With new advertisements entering the web portals this week, it is time to see what 2012 will bring to the Melbourne property market. Everyone will be putting forward their best guesses and estimates but in truth, the market will unfold itself over the next ten weeks. There are too many conflicting economic issues facing Australia, Europe, The Americas and of course our major trading partners in Asia, to make a best guess judgement on what property prices will do in the near future.
What we do know is that over the next decade property prices will double. People have to live somewhere, whether they buy or rent; after food, housing is the next most important item for any person. And whilst high end property prices may stagnate for a few more years, the lower to middle range median properties in good suburbs of Melbourne will begin to grow as our population does.
If you are purchasing a property this year you will need guidance. It is an appalling situation that our Government does not adequately warn purchasers of their rights when purchasing property or the need for good counsel. But then it is not in the State Government’s best interest to assist purchasers in any way. The more somebody pays for a property the more stamp duty the government collects.
Anyone spending $200,000, $500,000 or $1,000,000 should get assistance from a licensed Real Estate Agent who is acting in their interests to help them make their purchase. In most situations of sales of property in Victoria, only one side of the most important financial decision of your life, has counsel. And our government does not care. In fact they probably prefer it this way.
If you went to court to fight any type criminal or civil case and one side has counsel and the other does not, you would be counselled by the presiding member of the court. The proceedings would be halted and you would be asked if you would like legal counsel, and you would be given time to organise it.
When you are purchasing property the opposite occurs. You are actually led to believe the selling agent is there to assist you. The agent is usually very polite and very nurturing. Asking you what your needs are and also what special conditions you would require on an offer. They will then tell you they will write up an offer for you. They are under no obligation to explain to you when a three day cooling off period begins. In fact if you read the “Consumer Affairs website and look at the case study, “Buying by Private Sale” you can see that even the Government website can make errors. The example explains that the purchasers have made a written offer (signing the contract) and the next day the offer is rejected, they make a further written offer and then another verbal offer which is accepted. They sign the contracts two days later. Consumer affairs then say they have three clear business days to “cool off” This is absolutely incorrect. The cooling off period of three business days starting the day following the first written offer. The agent has very smartly used the purchasers cooling off period up during the negotiations.
www.consumer.vic.gov.au
Selling agents are under no obligation to write a special condition for a pest and building inspection that will allow you to exit the contract if these inspections are not satisfactory. In fact they are obligated to try to persuade you to have very soft conditions or none at all if they can. A standard clause written by most selling agents for an offer to be subject to a building inspection, will usually say that a purchaser can withdraw if there is a major structural defect. This doesn’t help if there are massive issues with the property that will costs hundreds of thousands of dollars to repair, but cannot be deemed structural issues! There has already been one court case in Victoria over what actually constitutes a major structural issue. A good buying agent will include a building clause that can allow a purchaser out of the contract if he is not “satisfied” with the report.
The selling agent is being paid by the vendor to get as much money out of you as they possibly can. THAT IS THEIR LEGAL, CONTRACTURAL OBLIGATION.
How good a negotiator are you? How many properties did you purchase last year? The selling agent may have been involved in hundreds of negotiations. They are usually well qualified and trained in property negotiations. If you attempt the negotiations yourself, you could be throwing money away.
If you are considering purchasing a property this year, you should seek the advice of a qualified Buyer’s Advocate. The agent should be licensed, a member of the Real estate Institute of Victoria and have at least five years real estate buying experience and selling experience before that. You can find out how long an agent has been working in the industry by going to the Business Licensing Authority website and looking at the Real Estate Agents’ list.
www.online.justice.gov.au.
Ian James
Director JPP Buyer Advocates