RateMyAgent’s unique Price Expectation data Three months ago, we began an exclusive survey of people who sold a property and wrote a review on our website. So far, we’ve surveyed more than 30,000 people. We asked one thing. Was your sale price above, in line with, or below your expectations? This simple question is very revealing. It cuts to the heart of what’s most important for vendors. It’s also a reflection of the work of good agents, to set realistic expectations then work hard for the best outcome possible. Price Expectation is a new, important perspective on property and agents. Here’s what we found and what it means for you if you’re coming up to selling. Across Australia Overall, 63% of vendors achieved a price in line with their expectations. For 6% of vendors, the sale price fell below expectations. The remaining 31% - almost 1 in 3 - said the sale price was above their expectations. State-by-state the picture was broadly in line with the relative performance of property in those markets. Our happiest suburbs Australia’s happiest suburbs - those with the highest number of sellers achieving above expectation prices are Altona Meadows (Vic) - 59%, Sunbury (Vic) - 51% and Charnwood (NSW) - 50%. 4 out of 5 of Australia’s happiest suburbs are in VIC. 2 of these - Sunbury & Greenvale are in Melbourne’s North West. And our unhappiest :( Australia’s unhappiest suburbs - those with the highest number of sellers reporting below expectation prices are Canning Vale (WA) - 15%, Bundeena (NSW) - 14% and Castle Hill (NSW) - 14%. 4 of the Top 10 suburbs reporting the highest level of BELOW expectation sales are in NSW, followed by VIC (2) and QLD and WA (2.) The bigger they are … Our survey also revealed that the lower the sale price, the higher the likelihood that the price achieved was above the vendor’s expectations. By contrast, the higher the sale price, the higher the chance that the price achieved was below their expectations. In other words, vendors at the upper end of the market were less satisfied with their sale price than vendors at the lower end of the market. We believe there are two reasons for this: Property prices are cyclical – and right now, Australia is coming down from a very strong market. Properties at the upper end of the market have fallen more in dollar terms than properties at the lower end, even if the actual percentage fall is the same. (People tend to think in dollar terms rather than percentage terms when it comes to property prices.) And at the lower end of the market, properties didn’t grow as much in dollar terms during the last upswing, so they haven’t fallen as much in dollar terms now that the market is softening. There will always be more people who can afford to buy properties at the lower end of the market than at the upper end. The larger pool of buyers means vendors can ‘find their market’ (that is, find the price buyers are willing to pay) more quickly. The right agent is the one who’ll negotiate your sale price up, not down In any market, and especially in a softening market, it’s vital to find an agent who understands the local area, knows what buyers at your price point are prepared to pay, and knows where to set your price expectations. As an example, let’s say that a vendor is choosing between two agents. Agent A says, “We’ll definitely get $1 million for your property, and my team will work as hard as we can to push the actual sale price higher than that.” Agent B says, “I think I can get up to $1.2 million for you; I’ll be doing everything I can to achieve that.” In any market – and particularly in a falling market – Agent B is often the one who will get the listing, because they have set the vendor’s expectations at a higher level. But if the vendor goes with Agent B, will they be better off in the long run? Let’s see. Agent A works like crazy and sells the property for $1.1 million, even in a softening market. Agent B, however, has to spend considerable time and effort conditioning the vendor to come down from the initial expectation of $1.2 million, and sells the property for the same price as the first agent. In theory, the actual price achieved might be the same, but the difference lies in where the agent has initially set the vendor’s expectations. This in turn influences the vendor’s view on whether they achieved a sale price above, equal to, or below their expectations. That’s what’s really important about selecting the right agent, especially in a softening market. And here’s the rub. There’s a danger that going with Agent B is like catching falling daggers. Their strategy is to keep reducing the price to find the market, and they don’t know where they will land. It’s likely that Agent B will end up selling the property for less than $1.1 million. At the same time, it’s quite possible that Agent A will achieve a price above $1.1 million. This is because Agent A is moving the market up to where he or she wants it to be. Agent A is the one you want to go with. When you’re a vendor negotiating with a buyer, you want to be increasing the price point, not reducing it. Rising price point = higher vendor satisfaction Since a good agent is the one who is likely to drive up the price point of your property, he or she is likely to rate more highly with vendors – addressing their biggest concern. By choosing this kind of agent, most sellers can walk away feeling content that they have achieved the best possible sale price. Ratemyagent.com.au is your key to finding the right selling agent, no matter what the market conditions. Every review from a vendor is linked to the relevant transaction, so you know it comes from a homeowner just like you. If you’re ready for reviews of agents in your neighbourhood, you can search RateMyAgent here: If you want to know when we have more Price Expectation data you’ll hear it first on our show, Property Banter, you can subscribe here. Read more: How RateMyAgent helps you choose an agent RateMyAgent reaches 500,000 reviews Having problems? Contact us at support@ratemyagent.com
