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Bill's Blog

The Times They Are a-Changin’

Released in 1964 the Bob Dylan anthem, “The times they are a-changin’” is a fitting heading for first blog of Winter because for Victorian real estate the times they are a-changin’.

As some readers may be aware 1st May 2017 saw new legislation governing how agents quote and market residential property came into effect.

The Estate Agents Amendment (Underquoting) Bill 2016 is an interesting piece of legislation. I am pleased that it has addressed the practice of some agencies to live by the old, and their well out-of-date adage “quote it low and watch it go, quote it high and watch it die”, by removing the ability to quote residential property prices as PLUS, ABOVE or FROM, etc. Instead property must now be priced with either a single figure, say $950,000 or with a price range of no more than 10%, say $900,000 to $990,000. Furthermore, the Legislation requires agents to provide prospective purchasers with a “Statement of Information” which will include the details of 3 recent sales that the agent believes are the most comparable to the property being offered for sale.

These changes should see a massive reduction in buyers attending auctions or making offers in good faith only to be advised that the “reserve price” or “vendor’s asking price” is massively above the quoted PLUS price.

During a recent auction campaign a prospective buyer informed me of their unpleasant experience when attending another company’s auction. According to this couple the selling agent had suggested to them that the property would sell in the high $900,000’s to $1 million area. Due to this advice they decided to attend the auction with the intention of bidding. When the property passed in on a vendor bid above $1.3 million they were not impressed and understandably frustrated. This situation will occur far less under the new legislation.

Vendors are still free to decide what price they wish to accept for their property and as agents our job is to obtain the best possible result by gathering together emotionally connected buyers and placing them in a competitive and emotional environment (which has not changed). We will still see quality property that’s in high demand sell well above reserve price due to competition.

How has the first month gone?

The biggest issue with the new legislation is the non-existent community awareness campaign being run by Consumer Affairs Victoria. Buyers that we are coming into contact with seem totally unaware of the new quoting system and are still assuming that vendors are wanting somewhere between 10-20% above the advertised price range. Anecdotally we are hearing about a number of buys who have missed out on purchasing a property they love because they “assumed” it would sell for 10%-20% above the agents quote price. This will sort itself out over time as buyer become accustomed to the new pricing. However this is little consolation to buyers who missed out on a property and vendors who may have received a little bit more if another buyer was involved. There are a number of other requirements and potential issues resulting from the new legislation which I covered in my last blog below, Estate Agents Amendment (Underquoting) Bill 2016.

 

Regards,

William Lyall

June 2017

 


 

Market Wrap May 2017

The median house price for Melbourne (city wide) increase by 7.6% during the first 3 month of 2017 to a record $826,000. According to the REIV this is the highest increase in any quarter since 2013. Across Melbourne the auction clearance rate remained strong at 79% while the average day on market during the March Quarter was 30 days.

In our core area a number of suburbs saw their median house price fall slightly during the March Quarter. However as explained in previous additions of the director’s commentary of our newsletter it is folly to look at a Quarter in isolation. Except for Ringwood every other suburb recorded a low number of sales (below 30) which in turn can skew the results. Because of this I have included the REIV’s rolling annual percentage change which provides a more accurate reflection on value trends.

Median House Price March Quarter 2017

Suburb                   # Sales          March Q       December Q       Annual Change

Heathmont                  13              $925,500          $860,000                 9.5%   

Park Orchards             12            $1,507,500       $1,120,000                11.3%

Ringwood                    57              $845,000         $859,000                  2.3%

Ringwood East            24              $915,000         $910,000                 11.5%

Ringwood North           23              $851,000         $950,500                 10.4%

Warranwood                10              $964,000         $920,000                  11.6%

Warrandyte                 15              $1,387,500     $1,512,500                  8.7%

Source REIV

Auction clearance rates remained strong with our core auction suburbs all achieving over 80% clearance rates. There were also a number of outstanding results such as our April auction of an original post war weatherboard/fibro home at 44 Ford Street Ringwood. Not only did it set a record for the street but saw 4 bidders push the price $225,000 above reserve to $1,125,000. A very similar house in the same street sold for $901,000 in late 2016. While a lovely family home at 19 Ringwood St Ringwood achieved just under $1.3 million at a hotly contested auction.

Auction Clearance Rates 1 January to 21 May 2017

SUBURB                              AUTIONS         # SOLD       CLEARANCE

HEATHMONT

32

26

81%

RINGWOOD

81

71

88%

RINGWOOD EAST

47

42

89%

RINGWOOD NORTH

20

16

80%

PARK ORCHARDS

5

3

60%

WARRANDYTE

12

12

100%

WARRANWOOD

4

2

50%

Source REIV

 

Regards,

William Lyall

May 2017

 


 

Estate Agents Amendment (Underquoting) Bill 2016

 

Here is a quick snapshot of the new requirements:

Statement of Information:  must be available to all prospective purchasers of homes being sold at auction or privately and the statement must contain the following:

What is a Comparable Property?

For property being sold in metropolitan Melbourne comparable properties must be located within a 2km radius of the subject property, sold within the preceding six months and in the agents opinion must be of a similar standard and condition to the subject property. When an agent believes there are fewer than three comparable sales that meet these parameters, they must state so.

Median Price

The Median Price provided must be for the same suburb as the subject property, state whether it is the median price of a house or unit and can be either the most recent quarterly median or the annual median.

Price Quotes: It is illegal to advertise residential property in Victoria with a selling price that is modified by words or symbols. This includes:

For more information go to:

https://www.consumer.vic.gov.au/businesses/licensed-businesses/estate-agents/running-your-business/advertising-and-representations/understanding-underquoting

 

So what to do?

If you are looking to purchase residential property here are my 3 tips to make sure you don’t miss out:

  1. Look at the comparable sales used in the Statement of Information and then do your own research on them. Are they truly the 3 most comparable properties? If they are and the Indicative Selling Price is reflective of these sales then take the property very seriously.
  2. Have your finances sorted out. We see too many buyers miss out on a property because they made an offer “subject to finance”. Speak to your bank or better still a good finance broker (I can recommend a great one) and sort out exactly what you can do.
  3. On the basis that there is strong interest in the property you are considering be prepared to pay above the top end of the Indicative Selling Price. Just because the Indicative Selling Price is say $900,000 to $990,000 doesn’t prevent another buyer offering a price above this level if they very keen. Remember there could be multiple buyers for the property and we can’t sell 5 families the same house.

 

Kind Regards,

William Lyall

May 2017

 

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