History Doesn't Always Repeat Itself

The market correction after the recent boom still seems to be rippling through the housing sector, with REIWA figures for the September quarter showing a fall in median prices for the third consecutive quarter.

However despite these official statistics and the messages of doom and gloom we regularly see in the media it is important to look at what is actually happening in the ‘real’ world.

Many of you will very clearly remember the stock market crash of 1987 which led to a surge of money flowing into the property sector. Then in 1989 it became apparent that property would suffer the same fate as the equities market. This typical boom to bust cycle left us with an oversupply of housing, high interest rates, high inflation and an extremely flat market for several years.

Unfortunately it’s impossible to predict the future of today’s property market, however given past history we can take a look at current conditions to see if we can draw any comparisons to the crash of 1989. Will history repeat itself?

In 1989 the property market was in a similar condition to today. However from my business and personal experience I definitely see hope in today’s market. We need to look at the ‘real’ market and the ‘real’ economy to really assess what we are seeing with the current conditions.

While figures and statistics can be extremely valuable they don’t necessarily reflect what’s happening on the street on a day to day level. In 1989 we saw the equities market drop 25% overnight. This was very dramatic and caused a tidal wave type surge straight into property. The current equities market has lost 50% of its value however this time it has been a more stepped decline. We have also seen that median house prices have also adjusted over the last periods but they have not dropped anywhere near as significantly as the stock market.

In many cases it is more that a sellers inflated expectations of price has returned to market normality.

Current market conditions also indicate that employment is still very tight, interest rates are very low (and lowering) and inflation is low. Perth also has a much broader population base than previously and is still experiencing strong population growth. This time round circumstances seem to be much better than the late ‘80s and early ‘90s.

I see two key factors dictating market stability, and buyer confidence. Firstly, the availability of money and people’s access to buy it. And secondly, the sustainability of employment. With the recent restructuring of the finance industry the availability of money has definitely stabilised and people are still finding good access to it. While employment will, most likely, be affected by economic conditions we are coming off a very tight market and we may see only marginal shifts in unemployment figures in WA. Buyers should continue to have confidence if they can still see value in the market.

There are still plenty of buyers active in the market. Attendances at auctions are still quite high and there is a really good energy to the bidding. We are also finding a really positive level of enquiries on internet listings, our online property magazine, over the phone and at a pen for inspections. Properties are still selling in a fair and reasonable time and at fair and reasonable prices.

Statistical trends will become clearer over the next quarter or so and we may continue to see some jittery and erratic results from suburb to suburb but there is still movement and energy in the market. People are still buying and selling so there is definitely still plenty of hope!
On this occasion history doesn’t have to repeat itself because the fundamentals are different.

The upside of uncertain times

These uncertain financial times have seen a real change of pace in this state and while the news definitely isn’t all good, it isn’t all bad either. Opportunities are certainly opening up for us at Realmark.

As an employer, things have really changed for us in the past four to six weeks. Previously and during boom time it was so hard to find good help. Many job seekers had this feeling that there was always more money or more benefits on offer and many followed cash, rather than the best career prospects. Don’t get me wrong, this does not apply to everyone, but it was very noticeable trend for most employers.

Today things are different. When we recruit we find we have much more choice when it comes to candidates, which gives us a far higher chance of finding the quality we seek. I see this as a massive time of opportunity for us. Realmark is going to continue to work hard to find the right people and build a premium team, not just the best agents, but the also best support and administration staff. We have even brought a full time HR manager on board to help us achieve this.

We are very lucky to already possess some of the best people this business has to offer, but there are gaps that need to be filled and now is the time. Our people are our biggest asset, and the right team means better results for our clients, which is the key to our success. We have always worked hard at being an employer of choice and we will continue to do so.

I think this is an important part of any business, making the most of all situations. Don’t get wrapped up in the hype around the financial crisis and miss opportunities because it’s true, there is an upside to everything. You just need to find it.

Check out our site dedicated to careers in real estate www.careersinproperty.com.au

Lessons Learnt

In October last year, Realmark took a large step into the unknown. Realmark separated from a franchise association and launched itself as its own brand. At the time we knew that the rebrand and repositioning was the right thing to do, but it didn’t make it any less scary.

What this experience really did highlight for me was that despite being in the industry for over twenty years, there was still plenty for me to learn. So today I am going to talk about some key things I have learnt during this process. Which is not so much a story about the real estate industry but business as a whole.

1. Everyone has to believe in the brand, not just you.

I think an easy mistake that can be made when creating an identity for a business is thinking that the brand is something that only has to work externally. It is so important to make sure the brand works internally, because your team members on the front line need to understand that it is more about the values behind the cosmetics of a brand. Everyone has to believe in it to be able to apply what it presents.

2. Don’t be overly optimistic.

There is nothing wrong with a bit of optimism here and there, but when you’re making big changes to a business being too optimistic can blind you to some of the warning signs that perhaps things are not going to plan and therefore they go on too long and become big issues.

It’s not about thinking the worst, it’s about being honest with yourself.

