JPP Buyer Advocates Newsletter - March 2017
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March 2017
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"Get an expert on your side"
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In this issue:

- Something New to JPP - Underquoting
- To Bid or not to Bid - How to rid your property of ants
- Housing Affordability - Tech News: Nintendo Switch
- Something Interesting: Replying to SPAM
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Upcoming Dates for March:

March 13th:
Labour Day
March 29th - April 2nd:
Melbourne Flower and Garden Show
March 29th - April 23rd:
Melbourne International Comedy Festival
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Something New to JPP

We now offer Managed Sales.

After nearly 20 years helping people buy property, many of JPP’s past clients have asked us to help them move on to a new home. This entails purchasing a new home as well as selling their existing home.

We now offer Managed Sales. We will organise the best agent to sell your home in the area, manage the entire process and our fee is totally covered by sharing the commission with the selling agent.

Click here for more information

Ian James

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Underquoting – gone tomorrow or here to stay

New legislation passed the Victorian parliament late last year known as the Estate Agents Amendment (Underquoting) Act 2016. The Act is due to come into being no later than July 1st this year. It can be brought in to effect earlier but only if The Director of Consumer Affairs can get everything done that is necessary for the Bill to be implemented.

The new bill introduces a few new rules that estate agents must follow and also some new penalties if the agents breach the Act. The basic new rules are as follows:

An agent must not advertise a property price with an embellishment. In other words…NO PRICE PLUS or OFFERS FROM or BIDDING TO START AT:

A property can be advertised with a single price or a range. The range cannot be more than 10% of the lower figure. Most people think this is not a change, but currently the range for advertising can be anything, however the appraisal amount the agent must give the vendor must be only 10%.

An agent must prepare a statement of information and this must be available upon request and must be available at all inspections in a similar fashion to the Due Diligence Checklist that CAV brought in recently. These new statements must include the median price of the suburb, the same three comparable sales used by the agent to give an estimated selling price to the vendor and indicative selling price.

It is the last item that will change the way real estate agents in Victoria market property. Whilst I cannot see anything in the legislation that technically will force agents to advertise this price range on the internet or print media, the rule that this information statement must be made available will certainly test the boundaries of the legislation.

If it is deemed that a price will have to be advertised, this will make it incredibly difficult for print media, because there is a further rule that states that an agent must promptly adjust an advertised price if he or she believes that the estimated price is no longer reasonable. This basically means, if the agent gets an offer and the vendor declines and this offer is at a higher amount than the estimate, then the agent will need to change the estimate.

Technically speaking that occurs now. However, there will be all sorts of debate and argument over what constitutes an offer. If the offer has abnormal conditions, then an argument can be made the offer was declined over these conditions, rather than price. A further argument, no doubt, will be offers during an auction campaign. If an offer is received in the first week that is above the price quote, yet the offer is declined and or withdrawn, will this constitute an agent knowing the price estimate is no longer reasonable? It will truly be difficult for the agents to know until somebody is prosecuted by Consumer Affairs.

I say this as most agents believe they need to underquote a property in order to sell it. Most inexperienced agents or those who have poor negotiating skills believe they need to draw prospective purchasers in through guile and trickery whilst at the same time telling their vendor they will get them a number well over what they really believe is possible.

I think we need to move into an era in real estate where accurate estimates of property values need to be available to both sides of the negotiation. Vendors need to understand what their properties are genuinely worth. There is nothing wrong with aiming higher than this figure, but they should have an accurate knowledge of the current market.

Purchasers also need to have realistic estimates of a selling price. This does not preclude someone offering dramatically over this estimate. But it should mean that if the purchaser attends an auction, it will not pass in 10% - 20% above the estimated range. If it sells to someone at that level, then that is fine and the vendor should be happy. This also means that those agents who specify their reserve early, but give a number that is well below current market trends, should also be tarred with the “underquoting” label.

Unfortunately, the new legislation as it is currently written has plenty of holes for the estate agent that wants to continue underquoting. And I know that many agents are currently spending their time working out these ploys now. If they actually spent more time learning how to look after their vendors, negotiate with prospective buyers and become less morally bankrupt, the Real Estate Industry may just one day become a profession.

Ian James

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To Bid or not to Bid

With the property market booming along, we often get asked what happens at the auction?

The answer is anything! I have seen everything from no one turning up to random passes-by on pushbikes securing the finial bid, then actually walking inside and signing the contracts for multimillion dollar deals. In short, never assume you know what the competition is, there may be none at all.