Property Investment: When is the ‘right’ time to invest? When it comes to residential property, most people’s opinions on the ‘right’ time to invest are based largely on market conditions. Whilst the state of the market certainly plays a role, changes in factors like interest rates and the ratio of supply to demand are beyond the control of the individual investor. This is why, if you’re considering buying an investment property, it’s wise to focus on the factors you have some level of control over; in other words, your personal and financial circumstances. The key to maximising this control is managing risk. Like any asset class, investment property involves a degree of risk. If your personal or financial circumstances change significantly and you haven’t planned for the change, the risk of getting in over your head is higher. Before you invest, it’s important that you’re in a strong enough personal and financial position to ride out an unexpected event like losing your job or contracting a major illness. 'Before you invest, it’s important that you’re in a strong enough personal and financial position to ride out an unexpected event.' Generally speaking, the least successful property investors are those who haven’t planned adequately for risk, cannot afford to hold the property and are forced to sell before the asset has begun to realise its potential. Read more: 6 facts to know about property investment 3 important factors when considering property investment Before you determine whether you’re in a strong enough position to buy an investment property and comfortably shoulder the risk, it’s sensible to seek personalised , expert advice. Meanwhile, here are three of the most important factors to consider: 1. Your income The best time to invest is during your peak earning years when your income is steady, or preferably, increasing. You should also have a reasonable expectation of earning this income on an ongoing basis for at least seven to 10 years. During this time, you can put any pay packet increases into the property loan to reduce debt rather than merely pay off the interest. This will enable you to further expand your portfolio over the long term. Before you buy, think ahead to any possible personal commitments you may make over the next seven to 10 years. If you’re likely to experience a drop in income due to maternity leave or self-employment, or higher expenses due to home renovations or school fees, you’ll need to consider how these could affect your ability to meet your loan commitments and other property-related expenses. If things could get tight, it may be best to delay buying an investment property until your income and expenditure is back on a more even keel. Even if you’re not anticipating any major changes to your circumstances, it’s advisable to consider taking out income protection insurance. Most policies will pay around 75% of your income if you sustain an injury or contract a serious illness that prevents you working for a substantial period of time. Policy premiums are generally tax deductible. 2. Debt Before you invest, it’s sensible to reduce your non-deductible debt as much as possible. Non-deductible debt is debt you can’t claim against your taxable income, such credit cards, car loans, store cards and the interest on your family home. There’s little point in taking on more debt by way of an investment property, if your current debt levels are already stretching your financial resources. 3. Gearing Only buy an investment property when you’re gearing (borrowing) to a level at which you can comfortably meet repayments even if interest rates go up. There’s no ‘ideal’ gearing level; it depends on your individual financial circumstances and risk tolerance. From the lender’s perspective however, a gearing level higher than 80% is considered a more risky proposition, so the lender will require that you pay mortgage insurance before they approve the loan. Remember to factor in this expense when you’re planning to buy. In short, there’s little point jumping into an investment when market conditions are more affordable if you don’t have the capacity to hold the asset for the long term and benefit from its full potential. The ‘right’ time to invest is when it’s the right time for you. 'The ‘right’ time to invest is when it’s the right time for you.' 4 property investment tips The best time to invest is when you’re likely to earn a steady and increasing income for seven to 10 years. Think ahead to personal commitments that may affect your income level. Reduce non-deductible debt before investing. Don’t borrow more than you can comfortably afford to repay. NB: All advice is general, and for guidance only. It is advised to seek professional financial advice, tailored to your personal situation before making any decisions.
Launched in 2014, ratemyagent.com.au has become Australia’s go-to real estate review website for sellers researching the best agents in Australia. Why? Because ratemyagent.com.au works, for agents and for sellers. For agents, ratemyagent.com.au provides a trusted consumer platform to share recommendations, reviews and customer feedback - things sellers are looking for to help select their agent. For sellers, searching for the right agent ratemyagent.com.au provides verified reviews, honestly written by real sellers and buyers like them, in thousands of suburbs across Australia. Together, this offers a unique, independent insight into the property market. 'RateMyAgent offers a unique, independent insight into the property market.' 5 fast facts To date, over 230,000 reviews have been submitted to ratemyagent.com.au from sellers and buyers who've used a local agent. On average the site receives a new vendor review every 2 minutes. Each review is attached to the property sale / purchase it relates to, so seller can seeexactly what'sbeing reviewed. Since ratemyagent.com.au launched in 2014, over 30,000 vendors have used the property website to help select their real estate agent. There is no charge to sellers searching the site, and agents do not pay for leads, so sellers can be sure they have access to the leading agents in each suburb across Australia, based on their property sales data and customer reviews. That's over $20 billion worth of property sold, since 2014, with the help of ratemyagent.com.au. An agent's next seller is looking for them online - fact! So an online profile is crucial for agents to connect with new customers. Customer reviews let sellers see more than just a dollar figure and gives insight in to leading agents, suburb by suburb.
