Discussion Random Discussion

[SaintsSeptember]

Smart sellers know what their house is worth.
Smart buyers know what a house is worth to buy.

If a "top" estate agent is getting more for your house than a smart buyer thinks its worth, they are suckering in the dumb buyers.

 

[VDS66]

I disagree. I wouldn't label it delusion in the case of top agents, I'd call it ability. A great agent will mosyt definitely affect the outcome.
I do agree with your later point, as well as Cartel's, the majority of the real estate industry is chronically underskilled. There's a reason it has the reputation it does.

I'm yet to see a top agent head to Purple Bricks, I wonder why...

Lol.

I've been in the industry over 26 years.

My reviews are 98% 5-star with nothing less than 4 star... All verified.

Apart from.underskilling, why don't you mention the reasons why agents have a bad reputation?

Buying listings.

Under quoting.

No negotiating skills.

Sticking vendors up with "kicker" incentives so if a property goes well they get an few grand for doing nothing much else... When the prices are being driven by the buyers and not the agent skills.

Telling vendors they have a lower offer than they actually have in order to soften them.up to accept a lower offer.

Bullshit buyers to help get a price reduction because the listed the property too high to start with.

The list goes on and on and on.

Care to add?

My favourite is when I ask an agent what price they will accept and they immediately ask me to try with an offer of X... Thus indictating the vendor will take a lower price. Gold.

Sorry, who are they working for again?

Or better still the agent that goes onto an appraisal trying to justify their fat commission because they are great negotiators. As soon as the vendor says they don't like the fee, the agent drops their pants, bends over and lubes up. So much for strong negotiation skills. LMAO.

If they don't care enough about their own $$$ will they care about the owners?

Like I said, feel free to continue...

Unite you avoid your error on fee structure.

Doesn't suit your narrative?

 

[VDS66]

Smart sellers know what their house is worth.
Smart buyers know what a house is worth to buy.

If a "top" estate agent is getting more for your house than a smart buyer thinks its worth, they are suckering in the dumb buyers.

I'm paid to negotiate the highest possible price a buyer is willing to pay. Simples.

If I sell a home then the buyer tells me they would have paid more, I deserve to be shot.

 

[St Muir]

My Does it all Drill bit has served me well!
Drills through Any surface!

For some reason I got a visual of you testing that theory out on various surfaces in the MM abode!

 

[VDS66]

Outer east currently although will be moving regional soon. I'm referring to the outer east metro market though.

I might be wrong, just my non scientific observation.

Do you work for purple bricks?

I am in full agreement that the traditional real estate model is ripe for some sort of disruption.

Sent from my F8331 using Tapatalk

Yes I do and proudly.

Like I said we had agents out their who listed at any cost, hence sticknis sitting around.

Agent is now gone.

It's funny when we launched, we were laughed at. REA wouldn't talk to us about our advertising on their site because of fear of backlash from the traditional industry.

Now that they have see our market share they fall over themselves to do business with us.

Watch this space.

 

[VDS66]

For some reason I got a visual of you testing that theory out on various surfaces in the MM abode!

He's got that many glory holes his wall looks like Swiss cheese.

 

[SaintsSeptember]

As VSD liked to point out to me , Wages growth has been slow in Australia for a long time now.
What i'd like to know is what real estate agents on a percentage have done to deserve 100% income increase over the last decade.
Real estate agents are not the reason for high real estate prices.

 

[BigPowerForward]

My Does it all Drill bit has served me well!
Drills through Any surface!

Its obviously high speed but does it have a spear point or is it plug cutter

 

[mightymalaka]

He's got that many glory holes his wall looks like Swiss cheese.

I take exception that my glory holes would be like swiss cheese!
You should know by my soft and creamy nature that it's Fetta all the way baby!

 

[Dard Ball Get]

Lol.

I've been in the industry over 26 years.

My reviews are 98% 5-star with nothing less than 4 star... All verified.

