Cunninghams Property Update

AUCTION

A public auction is generally a 3 – 5 week strong marketing campaign where all interested parties gather at the conclusion of the campaign to bid publicly for the property’s purchase (offers can be made and accepted prior to the auction date if the seller desires). Now this can be the best or worst way to market your property for sale. If you have a property with broad market appeal, then it can be ideal. If you are searching for a specific type of purchaser, or have varied needs yourself – such as an extended settlement, then it may be too limiting for you. Many agents will suggest an auction campaign, regardless of the property or owner’s needs as they are relatively easy to manage, provide a result in a specific time frame and are often supported by expensive marketing campaigns.

1. An auction is a comprehensive, time limited campaign with a scheduled ’sell’ date.
2. You don’t need to promote a price and potentially limit your result.
3. It can create a sense of urgency and greater competition between buyers and may even encourage high early offers to secure the property.
4. An intense marketing campaign can attract more buyers, sooner and generate a more competitive environment.
5. It can often create the impression of exclusivity in an unfamiliar market as it’s a more ‘unique’ marketing method.
6. If the highest bid is above the reserve price, the property is sold unconditionally at the close of the auction – no cooling off period.
7. Bidding at auction can also generate buyer competition. In ‘the heat of the moment’ buyers can bid more than they had budgeted, for fear of missing out.

The key aspect to a successful auction is increased buyer competition. And as most people make decisions based on either fear or desire, this is a tremendous environment to make the most of this decision making process.

These emotions are certainly best fostered with an auction campaign, due to the reasons mentioned above.

PRIVATE TREATY

A private treaty sale offers plenty of flexibility. You can advertise with or without a price, use a price range, plus you have no limitations concerning time. It may take a week, or months – depending on your requirements. Similarly, there is often no sense of urgency for buyers. Again this is a very effective method of marketing for the right property, under the right set of circumstances. Once we discuss your needs in more detail, we can explain the real benefits if this method is more suitable for your property and circumstances. The mistake sometimes made with private treaty is thinking that this allows you to “save” money on advertising and property marketing. This can have the very real and opposite effect of costing you both time and money.

At Cunninghams Property we have a saying…”It’s hard to sell a secret.” Poor or no marketing investment can see a sluggish buyer response to your property. This can cause a timeframe “blow out” and a “what’s wrong with it” buyer view if your property “hangs around” too long on the market.

Tune in to this ABC News Radio podcast interview after John Cunninghams own experience in sleeping out rough as part of the 2009 CEO sleepout http://mpegmedia.abc.net.au/newsradio/audio/20090619-sleepout.mp3

The event has grown from 28 participants last year to 220 this year and has raised over $560,000 for The St Vincent de Paul Society to assist with it’s homeless program. 

Imagine next year if we can multiply it 10 fold again with over 2,000 participants and 10 fold the result. it is possible and just needs engagement from all the business community in sydney and across Australia.

June has been a quieter month in terms of the number of enquiries and groups through our rental opens. We believe that this is due to the fact that there is currently a large amount of stock available for tenants to choose from as well as the exit from the rental market of first home buyers, who are making the most of the low interest rates and the extension of the first home owners grant.

We are seeing people moving on a needs only basis, perhaps due to the colder weather and the costs involved. At Cunninghams Property we are working hard to highlight the features of our owner’s properties as well as the benefits of living on the Northern Beaches. We are still securing quality tenants in these interesting times.

12 properties let so far in June with 17 currently available (7 are still tenanted).

It’s important you have consistency in what you discuss with your agent and what you allow them tell the buyers about your property.

When a buyer inspects a property, they have 5 key questions on their mind

1. Why are they selling?
2. How long has it been on the market for?
3. How come it hasn’t sold yet?
4. How does it compare with what we’ve seen and our goals?
5. What will they take?

Think about how you would like your agent to respond to each one of these questions.
Keep in mind when it comes to how long it’s on the market for, this is the perfect time for your agent to reinforce to buyers that negotiation power is higher in favour of the seller, earlier in the sale.

It is a given that home buyers and investors alike borrow money when they make a property purchase. The term used to refer to the relationship between the value of the loan and the value of the property expressed as a percentage is loan-to-valuation ratio.

While borrowing is a given, what is less clear-cut is what percentage of the value of the property purchasers should borrow. In this day and age, with the hindsight that has come with the sub-prime mortgage crisis, do purchasers need to be less ambitious?

For a long time, in most places, buyers were able to buy a property without saving a deposit by borrowing the full amount of the purchase price plus acquisition costs– a loan-to-valuation ratio of over one hundred percent, sometimes up to one hundred and twenty percent. Even in high net worth areas such as The Manly, Balgowlah, Seaforth region the valuers are sticking to thier guns and are ridgid on the requirements.

