Forum Replies Created
Hi Jacque,
The market is great in Hornsby with the exception of high rise units. Most properties, if priced right (and are not the dogs!) are selling easily within 6 weeks, often much sooner. We flattened out about Aug 05 and have been pretty steady since then. Even the interest rates have affected us much. I sold 9 in Nov, 5 in Dec and so far 6 in Jan with another one to go today. The market’s great!
LindaHi Devo76,
Don’t forget monthly management fees (somewhere between 5% and 10% depending on the agency), water rates (the tenant only pays the usage) and ongoing maintenance and repairs!I know, it’s a lot to think about!
LindaHi Tammy,
It’s OK, no offence was taken. I know us agents don’t have a brilliant reputation (in a lot of cases with good reason). I wanted to explain as a lot of people just assume it’s the agent, when it actual fact, it’s the vendor.It puts us in a horrible position and I hate it when it happens, but ultimately, we work for the vendor and have to follow their instructions whether we agree with their decision or not.
I also own 5 investment properties (in Sydney), so I have been on the buying side of things a number of times and haven’t always had the best experiences myself. If I can try and educate other members on this forum on how. what and why an agent is thinking, then it can only benefit all of you when you go to do your next deal. I’ve got nothing to hide and will help when I can!!! [exhappy]
Linda
Hi Peachy,
Tammy (above) is correct in what she says. I am a real estate agent in Sydney. I never ask for a ‘good faith’ deposit as it is not legally binding in any way. The only way a property can be ‘taken off the market’ is when the purchasers are willing to exchange contracts with a .25% deposit and this will buy them the right to have the property off the market for 5 working days. (It will also go towards the purchase price if proceed.) At the end of this period, the purchasers must come up with the balance of the agreed deposit, typically 5% or 10% of the purchase price or rescind the contract, in which case they will lose their .25%. (This money goes to the vendor as compensation for the property being off the market, not the agent.)It is very rare in Sydney for a solicitor or vendor to agree to accept less than 5% deposit because if the purchaser pulls out after the contract goes unconditional (ie after the 5 day cooling off is over), then the chances of getting the balance of 10% out of them is not good. (This is what they would have to forfeit if they changed their minds after the contract was unconditional regardless of the deposit put down).
Regards Tammy’s comment of being gazumped, it is not the agent that does the gazumping, but the vendor. We, as agents (at least in NSW) are legally bound to submit all offers to a vendor or we can be sued. If prior to exchange of contracts (either with or without a cooling off), the vendor chooses to accept the higher offer (or indeed, a similar or lower offer ) from someone else and instructs us to do so, then by law, that is what we have to do.
In 6 years as an agent and 100’s of sales under my belt, I have only ever had 3 vendors honour their agreed offer rather than accept a higher offer or one with more favourable conditions. Generally, they will instruct us to give the 1st buyer an option to match the higher offer, but will go ahead with the better offer if the 1st buyer can’t/won’t match it.
My suggestion to purchasers to avoid being put into this situation is to exchange as soon as practicable with a .25% deposit and insist that the agent take the property off the market. If the agent is still insisting on a good faith deposit, but won’t let you exchange, I would be very wary, although you have every right to have it refunded in full if the offer is not accepted or have it used towards the purchase price if it is.
Hope that clarifies somewhat!
Linda [exhappy]Hi Red Nails,
I use Peter Bentham, he is located in Sydney and will travel anywhere to meet with you face to face. He is very experienced and certainly knows the industry inside out. His number is 0414 347-009. I have referred him to a number of people and I’ve never heard a bad comment come back.Good luck.
LindaHi Lesley,
I’m a real estate agent in Hornsby in Sydney and whenever I am trying to sell a house that has an asbestos roof, it’s always a nightmare. If you simply paint it, it will still come up in a building inspection and is likely to scare off potential buyers.That said, asbestos is not dangerous unless it is deteriorating, dusty, broken etc, but the perception by the general public, particularly if the target market of your home (if you choose to sell) is first home buyers. Everyone wants to give them their 10c worth and it’s usually “don’t buy it!”
