Agent Underquoting & Patrick Dangerfield?

DangerUnderquoting

Under Quoting

Let’s look at Underquoting and Patrick Dangerfield – both have been in the news lately.

This week I read an article, it was on underquoting. It worried me where it was going – it read like a showbiz article and not like what we have been seeing with Underquoting since May.

We are seeing that agents have collectively, made massive improvements across the board in underquoting.  To say otherwise is perfectly fair enough BUT back it up with some balance please – because we are seeing things differently.

Today below – Underquoting facts!

But before that, back to Underquoting and Patrick Dangerfield.

Danger did the deed – he tackled in what was regarded as an illegal manner and he paid the price. In the past what he did was accepted and in fact, was praised.

Underquoting was also accepted, even praised (by some) in the past.

Now there are new rules. If you do the wrong thing, then you run the risk of a “suspension” and we are seeing Consumer Affairs suspensions – of course there are anomalies and conjecture and of course Consumer Affairs will need to stay on top of it – but underquoting like the sling tackle is being outlawed and for good reason (they both do your head in).

HOWEVER,

Do you, as a buyer, think that the selling agents are now actually going to help you get a fairer price, a better deal or even a lower stress deal – in other words TANK on their selling clients, the ones who pay them (the sellers) and break the law and risk going to jail under the Estate Agents Act, which states that a selling agent’s responsibility, is at all times to act in the best interests (highest price) of their principal (seller).

If you do, then maybe you are expecting Patrick Dangerfield to now shepherd out his Geelong teammates, to give the opposition teams a bruise-free run to the goals. Maybe you will be asking the umpires to say it’s not fair your team missed, because Danger pressured your player while he or she was having a shot at goal and that your player should get another go.

Serial underquoting is fraud, still around on the edges and those agents who keep transgressing should be prosecuted.

This differs from the new and improved professional quoting (in the best interests of the seller), which is good agency practice and we support that.

Why? Because many of our buying clients are then sellers and as sellers they want a sale at the highest price – they don’t want a “buyer-fair” price.

Selling agents are not primarily here to help you the buyer – they are here to maximise the seller’s position – but now they cannot do it by underquoting or dummy bidding, without risk of prosecution.

TO BE CLEAR ON DEFINITIONS: Underquoting Is and Underquoting Is Not:

Underquoting Is an agent saying $3,000,000 when the seller wants $3,500,000.

Underquoting Is Not when the agent initially thinks it’s worth and says it’s $3,000,000 – it’s “on the market” at auction at $3,000,000 and it sells for $3,500,000 – that’s not underquoting – that is the vagary of the market AND probably very good agent work.

What happened with Underquoting in our 9 auction sample today?

We put a preliminary target of 80% for the QUOTE QUOTIENT – meaning we feel the Industry will have made major strides forward if the home is “ON THE MARKET” or PASSED-IN & RESERVE within the quote range 80% of the time. Ideally it would be 99% – but let’s set the bar at a “fair” level, as this is the FIRST EVER such public measurement WITH A REAL SAMPLE FIELD, since the underquoting laws were introduced.

PASS-INS – SATURDAY

33% or 3 from 9, didn’t sell today (see below). One had a reserve within the range (Myrnong – Tim Derham).

Myrnong – ethical quoting.

Two have reserves at the top or above their range (we believe) (Parlington – Steve Abbott and Dorcas – Greg Hocking).

Parlington and Dorcas you will have to draw your own conclusions on.

Saturday Night: I can see no real issue with Parlington – they had a range, they dropped it, they got no bidders today and now have decided to put the range back up again – I see nothing wrong with that legally or ethically – as long as its communicated in accordance with the new laws.

Dorcas – Greg Hocking

Saturday Night: Dorcas in the middle of a negotiation and we have nothing concrete as to what the reserve is.

Monday Morning Footnote: Dorcas has not sold and is re-advertised, with an open tomorrow. There are clear legal rules that must now be followed (as there will be with Parlington and Myrnong), in how the price is advertised and they have one business day (today) to adjust the Statement of Information (public quoting of price) to NOT BE BELOW

a) any rejected written offer in Saturday’s negotiations (did you write your offer down buyers?)

b) or the new sellers asking price (Saturday’s reserve?)

c) or the new value the agents the home at (if no reserve and no rejected written offers).

SOLD AFTER – SATURDAY

22% or 2 sold within the range, after the auction – both at the lower end of the range (Leeds – Scott Patterson and Isabella – Brenton Ilicic).

Both a tick – ethical quoting.