Apart from.underskilling, why don't you mention the reasons why agents have a bad reputation?

Buying listings.

Under quoting.

No negotiating skills.

Sticking vendors up with "kicker" incentives so if a property goes well they get an few grand for doing nothing much else... When the prices are being driven by the buyers and not the agent skills.

Telling vendors they have a lower offer than they actually have in order to soften them.up to accept a lower offer.

Bullshit buyers to help get a price reduction because the listed the property too high to start with.

The list goes on and on and on.

Care to add?

My favourite is when I ask an agent what price they will accept and they immediately ask me to try with an offer of X... Thus indictating the vendor will take a lower price. Gold.

Sorry, who are they working for again?

Or better still the agent that goes onto an appraisal trying to justify their fat commission because they are great negotiators. As soon as the vendor says they don't like the fee, the agent drops their pants, bends over and lubes up. So much for strong negotiation skills. LMAO.

If they don't care enough about their own $$$ will they care about the owners?

Like I said, feel free to continue...

Unite you avoid your error on fee structure.

Doesn't suit your narrative?

I agree with everything you said, all those factors were a part of my broad "underskilled" stroke.

I don't have a narrative, it doesn't affect me at all.

I do, however, believe the "fat commission" is well earned at the top end of town.

If we're talking negotiation, why are you settling for less than you could make elsewhere? It sounds like you have been and continue to be successful, so what's the draw?

 

[mightymalaka]

Its obviously high speed but does it have a spear point or is it plug cutter

It does it All my friend! So a big yes to both
Just don't tell Plugger!

 

[Dard Ball Get]

As VSD liked to point out to me , Wages growth has been slow in Australia for a long time now.
What i'd like to know is what real estate agents on a percentage have done to deserve 100% income increase over the last decade.
Real estate agents are not the reason for high real estate prices.

Depends which part of Australia you're talking I guess. And it's similar to the mining boom, did cleaners deserve to be making six figures for sweeping dongas? **** no. Did they make it anyway? Absolutely.

 

[VDS66]

As VSD liked to point out to me , Wages growth has been slow in Australia for a long time now.
What i'd like to know is what real estate agents on a percentage have done to deserve 100% income increase over the last decade.
Real estate agents are not the reason for high real estate prices.

Last decade?

When I started in 1993, we charged around $2k oe 2% plus advertising.

Way back then we were always told to convince sellers to get the bigger ads and boards because it boosted our exposure and perception that we were the dominant agent. So we made sellers pay for our business profile promotion. Any way, I digress...

Back then a home in East Bentleigh was worth around $120k. @ 2% = $2400.

The same home is now worth. @ 2% = $24k.

On average an agent spends 8 - 10 hours on any transaction.

That's obscene IMO. 1000% pay rise by stealth.

And they still sell unnecessary advertising to boost their profile.

The funny part is they try and justify their based on all those homes that really sold themselves during the boom. The old drovers dog could sell houses in that market... And their expertise in marketing.

Old mate blind Freddy can upload an advert on the internet these days.

Bottom line is you pay your agent for their negotiation skills pure and simple. It's the art of extracting and persuading a buyer to spend to their limit.

The industry has seen an influx of order takers who stand at an open whilst chibesexbuyers throw bags of money at them.

The prevailing market will be a test of which agent is good and the majority IMO will leave the industry. Happens every cycle.

Unfortunately, the industry judges it's peers by how much fees they write.

You can be the most honest operator but it counts for nought because you're not a super star commission collector.

I'd love to see a royal commission into the industry.

 

[VDS66]

I agree with everything you said, all those factors were a part of my broad "underskilled" stroke.

I don't have a narrative, it doesn't affect me at all.

I do, however, believe the "fat commission" is well earned at the top end of town.

If we're talking negotiation, why are you settling for less than you could make elsewhere? It sounds like you have been and continue to be successful, so what's the draw?

Work life balance.

Ability to help people based on my value system.