The regulations are in the middle of being changed as well and even small asbestos removal jobs will need to be done by licenced contractors. Guess what will happen when their services are in more demand. Their rates will go up!
One of my investment properties had an asbestos roof and I recently replaced it. I could see the writing on the wall. Replacing it will add a lot more value than painting, you can depreciate it through your tax and last thing, if you paint it, people could think that you are trying to hide something. This makes people wonder what else you may be hiding, even if it’s nothing!
Good luck
LindaHi danhob,
Good advice from LA Aussie, but also check with council whether they will approve the house for a dual occupancy. Certain fire related restrictions may have to apply in relation to the dividing wall and even though the area is zoned for units, they may not deem the house suitable for dual occupancy from a building code point of view.
LindaHi Daniko,
I specialise in selling properties in the Hornsby region, and am not familiar with other parts of Sydney, so I couldn’t tell you why there are a lot of properties on the market in Campsie, other than the fact that 1. lots of people are looking to get out of the area for some reason or 2. there aren’t a lot of people that want to move into the area for some reason. What are the crime statistics there? Just a thought! Do you r research and ask the agents themselves. They should tell you.All of my investment properties have been bought with an interest only loan over 5 years, you simply refinance at the end of the term if you haven’t sold it beforehand. If I buy a property to live in, I borrow P & I usually over 30 years to keep the repayments as low as possible, but try and pay off as much as I can as soon as I can to reduce the principle and hence the total interest paid. When times get tough, you can always go back to paying the minimum amount required.
The general rule of thumb with properties increasing in value is that they will double every 10 years. If you pick well, it might be sooner, if you pick badly, it might be later. Personally, I won’t buy units simply because the land component of any property is what will increase in value, buildings only depreciate! The council only has to rezone more air space for developers to buy units and your investment is lot likely to increase in value for some time to come as the supply will outstrip the demand. But that said, my first investment property was unit as that was all I could afford, so don’t be put off if that is your only option.
In Sydney where I live, there is no more land, although that doesn’t apply to all areas of Sydney, particularly out west (and look what’s happening out there). That said, if do your homework in any area that you are contemplating buying in and the deal looks good, then go for it!
As to your question as to which area of Sydney that has the most demand and vice versa ….pick an area and look at the surrounding infrastructure. How many primary and high schools supply the area, what is transport like? Are there good shopping facilities (Westfield only goes where the going is good!), hospitals, main roads? Go to council and ask them if large companies are looking to move into the area and set up shop (Govt. depts, company headquarters etc) All these things will point you in the right direction.
Your biggest mistake will be to do NOTHING! Don’t be paralysed by fear, do something and if it’s wrong, fix it and learn from your mistakes. It will make you much stronger! Good luck.
Regards
LindaHi Bridgebuff,
Thanks [cap]!On the ‘get out clause’, in NSW (and this might be different in other states), you don’t have to actually add a special clause to the contract. The contract states on page 3 that you can rescind the contract at anytime in the 5 working days after exchanging contracts ‘for any reason’ and any deposit paid minus .25% must be refunded. You don’ t even have to tell the agent why, your solicitor/conveyancer simply sends a fax/notification to the vendors solicitor advising of the rescision.
It usually only happens when something really bad has come up in the pest and building report or if the purchaser’s finance has not been approved, hence my recommendation for getting pre-approval first….the number of first home buyers I get that THINK they can afford to buy when then can’t……!!!!
Linda
Hi Ems,
Don’t do it!!!!I am a real estate agent in Sydney and in my experience of selling over the last 6 years, the closer a property is to a busy road, the harder it is to sell and the cheaper people want to buy it for. The same applies to renting it out. I have 5 investment properties in Sydney and a rule of thumb that I follow is “IWould I happily live in this house in this location, if not, don’t buy it”
Ems, would you live in the house?
Good luck, let us know what you decide.
