A bond is payment by a tenant or resident that acts as security for the landlord or owner against the tenant or resident meeting the terms of their rental agreement. The bond money must be given back when the tenant leaves, unless the tenant has broken either the terms of the lease or the Residential Tenancies Act 1997. The bond is typically equivalent to 4 weeks rent, or one calendar month. If the rent is $350 a week or less, the bond cannot be more than the equivalent of one month’s rent.
A landlord or estate agent may charge a bond that is more than one month's rent if the:
tenancy agreement states that the premises are the landlord's principal residence and the landlord intends to resume living there at the end of the tenancy, or
rent is more than $350 a week, or
landlord or estate agent gets an order from the Victorian Civil and Administrative Tribunal setting out the amount of...
10 things no-one ever told you about when shopping for a house
Buy a home you can really afford.
Qualifying for the loan and then being able to afford to maintain your lifestyle of nights out, holidays, new car etc are all very different once you own your own property. Make sure you have left room in your budget after your repayments to be able to maintain the lifestyle you want to have, even if that means shopping for a less expensive home.
It is wise to stay in the home for several years.
The best way to ensure you make a profit, or at least recoup your costs after purchasing a property, is to stay in the home for several years. In this time the market value should increase provided you didn’t pay too much for your home in the first place. Given the cost of moving, stamp duty, mortgage lender’s insurance, legal fees etc, there is little to no chance you will make this money back unles...
Things to tell your real estate agent when looking for a house
There are a number of important things you should tell your real estate agent when shopping for a property. Knowing these things can save you time and money while searching for a new home that suits your needs.
Tell you agent your real time frame for the purchase or for the sale of your new property. If you need to be settled in your new home for a new school year, or in a particular number of months, let your agent know. The agent will be aware of what time frames will suit various vendors on their books. They might also be aware of an upcoming listing where the property and the time frame suits you. Some vendors need a particular time frame to be able to move on to another property and their house might not be for you if the time frames do not align. So definitely tell your agent the time frame you need to work to.
Your agent needs to know whether you can afford to buy the pr...
So you've chosen your agent and they have asked you to sign a sale authority. This is a legally binding contract between yourselves (as Vendors) and the Agent/Agency which gives the agent permission to market and sell the property on your behalf. Prior to signing, you should ensure that your contact details are correct and needs only to be in the name of the property's title holder. Below are a few items to consider before signing.
Goods are fittings and fixtures that stay with the property upon settlement and generally include such things as floor coverings, light fittings, window furnishings and water tanks just to name a few. If there are exclusions, they should also be mentioned here i.e. Grandma's prize rose bush that you intend to dig up and take with you.
The truth behind listing and selling commission and commissions in general.
Generally speaking, the commission charged by an agency to sell your home is split in some fashion between the agency, which typically retains the larger portion of the entire commission. The remainder is then split up between the agent who actually listed the property and the agent who sold the property. Most agencies split the remainder of the commission between the listing and sales agent in a 60% to 40% split. It is therefore in the best interest of the agent who listed your property to sell it so they get both the listing and the sales commission components.
For example, if an agency charges you $10,000 to sell your property, they many keep 50% (or $5000) with the remainder, also 50% split between the listing and sales agents. If that was a 60/40 split, the listing agent would receive $3000 and the selling agent would receive $2000.
The vast majority of what Vendor’s call Real Estate Agents are actually Agent’s Representatives and not fully licensed Real Estate Agents at all and most people do not know the difference.
Anyone can enrol for an Agents Representative Course. They are reasonably cheap and quick to complete. Most are less than 5 days and cost anywhere from $295 to $995 depending on who you complete it with. They consist of merely 3 units of study: one unit on working in the real estate industry, one on Identifying Legal & Ethical Requirements of Property Management to complete agency work and the last on Identifying legal and ethical requirements of real estate sales to complete agency work.
A fully licensed Real Estate Agent is a Certificate IV and consists of 24 units of study. This course is a substantial commitment of both time and money as it costs a few thousand dollars or more to complete. Most people take up to 24 months to complete this course via distance ...
Many of the larger agencies and franchise agencies make their staff practice pre-written scripts and dialogues. These are rehearsed answers to any questions and objections you may have as a Vendor/Landlord, or a Purchasers/Tenant. They are designed to give you the answer they believe will give them the best chance of overcoming your objection, and having you sign with them or stay listed with them. Agents can also purchase scripts and dialogues. At a real estate seminar we attended recently, we were offered the opportunity to purchase scripts to 'triple your income'. We were astounded at how many people in the room were using them. Next time you speak to and agent, ask yourself if the conversation seems organic or whether it perhaps seems like it could be rehearsed. You might be surprised at what you notice.