At the time, it was a good idea for many people, especially since in Australia, such loans mostly went to DINKS (double-income-no-kids) whose capacity to pay looked good – and they were able to get into the market sooner and so buy at current prices. In other words they saved money on the purchase price in a rising market; waiting would have meant a higher purchase price for their home. At the same time, the rising market meant they were unlikely to default on their loan even if they were forced to sell unexpectedly, as they were likely to sell the property for more than they paid for it.

In the current less buoyant market where prices are static at best, anyone borrowing more than their capacity to pay the interest rate is likely to come unstuck if their circumstances change. And why overreach themselves anyway, since in a static market, with no upward pressure on prices, the time used to save a bigger deposit is not likely to result in the purchaser paying a higher price?

There is no ideal loan-to-valuation ratio that will minimise risk while maximising investment potential at all times and for all people, but purchasers deciding how much they want to borrow need to consider their ability to pay even if circumstances change – for example a job is lost or interest rates go up.

In the macro economic atmosphere that has come about as a result of the sub-prime mortgage crisis, it is also worth reflecting that, on the micro level, behind the technical jargon and statistics of the sub-prime mortgage crisis, each loan default represents ordinary individuals whose lives have been thrown into turmoil because of unacceptable levels of risk.

source : ROBERT BEVANS BEST PRACTICE

How long has it been since we have seen 5% interest rates and 4% yields on property investments? Not in my 33 year career in real estate (John Cunningham). So why aren’t investors flocking back to property?

Good question but not simply answered, many are still licking their wounds from a stock market massacre and have lost a lot of equity so caution is the order of the day, but to gear up and borrow to purchase property is so attractive and the risks are now so low so what is holding them back. The reality is that many are quietly creeping back, just taking their time to assess the full economic washout, as long as property values hold firm we will see a steady build-up of investors looking at property for a long term investment perspective, and that is the key – look long term and you will not go wrong.

John Cunningham the Director and founder of the leading Northern Beaches Agency – Cunninghams Property will be doing a regular “property spot” on radio Northern Beaches  90.3 on the fm dial once a month on the 3rd  Monday from 12.00pm – 1.00pm.

John will be talking real estate, specifically what is happening in the Northern Beaches market place, answering questions and generally trying to take the mystery out of buying, selling, investing or leasing property. Send your questions via this blog or email John at

 john@cunninghamsproperty.com.au

We hope to be able to put podcasts of these sessions on our site shortly.

John and Cunninghams Property are well credentialed for this task having been awarded N.S.W Agency of the Year by the REI NSW 2008, Australasian Agency of the Year 2009 Real Estate Results Network plus Winner of the Manly Daily Agency of the Year 2006, 2007 and 2008. John was awarded R.E.R.N Principal of the Year 2009 and Australasian Best Practice Principal in 2006.

Anyone who has ever bought or sold even one property knows that real estate agents are often very different from each other and have different styles of presenting themselves and their company.

Agents who spend their time telling you what they will do for you before they know whether you want it or not show that they could be rigid and inflexible during the selling process and less capable of meeting the needs of a changing market and different clients. This same rigidity could show up in the way they work with purchasers and reflect badly on their ability to negotiate the highest price. Their range of skills is likely to be more limited if they are keen to work the the same tired old script and package they use for every other client.

On the other hand, agents who ask questions and listen to the answers to find out what suits their clients, rather than trying to sell them a ready-made marketing programme, are more likely to go the extra mile to meet client needs instead of pressuring clients to meet theirs. They demonstrate the kind of empathy that indicates they are more likely to be flexible enough to tailor a marketing programme that really delivers what the vendor wants.

Agents who demonstrate willingness to listen and be adaptable tend to form better relationships with their clients, going a long way to reducing the stress of selling and delivering better sale outcomes.

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Why do I have to advertise when other agents say they have buyers?   Cuninghams Property has buyers just like other agents, in fact even more than any other local Manly region agency, however, that may be just scraping the surface of buyers in your price range.  If we already have one great buyer, imagine the results we could achieve in a competitive market with three or four or more!

Advertising is like a supermarket.  It doesn’t matter how great your Real Estate product is, at any given time you have plenty of competition from other great properties and yours must stand out.  This is where a clever marketing campaign will help you achieve the best possible price

It then comes down to the Strategy and negotiation skills of your agent.  How well trained are they in the art of negotiating.  Are they happy to stop when they reach the price you said you want or do they use thier skills to get the buyers up to the maximum price they will pay.  Tiger Woods is an expert golfer – how often do you think he practices?  It should be the same with your real estate agent.