I still make six figures. Who says I'm making less.

Difference is I don't spend 60% of my week cold calling. Actually work about 30 hours tops.

We have agents making $20k per month.

Been there done that with the big bucks.

BTW the average agent income is about $49k.

 

[VDS66]

I pick and choose? Germany has had "cables and wires" ( love your technical terms ) for years, they aren't pulling down the old cables , what do you think they do on those calm nights when they buy nukes from France.
Germany are so clever they built a nuclear power plant on a fault line , never getting to use it.

What they have in Germany and what they will always have in Germany is reliable 24 hour electricity supply. We don't and we seem to be proposing to make it worse.

https://www.nationalgeographic.com/magazine/2015/11/germany-renewable-energy-revolution/

https://www.iea.org/countries/Germany/

https://en.m.wikipedia.org/wiki/Energy_in_Germany

 

[Joffaboy]

On a different note...

Looks like I now love rugby.

Corporate privileges here we come.

Joffaboy, you in?

View attachment 629778

Ok now I know you arent offering a job, when is the first booze up?

We will start at the Members for a game of footy , then stagger across to AAMI and watch the DV and sex tapers bash the shit out of each other.

On SM-G960F using BigFooty.com mobile app

 

[VDS66]

Ok now I know you arent offering a job, when is the first booze up?

We will start at the Members for a game of footy , then stagger across to AAMI and watch the DV and sex tapers bash the shit out of each other.

On SM-G960F using BigFooty.com mobile app

Let me suss out what's available.

The marketing guy says hope you like going to the rugby.

I says Nah not really into it.

He says we'll I hope you like drinking, just go anyway.

I says OK.

 

[StCicatriz]

Work life balance.

Ability to help people based on my value system.

I still make six figures. Who says I'm making less.

Difference is I don't spend 60% of my week cold calling. Actually work about 30 hours tops.

We have agents making $20k per month.

Been there done that with the big bucks.

BTW the average agent income is about $49k.

hey this topic of conversation is interesting

over your time in the industry what do you think contributed to the boom and have you noticed any difference the boom ended?

was there really an issue with over-seas investors? has it changed?

 

[SaintsSeptember]

https://www.nationalgeographic.com/magazine/2015/11/germany-renewable-energy-revolution/

https://www.iea.org/countries/Germany/

https://en.m.wikipedia.org/wiki/Energy_in_Germany

Yes but we can't just apply that to Australia.
Germany are building renewable , then closing down the power stations they don't want/ no longer need.
Australian politicians aren't sure what to do, so they do nothing.

So we ( Victoria ) just shut down a power station that was approved for construction in 1959. Under the old SEC it would have been replaced by something similar to Loy Yang.
A more modern station, still coal , but more efficient , hence not emmitting as much CO2 /kwh as Hazelwood was meant to be built 20 years ago , allowing Hazelwood to retire.

Interestingly the cleaner burning Newport ( gas )power station was hobbled by Environmentalists and Unionists.
Unions are also largely responsible for inflicting the current privatized system upon us.
( As well as ensuring that most of their members in Latrobe Valley and their kids had no jobs ).

Sure go sustainable, but even in Germany it'll take a while, and we are just waiting until we run out of electricity.
Germany will only run out of electricity if Europe runs out of electricity.

We can only hope that we drive industry offshore quicker than we close down aging power stations .

 

[VDS66]

Yes but we can't just apply that to Australia.
Germany are building renewable , then closing down the power stations they don't want/ no longer need.
Australian politicians aren't sure what to do, so they do nothing.

So we ( Victoria ) just shut down a power station that was approved for construction in 1959. Under the old SEC it would have been replaced by something similar to Loy Yang.
A more modern station, still coal , but more efficient , hence not emmitting as much CO2 /kwh as Hazelwood was meant to be built 20 years ago , allowing Hazelwood to retire.