Most real estate agencies simply LOVE Vendor paid advertising. This includes print media (ads in the newspaper), Premier or Feature listings on portals such as realestate.com.au and domain.com.au. This advertising is paid for by the Vendor but actively promotes the agency. This is especially true for print advertising. Most active purchasers set up buyer alerts on the large portals. That ensures they receive emails when a new property hits the market regardless of whether you pay extra for a Premier or Feature property. Given that the way people purchase real estate has changed so vastly, most buyers do not wait for the Saturday paper to see what new houses have hit the market. They already know because it comes up on their phone, tablet or computer. However, agencies love press ads because it costs them nothing! You pay for their company profile to be in the newspapers, this helps to increase their profile. There are a few agencies that offer advertising included in their ...
Consumer Affairs Victoria have some very good information about underquoting. You can read the information CAV.
Underquoting is when an agent misleads a prospective buyer about the likely selling price of a property for sale.
Examples of underquoting are when a property is advertised or quoted to a prospective buyer at a price that is less than:
the seller's asking price or auction reserve price
the agent's estimate of the selling price
a genuine offer or expression of interest
Fines for underquoting can be as high as $30,000 in proposed new legislation, and there has been a lot of media attention to this issue in recent years, especially in the realm of properties going to be sold at auction.
Overquoting is when an agent quotes a higher price to a Vendor than the property is actually worth in the current market, in order to get the listing of the property. Most offices require agents to bring in a certain number of listings per month and that can be one reason why an agent might simply relent and tell you the price you want to hear in order to get your listing. From there a few things will most certainly happen, they will begin to condition you that your property isn't really worth what they originally stated.
This can be done in a number of ways; their team will come in and say the price is wrong and they will pressure you to drop the price after a very short time on the market, or, they might say their boss believes the price is wrong and that a price reduction is needed.
Not all agencies mind if the property sits on the books for sale for a long period of time though. Often this is because they are happy to continue for their agency to benefit from ...
The importance of a good conveyancer or lawyer when selling or buying a home.
Choosing the right conveyancer or solicitor to represent you when purchasing a property can make or break your sale or purchase.
Many conveyancers simply don’t realise the market can be as competitive as it actually is and that their inattention and inactivity can cost you your dream home or quick sale.
From a Vendors point of view, the days of having to wait 3 days for a Section 32 to sell your home are really over although there are exceptions to this, one being waiting for an owner's corporation certificate for example. Furthermore, once a sale has been successfully negotiated for your property, purchasers should not need to wait days for the preparation of contracts. Ideally, Section 32s should be ordered when the house goes onto the market as contracts of sale cannot be signed or prepared without a Section 32. It pays to have one ready, especially in a market where you...
Myth number 13 is that you should choose the listing agent who says they will sell your home for the highest price.
Agents want you to list with them, so many agents will give a high appraised price to secure your listing. Be sure to ask how they arrived at that price. Ask for recent sale figures or some evidence to support their opinion. Putting an inflated price on your home can lead to it being for sale for an extended period of time which can stigmatise the property. This can lead to less people viewing the property than if it had been marketed at a more realistic price. You may find you end up needing to drop the price to secure a sale. Obtain a number of appraisals and get a general feel for what agents are telling you. Be open minded and listen to the evidence that supports each appraisal to help determine where your property might sit in the current market. Be aware that offers to purchase your property made that are subject to finance will involv...
Myth 15, is the agent with the most listings in town is the best agent to call
If you were to choose the agent with the most number of listings in an area, your property will be competing with all of those other homes for the agent’s, and the buyer’s attention. Why would they show your home over the dozens or perhaps hundreds of other properties they have? When choosing an agent, it’s important you hire the person, rather than the company or how many listings they have. They will be the one you are entrusting this important transaction to. You may find you can get more personal service and a better experience from a smaller company with fewer listings to compete with yours. Think about this; do MacDonald’s make the best hamburgers?
Next time, is the myth that early offers should be declined.
Myth 14 is that Spring is the best time to sell a property.
Many vendors decide they will put their property on the market in Spring. They want the garden to look nice, or to be able to get out and do a few things before it hits the market. The problem with this is, many other vendors think the same thing so there tends to be a lot of properties on the market in Spring. This can lead to prices being lower than if there were fewer properties on the market. While Winter may be a bit wet and cold, there is often less on the market at that time, so it can be a good time to list your home for sale. Purchasers looking to do so in Winter months are generally very motivated and genuine. Most families don’t bring their kids out in Winter and all that entails, unless they are motivated to buy.
Next time, is the agent with the most listings in town is the best agent to call?
Myth number 12, When buying a home, should I make a low offer first?