9 factors to consider when buying a house to flip Trading property may sound exciting, but the entry and exit costs could eat away at your profit. It's a decision that needs experienced research and insight. If you've thought of buying a residential investment property, renovating it, then selling it to make a profit you're not alone. It’s a common strategy, but unless you plan carefully, it may not bring the kind of return you were hoping for. 1. Check the Stamp Duty When you buy a residential property in Australia, the State Government asks you to pay stamp duty worth around 5% of the purchase price, it varies state to state. 2. Check you can afford to pay off the loan If you’ve borrowed money to purchase the property and undertake the renovations, you'll be paying interest on your loan without receiving any rental income during the renovation period to offset the loan repayments. Make sure you're fully aware of the costs, and that you are confident you can manage to stay on top of them. 3. Remember to calculate the agent's commission when you sell Don't forget that when you sell the property, you’ll lose 2 - 3% of the sale price in the commission you pay the real estate agent, plus approximately another 1% in advertising costs. Factor these costs into your calculations. In short, not only are you paying interest on an investment loan out of your own pocket, but you are losing close to 10% of the property’s value merely by entering and leaving the market. 4. Calculate realistic profit margins When you actively add value to a property, you're taking a gamble that the sale price will equal the price of the renovations plus your profit margin. Most property grows in value over time, but not all sectors of the market grow at the same rate. 5. Know your location, location, location If there isn’t sufficient demand for your style and location of property, you may not make enough money to cover the entry and exit costs, outstanding loan balance and renovation costs, let alone make a profit. If you're planning on trading property, be cautious about where you buy it, and how long you'll be holding on to it. Research the local market and its past sales thoroughly to determine the property’s likely selling price. Look at other properties in the area that have been renovated to the same standards as yours and sold in the last three months. 6. Don't forget Capital Gains Tax If all goes as planned and you do make money on the transaction and you sell the property, you'll also be liable for capital gains tax. It’s can feel like taking two steps forward and one back! 7. Will capital growth outweigh the costs? We’re not saying that buying to renovate and sell is a poor strategy in itself. It can be highly successful, but only if the capital growth outstrips the buying, holding and selling costs. Even in locations where capital growth is strongest, this may take several years. And capital growth compounds, so the longer you hold the asset, the greater the amount of growth. If you sell the property as soon as the renovations are complete, you may not have allowed enough time for capital growth to take full effect — substantially reducing your potential profit. In other words, the substantial entry, exit and holding costs mean residential property should not be traded like shares, but held for the long term (at least 7 to 10 years) to ensure the capital growth justifies all the expenses you’ve incurred along the way. 'Make sure capital growth outstrips the buying, holding and selling costs.' 8. Will you be the main one to benefit from the property trade? If a real estate agent is advertising a property as 'perfect for adding value', ask yourself whose interests they are promoting — yours or theirs? Remember, they stand to make a commission on selling the property for the previous owner, followed quickly by another commission on selling the property for you after it has been renovated. It's an important factor to consider. 9. Calculate the cost of your time It’s also important to factor in the cost of your time. How much you would have earned from your normal job if you weren’t at the property supervising or undertaking the renovations? And what about your leisure time? How much time will you spend away from your family and friends? For example, if the project is going to take up six months of your evenings and weekends when you would otherwise have spending time with loved ones, will the expected financial profit make that lost time worthwhile? If the holding, transaction and time costs add up to more than the property’s likely sale price, you may need to reconsider whether it’s worthwhile undertaking the project. Finally, once you've answered all those factors, if you still believe that buying to renovate and selling quickly is the right strategy for you, make sure you calculate all the likely holding and transaction costs. 'Make sure you calculate all the likely holding and transaction costs.' Top points to remember when trading property Trading property, or flipping property, as it's commonly known isn't something that will always end in financial gain, so be thorough in your research and consider the props and cons of each decision. Here are five points to consider: Buying and selling a residential property can eat up 10% of its value Holding property for at least 7 to 10 years can ensure the capital growth justifies your outlay Calculate holding and transaction costs Research the local market Factor in the cost of your time. NB: All advice is general, and for guidance only. It is advised to seek professional financial advice, tailored to your personal situation before making any decisions.