Interestingly the cleaner burning Newport ( gas )power station was hobbled by Environmentalists and Unionists.
Unions are also largely responsible for inflicting the current privatized system upon us.
( As well as ensuring that most of their members in Latrobe Valley and their kids had no jobs ).

Sure go sustainable, but even in Germany it'll take a while, and we are just waiting until we run out of electricity.
Germany will only run out of electricity if Europe runs out of electricity.

We can only hope that we drive industry offshore quicker than we close down aging power stations .

I think we arguing different points here so let's move on.

 

[VDS66]

hey this topic of conversation is interesting

over your time in the industry what do you think contributed to the boom and have you noticed any difference the boom ended?

was there really an issue with over-seas investors? has it changed?

Where do I start?

There's facts and there's my views.

The boom over in Perth was probably fuelled by the resource boom. Same as mining towns.

Over this side there was the combination of cheap and easy money from the banks, foreign investment, population growth and local fear of missing out.

Things like first home buyer grants and cgt concessions from Howard and Costello ignited the fire IMO.

Then it's a self fulfilling prophecy with local buyers afraid to miss out. Demand outstrips supply etc etc.

Bad lending and bad borrowing...

As you know, the bank looks at your income and expenses, allocates 35 to 40% of your income and that figure determines what loan repayments you can afford to pay and therefore the loan amount.

Normally, home buyers take out P&I loans where the payment is interest plus principle.

For the sake of the discussion, let's call it 66% interest and rest principle.

The rapid rise of prices combined with the fear of missing out or FOMO saw desperate buyers borrow interest only loans.

What this means is 100% interest and without the principle component, they could borrow a larger amount whilst keeping the same repayment level. Using the above ratio... Interest on $100 @ 10% is $10.

If your income shows you can afford to repay $13 per month then you can borrow $100 with $10 going to interest and $3 going to principle pay down.

However, if you went interest only, then $13 allows you to borrow $130 @ 10%.



More on this later.

Foreign investment review board figures show that applications (new dwellings) have almost halved in the last year.

There was a fair bit of Chinese money coming in for residency holders and dodgy practises. Hence our government has clamped down and imposed taxes.

Add to it the Chinese government put the clamps on money leaving their country, and all of a sudden a whole segment of demand is taken out of the market.

Next we have APRAs decision to cap his much banks could lend on an interest only basis. This started two years ago with the intention of dampening investor dead... Didn't really work IMO because investors were leveraging burgeoning equity values to buy more.

Next we have the banks...

Banks can / could lend up to 10 times the amount they held in cash reserves. So for every dollar in cash deposit, they can lend $10.

Can you see where this is going? Banks are borrowing money then lending it out at a profit.

With interest rates at record lows after the GFC, it was easy to sourcecfunds from Europe and the USA.

So banks were falling over themselves to lend you money. More loans, more profit.

Oh and let sit not forget low doc and no doc loans where all you needed was a deposit and a letter from your accountant to get a loan.

The perfect storm...

This is where it gets tricky.

Apart from the clamp down on interest only loans, APRA also clamped down on other loan types including low doc etc to try and cool things down.

The banks seeing themselves as over exposed, took a more caution approach.

Simply the boom was unsustainable as they always are.

That's when the risk managers in banks take over from the sales people.

The change in policy has led to the credit crunch as follows:

Whatever your loan capacity is, banks will now look at it and and ask can you afford to pay this loan principle and interest if rates are 8%. Because banks now that eventually overseas rates will go up and so will their borrowing costs.

Despite the RBA keeping rates on hold, banks have put theirs up to reflect overseas rises.

Secondly they are pretty much up your arse with a probe when it comes to your income and expenses. See royal commission effect. Result: over 40% of loan applications being declined.

In rough figures, if based on your income 18 months ago, you could borrow $800k... Those same figures now on qualify you for $600k.

So now it's so much harder to get a loan right?

This has led to less buyer demand and those who are looking have less to spend.

