Talking Real Estate
No, I didn't "jump ship", it was a merger. Bayleys is growing!
Hi folks,
Recently I've been pleasantly surprised to receive phone calls and texts welcoming my column back which I found very humbling as when I write these columns, I really have no idea if people actually read them, so a huge thank you from me to you for taking the time, always much appreciated from my end.
I talked in the past about some of the changes we've seen property wise since 2019 so here's another change which I've have had lots of comments!
I can assure you that I did not “jump ship” from Tommys, instead both Upper Hutt and Lower Hutt offices were bought by Bayleys. We have largely the same team but since merging the two companies we now have a considerably larger team. I believe this to be huge advantage when selling property as more agents could lead to more offers leading to higher prices for our clients. Choosing me to sell your home means you get a large team of experienced agents as well as me.
Our annual anniversary is November 1st and I don’t know if it’s because I’m getting older but each year has gone lightning fast!! And I can answer another question I have heard plenty of times in the last 12-24 months, “Why did Bayleys buy the Hutt Valley Tommys offices? It’s actually a pretty simple answer. To grow.
What people might not be aware of is that we are a regulated industry under The Real Estate Authority (REA) and as such we must not only qualify to be a licensed salesperson, but we must undertake ongoing education.
The first part of that statement is the important part.
To become a licensed salesperson, you must achieve a New Zealand Certificate in Real Estate Level 4. This could take up to 6 months of study, generally while working full time. Further there is a cost involved, the Open Polytechnic is approximately $1040, The REA charges total $930 (approx). So, no change out of $2000 and all for a career you do not get paid a salary for as we are commission only. Not for everyone but a rewarding career for those who are good at it.
It is quite difficult to take a leap to a commission-based income which means not many young people are coming through, often the best way to grow a business is through strategic purchase.
If you would like to know more about the market, or how our larger marketing reach at Bayleys can help you if are thinking about selling or simply wish to see how much your house is worth then call me on the number below or contact me via email steve@steveslicker.com alternately fill in your details here on my website.
Hi folks, Having had a number of properties for sale over the years that have been tenanted I thought I would discuss the choice vendors have to make when selling - …
Hi folks,
Having had a number of properties for sale over the years that have been tenanted I thought I would discuss the choice vendors have to make when selling - do they sell with the tenants in or should they serve notice and sell without.
Let me point out that retaining tenants during a sale certainly keeps the rental income coming in. Also, unless the property is dirty and untidy, it will usually present better with furniture and household items making it look lived in and camouflaging wear and tear.
However, there are times when a tenant in residence could be a financially less rewarding scenario.
Tenants who do not want to move can put a lot of obstacles in the way of a sale. They can limit and postpone inspection access almost at whim in spite of legally having to provide ‘reasonable access’(what is ‘reasonable’ to one person may not be ‘reasonable’ to another). By the time this sort of obstacle is sorted out, valuable time has been lost and many purchasers have moved on. If the market is not trending up, this can result in a lower sale price as the market drops before the property can be sold. Most rental incomes can’t compensate for this kind of loss. Furthermore, if the seller is using the money for another financial project, delays in having the money available could cost them the project or render it more expensive if bridging loans are required.
Disgruntled tenants can also highlight the property’s faults in order to put off prospective purchasers and while many owners are happy to absent themselves from the property to allow the agent to show the purchasers around at their leisure and improve their selling prospects, tenants have no such motivation to leave the property and many more to stay watchfully present.
Sometimes, property owners have no inkling that tenants will behave badly in the event of a sale, but there is a bit of basic research investors can do to try and determine whether their tenants will play ball. Ask the property manager how easy it has been for the agent to get access for periodic maintenance inspections or for tradespeople who have been contracted to carry out work on the property. Tenants who have been slow to concede access for activities such as repairs that will benefit them are highly unlikely to come to the party when they think they will ultimately lose their home to a successful purchaser.
Thankfully in all my years selling property in Upper Hutt, I have met very few of the latter!
The way a property manager answers the following seven questions will help investors decide whether they are up to the job.
Hi folks,
The market is moving nicely as we enter the busy season.
I have been meeting more rental investors looking for property so I thought this week I would address some property management issues and offer some questions that a good property manager will know the answers to. Note the way a property manager answers the following seven questions... it will definitely help investors decide whether the prospective manager is up to the job.