3. Never forget about the basic fundamentals of business.

While things may be changing in your business, the basic fundamentals of business don’t change so make sure you continue to apply them to everything you do. Don’t make ego based decisions. Make strategic decisions based on good practice and providing better value to your employees and your clients.

4. Have “non anxious” leadership presence.

Often people feel that being a good leader is about coming across as busy, energetic and motivated, but in times of change this can come across as an ‘anxious’ presence, which is far from motivating for those who work for you. It actually makes you seem uncertain, almost without direction and your team want to know that you are in control and therefore capable of making good decision for the business and for them.

5. Don’t be afraid of change, be open to learning and adapt.

Change can be a frightening thing, but it is an important part of business life. In real estate our industry is a moving thing and if you simply refuse to adapt, the industry, the market and the clients are all just going to keep on moving without you.

Also you never know it all, there is always more to learn and ways to grow. Read blogs, talk to people, go to seminars and consult your colleagues. Learn from your mistakes and your successes. Be honest with yourself.

Looking back the past year has been very challenging, but it has also been a very important and exciting chapter in Realmark’s business evolution. As we hoped, Realmark has grown significantly and we are achieving great results.

But I still have plenty more to learn.

first mover advantage

It is funny how people always feel so much more comfortable in a crowd. It’s human nature to want to run with the herd and the world of real estate is no exception. What people don’t realise is that finding the courage to go against the herd is often how the best and most successful decisions are made.

Right now my agents are seeing plenty of potential buyers at home opens and they are also seeing plenty of buyers who know they have found the right home. Yet many of them are so reluctant to make a move and make an offer because no one else is buying.

There are an amazing amount of things wrong with this mentality, why do people instinctively want to buy when everyone else is buying, when there is competition galore, negotiation opportunities are few and prices are up?

So my message to buyers out there is this, seize the first mover advantage. Today there is so much choice, limited competition and affordability has made a come back. So if you’re ready and have found the perfect home make an offer, know what you can afford and offer it. Sellers today are willing to negotiate and whatever you do, don’t sit and wait for the crowd to start buying because once the herd catches on its almost too late. I know that this isn’t the most comfortable thing to do, but it truly is the key to success in property.

Although there may be some price fluctuation remaining in the market, the advantage of moving now will out weight any short term movements in purchase price.

Go about things a little differently, go against the herd and get a good buy now.

LOOK ON THE BRIGHT SIDE

It’s no secret that the Perth real estate market is no longer booming. Naturally, everyone is constantly trying to pick that silver bullet that will fix everything and make the tough times go away. Many were hoping an interest rate cut was the answer, unfortunately it’s not that simple.

But let me put things into perspective. Sure the market is not an easy place but the news isn’t all bad. If you’re a buyer, the news is actually quite good. The market is full of choice and affordability has made a come back. The cost of money is starting to drop as indicated by the first cut in interest rates and buyers have the time to make informed decisions. Put simply, right now there is an abundance of opportunity out there for buyers. The challenge for buyers maybe the availability of loan funds although the Federal Governments $4 billion initiative last week will greatly assist funds liquidity for housing.

We are truly witnessing a buyers market and to be honest, it is probably about time they had a fair go and actually good for market fundamentals. Boom time pushed the Australian Dream further and further from the reach of many people and while Perth is by no means a ‘cheap’ place to buy, prices have corrected and there is value to be had. I see this continuing well into 2009.

However like all things, this buyer friendly market won’t last forever. The fact is this is simply a normal part of the property cycle and in time things will again turn in favour of the sellers, it’s the way the cycle works. World economic factors may distort and prolong the cycle timing but it will re-align itself.

While things are not going to dramatically change in the near future, Perth is poised for change. The following factors indicate that a strengthening of the market is on the horizon.

1) The dropping of interest rates is always the first trigger – the first sign of the ‘curve’ in the property cycle.

2) Demand for housing continues to accumulate as people move into the state looking to capitalise on the employment opportunities.

3) Another key factor is employment, all signs point to continued employment growth in WA. Security of employment encourages buying confidence.

If you understand the property cycle, you will understand that what we are going through now is completely normal and somewhat predictable. Trust me, I have been in this industry for a long time and I have seen it all before.

New Realmark Corporate Website

I'm very proud and pleased to announce that our new realmark.com.au website has been launched this week. This new website has a fresh, contemporary look inline with the brand positioning of Realmark and introduces a number of key advantages for our clients.

I invite you to view the new realmark.com.au.

Buyers no longer fear auction

Here at Realmark we have seen a noticeable lift in auction activity over the past month. Realmark auctioneers held five auctions held over the past two weeks. All have had bidders, with one selling under the hammer, one selling on the day and offers written on the other three which are still pending negotiations. All auctions drew an impressive crowd.

So why is this? Well sadly I don’t think it is because all of the property markets woes are over. I am also certain it doesn’t have anything to do with the Reserve Banks announcement of interest rate cuts.

I think it all comes down to the buyers.

In Western Australia the idea of the auction is relatively new, us sand gropers have always been far more comfortable with the private treaty sale. Many thought the auction was reserved for the multi-million dollar mansions scattered throughout the western suburbs. The auction was something that normal West Australians simply weren’t used to.