Combine that with around 30% extra stock on the market - nre stock plus leftover stock from.last year that hasn't sold... And you have a full 180 turn in the supply / demand equation.

The unknown...

People who borrowed interest only cannot get their loan.rolled over and are required to convert to P&I as the banks want them to start paying down the loan.

They will have two choices: either find an extra 30% extra to make repayments or if they can't, they will be forced to sell.

Remember that they can probably 80% less now due to lending policy. So if their loan was $800k they will only qualify for $600k at 8%. So they can't refinance.

Anyone who bought in 2016 or 2017 @ 90% lvr are now in a negative equity situation and better hope the bank doesn't come knocking.

So much more to play out.

Population growth is keeping things afloat. However I hear today that if you take out population growth from the numbers, the economy had gone backwards in growth which is not good.

Rising interest rates is slowing domestic spending, and yes the penalty rate cuts means less.money into the economy.

A recession is a real possibility this year.

Sorry for the long post. I think I answered your question in there somewhere lol.

Cheers.

 

[StCicatriz]

Where do I start?

There's facts and there's my views.

The boom over in Perth was probably fuelled by the resource boom. Same as mining towns.

Over this side there was the combination of cheap and easy money from the banks, foreign investment, population growth and local fear of missing out.

Things like first home buyer grants and cgt concessions from Howard and Costello ignited the fire IMO.

Then it's a self fulfilling prophecy with local buyers afraid to miss out. Demand outstrips supply etc etc.

Bad lending and bad borrowing...

As you know, the bank looks at your income and expenses, allocates 35 to 40% of your income and that figure determines what loan repayments you can afford to pay and therefore the loan amount.

Normally, home buyers take out P&I loans where the payment is interest plus principle.

For the sake of the discussion, let's call it 66% interest and rest principle.

The rapid rise of prices combined with the fear of missing out or FOMO saw desperate buyers borrow interest only loans.

What this means is 100% interest and without the principle component, they could borrow a larger amount whilst keeping the same repayment level. Using the above ratio... Interest on $100 @ 10% is $10.

If your income shows you can afford to repay $13 per month then you can borrow $100 with $10 going to interest and $3 going to principle pay down.

However, if you went interest only, then $13 allows you to borrow $130 @ 10%.



More on this later.

Foreign investment review board figures show that applications (new dwellings) have almost halved in the last year.

There was a fair bit of Chinese money coming in for residency holders and dodgy practises. Hence our government has clamped down and imposed taxes.

Add to it the Chinese government put the clamps on money leaving their country, and all of a sudden a whole segment of demand is taken out of the market.

Next we have APRAs decision to cap his much banks could lend on an interest only basis. This started two years ago with the intention of dampening investor dead... Didn't really work IMO because investors were leveraging burgeoning equity values to buy more.

Next we have the banks...

Banks can / could lend up to 10 times the amount they held in cash reserves. So for every dollar in cash deposit, they can lend $10.

Can you see where this is going? Banks are borrowing money then lending it out at a profit.

With interest rates at record lows after the GFC, it was easy to sourcecfunds from Europe and the USA.

So banks were falling over themselves to lend you money. More loans, more profit.

Oh and let sit not forget low doc and no doc loans where all you needed was a deposit and a letter from your accountant to get a loan.

The perfect storm...

This is where it gets tricky.

Apart from the clamp down on interest only loans, APRA also clamped down on other loan types including low doc etc to try and cool things down.

The banks seeing themselves as over exposed, took a more caution approach.

Simply the boom was unsustainable as they always are.

That's when the risk managers in banks take over from the sales people.

The change in policy has led to the credit crunch as follows:

Whatever your loan capacity is, banks will now look at it and and ask can you afford to pay this loan principle and interest if rates are 8%. Because banks now that eventually overseas rates will go up and so will their borrowing costs.

Despite the RBA keeping rates on hold, banks have put theirs up to reflect overseas rises.

Secondly they are pretty much up your arse with a probe when it comes to your income and expenses. See royal commission effect. Result: over 40% of loan applications being declined.