- How much notice must a tenant give to a landlord when they are going to vacate?
- How much notice must a landlord give to a tenant that they require vacant possession?
- How much notice must a landlord give a tenant that they are going to vary the rent?
- What is the difference between fair wear and tear and negligence?
- What is the maximum security deposit / bond a landlord can charge a tenant?
- What is the minimum period a tenant needs to be in arrears before the landlord may commence formal eviction proceedings?
- Can you briefly explain the steps involved in a formal eviction?
The answers to these questions will vary depending on local legislation governing residential rental arrangements in the area.
But if you are thinking about signing up with an agent who does not answer these questions with confidence, think about choosing another agent.
Finally, investors shouldn’t expect their property manager to have a detailed knowledge of the tenancy legislation – as long as they know where to go for the information when they need it.
Who doesn’t want to put their feet up and watch their investment property make some money?
Hi folks,
Listing your home on short-term rental sites like AirBnB and BookABach can be an excellent way to get great returns on your rental.
AirBnB and BookABach have completely changed how we holiday, moving away from traditional letting methods to connecting the owner and renter directly, usually on short term lets.
It’s now easier for owners to use different renting methods to get a return on their property. We’ve seen recent reports of landlords in Auckland’s CBD choosing to only rent out their apartments on AirBnB instead of relying on a long-term tenant because of the higher returns and with occupancy rates sitting between 80 and 89 per cent, it’s an attractive option.
While there can be a bit more work around booking guests and handling cleaning, short-term rentals can work well if you’re willing to take the risk and uncertainty.
Some other issues to consider include
- securing the right insurance
- working with an accountant to understand your tax obligations
- maintenance costs with a higher turnover of tenants
- how much property management you really want to do.
Owning a holiday home has an added bonus in that you have somewhere to holiday yourself - and if you structure it right, the house should pay for itself.
Hi folks, Thought I would talk about property ads this week, a popular topic among my colleagues currently as we enter the listing season.
Hi folks,
Thought I would talk about property ads this week, a popular topic among my colleagues currently as we enter the listing season.
Many people feel that real estate ads often exaggerate the features of the properties advertised. Yet agents frequently report that when it’s their turn to sell, many vendors just can’t help wanting to ‘oversell’ their property by insisting that every feature of their home is highlighted in every ad, or by insisting on ‘four bedrooms’ rather than ‘three bedrooms and a study’. But what does a real estate ad really need to achieve?
There’s an important distinction that needs to be made: the ad is not the property. Furthermore it won’t sell the property by itself. A real estate ad has done its job if it makes people want to come and carry out an inspection. Then it’s up to the property to live up to the description if a sale is to be made. If purchasers feel disappointment that the property does not live up to expectation, they are unlikely to make an offer.
As such it is better to claim less for the property rather than more. Underselling works better than overselling. There should be a buildup of desire and excitement that reaches its peak by the time people set foot in the property. Purchasers should be delighted to find that the property is everything the ad said it was – and more. Purchasers are frequently buying a lifestyle and rather than listing all the features of the property, it is more effective to evoke the kind of life they might be able to live as owners of, and dwellers in, this particular home..
Secondly, too much information can actually make people decide not to inspect the property at all. To the inexperienced, this seems an unlikely situation. How could an ad that highlights the property’s desirability actually go against it in the long run? They don’t realise that potential purchasers may decide without seeing the house that it would not suit them. Some vendors think that purchasers who have already made up their minds against their property weren’t ever going to buy the property anyway, so it’s a good job they didn’t waste everyone’s time on an inspection. This approach is a short-sighted one, however, as it overlooks the very real potential for the house to sell to someone who falls in love with it even though it doesn’t outwardly meet all the criteria on their wish list, or had a feature they had decided they didn’t want.
Remember, most purchasers have to compromise on some features, and the home may meet their needs so well in some particular way that is special to them that they overlook the glaring lack or supply of something else they thought they needed.
Is it better to saturate the advertising space or target specific areas?
Hi folks,
I thought I would discuss putting your advertising dollar to work.
