value right? It pays to remember that the salesperson is getting a far smaller amount on the successful sale of your house than you are getting. The salesperson will think twice about spending the same $500 on advertising for your property because it represents a huge chunk of their potential commission. If you are going to spend your own money up front on advertising, do your homework. Not all advertising is equal. In my view, $500 bucks goes much further when put into web upgrades than invested into print media. The writing is on the wall for print media for property searching.

Under the new Act, agents are obliged to obtain best value for you in terms of any advertising purchased on your behalf (rule 9.17). Could this be interpreted to mean that they should also guide you towards the best advertising media?  They should also disclose any kickbacks or incentives that they are offered to sign you up to advertising.

Will you get less service by paying less commission?

Some agencies prioritize higher commission paying properties in terms of free upgrades to advertising etc if it becomes available, but in general terms, I don’t believe that you will receive less service because the commission has been discounted. In most situations, the salesperson you have employed will work just as hard selling your place as selling any other listing they have. I want to say so much more here but am aware that I am still working actively in the industry and don’t want to raise the ire of my colleagues and peers.  Suffice to say that it is my opinion that even if you are receiving a good deal on the commission, a good agent will still market and sell your home to the best of their ability. Good agents have pride in their work, and it is not all about the money.  You may smirk at this comment but it’s true. The best salespeople enjoy their work, have a people focus, and fulfill their obligations with energy, positivity, and enthusiasm. Though they are competitive, they are not necessarily driven by the profit motive. Being the top seller or top lister in their company can be as much of a motivation for these salespeople as anything else. Money, fame or power – the three most powerful motivators right?

As an extra comment on this subject, it is my view that if a salesperson suggests that you will get anything but the best from them because of a commission cut, MOVE TO THE NEXT AGENCY!

I do feel the need to balance what I have just said though. Some salespeople are worth the extra commission they charge. I emphasize SOME. It can be hard to know which salespeople are worth their weight in commission, but how to choose an agent is a whole different blog post!

Time for the big question!!

Is there an industry standard level of commission?

Yes and No.

On the surface, a level of commission around the 4% mark plus gst could be considered to be a standard in New Zealand. Certainly, naive media commentators have picked up on this magical 4% ish mark as the expectation of what real estate companies charge for their services.

HOWEVER! And it is a BIG however… The real estate industry is a very free market in the basic sense of the words, meaning that it is easy to enter and exit the industry, there is little government intervention or regulation in terms of commission setting etc, and the laws of supply and demand reign supreme. Pundits who rail against what they see as horrendously high real estate commissions forget that it is one of modern humanity’s oldest professions. If there was no longer a need, the industry would dry up. Technology is changing the way buyers and sellers and agents communicate offerings to each other, but there still appears to be a place for the good ole real estate professional standing at the door to the open home.

There are huge variances in commission charges from market niche to market niche within the real estate industry in New Zealand. Geography both physical and social has an impact on real estate demand, prices, and commissions. What you would expect to pay in commission will differ in a small holiday town like Pauanui compared with the commission you would pay in an outer suburb of Christchurch. Smaller provincial areas often have less agency competition, and less competition means higher commissions.

Even within towns, standard commission rates can differ. An example of this could be the student accommodation investment market in central Wellington vs the suburban homeowner market in Khandallah, a prestige suburb of Wellington. Within the industry it is known that passive investments are a hard sell currently and, therefore, few agents are really keen to take on such listings = little or no negotiation on commission. On the other hand, if you a get a chance at a listing in Khandallah that isn’t texture coated and ticks all the common sense boxes like sun, drive on,  indoor/outdoor etc it will be out the door in a week or so = drop the commission, just get that listing!

This variance was highlighted to me just this week by two phone calls I received. One call was from an ex-client who is now living in a town about an hour north of Wellington on a couple of acres.  She has her home on the market currently. She told me that in her locale, the average time to sell a house is over a year. The value of her property is around the $800k mark. She is being charged 4.5%+gst by the agent she signed up. When she tried to negotiate on the commission, the agent told her that this is what the commission is, take it or leave it and that no agent  in the area would take on listings for less because of the length of time it takes to sell houses in the area, and the traveling distance for the agent from the township to this semi rural property. The agent also mentioned that she was aware that this particular lifestyle property has a neighbour who was going through the process of subdividing and there would be a bunch of new houses on the boundary that would make this property hard to sell as a semi rural lifestyle place.

The second phone call was from an acquaintance who wanted advice. He was trying to buy the next door neighbour’s property in a good part of an inner Wellington Suburb.

The owner of the next door property had approached an agency and they had agreed to sell the house (worth around $700k) for $8000 representing a commission rate of around 1%.

One percent you say! But wait there is more…. One of the salespeople in this agency wants to buy the property. Oh really, you say??? In the face of a guaranteed sale within a day or so, wouldn’t you sign up the agency for a paltry 1% if you were the listing salesperson? A couple thousand dollars for visiting the house maybe twice??? Corse you would!