In rough figures, if based on your income 18 months ago, you could borrow $800k... Those same figures now on qualify you for $600k.

So now it's so much harder to get a loan right?

This has led to less buyer demand and those who are looking have less to spend.

Combine that with around 30% extra stock on the market - nre stock plus leftover stock from.last year that hasn't sold... And you have a full 180 turn in the supply / demand equation.

The unknown...

People who borrowed interest only cannot get their loan.rolled over and are required to convert to P&I as the banks want them to start paying down the loan.

They will have two choices: either find an extra 30% extra to make repayments or if they can't, they will be forced to sell.

Remember that they can probably 80% less now due to lending policy. So if their loan was $800k they will only qualify for $600k at 8%. So they can't refinance.

Anyone who bought in 2016 or 2017 @ 90% lvr are now in a negative equity situation and better hope the bank doesn't come knocking.

So much more to play out.

Population growth is keeping things afloat. However I hear today that if you take out population growth from the numbers, the economy had gone backwards in growth which is not good.

Rising interest rates is slowing domestic spending, and yes the penalty rate cuts means less.money into the economy.

A recession is a real possibility this year.

Sorry for the long post. I think I answered your question in there somewhere lol.

Cheers.

Mint post!!!!

Over here it's strange we really had it hard when the boom stopped. Was a big shock to the system. But once it bottomed out things got ok again. It seems normal now.

Having said that it feels like we could go backwards again at any point.

What is interesting is there are still land releases happening here. I know of a case that happened last week where a developer spent millions on some acreage at an already over inflated suburb where the land isn't even zoned for housing yet. Which implies they think they will get approval for it and there will be demand.

I think more people here are looking at existing rather than building new in a new estate on a small block.

There's certainly been pain for people who bought up the new land releases during the boom here.

 

[VDS66]

Mint post!!!!

Over here it's strange we really had it hard when the boom stopped. Was a big shock to the system. But once it bottomed out things got ok again. It seems normal now.

Having said that it feels like we could go backwards again at any point.

What is interesting is there are still land releases happening here. I know of a case that happened last week where a developer spent millions on some acreage at an already over inflated suburb where the land isn't even zoned for housing yet. Which implies they think they will get approval for it and there will be demand.

I think more people here are looking at existing rather than building new in a new estate on a small block.

There's certainly been pain for people who bought up the new land releases during the boom here.

There you go...

https://amp.smh.com.au/money/borrowing/tighter-mortgage-credit-is-here-to-stay-20190228-p510ug.html

The biggest risk now is a recession and people start losing their jobs.

 

[gringo2011]

There you go...

https://amp.smh.com.au/money/borrowing/tighter-mortgage-credit-is-here-to-stay-20190228-p510ug.html

The biggest risk now is a recession and people start losing their jobs.

There will be resettling pains but the reality is that the way the housing market was running was like an American teen movie where the parents were away and the kids trashed the house partying. You always knew it had to be reined in at some point, but no-one thought anyone else was brave enough to do it. In the end it kind of came by accident...like the parents coming home early. Same with negative gearing, and franking credits, no-one wants to wear the cost but everyone knows deep down it's a loophole that they exploit, not a fair system.

 

[VDS66]

There will be resettling pains but the reality is that the way the housing market was running was like an American teen movie where the parents were away and the kids trashed the house partying. You always knew it had to be reined in at some point, but no-one thought anyone else was brave enough to do it. In the end it kind of came by accident...like the parents coming home early. Same with negative gearing, and franking credits, no-one wants to wear the cost but everyone knows deep down it's a loophole that they exploit, not a fair system.

Eventually, prices will.hit a level where investors see value and come back in.

Then we see equilibrium between supply and demand. Then as stick dries up, you get pressure on rents and more investors come in and away we go again.

If Labour gets in, expect a flurry of activity in established property from cashed up investors between the election and June 30.