It's done

That is what my conveyancer told me when he called about 6pm last night. The fat lady has finished singing. The party is over.

The contract is now unconditional and we have the balance of the deposit sitting in my conveyancer's Trust Account. As soon as I find a new place we'll move out and bring the settlement forward. We have a 60-day settlement period, so there should be plenty of time.

It took me just over a month. The total cost to me of selling my apartment was under $400, including advertising, the For Sale sign and an ad for which I paid $15. Conveyancing was for a fixed fee of $750 (plus disbursements).

If I had paid an agent a commission (assuming they would have worked hard and got my price for me) I would have paid:

At 2% - $9,200;

At 3% - $13,800.

So I have saved somewhere between roughly $9,000 to $13,500. That money is far better in my pocket than some bastard agent's. And that is what this exercise was all about.

***

I saw an ad by a Real Estate Agent in a local paper yesterday. There were pictures of about a dozen properties with "Sold" splashed across each picture, diagonally in large letters. He proudly stated that he has sold over $11 million worth of property recently, and was hungry for more.

At a rate of commission of 2% (which would be the minimum, I would imagine), that is a cool $220,000 that he made; even if "recently" was the last 4 months (although I think it would have been the last 2 months), that is very, very good money.

What makes me sick is that not only is this easy work, this prick probably undersold the properties at the expense of the vendors.

Surely that $220,000 would have been better off in the pockets of vendors (and buyers) rather than that sleazy bastard Real Estate Agent.

I hope people start going away from agents and selling properties privately. There is nothing to it, really. I've done it. Anybody can do it. There is no law requiring you to go through an agent. You just need a conveyancer or lawyer and to have the contract ready prior to showing your property to potential buyers.

Should you decide to sell properties yourself, good luck. If you still go through an agent after reading my blog, just remember - you are pissing thousands of dollars away.

© All Rights Reserved

Yes we can!

Today shit came to a head.

The woman that came this morning was deadly serious. She loved the apartment at 1st sight. She wanted it and placed an offer, after some haggling, of $450k. She came with her boss, who gave me a cheque for $1,000 as a 'holding deposit'.

I had asked my conveyancer about the holding deposit and it's implications. It is simply a gesture of good faith, and according to my conveyancer, the only legal implication is that "it makes you feel warm and fuzzy inside."

Nobody is obliged to do anything unless a contract is signed by both parties.

So, after they left, I called my wife and gave her the good news. We were happy with the result. It was what I had expected, at least for the last 2 weeks.

But wait, there was more.

Subsequently, I called the other couple who had offered $440k and told them that I was taking the apartment off the market because I had received this offer. She immediately said she would come up to $455k.

I was in a dilemma. Of course, I'd go with the highest bidder, but I also felt terrible as I had reached an understanding with the young lady earlier, although we both knew that legally there was no obligation on either party. For example, if her finance was not approved, I would have had to return the 'holding deposit' and the only thing I would have been left holding is my own dick.

As my conveyancer said, both parties can walk away unless a contract is signed (despite providing/receiving the 'holding deposit') and I would simply have to return the cheque if that had happened.

So I went back to the young lady, apologised and told her that my intention was to inform the other party, as a matter of courtesy, that I had received her superior offer which I intended to take - and I was about to take the property off the market. She shot back with a counter-offer of $458k. I think she said that was as high as she could go, although I can't recall exactly what she said.

So I went back to the older couple, and they came back with their final offer of $460k.

I told them we had a deal. I returned the $1,000 cheque to the young lady's boss (and copped a spray of insults from him for reneging on a verbal contract, failing to keep my word and a whole host of other things).

I emailed my agents and asked them to change the status of my apartment on the online ads to "Under Offer" and told them that the property was off the market.

After speaking to my conveyancer again, I called the couple and had a good chat. I told her that I had been advised to take certain actions by my conveyancer, and emailed her the following:

1. Exchange contracts tomorrow;

2. Contract to be subject to a cooling-off period of 5 working days;

3. Purchaser to provide a cheque made out to "X Conveyancing Trust Account" equivalent to 0.25% of the purchase price (i.e. 0.25% of $460,000 = $1,150);

4. Vendor to take the property off the market (pending the contract becoming unconditional);

5. Deposit of 5% to be paid to "X Conveyancing Trust Account" at the conclusion of the cooling-off period;

6. Balance to be paid on settlement (after subtracting the amounts held in the Trust Account).

The 0.25% is basically mine to keep if, once the contract is signed and exchanged, the purchaser pulls out for whatever reason. They are given 5 working days to carry out their due diligence and searches. This can be extended if the purchaser requests and both parties agree.