So you can see, agency commissions are never cut and dried. There is often stuff going on under the surface. The going commission rates can vary depending on where you live, the salesperson you talk to within an agency, your price expectation (if you believe you home to be worth more than than fair market, it will take longer to sell or not sell at all and the salesperson will alter their view of the coming time and energy to be spent on selling your home. Based on this you may pay more in commission), what type of property you want to sell, the part of the property cycle you are attempting to sell in (in a sellers market you can expect to pay less commission than in a buyers market), and the characteristics of the property market in your specific area.

I know that this doesn’t really help in terms of knowing whether you are paying too much commission for the sale of your property or not, but at least it gives you a small insight into the workings of real estate agencies, some of components that go into the commission an agency charges, and some of the factors that influence commission rates.

Thinking of selling? My advice…

If you are looking to list your home and haven’t had any contact with agents active in the area, talk to more than one agency. Get them up to give you an idea of your property’s worth and an estimate of the commission. Let the salesperson gently know that you have invited other companies in to talk to you also. You won’t have to say any more to get them sharpening their pencils! In this way you will have marketing packages to compare.

NOTE: I used the word “gently” because salespeople are people too! No one likes the feeling that they are being used, and the salesperson is taking time out of their day (or evening or weekend!) to come and talk with you and provide you with a service. The old adage applies – treat people in the same way you would like to be treated. Believe me when I say that the real estate world in any locale is a small world! Salespeople talk with their peers in competing agencies. Snarky no-it-all people can have their reputation precede them. Salespeople have their own informal black list of people who are dodgy or nasty. These types of people will have a totally different experience at the buying and selling coal face than the nice people. IN my experience, it isn’t unusual to be texted by opposition agents to warn me about such and such who may come through my open home or call me. The real estate grapevine is a strong one, and salespeople have very long memories when it comes to past buyers and sellers. People who stir the honey pot run the risk of getting stung!

If you have bought or sold a house before and rated the service of your previous agent positively, then make contact with them first. Nothing appeals to the sensibility of a good agent more than loyalty. Make it known that you contacted them because of a good previous experience and that you trust them to give you a good deal in terms of commission. No good salesperson would abuse this trust as it is a very rare and beautiful thing in the real estate industry. You will get the best that the salesperson has to give!

February 26 2010 | General Real Estate and Home Sellers | 6 Comments »

Baby Boomers – An A to Z of things you need to do before you are relocated to a rest home

I came upon a wonderful list on the facebook wall of a vivacious female acquaintance. It gave me a giggle…I have taken the concept and tweaked it for the 60 plus generati0n. Can you make your own list?

Acquire a laptop with wireless so I can keep in touch with friends and kids on the go.
Buy better quality wine for less on the Internet.
Create a winning weight loss secret and name it after yourself.
Drive a campervan the length of NZ
Eliminate toxic friends
Finance my own retirement
Get a single level brick property with a small garden. Sounds boring I know, but consider it a base to tour from.
Have at least one big super hero costume party – cheap and fun! Start your own costume box with some wigs.
Independence – maintain it!
Jump up and down on a trampoline with the grandkids
Keep up with technology and learn to text on a cellphone and/or sign up for facebook so I can keep in touch easily.
Learn a  bit of Italian or Spanish or both. And while you are at it, take some salsa lessons. Viva!
Manage my money for myself rather than feed fundmanagers. Get actively involved in the family finances.
Not care what other people think. Life is too short to worry any more about pleasing others. Be kind but have fun!
Own an ipod so I can take all my fav music with me. Dump all the old cd’s once they’ve been transfered to the ipod.
Pay off my children’s student debt to help them get started properly in life without being burdened mentally.
Quit whining about what I can’t change and get on with things I can change
Respect myself for my wisdom and life experience and share this gently with younger people.
Sell all the junk thats been cluttering my life for the last 20 years – minimal is good!
Travel to Stewart Island and/or Milford Sound
Use an electric drill/ hair straightener and/or water blaster
Vroom through Italy on a Vespa Tour
Wake up early and start the day with a good healthy breakfast. Take 15 mins out to write another page in my lifebook.
X-ceed my own expectations. Learn a new skill or sport. Get active. Use it or lose it!
Yawn less in public. Remind myself to sit up straight and actively listen when people are talking to me.
Zzzzzzz – good sleep is the foundation for all activity. Buy a new top quality bed! The old one has to go!

February 22 2010 | General Real Estate | No Comments »

North Wellington market fails to fire in Jan

The number of sales in December and January lagged behind the levels of the previous year as bad weather encouraged Wellingtonians to stay longer on holiday in warmer regions and uncertainty over the state of the economy and any tax changes dampened buying enthusiasm. This decrease in turnover echoes the market nationwide.

The average sale price dipped slightly in January but average prices are still well above the last couple of years.

The average time on the market spiked in January to 38 days on the back of lower turnover and a quiet selling period.

February 12 2010 | General Real Estate and North Wgtn House Market Trends | No Comments »

Landlords may not have escaped after all.

In the last couple of days I have been giving this whole issue more consideration with insight from the coal face. Here are my thoughts so far …..