However our eastern counterparts have a long history with the auction, believe it or not, they think the private treaty sale is a little strange.

So what has changed in WA? I think the buyer has changed.

Today’s buyer is far more calculated and knowledgeable than the buyers of boom time. Buyers today are well informed when it comes to price and they want to negotiate in an honest, transparent environment. They don’t want sales spin, they want the facts. The auction provides all of the above and hence, they seem to be coming.

Don’t get me wrong, it is not as easy as sticking up an auction sign and buying a hammer, auctions have to be done right. But I believe the current market has spurned a new breed of buyer, and they are not afraid of an auction.

So what is the morale of the story? Simple. If the buyer has changed, we as agents need to change too. Boom time is over, its time to adapt.

Let the facts speak for themselves

Spring – supposedly the “Nirvana” of the real estate year – is upon us once again. With temperatures on the rise, flowers blooming and much talk about an impending interest rate decrease, it might feel like the Perth property market is about to perk up. But don’t let emotion mask the facts – and the facts tell us that there is unlikely to be any radical “bounce back” in
the near future.

It is impossible to predict the future of the property market – unfortunately we don’t have a crystal ball! But according to Realmark principal John Percudani, we can use current data mixed with historical evidence to look at probabilities. And the most recent facts and figures tell us that no matter how much we might want to see a strong positive change, it is unlikely to happen this year.

“If you look at the recent REIWA figures, we can see that the volume of residential transactions or sales is down this June quarter (as compared to March quarter 2007) by 25 per cent,” says Mr Percudani. There are currently 17,500 properties for sale in Western Australia. This equates to about 5 months supply of property. In March 2007, we had only 3.5 months of supply.”

“Not only is there a glut of property, but they are taking longer to sell. The average days on market are 74 as compared to 55 days in March last year. This is an increase of 35 per cent. And we already know that this has had an effect on overall median house prices In Perth which are down approximately four per cent.”

Even with the likelihood of an interest rate drop, which has been touted by the Reserve Bank and the media in recent times, Mr Percudani believes it would unrealistic to expect an upswing in 2008.

“It’s not all doom and gloom – this current downturn is part of the overall property market cycle and with any price correction comes buying opportunities and increased affordability,” says Mr Percudani. “But I think it is important to understand the factors that lead to this downturn in order be realistic about any positive change in the property market ‘curve’.”

Mr Percudani points to a number of events that have influenced today’s market. Not only is there a global economic downturn which has created a general sense of unease and caution amongst buyers and investors, but also our major lenders are suffering from a global credit squeeze, forcing interest rates up. Even if the Reserve Bank lowers interest rates, there is no guarantee that this will be passed on by the banks and lenders who are finding it increasingly difficult to borrow money themselves in the global credit market place.

“All I’m suggesting is that it has taken a number of changes in the market to create the current situation,” says Mr Percudani. “So it would be unrealistic to suggest that only one change – such as a decrease in interest rates – will be enough to radically change the property landscape. We cannot expect one factor alone to influence such a major turn around.”

“Agents are intrinsically optimistic – they want the best price for their clients and themselves,” says Mr Percudani. “But advice that is not based on facts can be misleading and unrealistic. And the current facts tell us that a Spring upturn is unlikely. Agents need to be using transparent evidence on which to base their estimates. Otherwise sellers will be living with false hope.

Realmark Homes Come Online

Realmark have launched a new online marketing initiative which provides sellers to showcase their property with a customised website.

Each property specific website will use the actual street address of the property as the web address to ensure easy buyer attraction. Realmark is the first agency in Perth to offer this service to sellers.

Realmark Director John Percudani said the new initiative was just another way Realmark was leading in property marketing.

“The internet plays a very important role in selling homes and theses property websites are taking virtual marketing to another level,” Mr Percudani said.



“Buyers today are very different from those 10 years ago, they want to see and experience the property via their computer first before they make contact with the agent or decide to view a short list of properties that suit their criteria.

“It is for this reason that you need to give buyers the very best first impression of a property.”

Mr Percudani said that like most other industries, real estate had to embrace online marketing in a more proactive manner.

“Just as we have seen the print media move to creating an online presence, it was time for us to do the same for property consumers,” Mr Percudani said.

The websites will be created internally by Realmark’s team of professional web designers.



“The websites are a very affordable seller investment and are therefore suitable for the entire spectrum of properties, Mr Percudani said.

Realmark has been recognised for its excellence in marketing, winning the 2007 REIWA Communication Award.

Invest with the best

Finding the ideal investment property can seem intimidating. Done well, it requires research and an investment in time as well as a financial commitment. But the current market is well suited to buyers so if you’re thinking of investing in bricks and mortar, here are some things you might like to think about.

Buying an investment property requires a different mind set to buying a home to live in. It’s a business decision based on objective data rather than a subjective “feeling”. The property market works in well-documented – approximately 10 year – cycles. Most financial advisors will recommend a long-term investment strategy which means experiencing at least one “cycle” in order to maximise capital growth.