In the US, eight out of 10 people (in Australia and New Zealand seven out of 10) make their initial foray into the market via the internet. After all, the net is convenient, inexpensive and wide-ranging and it allows purchasers to be anonymous until they are ready to buy. What do the internet and other technologies mean for the more traditional advertising vehicles and how does a vendor work out how to get the best value for advertising dollar with so much out there to choose from?
Should vendors spend their advertising dollars by concentrating on saturation advertising in a few advertising vehicles or should they spread it more thinly over a wider range? Traditional advertising vehicles (window display, local paper, signboard) are still popular, but the internet is not the only recent advance in real estate marketing.
In the United States and in some parts of Australia and New Zealand, the use of Mobile or SMS marketing is also an option as well as social networking sites. Most professional agents conduct bona fide local research to establish what media work best in their area. Informed vendors would do well to ask if agents have done that research and what the results show, rather than making the assumption that the more widely (thinly!) they spread their advertising dollar, the more successful it is likely to be. While the successful media vary from location to location throughout Australia and New Zealand, the number of media that generate 80% of inquiries is usually no more than four. The main three are usually internet, newspapers and For Sale signs.
Confusion arises because some less professional agents recommend a wide range of advertising vehicles that sound good to the lay consumer even though the statistics about where the purchasers come from don’t actually support them. It is easier for some agents to offer to advertise in a large number of media rather than do the research that isolates where the vendor’s dollar is best spent.
Remember: the market value for a property cannot be scientifically established nor arbitrarily insisted on.
Hi folks,
Negotiating the selling price of a property is often the most emotionally difficult part of the selling process, especially for vendors. After all, purchasers can always move onto another property if they don’t like the vendor’s counteroffers but vendors are there until the property is sold. The sense that so much money is riding on one decision heightens emotions all round. In the heat of the moment, vendors often think that moving from their original asking price means they are “losing money”, while purchasers are afraid of “going too high”.
It helps to remember that market value for any property cannot be scientifically established or arbitrarily insisted on. The point or price that is neither too little nor too much depending on where you are standing is arrived at by small (usually!) adjustments until the two parties evolve to a position they find mutually satisfactory. Neither the vendor’s “I won’t take any less than…” nor the purchaser’s “This is my final offer” actually determine the price. In the course of negotiation, the vendor’s desire to get the highest price is offset against the purchaser’s desire not to pay too much.
Neither wants to miss out – vendors on sales, purchasers on properties they have set their heart on, but it helps to remember that ultimatums usually bring negotiations to an end.
The New Shorter Oxford Dictionary (1993) says: “It is not a negotiation when one party says “This is what I want.” It is easy to forget that market forces dictate prices and vendors who say: “We need $x to buy what we want” and purchasers who say “This is my one and only offer, take it or leave it” need to ask themselves whether they have based their figures on analysis of past selling prices for similar houses, and not on their own wishful thinking. Whether you’re a purchaser or a vendor, leaving a window open for negotiation usually means you won’t get the door closed on the sale.
Where the balance of power lies in negotiations depends on the market. In a sellers’ market, vendors can, and do, make ultimatums and hold out for dream prices, while in a buyers’ market it is the buyers who have the upper hand in any negotiations.
The ultimatum ball is ultimately in the vendor’s court: after all they have the most to lose by scaring off a purchaser by high handed tactics.
Vendors who refuse to negotiate because they don’t like a purchaser’s initial offer never find out the highest price their would-be purchaser is prepared to pay. (Sometimes even the purchaser doesn’t know until they have negotiated their way there!) Even if the highest offer a purchaser makes is unacceptable, at least it provides a point of comparison for future offers.
Elections come around regularly, do they really affect the Real Estate market?
Hi folks,
A general election can have a dampening effect on the housing market with many people likely to adopt a "wait and see" approach and delay making sale or purchase decisions until the election is over.
Property valuation and market analysis company Valocity has analysed property sales trends around the 2014 general election and compared them with trends in 2013 and 2014 to see if that election had a noticeable impact on the market.
It found sales volumes nationwide were down an average 8% per month between the time when the date of the election was announced in March 2014 and it taking place in September that year, when compared to the same periods of 2013 and 2015.
The effect was even more pronounced in Auckland, with monthly sales down and average of 23% between the date when the election was announced and it being held.