UNDER THE HAMMER – SATURDAY

45% or 4 sold above the range. (Coonil, Kendall, Marriage and Kent).

Marriage – John Clarkson – I think was ethical and professional quoting – not the best block I have seen and quoted sensibly. Announced on the market at basically the top of the range and it kept going another 7.5%.

Coonil – Andrew Boyce – Yes, it went well over the quote (10+%) – but I’m supporting the selling agent (whom I worked for nearly 20 years ago for a brief time). Coonil was opposite the hospital and had an appalling renovation and one a few doors down (that we bought in a lot better condition, a little while ago) passed in just above $3m. It was announced on the market at basically the top of the range. I think the quoting was professional and ethical and the result was very solid.

Kent – James Tostevin – Good home, announced on the market $100,000 above the quote, but nobody asked before and it was a hot and spicy auction. Conservatively but legally quoted from what we can see.

Kendall – Kaine Lanyon- Ditto above description of Kent. Conservatively but legally quoted from what we can see.

10% and 15% above the quote – if that was a trend on everyone of these agent’s homes, then there is an issue – but in isolation the quotes seemed OK.

SUMMARY

A few iffy bits, but no real shockers (as of Saturday night – Tuesday maybe different) and overall, in our opinion, a major improvement on a year ago and a tick on ethics and professionalism.

I reckon it’s a pass for Quoting today and I would say the Quote Quotient for buyer fairness was 77% today, which is up from almost zero before Easter.

Please note: Patrick Dangerfield is a great player and has nothing to do with underquoting, neither does the agent in the picture we used from a previous James Marketnews – the above lead photo (ours and one from the internet, triple MMM) are merely to add colour to the article.

Click on the pictures BELOW to go to the Auction Reports and James Home Rating.

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Word on the street is there is not a lot of stock out there… Is that really true?

There are two or three dozen key agents who actually “run” the Top End market (Inner East, Stonnington to Bayside).

We buy a lot more off these agents, than we do off suchandsuch.com.au.

How can you do that? How can you get an exclusive, when it’s on the all inclusive internet?

You get exclusives with hard work, smart work and relationships – not 24 meaningless hours on a keyboard shuffling through a lot of useless information.

Three really, really important concepts about STOCK;

1. That boring stat again: 82% of all homes over $4m are NOT sold under the auction hammer. Are you looking where your best home is?

2. What does a low stock market mean to a real estate agent? Less stock means……. less deals, means………. less income. Have you got what the agent needs – if you don’t, then are you going to get a call over another buyer, who does have what the agent needs (in the future), all things being equal?

3. Lower stock is often myth – more difficult to buy for the inexperienced and uninformed, is more often the truth.

We’ve seen a number of homes Off Market in Brighton, Toorak, Hawthorn and surrounds this week.

For example;

In Brighton a very interesting, newly done home on big near Church St – no it’s not Leslie. Another brand new home off Church St is also off market and no it’s not, Middle – both homes are in the $5m to $10m price bracket.

In Hawthorn on Scotch Hill – there are two off market homes within 100 metres of each other – one we wouldn’t touch with a ten foot bargepole and the other has some possibilities, depending on what your desired outcomes are.

In Toorak – there are several dozen off market homes – the question here is rarely lack of, it’s simply access or price justification (hey not complaining, just highlighting traps for new/young players).

On Market we are seeing at lot of homes right now.

A sample spread below are just a few of our recent public James Home Ratings, click on the address for our comments.

Brighton – 139 Cole Street – James Home Rating 747/1000

Brighton East – 31 Shasta Avenue – James Home Rating 720/1000

Brighton East – 9 Berkeley Grove – James Home Rating 567/1000

Glen Iris – 6 Viva Street – James Home Rating 667/1000

Hawthorn – 53 Linda Crescent – James Home Rating 738/1000

Hawthorn – 47 Coppin Grove – James Home Rating 627/1000

Hawthorn East – 10 Rosslyn Street – James Home Rating 554/1000

Malvern – 2 Thanet Street – James Home rating 649/1000

Malvern – 9 Haverbrack Avenue – James Home Rating 754/1000

Malvern East – 3 Rothesay Avenue – James Home Rating 734/1000

Malvern East – 34 Kerferd Street – James Home Rating 573/1000

Port Melbourne – 297 Ross Street – James Home Rating 673/1000

South Melbourne – 4 Anderson Street – James Home Rating 731/1000

South Yarra – 200 Walsh Street – James Home Rating 735/1000

Toorak – 14 Toorak Avenue – James Home Rating 709/1000

Toorak – 16 Stradbroke Avenue – James Home Rating 575/1000

We are reviewing hundreds of homes every month, as we have since 2002 and our scored ratings (like what you see above) are not computer generated – we visit the homes, handcraft all the reports and peer review on all properties we score.