LindaHi Peach,
I am in NSW and am a real estate agent, so here’s what usually happens!1. Get your pre-approval before you do anything, you need to know what the maximum is you can spend. (Don’t offer over this figure). Find a conveyancer/solicitor that you are comfortable with. Trying to find someone later on when you are in a hurry when you want to buy something could mean that you make a hasty decision.
2. Once you have your pre approval, start looking at all the properties on the market that may be interested in buying (ie if you are looking to buy a 2 bedroom unit, look at ALL the 2 br units that are on the market in the area that you want to purchase in – regardless of the listing price. What it is listed for and what the vendor is prepared to sell for are 2 completely different things!
3. Ask the agents LOTS of questions. eg. What are the strata levies (and does it include the sinking fund?). How long has it been on the market? Why is the owner selling? What is the minimum they will take for the unit? – Don’t expect a good agent to tell you the answers to these questions (I wouldn’t) as the agent is working for the vendor, not the purchaser, but there are some agents that WILL reveal this type of information, so it’s worth asking. Ask the same questions for every property that you inspect and take notes on what they say. Also ask the agent if there is anything about the property that they feel would affect the resale price when you go to sell. This is important. If the agent knows anything, they must disclose this now, but most agents won’t volunteer the information unless you ask. (Examples could be dodgy neighbours, structural problems in the building etc)
4. Spend at least 2-3 weekends looking around before you do anything else. By the time that time is up, you will know a LOT more than when you started and when you do finally make a decision, it is likely that you will make an informed decision, not an emotional one.
5. Try and find 2 or 3 that you like, not just one, it makes it easier for you to walk away from your number 1 choice if the vendor won’t budge on price. It also gives you some power with the agent/vendor if they think that you may walk away and are not too emotionally involved! Don’t be afraid to make a stupid offer on a property that is way above your budget. You don’t know the reason why the vendor is selling and you could just be in the right place at the right time. Often the only reason why a property hasn’t sold is that it priced too high, not that there is anything wrong with it. I bought a property once that had been on the market for ages where the vendors were being greedy and asking too much. Everyone knew it was overpriced, but everyone else just walked out shaking their heads, I made a stupid low offer and they said yes! Don’t worry if the agent says NO. The more times you offer, the more comfortable you will get with the whole process.
6. Make an offer on your number 1 choice before you spend any money on pest and building inspections and formal unconditional approval. It’s difficult to advise someone who has never bought before HOW / WHAT to offer as each situation is different, but if you are more emotional than your partner, let him do the negotiating or vice versa.
7. Always offer lower than what you are prepared to pay. Don’t let the agent know your full financial situation, they will use it against you (remember, they are working for the vendor and have a legal obligation to get the highest price they can for the property!). Don’t negotiate too quickly, take it slowly, it is hard, but remember, the vendor is just as anxious as you (mostly you can get away with this in this market – when the market was booming, you did have to move a lot quicker), although if you see a property that has just come onto the market and it is obvious that it is underpriced, don’t delay for too long because if you realise that it is good value, so will everyone else.
8. Once you have settled on a figure, either ask the agent to fax the contract through to your solicitor straight away or collect a copy of the contract yourself and take it to the agent to view. DO NOT SIGN ANYTHING UNTIL YOUR SOLICITOR HAS SEEN THE CONTRACT FIRST. It will take the solicitor 5 minutes to read through the contract and give you the go ahead to sign.
9. Organise your pest and building inspection (this is important, even if you are buying a unit and it’s NOT a waste of money). DO NOT let the agent organise the inspections for you or recommend someone (unfortunately, there are some dodgy agents out there, that will suggest a ‘not so good’ inspector). If you don’t know any inspectors yourself, ask your solicitor/conveyancer for some names (if they won’t recommend any – and sometimes they won’t, ring around to some of the other agents in the area (not the one you are buying from) and ask them who they would use. You can generally organise a pest and building inspection within 24 hours. Whenever I buy property, this is the first phone call I make and I do not sign the contracts – even on a 5 day cooling off until I have a verbal result from the inspector. (I also suggest that you be there when the inspection is being done – regardless of what the agent/inspector says, it’s amazing what you can pick up. When you exchange contracts on a 5 day cooling off, you will forfeit your .25% deposit regardless of the reason why you pull out. It won’t matter if the property is full of termites, you will still forfeit your deposit, so get your inspections done first. If everything is OK with your solicitor and the inspection, NOW you can sign your life away! This can be done with either the agent or the solicitor/conveyancer. The only exception to this would be if you knew that there was someone else who wanted to buy the property just as much as you do, if this is the case and you are prepared to lose your .25% deposit if it all goes pear shaped, then go for it.