Rather than rushing in to an investment, take time to do your research and wait for opportunities that represent value and try to ensure your property will always hold tenant appeal. The rental market may be tight now, but what if things change? Will your property stand out from the crowd? Does it offer something that other properties don’t?

Realmark Property Management director Anita Percudani believes making an educated purchase starts with doing the research that identifies desirable locations and property characteristics that set up an investor to succeed with their strategy.

The Real Estate Institute of Western Australia (REIWA) agrees that is currently a buyer’s market with more than 17,600 properties for sale including more than 2,500 blocks of land.

“Despite these favourable circumstances, investors should still be looking for opportunities that offer good value for money,” says Mrs Percudani.

“As this will always help increase their rental returns throughout the investment period.”

When researching the market, investors should be mindful of the key characteristics of successful residential property investment.

”It is important to look not just at the rental achievable in this current high market, but also consider the fundamentals relative to the property that will create positive capital growth,” says Mrs Percudani.

According to REIWA, the better investments are generally in places where there is consistent population growth, such as the near city or the rapidly growing regional centres. The built up areas of a town or city where there are plenty of tenants needing rental accommodation are often good choices.

Tenants like convenience therefore investors should always look for proximity to the best amenities: access to main roads and public transport, close to shops, schools, tertiary institutions and other community infrastructure.

The ideal investment location is where demand for rental properties exceeds supply. In the current tight market this is almost everywhere, but it won’t always be the case. Do your homework to gain a long-term view of local conditions. The Australian Bureau of Statistics has census results illustrating areas of high tenancy rates.

Look for properties that are affordable, generally at or around the median price and which have reasonable prospects of good growth in values.

Historical median house price information for suburbs and major regional areas is available from REIWA.

This information is useful to discover patterns in values.
Usually one part of the market will be experiencing high growth rates that eventually influence neighbouring areas, particularly if they have similar characteristics. This ripple effect can be well worth exploring. Are there undervalued houses in a suburb next to one that is currently doing well?

Choosing a property with redevelopment potential can also be worthwhile. An investment property that can be subdivided into smaller lots for home units will be popular with some developers and can bring long term rewards.

Compiled with the assistance of REIWA

Buyers Aren't Liars

As the Perth property market continues to correct itself with prices easing and supply outstripping demand – something positive is finally occurring: affordability is currently increasing. Buyers hold the majority of power in the real estate equation and it’s time for sellers and agents to respect their needs.

Recent figures released by the Real Estate Institute of Western Australia confirmed what most of us already knew – median property prices in Perth have dropped for the second quarter in a row.

This price adjustment is not good news for sellers who are after high, short-term capital growth. But according to Realmark director John Percudani, it is all part of the property market cycle and has a healthy effect on housing affordability. But it also creates uncertainty – and buyers, sellers and agents alike are all feeling a little unsure.

“When people are feeling unsure in the market place, sometimes they go about things the wrong way when trying to find solutions,” says Mr Percudani.

“Right now – and for the foreseeable future – we are seeing a significant adjustment in the property market. Suddenly agents need to focus on buyers and making sure their needs are looked after.”

Instead we have seen an increase in selling solutions – including hybrid selling methods such as “expression of interest” and “price ranging” – that only confuse the buying public.
According to Mr Percudani it is a buyer’s market, and buyers’ needs must be addressed. So what does this mean?

“What buyers need now more than ever is clarity, simplicity and transparency around the buying process, “ says Mr Percudani.

“The way some of the property industry is trying to address market uncertainty is counterproductive.”

Mr Percudani believes a buyer’s needs must be met on several levels – from marketing through to the transaction of selling a property – to ensure the process is a success for everyone.

“Sellers entering the market must work with their agent to establish both desire and value. This should be done by showcasing their property to ensure it stands out from the rest. It also means attaching a pricing strategy that has integrity in the current market.

“When it comes to transacting, buyers need to feel comfortable and have confidence in the process. They are looking for forthright answers and transparent processes. If they don’t see these things, they are not going to be engaged in the process.”

Now is not the time to be trying out hybrid selling methods, he says. Recognising that the majority of property in WA is sold by Private Treaty, Mr Percudani warns against using techniques that confuse or distract buyers. Don’t put a “dream” price on your property and see what the market says.

“Similarly, putting a wide price range which starts well below the seller’s desired or realistic price is also going to create false expectations which can damage the chances of a successful result.”

Mr Percudani recommends using recent sales data to develop a truthful and realistic pricing strategy that makes a seller’s expectations clear to potential buyers.

“No matter the market cycle stage, buyers are the most powerful force in the property market place and should always be shown respect. As a seller, take the time to ensure that both you and your agent approach the process the right way. This is a time when informed advice from a real estate agent could be of high value in achieving a favourable sales result.”

Prestige property deserves prestige marketing

Some of Australia’s most valuable property is bought and sold in Perth, yet the majority doesn’t receive the marketing strategy it deserves. If you had a luxury item to sell, wouldn’t you want to tell as many people about it as possible?