Perhaps somewhere along the line you have been told to always offer less than the asking price. In the past this strategy may have worked. It was once common practice for agents and vendors to add money to the price to allow room for negotiations. The potential purchaser then factored in an amount they thought that might be, and offered less. The other scenario is the potential purchaser who walks through a property mentally tabulating the cost of repairing or renovating to their specifications, and then deducting that from the asking price, to help them formulate their offer amount. Many vendors now use a price range. This lets the purchaser know they would like to hear offers in that price range and it is unlikely they will consider offers below that range. In the case of purchasers believing work needs to be done to a property for them to own it, the property is priced in its cu...
Myth number 16 is that early offers should be ignored
Many vendors believe offers made on their property in the first couple of days or weeks should be ignored because a better offer will be right around the corner. This is not always the case. Early offers are often very serious ones and should be treated as such. Many purchasers have alerts on their devices and are keenly following the market and new stock to find their ideal property. They have the capacity to find and to see a property much faster than ever before. They know what they want and are waiting to buy. Usually early offers are genuinely good offers in the hands of an experienced agent, and they are ignored at your peril. There is no guarantee a better offer is around the corner. Carefully consider all offers put before you.
Myth number 11 addresses the idea that I will save money of I buy at an auction or through a private seller who isn’t using an agency.
Some purchasers believe if they inspect homes being sold by the owners through private sale, they will grab a bargain because the owners hasn’t had to pay agents commission. However, many owners simply have unrealistic ideas of what their home is worth in the market (see some of the other myths we have written about). It often takes an agent to point out recent comparable sales to alert the owners as to the homes likely market value. Therefore, purchasing directly from an owner can result in the home’s price being inflated at the start.
While purchasing at an auction can be a great way to buy a bargain, this is only the case, generally speaking, if there is only one person interested in buying it, and there is a realistic reserve price. If two potential purchasers both desire a property, this can dr...
Although the weather is sometimes a little cold and rainy, generally speaking people who are shopping in Winter are genuine buyers. Let's face it, who wants to drag the kids and their gumboots out to look at houses unless you need to buy one? Many Vendors believe the Spring market is the best time to sell because their gardens look great. However, in Winter gardens tend to look quite green and photos can always be replaced as the garden comes in to bloom later in the season if the property remains unsold.
Another thing to consider is that in Winter there is often less stock on the market for purchasers to choose from, so this creates more of a feel of a sellers market with properties often able to maintain a slightly higher price. Come Spring that will change as many many other properties come on to the market for sale. This results in more competition for your property which can lead to the prices coming dow...
When selling a home, price it to leave room for negotiations is myth number 8
Most sale prices are devised by a mix of agent appraisal and vendor expectations. Many vendors feel it is important to add money to the value of their property to allow room for negotiations. This can be a dangerous tactic. Firstly, if the listing is perceived to be too expensive by today’s very savvy buyers, people do not take the time to inspect what might be the perfect property for them. This can lead to the property sitting on the market for extended periods of time, and can lead to clients watching to market to question what might be wrong with the property, when in fact there is nothing wrong other than the price. Adding money to the desired price can eliminate buyers who are in the market to purchase, as many will not view properties that list as out of their price range. These days’ buyers have access to many tools online. These include reports about p...
I don’t need to organise my finance until I have found the perfect property is myth number 9
It takes a lot of time and effort to go house hunting and nothing is more frustrating than missing out on a property because you aren’t in a position to make an offer to purchase it or don’t know how much you can borrow. Sure, you can make an offer subject to obtaining finance, but many vendors want to know if a potential purchaser has pre-approval. From a vendor’s point of view they are effectively removing their home from the market while a subject to finance contract is trying to obtain finance. This prevents them selling it to a buyer who has pre-approval or even cash, thus lengthening their sale process. When presenting multiple offers to a vendor, they are likely to choose the offer with cash or pre-approval of finance if the other terms are fairly equal. It is best to know how much money you can borrow and have pre-approval bef...
Real estate agents earn squillions is myth number 10
While some real estate agents make a nice living, most earn an average income or less. Things that people don’t know are the extra expenses most agents have to cover in order to do their work. These expense include petrol, car costs including all maintenance, mobile phones and device charges. Some agents are lucky enough to get a small car allowance or a phone allowance. Some agents have to pay their own workers compensation and superannuation as well. Generally agents do not get paid unless they actually sell a property. This means if an agent drives out to meet a client for an appointment and the client doesn’t show up for it, the agent will have no chance of being paid. They certainly don’t get paid an hourly rate to come out and show the property for sale. In fact they could well miss out on showing another property that they may have sold while they run around for no show ap...