A typical Melbourne auction will begin shortly after the open for inspection (OFI) when the estate agents will herd all parties onto street so they are able to create a better atmosphere and hopefully either strike fear or confidence in the potential bidders.

The auctioneers spiel: Beautiful property, Quiet Street, walking distance to local amenities and that of course you need to put your hand up to secure the property and take home the keys. At this point the agent will call for an opening bid.

In which buyers will almost always respond with hands in pockets and a blank look…

And then we begin;

The agent will either place a Vendor Bid or a Bid will come from the crowd, at this point the property is not on the market. Only about one in ten sales in Melbourne end up as bidder vs bidder in an auction that is “ON THE MARKET”. What isn’t sold as private sale, or advertised for auction but sold prior to the big day, ends up as an auction. It is of these most will not reach reserve and pass in. The media will tell you about the huge sales on the day, but this may be less than 1% of the properties on offer.

Vendor bids are bids made by the auctioneer to keep the auction moving or get it started. In Victoria, the auctioneer can make as many vendor bids as they like. I have seen an auctioneer vendor bid over a genuine bid, and then tell the crowd the original “real” bid no longer has the first right of negotiation. This is absolutely incorrect. The Real Estate Institute of Victoria have said that the last genuine bid will have the right to negotiate. However, either way, do not bid over a vendor bid unless someone else comes into the bidding.

Bidding, reading through a few websites on Auctions 101 things that are unlikely to work in 2017; Dress to impress, wear a suit; Park a prestige car in front of the property or borrow one; Asking a question during the auction to put off or unnerve potential bidders, staring down other bidders or bidding from behind poles or bushes.. If you have attended multiple auctions, then yes you have probably seen all types of games being played.

The simple answer; if you are intending to bid at auction, set your limit prior and do your research, even better use a professional buyer advocate who will understand the true value of the property, they have access to the same data that Selling agent has, they will understand what the market is prepared to pay and what the vendor is looking to achieve and if you are nervous you can always be around the corner at a coffee shop whilst being able to hear the action over the phone.

When you have set your Budget, stand clear of tree’s, pole and make sure that you can be seen by the auctioneer; If the property is “ON THE MARKET” you are no longer competing with the agent or vendor, your competition is in the crowd and its always best practice to be able to watch your competition’s body language. This is key to your next bid; do you double down, hold or slow down the bids into smaller increments.

If the property isn’t on the market, you need to be in it to win it; Make sure you are the last BID other than any VENDOR BID; this will give you first right to negotiate if the property is passed into you.

At this point the agent will say come inside, they will sit you down and give you an abnormally high throw away price. Firstly, don’t go inside; as its best to see if your competition is still interested in the property. Secondly, take your time and never assume if you don’t agree to the first price that the negotiation is over. Consider settlement terms, deposits then price and always remember your original budget/Limit.

If the reserve seems much higher than your last bid, remember that the agent doesn’t have to sell to you. He can always put the property back onto on the Monday, and they may be flooded with fresh interest. I have seen this happen a lot when buyers assume that after a pass in the property is re-advertised at what seems like a bargain, however come Monday it sells quickly and often for more than the vendor wanted during the negotiations.

Finally know when to walk; IF a deal isn’t going to happen or the negotiations have stalled, know when to walk away two things will come from this; either a phone call in the following hours from the agent or your search continues.

Justin Lilburne

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How to rid your property of ants

Doesn’t seem to matter how often we clean, sweep, and vacuum the ants just keep coming, and they seem to be bringing more and more friends each time.

  • Cinnamon is a deterrent, this can be used in oil form on a cotton bud, wiped on benches or leave the cotton bud in a cupboard, alternatively full cloves or grounded cinnamon can be placed in door frames and window frames to stop them entering the property.
  • Vinegar will work in the same way, they really don’t like the strong smell of vinegar.
  • Lemon juice and Lemon peel is also a good deterrent, again used the same as above.
  • Peppermint you can put a pot of fresh peppermint on your bench and the smell with deter the ants, or plant it in the garden.
  • Peppermint oil can also be used in the same way as the above ideas.

(be sure to check the dangers of any of these products with your pets)

If you want the ant trail to go a different way, all you need to do is put soapy water on the trail and this will stop there scent and they will change the way they travel, (confuse them) There ultimate goal is to get your food and go back to there nest. They too need food to survive.

We try not to kill them, as they are also useful in the ecology of our gardens, however in some instances, if the nest is too close to the house or your children’s play areas you may need to destroy the nest, Find the nest, dig into it a little, and pour boiling water into it, this should destroy the colony. (don’t be thinking of the Disney Movie “Ants” when doing this).