Traditionally, the Perth’s western suburbs located nearest the Swan River have been the city’s most exclusive and expensive. In 2006, Perth took the mantle from Sydney as having Australia’s highest median property value. Although this has now reverted back to Sydney, Perth’s “purple” band – or band of suburbs that have an average house price of more than $800,000 – has grown in number and geographically spread away from the river to include many northern suburbs such as Trigg, Marmion, Sorrento, Wembley Downs and Mt Lawley.
According to Realmark principal Mr John Percudani, selling premium property requires a premium approach from agents yet often this does not happen and these homes are left languishing on the market for months at a time. This has an adverse impact on final sale price.

“We are finding that sellers in prestige suburbs are often reverting to what is safe and comfortable,” says Mr Percudani. “This usually means they select a local agent who only markets to the local community. This surprises me as people who own premium property are likely to be commercially savvy people and would be expected to make informed decisions.”

“If you only market to your local area, you are narrowing the potential buyer pool. If you only take an advertisement in the local paper, no matter how big the ad is , then you will only attract local interest!”

What sellers need to be thinking about says Mr Percudani is a much broader, sophisticated and dynamic marketing approach, especially as the number of premium suburbs and buyers grows.

“If I was selling a luxury product, I would want to showcase it in the best possible light to as many people as possible,” says Mr Percudani. “Sellers need to move away from the ‘traditional’ approach of selecting an agent based on friendships and local prominence and instead start thinking outside the square.

“Look for an agent who talks to the widest possible audience and has the marketing tools and approach that uses the best photography, best copywriting and other customised marketing tools.”

Mr Percudani uses a recent example where Realmark recently sold a property in a high-end beachside suburb which had failed to sell with a previous prominent local agent who was the vendor’s golf “buddy”.

“We got the listing, marketed the property highlighting its many excellent features to a wide audience,” says Mr Percudani. “Within 28 days we had three offers on the property and it was sold for a premium price. The competition we generated was due to the wider area marketing we undertook and the premium marketing strategy that truly ‘spoke’ to the premium market.”

Rather than making a decision based on safety and comfort, sellers must embrace a non-traditional attitude believes Mr Percudani.

“This will ensure the freshest marketing approach, attracting the freshest buyers and achieving the freshest price.”

Talking about my generation

It’s hard to pick up a newspaper or turn on the TV without hearing something about generations X & Y and how different they are in their outlook and demands from their baby boomer predecessors. So what does the real estate industry need to do to adapt and relate to this group of buyers and sellers?

For the first time in two decades, baby boomers – those born between 1945 and 1965 – no longer represent the “majority” of real estate buyers and sellers. This mantle is now held by Generations X&Y who represent a whole new outlook on life.

Statistics recently published by www.realestate.com.au paint a very clear picture of today’s real estate buyer:

• 60% are female
• 75% are aged 25-49
• 70% work full time and have a household income of more than $100,000

So what does data tell us? Principal of Realmark Real Estate John Percudani strongly believes that agents need to recognise this shift in buyer/seller population to a younger, more technology savvy and sophisticated market.

“This clearly shows us that women are the primary decision maker when it comes to selling and buying property,” says Mr Percudani. ‘’Addressing their needs and requirements is paramount to agents wanting to grow their business going forward.”

Mr Percudani believes women demand an honest, up-front type of real estate service and place emphasis on honesty and reputation.

“Women like a dedicated contact person within the agency with whom they can develop a relationship of trust,” says Mr Percudani. “They are also natural information gatherers and want good statistical data and lots of relevant detail so they can make informed decisions.
“Customer loyalty matters to them as does a no-nonsense, no-jargon approach.”

This is a shift away from the past 25 years of baby boomer relationships, which were based on repetitive habits and patterns and a sense of strong brand loyalty.

“Baby boomers are really yesterday’s buyers and sellers,” says Mr Percudani. “They also represent a large proportion of today’s real estate agents who are used to dealing with fellow baby boomers. This means that some agencies will need to actively educate their people to understand this new strongly emerging buyer and seller.

“Gen X&Y sellers in particular will be looking for a like-minded agent to represent them,” says Mr Percudani. “They understand that today’s buyers are unlikely to be local to the area, therefore a wide-spread, sophisticated marketing campaign using modern tools and mediums is going to be imperative. They will want an agent who can demonstrate that approach and understands that it is important to communicate with a wide audience.”

Change is the only certainty

Agents take note! Gone are the days when quoting a good selling price for a property was enough to ensure a property listing. Today’s sellers demand much more from their agent starting with a proven ability to communicate campaign updates and statistics honestly and openly.

It’s not surprising that recent statistics show a fundamental shift in what is important to real estate clients when selling their homes. The entire market place has changed and the old “born local, stay local” mentality has all but disappeared. We have a much more itinerant population who are open to moving not only suburb, but state and country to find the lifestyle they are seeking.

The shift towards a more modern style of client representation is imperative and agents need to adapt in order to meet their clients’ expectations and build sustainable businesses. We examine the top 5 “then” and “now” agent criteria.

Traditional top 5:

1.Recommendation by family member or friend – although there is nothing wrong with taking a recommendation, making a decision on that basis alone is no longer enough.