You may not agree with our opinions (fair enough) but they are real opinions, based on real visits, from real estate qualified people acting for BUYERS.

The information you see at James goes much deeper for buying clients – due diligence, real values, bidding and negotiation strategies etc.

For most people buying a home takes commitment – to a strategy and a process – information gathering in itself, we feel, is really not enough.

Opinion

Is the information you are receiving of any use anymore – even if it’s free?

Sure it fills in your time over a coffee, sometimes gives you a laugh, but does it help you buy, and buy better?

Is the vast majority of property reporting becoming more like showbiz reporting? The negative headlines about market crashes, don’t buy now, low stock and so on. Does that help buyers and sellers make better decisions?

Corelogic or REIV stats on clearance rates are now part of the 24/7 media cycle, where the clearance rate of a huge area moves an indistinguishable amount almost every week. Are these numbers relevant or just space fillers?

Is there good and bad information or just information – is real property analysis or showbiz opinion of equal value to you?

What is good information and what is just information below:

1. What the agent is telling you about the quote or to know that you as a buyer are worth $10,000 in commissions to the agent if you buy, but the other buyer across the room at the open for inspection is worth $40,000 to the agent if he buys.

2. You are looking for a $4,000,000 home. One stat (information) is the clearance rate across Melbourne at all auctions is 82% and the other stat is that 82% of all homes sold over $4,000,000 are NOT actually sold at auction.

EarlySpring100Auction

Starting next week – We at James Buyer Advocates will cover and report back the results on 100 randomly chosen auctions, over $1 million in Inner East and Bayside on August 19th, 26th and September 2nd.

Disclaimers

Yes auctions are not the be all and end all – but they are a public sample (so we can talk about them) and they do give really good measurements (if the sample is relevant).

The Market Measurements

Rising Market: Over 70% Clearance Rate (auctions bought versus auctions conducted) with over 2 Bidderman (bidders per auction), on auction numbers over 100 per weekend in Inner Melbourne.

Steady Market: Between 60 and 70% Clearance Rate, bidders below 2 per auction on auction numbers over 100 per weekend in Inner Melbourne – which we are happy to accept is an easing market, off solid highs of the last few years.

Falling Market: Below 60% Clearance Rate, bidders below 1.5 per auction, on auction numbers over 100 per weekend in Inner Melbourne.

Target of Interest

May 2017 was a bumper time for the market and early spring 2016 was even hotter, if that was possible – so a drop on the stats below would not surprise and would not necessarily show a falling market – just show a market not as out of control.

Anyway let’s wait and see.

MMMAEARLYSPRING

Stay tuned over the next three weeks for the results of the 100 Auction Inner Melbourne Market Test.

Homeless Solutions red banner

1. Got a property that needs looking after?

2. Want to directly help the HOMELESS

3. And get a TAX DEDUCTION.

You can lease your investment home through Launching Housing/Hanover to people in need, at a below market rent AND get a tax deduction for the rent foregone.

WOW – you can have a social conscience AND get a tax deduction AND Launch takes care of everything (eg the tenant headaches).

Below is the Nuts and Bolts AND another story of the increasingly “hidden” Melbourne homeless AND how the tax deduction works.

Note from James Buyer Advocates: This charity (Launch/Hanover/Homeground) really works AND this idea really works AND it has been doing so since 2006.

Hanover/Launch Housing is a brilliant organisation really helping. For over 50 years AND over 10 years with us, they have allocated 90% – yep 90% of the not inconsequential amounts of money given, directly to prevent mums and dads and kids from becoming homeless.

Hey please wake up if you are well off, a typical homeless person these days is not a wino with a brown paper bag, not a radical left winger on the streets giving police a hard time – no, a typical homeless person in 2017 is just a normal family (yes ) in need….. of your help.

You can give money directly (less 10% admin) to STOP homelessness.

OR if you have a spare home anywhere, then Hanover/Launch Housing can look after it for you AND you can get a tax deduction.

OR you can buy a home as an investment and let Hanover/Launch manage it for you, for housing people in need. Over the years we have bought a number of homes for generous people for housing the homeless. We do not charge a fee to do this, if you lease it to Hanover/Launch Housing for 5 years or more.