10. Your solicitor will now be organising a strata search report (if the property is a strata property which most units and townhouses are) and you now need to ask the agent to send a ‘completed copy of the front page of the contract’ to your broker or bank (whoever you got your pre-approval from) as they will need to move on the formal unconditional approval. This will usually happen in the 5 working[exhappy] days, but in the event that it isn’t, you can ask the agent for an extension of the cooling off (blaming the banks). This is quite common and so long as you assure your agent that everything else is OK (pest and building inspection/strata search etc,) there should be no problem.
11. In NSW, you are not likely to get any ‘subject to’ clauses put into the contract that you prevent you from losing your .25% deposit. As an agent, I would NOT be recommending to my vendor that they take the property off the market only to risk the sale falling over later on because the purchaser couldn’t get their finance or they weren’t happy with the inspections. That’s why it’s important to get yourself organised beforehand and believe me, it will give you power when you can tell the agent that you are pre-approved. The only possibility of the approval not coming through once you have pre-approval is if the valuation (which is done if you are borrowing more than 80% of the purchase price) comes in less than purchase price. This is rare, although it has happened and when it does, sometimes you can renegotiate the purchase price.
I hope all this helps, if you have any more questions, I’m happy to answer them for you.
LindaHi AO,
My experience as a real estate agent in Sydney is that 99% of people when purchasing a unit or townhouse will rely soley on the strata report to determine if there are any problems. THIS IS A BAD MOVE! I exchanged contracts on a unit with NO KNOWN problems (therefore the strata search report would have showed nothing!), but my purchasers went ahead and got a P & B done anyway. The result: CONCRETE CANCER. No one who owned in the building knew it was there because they didn’t know what they were looking for and unless someone in the building brings it to the attention of the strata management company to investigate, nothing will be done. My purchaser pulled out (it was worth it to lose .25%) and 10 months later, after all the repairs have been completed, my vendors are ready to put it back onto the market. It didn’t cost all that much to fix (about $1,000 per unit), but the time delay caused huge problems). Advice from a real estate agent – ALWAYS get a pest and building inspection!
LindaHi Daniko,
I live in Sydney and have 5 investment properties as well as my own residence where I live. I am also a real estate agent!I live approx. 25km to the north of Sydney near Hornsby and you are mostly right in what you say, you can’t spend $500k on a normal property and expect much more rent that around $400/week, but I have found a solution!
2 of my properties have granny flats attached to the houses and I rent them out separately. One I purchased at the peak of the boom (2003) for $535k and I achieve (and have achieved from day 1) $630/week ($380 + $250). Now , I am nowhere near the return that I could get in regional areas, but being in Sydney, my capital growth will be much better. We had this particular property valued in late 2005 by the banks when we were refinancing and it came in at $580k and other than add a separate electricity and water meter and put a dividing fence to separate off the backyard, we have made no improvements to the house.
Have a think about this as an option. Depending on your circumstances, you could rent out the house and live in the granny or vica versa or you could rent elsewhere and rent them both out, it will all depend on what your housing requirements are. If you find out from the agent selling the property what the rental return will be if you rent them out and get it in writing, the banks are more likely to lend you the extra money that you may need.
Anyway, good luck in your search. They don’ t come up often, but they do come up. Let all the agents in your search area know what you are after and be prepared to be a bit flexible in case you have to modify the property slightly. I now own 2 of these properties and I have never had a problem renting either the house or the granny out, although you do have to be careful who rents the granny. Families with children won’t tend to want to rent the house if a single gentleman rents the granny (no offence, it’s just the way it is!)
Linda