2.Expected sale price quoted by the agent – in other words, the agent who quoted the highest expected sale price was often the most successful. Yet often as the campaign progressed, the expected sale price was adjusted down and the seller was left wondering why… Today’s sellers are more likely do their own research and know exactly what is a fair price for their property. They want the truth, not an inflated number that discourages realistic buyers.

3.Online marketing – everyone offers marketing on the internet today and that ability alone is no longer a differentiator. Sellers are looking for more wholistic marketing approach.

4.Have previously used the agent to buy or sell a property – using an agent you have previously had a good experience with is still a good basis for making a selection, but only if they have adapted to meet today’s requirements.

5.Experience and local knowledge – taking the “if they live and work locally, they must really know my property” approach. What is clearly evident today is that buyers often come from outside the suburb they are buying in to.

Today’s top 5:

1.Demonstrated professionalism and ability – sellers are now looking for agents who can back their “talk” with the “walk”. Facts, figures and a way of demonstrating the ability to market a property and close a deal are vital.

2.Deep neighbourhood expertise – it is important to sellers to feel that their agent really understands the “lifestyle package” that their property represents. If an agent can demonstrate that understanding to a seller, they will feel confident that they can demonstrate it to potential buyers.

3.Marketing acumen – sellers are much more savvy about the importance of marketing. It is no longer just about placing a classified advertisement in the newspaper and some photos on the internet. It’s about a campaign. Sellers are looking for agents who deliver a fully integrated campaign that uses the best photography, copywriting and other modern marketing tools across a wide range of mediums.

4. Value for money – what does an agent’s commission and fee truly represent? This is what today’s sellers are asking. If the value is there, clients will pay a fair fee for the right result.

5. Communication and responsiveness – providing accurate, honest reports with real data on a pre-defined, structured basis is what sellers demand. Being able to demonstrate a communication methodology and responsive manner is important – especially for women who are now represent the majority of property buyers and sellers.

Today’s smart seller will think outside the traditional and some what comfortable square of just calling in the local agent and focus on truly selecting an agent and an agency that can deliver today’s top 5 and get a top sale result for them!

Succeeding in today’s market: Advice for buyers and sellers

The amount of property on the market in Perth has ballooned over the past six months. There are now 17,000 homes, units and town houses for sale on any given day. Although buyer demand is positive, it has not grown to match the recent dramatic increase in sellers coming on to the market. But as we know, the market can change from one week to the next. So how can buyers and sellers stay ahead of the curve?

At the height of the Western Australian property boom in 2006, there were as few as 5000 properties on the market day to day. This lack of supply, along with low interest rates, played a large part in creating the dramatic price increases that saw the median Perth house price soar above $500,000.

Today there is more than triple the number of properties for sale creating an abundance of housing, and with a steady number of properties entering the market every day, last quarter’s statistics show a current median sale price of $457,000.

This is having a flow on effect for sellers – their homes are staying on the market for an average duration of 71 days. This is far from ideal and leads to a compromised sales price.

So what can both sellers and buyers do in this current market to maximize their position. Here's some tips for both groups:

Sellers

Ideally, your property should sell while it is still “fresh” on the market, i.e. between 30-45 days. To ensure your agent is focused on this outcome, employ the following tactics:

• Insist on a bold, multi-media marketing campaign that showcases your property and generates buyer excitement – quickly in a crowded market

• Only sign up with your agent for 60-day authority. This is the prime window of opportunity in which to achieve a premium price. After 45 days on the market, your property will appear “stale” against new stock in your area

• Insist that your agent provide detailed written reports on buyer feedback and interest each week. This will help you tailor your campaign and make any necessary adjustments to the price or presentation of your property.

Buyers:

The current market is well suited to buyers, even if interest rates are the highest they’ve been for 10 years. Here’s what prospective buyers should be thinking about:

• There is a unique range of choice in Perth’s property market today with 50% more stock on offer than “normal”. Properties and opportunities that would not normally be available are being flushed into the market place

• Sellers are more likely to be reasonable in their price expectations and terms and conditions. Opportunities to buy “fairly’ are increased.

• There has been a lot of talk about interest rates and their steady increase over the past year, but with median prices decreasing at 2.7%* last quarter buyers need to see the clear offset in house price (savings that may be in the tens of thousands) against the interest rates which are now likely to remain steady for some time going forward.

Both buyers and sellers need to have a clear plan when entering the property market. A good agent will provide sellers with the most up to date information and statistics enabling the vendor to make realistic pricing decisions.

And buyers need to remember that the market can change very quickly – almost from one weekend to the next. The data we are seeing today is already “old” and if demand builds up again, the next rise in the cycle will kick in. Now is the ideal time for buyers to capitalise.

* Source: REIWA

Demand more from your agent

Realmark has bucked the trend for lengthy sale periods in the current slow market conditions, selling properties almost a full month quicker than their competitors – scoring an average 44 days on market for March.

Realmark properties are averaging just 44 days on the market while REIWA recently announced that the average home is taking 71 days to sell.