All those people have made significant CAPITAL GROWTH money – we only buy goodies AND Hanover/Launch Housing has been around since 1964 – they take care of everything for you – you have no “landlord stress” AND you change people’s lives dramatically.

The property market is going ballistic as they say – there are winners, like all of us who own homes AND there are people who are losing, people who can no longer afford a roof over their head and their ’s heads.

Directly helping people really works – the money is not spent on grog or ciggies and the giving is only temporary and 90% of your money gets there and it makes a difference.

More Reading and Information

1. Direct giving works – this has nothing to do with Hanover, but check out how direct giving is working in Africa. Click here – Give Directly

2. Hanover/Launch is a super reputable charity, over 50 years – we’ve worked with them for over 10 – check out their website here – only 10% admin cost.

Homeless

Jenny and Millie’s Homeless story

Background

Jenny (51) and Millie (47) are a couple who have lived in their private rental for many years with their daughter, Sam (21) who has Autism Spectrum Disorder and a medical condition that has caused developmental delays, as well as their three foster sons Tim (13), Joe (6), and Fin (9 months). The three boys arrived into their care at the same time and also require special support to manage their intellectual disabilities.

Jenny and Millie have always successfully managed their tenancy until recently when Millie was diagnosed with a life threatening illness. Millie was subsequently placed on Work Cover payments, which significantly impacted their ability to meet their rental payments on a reduced joint income.

During this time, Jenny and Millie accrued rent arrears and were extremely close to receiving an eviction notice when they approached Launch Housing for assistance.

Support provided

Jenny and Millie were referred to the Homelessness Prevention Private Rental Support Program as a way to help them maintain their rental payments while Millie’s health condition stabilised. This gave Millie time to focus on getting well so she could start to plan her return to work. During this time, they also became eligible for foster care payments to support their three sons to access the additional care they required.

The Launch Housing Initial Assessment and Planning (IAP) Support Worker, together with the Accommodation Options for Families (AOF) Support Worker, also advocated on Jenny and Millie’s behalf with their real estate agent to clear their arrears debt.

Outcome

Launch Housing was able to assist Jenny and Millie to salvage their tenancy through a combination of internal program funding options. In order to clear their rental arrear debt, we provided Jenny and Millie with $1,763 from our Housing Establishment Fund (HEF) and an additional $1,763 from AOF brokerage.

They were also provided with $2,391 through the Homelessness Prevention Private Rental Support Program to maintain their rental payments. We are pleased to report that this incredible support has enabled Jenny and Millie to salvage their tenancy while they concentrated on Millie’s health and the high support needs of their children.

Ultimately, this vital preventative program and collaborative case coordination has provided the family with a great sense of security knowing that they can continue to remain in their home during this challenging time in their lives. They are incredibly grateful for the opportunity to access this program during a time of need.

TAX RULING FOR HELPING HOMELESS

  1. What is the ATO ruling?

 The Australian Tax Office has made a class ruling (which means it is a legal ruling that applies to HomeGround Real Estate only – Launch Housing/Hanover) that allows landlords who list their property with Homeground/Launch/Hanover at a discounted rental rate (eg less than market rent) to claim the gap as a tax deduction at the end of financial year.

  1. How does it work?

 At the end of financial year (HomeGround Real Estate) will provide you with all of the documents you need to do your tax return – including a tax deductible donation receipt for the amount of rent you have deducted to provide a more affordable property to a tenant or tenants. For example your property is worth $800 at market rent and you decide you only need $400 in rent and want to offer the property to a family in need. Launch Housing/Hanover will provide you with a donation receipt for $20,000 (made up of the $400 per week in rent you have foregone) from Launch Housing (our parent organisation).

  1. How does it benefit me?

 The tax ruling is not designed as a financial incentive, but it does recognise your contribution by allowing you to legitimately claim the gap between market rent and any discount you decide you can offer.

  Launch Housing is one of Melbourne’s largest providers of services to people experiencing or at risk of homelessness. Even if you need a market return on your property – if you list it with Homeground the management fees go into supporting the work of Launch Housing towards ending homelessness in Melbourne.

  •   A discount of just 10% off the market rent can make housing affordable for thousands of Victorians who are otherwise priced out of the market and at risk of homelessness.
  •   Please contact your financial adviser or tax accountant for more detailed advice on how this ruling might apply to you and your financial situation.

launch

If you wish to help homeless people or for a copy of the tax ruling please contact Andy Grant at Launch Housing on 9288 9810 or Andy.Grant@launchhousing.org.au

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