The baby boomers are all  beginning to reach retirement age. Many of them are equity rich but will be holding out their hands for their well earned superannuation. In the next 10-20 years there will not be enough full time workers to feed all the mouths that are no longer actively earning. Add to this generational anomaly, the NZ welfare mentality that has become so ingrained in many sectors of the community that there seems to be the expectation that when you leave school you go on the dole. Beneficiary and sickness benefit fraud appears rife. I am sure, everyone knows someone who is claiming some kind of benefit unjustly but do we do anything about it?

How to increase the Govt cash haul?

User pays taxes like GST. Cut into the equity pie using land taxes, capital gains taxes, and death duties. Decrease handouts by tightening up on fraud, lowering the school leaving age and raising the retirement age.

The big news in the Government’s opening parliamentary speech are the comments about trying to extract extra revenue from the residential property sector which they believe is not paying its way. After ruling out capital gains, land taxes and the notional return, the two areas the Government is likely to target is depreciation and how much in the way of losses can be claimed. There are two types of depreciation, one on buildings or improvements and the other for chattels.

The change, I understand, will only apply to buildings or improvements. The second change, hinted at, may be ring fencing losses to a certain level or restricting their offset to property income. The Government must be careful in changing of the rules regarding property investment as many people have their only form of superannuation tied up in this sector. Secondly the Government should be encouraging the landlords to continue improving their properties and so improving our housing stock. These changes will not do this. If this sector is made unattractive to invest in, there will be fewer investors – this may well lead to a rental accommodation shortage and hence higher rents.

From the horses mouth….

A conversation this week with my local National MP Katrina Shanks has helped me to clarify what form the depreciation changes may take, and has confirmed the Government’s dedication to closing the so called tax “loophole” around rental properties by ring fencing losses. Ring fencing means that any losses on rental properties will no longer be able to be offset against your income from other sources. The losses will be held as a tax credit to be applied once the property becomes cash positive (if it isn’t already). With the price appreciation and fairly static rents of the last five years, most investment purchases have been negatively geared especially in the larger cities and growth areas.

The end result???

For many people who have purchased rental investments in the last five years, this will make a huge difference to their annual cash flow. Many will not be able to absorb the costs personally and so will sell. Others will review rents upwards. In my opinion, expect house price adjustments downwards in the short to medium term and rent adjustments up especially in the medium term. In the longer term there will definitely be a greater overall focus on cash flow as opposed to capital gains, and I think that investors will tend to turn over investments more quickly to profit take rather than holding on to them for the long term.

Less landlords means more for the Government to take on. I would expect a decline in the overall standard of the rental housing stock as landlords put off making capital expenditures and do patch up jobs instead which they can claim as repairs. I think we will also see a greater separation between home owning suburbs and rental areas. I expect a worsening of slum areas with history showing us that the Government likes the idea of having their rental housing stock all bunched together and of a generic design and size.

Any thoughts to add????

More reading here

February 12 2010 | General Real Estate and Investing | No Comments »

Homeowners and investors breath a collective sigh of relief

John Key today announced that a capital gains tax on property in general and residential investments in specific is not on the cards. He suggested that there are changes coming but was cagey about saying too much before the budget.

What form the changes will be in is open to debate but I would think that a tweaking of depreciation rates for improvements and chattels is probably one of the focus areas. Ring fencing losses may be another way of catching some cash from landlords in the short to medium term also.

After fielding a handful of worried phone calls in the last few days, I am pleased that we aren’t in for the stupendous market shake up that was predicted and it will be business as usual for most of the country’s private landlords.

Other changes? GST up , personal tax rates down

Your thoughts?

Read more here and here with the prime ministers statement here.

Young person in NZ? Read Bernard Hickey’s comments here

February 09 2010 | General Real Estate and Investing | No Comments »

North Wellington House Market update – Feb 2010

The median sale price in North Wellington saw a dip in December 2009 but the moving average shows prices above the market peak back in November 2007.

December is traditionally a slower period with the market going into hibernation from mid December until mid January. Sales were slightly above the level seen in Dec 2008.

The time to sell the average home in North Wellington is still sitting just under three weeks having dropped sharply during 2009 from a peak of over 60 days to sell in Dec 08 and Jan 09. Houses sold quicker on average in Dec 09 than has been seen for a good number of years reflecting the fact that there is a shortage of stock on the market in north Wellington (as there seems to be throughout the Wellington region) and buyer competition meant quick sales for homeowners.

Larger homes are still seeing a climb in weekly rentals obtained with a jump in rent of $30 per week over only a couple months. Two and three bedroom rental yields have plateaued.

Sales for December by Suburb and Bedroom number

Info in the graphs has been gleaned from the REINZ monthly sales data and tenancy services rent data.

While I have attempted to be as accurate as possible, I cannot vouch for any of the information represented and , therefore, won’t take any responsibility for any inaccuracies.

Disclaimer, copyright and use of Market rent data

February 01 2010 | General Real Estate and North Wgtn House Market Trends | No Comments »