I believe that while the Perth real estate market is in a period of uncertainty, sellers should not accept a slowing market as an excuse for lengthy sales periods.

At Realmark we are selling homes in a third less time than our competitors because we have adapted to the changing climate.

Seller’s really need to be aware that time on market is a critical factor in terms of achieving a favourable selling price, a lengthy sale period can result in the loss of tens of thousands of dollars.

The best advise I can give is sellers need to make their agent accountable, when signing an agent, do not issue them with an authority of longer than 60 days, if they can’t find the right buyer in that time, you need to reconsider your position.

Many agents use the market as an excuse, but the fact is for an agent to survive they need to be able to sell in both the good times and the hard times – unlike Perth’s recent boom years, homes no longer sell themselves.

Agents have to employ a strategic range of initiatives which takes the market situation into account and offer sellers effective solutions.

My 5 key points of advise for sellers;

1. Only issue your agent with a 60 day period to sell your home to ensure they retain focus and remain accountable.
2. Do not accept that market conditions are an excuse for lengthy sales periods – time on market is critical to price.
3. Find an agent with a strong track record, a detailed knowledge of your suburb and positive seller testimonials
4. Understand the value of investing in good quality, strategic buyer attraction marketing with a point of difference.
5. Expect weekly written reports from your agent detailing buyer feedback

Your comments and/or questions regarding this post are most welcome.

Private Treaty: Going, going, gone…

Western Australia, unlike its brother and sister states in the east, is fixated on Private Treaty as a method of selling property. But why? In today’s information age, buyers hold the power. So why haven’t sellers and agents adjusted their approach to make it work for them?

Ask most Perth real estate agents which method they recommend when selling a property and the answer will almost always be “Private Treaty.” But does it necessarily deliver the best result?

Western Australian’s have always been hooked on Private Treaty while most other states in Australia have a more balanced approach with at least 50 per cent of suburban property being marketed without a fixed price, culminating in an auction or tender process.

The essential difference between these two approaches comes down to setting the price.
Using private treaty requires the seller to set a fixed price for the property and making that price public knowledge. This sale price is often based on their real estate agent’s recommendation.

In fact, sellers often mistakenly select an agent purely based on the price that the agent forecasts and agents are tempted to quote sellers a price they want to hear!

Alternatively, going to market without revealing a set price means the market place (i.e. buyers) bid for your property to the maximum price they are willing to pay.

The Real Estate Institute of Australia lists the differences between the two approaches however, important issues for a seller include:

Set Price
also known as Private Treaty or Open Market
• No set settlement period
• No set terms of sale
• Price that is attacked by buyers
• Buyer is in control

No Set Price
also known as Auction, Tender or Offers Invited
• Set settlement date
• No price barrier
• Set sale terms
• Seller in control

I believe Perth’s fixation on Private Treaty is based on an era when buyers didn’t have easy access to market information and real estate agents controlled that data. Today, buyers are very well informed and have access to ample market data. They are capable of making their own decisions about the value of a property. The no set price approach, especially when combined with the auction sale process, brings a concentrated and defined marketing campaign to a climatic conclusion where buyers are forced to offer their best price.

Agents need to let go and encourage sellers to ‘take the lid off’ and let the market decide. You want buyers to compete. The result may exceed expectations.

And sellers remember, even at an auction, you don’t have to sell unless the result is right for you.

Don't follow the herd!

Despite economic uncertainty and a turbulent equities market, the real estate market continues to offer opportunity. Scratch the surface of the most recent statistics and you’ll find that the volume of property in WA exchanging hands has been consistent for the last three quarters signalling steady supply and demand. Smart buyers will stay ahead of the pack and look for opportunities – now.

There’s no doubt that any changes on the global economy and the local markets causes anxiety for both investors and the general Australian public. There is a general “sense” out there that things are “a little unstable.”

This might be causing some prospective real estate buyers to sit back, waiting for the bottom to fall out of the property market. I believe the data we are seeing is actually telling a different story. Since the June 2007 quarter, we have seen a consistently healthy level of supply and demand.

In fact, around 13,000* properties have changed hands each quarter, which equates to approximately 1000 per week. This indicates that there are still buyers out there. And if buyers are astute, they will move to buy now. There is a steady amount of stock offering excellent choice and the potential for good value as well as the potential to negotiate fair terms and conditions.

Interestingly, the type of buyer in the market place has changed a little over the past few months. The number of investors and first home owners has decreased by 5% while those buying their second or third home represent an increase of 5% in the market.

No doubt this is because the higher interest rates are impacting some investors who may be paying more to borrow money and may have been too confident in the value of their assets. But if people can get over the current sense of economic anxiety and affordability issues, it’s never been a better time to buy – and buy well!

The real estate market will always peak and trough and admittedly we have seen some very strong growth up until last year. But overall, the WA economy is very strong and is likely to be for the mid to long term. Furthermore, the demographic data indicates that housing demand will continue to grow. Similarly, the real estate market data tells us things are also consistently positive.