Valocity Valuation Manager James Wilson said the drop in sales was clearly uncharacteristic when compared to sales patterns from the previous and following years and was likely caused by the market adopting a wait and see approach.
However the figures also showed that there was a sharp uplift in sales once the election was over and the outcome was known, and the upturn continued into the following year.
My own experience regarding elections since 1997 in the UK and NZ is that yes, the market goes quiet while everyone adopts a “wait and see” policy but it returns to normal when absolutely nothing changes when the results are in.
Whether selling or renting, there are so many things to consider. Here are some of them.
Hi folks,
I thought I would ask the question: Is it ever financially sound to hold onto a property that doesn’t reach the desired price rather than sell for less?
Agents often hear home owners say: “If I don’t get my price, I’m not selling.” There is no hard and fast rule and, of course, many people who are buying another property with the proceeds of the sale have little financial choice in the matter.
But how can those who have the borrowing power determine whether they might be better off renting the property out rather than selling? Naturally, it is important that they do their sums before making a decision.
If you find yourself thinking of the rent-and-hold option, consult an accountant or financial planner as well as a real estate agent. Find out whether the market is stable, climbing or falling so that you know whether there is a potential increase in capital gain worth holding out for. It is important to check out the rental and vacancy rates and the likely income including capital gain against the cost of any borrowing you need to incur.
Many people moving out of the area they have lived in for a while automatically think “I’m moving so I’m putting my house on the market.” But have they checked out the state of the market in their new area? It is possible that property won’t go up as fast in the new location as the old one. Or conversely it might go up faster. Is the future sufficiently hard to predict that it could it be safer to have a foot in both camps in case they want to return and not find themselves priced out of the market?
If you do the figures and decide it is a better financial choice to hold onto the property rather than sell, the last thing to take into account is whether the property is a good rental proposition. Often high maintenance properties (such as those with pools or large garden) have costs that have to be offset against income. Or the market may not pay the rent you think it should be worth if it is not the type of property normally in demand by typical tenants in the area.
It is clear that in many cases, holding onto a property instead of selling it does indeed pay off. Many people buy their first property with the long term strategy that they will never sell. They choose a property that will be suitable as a rental when they upgrade and go on borrowing and buying properties as a means of wealth creation. This does not require high income or great wealth – simply an understanding of the strategy and some good financial advice.
For every doer-uppper success there is an equal and opposite failure.
Hi Folks
Sometimes I have properties for sale that are most definitely “do-er uppers”, so I thought I would discuss the potential perils and advantages of buying such a home.
There is no doubt that some buyers are attracted to the clean slate potential of a property advertised as “renovators delight”. After all they get the layout, décor and colours they have always wanted and completely brand new. It’s also a way of getting into a preferred area at a lower price than normal. So is it really that easy?
While on the one hand stories abound about marriages breaking up over renovations and budgets blowing out, there is an equal number of stories about people who renovate and make money in the process when they resell. So what makes the difference?
Firstly the very ‘clean slate’ concept that often attracts buyers in the first place carries its own danger.
Home buyers who gut a house with the aim of getting it just how they want it need to do their research and be aware of the amount of money represented by the amount of reconstruction needed.
Research also needs to be done in the local marketplace to make sure that the amount spent on the property plus cost of renovations equals potential selling price if it were to be placed on the market now.
You often hear people say that if home owners hold onto a property long enough they will get the money back, but often this theory is simply allowing the costs to be absorbed into the capital gain that would have happened even if the property remained unimproved - as on average, most property doubles in value every seven to ten years.
Much of the uncertainty can be overcome by seeking advice from several expert sources before purchasing.
A builder can assess what a renovation project is likely to cost but a real estate agent’s advice should be sought about the potential selling price of the property once the work is done. If the prices being achieved in the street or suburb don’t justify the state of the art renovation, it should be pared back to something simpler and more in keeping with the local pricing. The best house in the street rarely sells for a price commensurate with the cost of getting it that way.
Before buying, would-be renovators should always get a builder, architect or engineer to have a look (there may be a fee for this but it’s worth it) and do a report on such things as roof, guttering, tiles, floors, walls, electricity and plumbing so that they will not be surprised by having to spend money on improvements that don’t really make the house look any different, or add equivalent re-sale value.