Myth number 7 addresses the idea many Vendors have that their home is sure to sell fast.
Many people think their property will sell quickly and sometimes it does. There are numerous things that affect how long a property stays unsold on the market. These factors include how many other properties are competing with it on the market at the time, the presentation of the property, the online marketing and advertising and of course the price the property is on the market for. Many vendors want to maximise their price and this can take longer than vendors who are more motivated to sell and price their property to be on the market for a shorter length of time. Ultimately the market of buyers in a particular location decides where your property sits within the rest of the market. Some Vendors choose to put a slightly higher price on their property and this can result in the property sitting on the market for longer than it needs to. Generally speaking, a realisti...
Myth number 6 is that buyers will pay more for some potential the vendor sees or believes the buyer will see in their property.
Many vendors believe that their house has potential! They also believe that buyers will recognise it and pay more for it.
Buyers will pay for what they see before them at the time. Buyers know the difference between potential and reality. A purchaser will not necessarily pay for the potential of a land to be subdivided when it is the great house on a big block that they like. A potential subdivision may not have value to every buyer. Other examples include vendors wishing to sell their unrenovated home for a high price because it has the potential to be magnificent when completely restored or renovated. People will sometimes pay more because the property is renovated, they do not necessarily pay more for the potential of spending money to renovate it themselves.
If I renovate I will get more for my house? Addressing myth number 5.
No, this is not necessarily the case. Reality TV has made many home owners think they can renovate when in fact many are not capable of achieving the same quality results as one would get my employing a tradesperson. Purchasers know the difference and building inspections will pick up work not to a professional standard. Even if professional tradespeople are employed to renovate your property prior to sale, there is no guarantee that the work you perform will be to the taste of a potential buyer. The blue bathroom tiles you love so much might be awful to a potential owner. Even if you manage to get the recipe correct, you employ the right trades-people, and renovate to a high tasteful standard, there is no guarantee you will recoup the money you spent on the renovation. Many people over-capitalise when renovating.
Do agents have buyers lined up to buy my property?
Many agents talk about their database of clients, those people just waiting on their list to buy a property. People usually take months to find a property to purchase and they usually do not deal exclusively with one agent. Most buyers are registered buyers with the main real estate portals such as Domain or Realestate.com.au. This means they will see your home for sale no matter which agent is selling it. Furthermore, people come and go from the database all the time. Some find properties, others change their purchasing requirements, and others leave the market as their circumstances change because of work or relationship breakdown. A database is a very volatile thing and cannot be relied upon to introduce clients to your property. This also applies to agencies who claim because they are state or nationwide they can bring a larger pool of buyers to you home. These buyers typically all use tools on the in...
There are a lot of misconceptions about real estate agents and real estate agency practices. In this series called 16 Biggest Real Estate Myths, we will take a closer look at some of the most common beliefs about both agents and agency practice.
Do Real Estate Agents get kickbacks?
Not anymore. Gone are the days when real estate agents received secret cash bonuses and holidays from companies including newspapers, for such things as placing advertising in their publications. These days it is against the law for an agent to receive a secret commission or kickback. In fact any commissions must be declared in the sales authority by supplying a completed rebate statement with the authority. This outlines any commission or other benefit or non-monetary gain the agent may be receiving. Agents may recommend conveyancers/solicitors, lenders and other professionals such as building inspectors, but typically this is because they have professional working rel...
What happens if I need to get a higher price for my house because I am buying in a more expensive area?
The buyers are sympathetic to my needs (if I am buying in a higher market, they must understand I have to get more for my house) - myth number 3.
One of the most popular myths in real estate is the belief of the vendor that because they are selling one area and moving to a bigger or more expensive area, that they must achieve a higher price for the home they are selling. Although it might be true that they need to achieve a higher price, it rarely happens when one is moving from a smaller or less expensive area to a larger or more expensive area. An example of this might be someone wishing to move from Ballarat to Geelong. Parts of Geelong are more expensive than where they are currently located in Ballarat. This does not mean that a new purchaser will pay more for the property out of the goodness of their heart because th...
You never lose money on real estate- myth number 2
Yes, you can. People lose money on real estate. Examples of people losing money on real estate transactions include those who do not keep a hold of the property for a long period of time and sell it quickly when there has been no growth in the market. This often results in a failure to recoup stamp duty, legal fees and sometimes even the purchase price. Other examples include building or renovating in a way that over-ccapitalises the property for the area, the cost of every item in the home will not necessarily be recouped. Another way people may lose money in real estate transactions is to sell a home in a developing area such as an estate when it is sometimes less expensive for people to be able to build a brand new home just a couple of streets away.
Next time we talk about the realities of buying a new home in a higher market when you are selling in a lower market.