So our message to buyers is “don’t hold back" waiting for a dramatic negative change in the market that is unlikely to happen. Be confident and take the opportunity while it exists today.

“Stay ahead rather than follow the herd.”

* Source REIWA Market Update

"penny wise pound foolish"

Due to the slowing nature of the Perth residential property market sellers maybe tempted to consider private sale rather than engaging the services of a real estate agent. Cost saving is probably the principle motivation for such a decision.

Sellers may see this as a smart option to reduce the cost of marketing their property and avoid paying a selling fee to a real estate agent. However experience has shown that this is false economy. By entering into a private sale, sellers generally harm themselves in respect of the sale result.

Sellers may see it as an easy task to put a for sale sign on the property and place an advertisement in the newspaper. Experience has shown, however, that the buyer of today is a very different creature to that of the past. The methods of communication are far more diverse and buyers are generally much more informed prior to making enquiries about a property.

By decreasing the extent of buyer exposure in the market place sellers in effect reduce the number of buyers attracted to their property and also dilute the focus of buyers. This combines to reduce buyer competition for the seller's property. Buyer competition is all about generating a better sale price for the property.

New consumer
Accordingly it is important that a marketing campaign be assembled to create market impact around the property and generally this can only be done through the extensive resources offered by a progressive real estate agency. In particular, marketing not only via the internet but also b direct presentation to a buyer database is probably one of the most beneficial ways of focusing buyer attention to a seller's property.

Another consideration is that sellers do not have the expertise to apply the different selling methods employed in today's real estate market. Historically Perth sellers have became overly familiar with the private treaty sale with set asking price method, however, this is not necessarily the best method to employ especially in the current market conditions. Furthermore over the course of a property being on the market various different marketing and selling methods can be employed by a professional real estate agent for the benefit of the seller.

Having yourself as the client
The other failure of the private sale comes from the sale negotiations. When sellers negotiate directly with a buyer they are more likely to agree to the buyer's terms, because they do not have the advantage of an independent and impartial person standing between themselves and the buyer to negotiate the best seller result.

So, as a seller it's smarter for you to choose a real estate agency and take full advantage of all it can offer, so you get a better sales result because it will be worth the investment...a few $1000 in commission and marketing can deliver tens of $1000's in sale price!

Watch those days on market

When a property market slows (as it is occurring now in various sectors of the Perth property market), both real estate agents and sellers adopt an attitude that it will simply take longer to get a result.

When a property market slows it is important for a seller to seek a result within good time because the longer the property is on the market it is increasingly less likely to attract the seller's price expectation.

Why?...because prices are falling rather than rising and also because buyer interest will be diluted the longer the property is on the market, especially with increased buyer choice continuing to enter the market weekly. The result is the seller often finds itself chasing the market (price) down!.

Put more simple, a longer time on market means a decreasing opportunity for a premium price.

Unfortunately, most real estate agents adopt a mindset that this "is just the market" and therefore ask for longer and longer listing periods to give them more time to let the market slowly "condition the seller". This in tern creates a mindset in both the agent and the seller that
it's going to take 80, 90, 120, 180 days or longer to get a result, rather than keeping a focus on trying to achieve the sale within the optimum 30 day selling period whilst the property is fresh to the market and buyer interest most acute.

In these circumstances sellers should consider only issuing real estate agents a tight selling appointment period of say not more than 45-60 days to keep the agent focused on achieving a result for the seller in the time period that is optimum for them in the current market conditions.

WA economy continues to boom, property market challenged...informed buyers & sellers will adapt & prosper

Market Realty

Notwithstanding that the WA economy will continue to be positive and strong for at least the next couple of years there are underlying turbulent world economic conditions that will affect us. The rising petrol price and interest rates are obvious examples of this impact.

The recent boom period in the Perth market is well and truly behind us. This market was driven by cheap easy credit, this is no longer going to be the case. In 2008 we are now faced with conditions were credit will become less available and increasingly more expensive. The single most influential factor on the property market is always interest rates (the cost of money). Some analysts will go as far to say that there is a pending debt crisis that is sitting like a set of poised dominos ready to fall.

The Financial Review on the 1/1/08 forecasted that only five (yes 5!) Perth postcodes were expected to avoid negative price adjustment in 2008.

Pricing Sensitivity Will Be Acute

In 2007 we saw that the Perth property market moderate but also splinter with various suburbs performing differently. In 2008 buyers and sellers will carry a sense of unease in relation the property market. Recent press has delivered a strong negative tone that both sellers and buyers would have absorbed. This sentiment will be fueled by;

1. affordability will tighten even harder (especially in Perth which is the second least affordable capital city in Australia)
2. tapering demand with upward interest rates will force a further correction in property values, particularly in outer suburbs or those not offering lifestyle attraction
3. mortgage sales will continue to increase

Conversely there are great opportunities in the top end of the market due to the lifestyle choices the wealthy and retiring baby boomers have the ability to pursue. In particular, coastal - water front and CBD will present the best opportunities. Under $500,000 especially on the outer fringes will be severely challenged and the $500,000 - $1m range will continue to moderate significantly. Facing price reality will be critical in 2008.