Our grandchildren and learning not to harm insects through their day care teachers, so we do try to relocate rather than eradicate.

Insects are very useful to keep all our gardens beautiful.

Sam James

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Housing affordability

The State Government have decided that first home owners need more help to get into the market place. By reducing stamp duty payable on their purchasers from 50% to nil on purchasers at or below $600,000 and a reduced stamp duty on properties up to $750,000, the new savings on a $600,000 home for first home buyers will be around $15,000. The government has also doubled the first home owners grant (FHOG) for those who buy new homes in regional Victoria.

So far, this announcement has been made by the politicians on radio, TV and in the print media but there has been little, to no detail to follow this up. The press releases say this will start on July 1 2017. But nothing has been said as to whether this is the contract date or settlement date. If it is the latter, then every first home owner will be trying to delay settlement until after July 1 and if it is the purchase or contract date then we will see most first home owners stop purchasing property until July 1st.

This means there will be there will be a decrease in demand for homes under $600,000 until July and then a massive upshot in July and August. Whenever the first home buyers are given more money the price of homes that are being targeted, such as family homes in new estate suburbs will traditionally increase by approximately 3 times the savings being offered. On a $600,000 home the savings to a first home buyer will be approximately $15,000; so I expect to see a rise in price of those homes to be approx. $45,000. Basically, if the purchaser has an extra $15k then they can usually borrow 3-4 times that from the bank. If you have $100,000 in savings, then the bank will normally lend you between 3-5 times this amount. ($300,000 - $500,000) depending on your income. So, if you have an extra $15,000 then potentially a bank will lend you $45 – $75k more. AND IF YOU HAVE MORE MONEY AT YOUR DISPOSAL THE AVERAGE PERSON WILL USE IT IN THEIR PURCHASE.

And don’t think for one second the government don’t know this. Only around 13% of buyers are first home buyers, so the other 87% will end up paying up to 10% more for their properties and therefore up to 10% more in stamp duty. This the only winner here is the state revenue office.

Ian James

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Tech News

Nintendo Switch

For anyone sitting on the fence about buying a Nintendo switch, I can honestly say that after spending my first weekend with it, I love it, and hope that Nintendo have learned from the failure of the Wii U and support this system properly.

The fact that I can play console quality games on a handheld while my wife or daughter watch TV, then reconnect it to the TV and get straight back into the game is a massive selling point for me and while technically you can do this by streaming a PS4 to a PS Vita or PC, there has always been the problem of lag or disconnecting, not to mention the PS Vita has different button layout than the PS4 controller, meaning the L2, L3, R2 and R3 buttons were relegated to the back touch panel.

Specs (tablet only):

  • 6.2-inch LCD touchscreen (1280 x 720)
  • Nvidia "customised" Tegra processor
  • 32GB storage (25.9 usable)
  • 802.11ac Wi-Fi
  • Bluetooth 4.1
  • Stereo speakers
  • USB Type-C port
  • Headphone/mic port
  • MicroSD card slot
  • Game cartridge slot
  • 4,310mAh battery

While the launch game lineup is not what I would call amazing, there are many first and third party games on the horizon, and the 2 I have played (The Legend Of Zelda: Breath Of The Wild and Super Bomberman R) are very good, and should keep me busy until games like Lego City Undercover, Sonic Mania, Yooka-Laylee and Super Mario Odyssey launch later this year.

As much as I like the system, I do have a few complaints:

For anyone thinking that 32gb of storage in 2017 is not are correct, this is a ridiculous amount of storage considering that if you were to download The Legend Of Zelda: Breath Of The Wild, it would take up 13.4gb of space, which is over half of the 25.9 gb of usable space...A large MicroSD card is a must buy.

For anyone that watches Australian tech Youtuber Blunty, you would have seen the video where he scratched his switch screen on the first day, just by putting it in the dock, so a screen protector is another must buy.

I really hope Nintendo keep supporting the system as I can easily seeing it becoming my favorite games console, if enough games are released for it.

Image from Nintendo

Chris Thursfield

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Something Interesting


Replying to Spam

For anyone that uses email, SPAM is a major problem that doesn't seem to be going away anytime soon.

There is a great series of TED talks done by a man named James Veitch, where he replies to the spammers, seeing how far he can push them, with some very funny results.

I can suggest the following YouTube links: This is what happens when you reply to spam email, More adventures in replying to spam and The agony of trying to unsubscribe

Chris Thursfield

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