Nothing as been signed as yet (they are going to come to Sydney tomorrow to see their lawyer and meet with me), and the party is never over until the fat lady has belted out some tunes, but it looks like we are there. I am extremely happy with $460k. If we had gone to auction I probably could have achieved $470k to $480k, but an auction has it's risks, and buyers like me almost always stay away from them.

Going back and forth between the two bidders was the ugliest part of the exercise. My wife kept saying to me "be firm - we're not here to be liked", which is true (if not profound). But it was the hardest part, especially when the younger lady became emotional and tried to impress upon me the difficult situation she was in. She really needed to settle down.

I felt sorry for her, I really did. But I don't think anybody, much less a stranger, would hand me $10,000 just because they felt sorry for me. So why should I do that for her?

When the dust has settled, we must realise that life itself is a competition. You don't always win. I have been on the receiving end of many disappointments myself. You simply have to 'pick yourself up, dust yourself off' and get on with it. You learn from experience.

I am just happy that I have managed to do this without using Real Estate Agents. They are bastards of the highest order. And unless they get a kick in the arse (and in their wallets) they will continue to take advantage of people. It is literally how they make their living.

I hope people reading this will get some ideas, some confidence, and at least try to sell their properties privately. I read a quote a long time ago that went something like this:

"Whether you think you can, or you think you can't - you're right."

© All Rights Reserved

The Home Stretch?

I received an offer, from the couple who came to view the apartment last Thursday, the next day. They offered $440k after starting at $425k.

I told them that I had some more people coming to view the place on Saturday and that I would get back to them by Monday.

I then called everybody that had viewed the property (I kept a list of their names and contact details) to inform that that I had a good offer and that if they were still interested they should consider their position and make an offer so that they didn't miss out.

I know... it made me as sick saying it as you probably are reading it, but hey, leave no stone unturned right?

I did have one person come on Saturday - the very first lady that came to see the apartment. She came back with the same friend that accompanied her last time. They brought a measuring tape - she had told me during our conversation that she wanted to measure the place prior to placing an offer.

So she measured the lounge and bedroom and compared the measurements to the floor plan I had given them. They even discussed where various pieces of furniture would be placed... then she turned to me and said that despite my apartment being listed at "Offers over $439k" she was of the opinion that it wasn't worth nearly as much!

Now this is what I call 'The Audacity of Hoping Against Hope'.

She thought it was closer to $400k because of the same illogical reasons that other people had given me. Basically she was saying that all the improvements which I had spent time, effort, money, blood, sweat and tears on - were worth nothing.

To be honest, I felt quite insulted - she was telling me that in her miserable opinion all my tens of hours of research, all my homework - and my resulting judgement - was wrong.

What could I do but smile and nod. I decided against reiterating to her that other similar apartments had sold for between $460k and $495k, and that many of them were smaller, in worse condition, with old and smelly carpet, etc etc. I wasn't going to waste my breath on this stupid cow.

I simply told her that I had 2 good offers, both well above the $439k that I had listed at, and that I would not consider anything unless it was above $450k... my own 'Dreams of Avarice', if you like.

She wished me luck and left. I didn't even say goodbye.

Why do people continue to not read the advertisements properly? Surely, if it says "Offers over $439k", surely that means 'Do not waste my time with offers less than $439k'. Why do people keep reading between the lines, when those lines simply do not exist?

If I had to do this over again, I would list it at $460k. Australian buyers seem to be conditioned to seeing a price and then negotiating down from there. There is an utter refusal out there by everyone who has seen my apartment to take literally my guide of "Offers over $439k". I cannot see any reason why people would not take that literally.

I had another call today from a lady who seemed keen, so keen that I actually suspect it is a hoax. She has arranged to come here at 10am tomorrow and says that if she likes it - she gave me every indication that she already does like it - she will give me a $1,000 'holding deposit'.

I told her that I had a couple of good offers which I am considering right now and that if we can agree on a price, we will have a deal tomorrow and I would take the property off the market pending her legal searches etc.

I'm hoping this thing wraps up tomorrow. I'm getting to a stage where I have had enough, I don't want to be nice to any potential buyers, I don't want to spend time cleaning the place every time somebody wants to view it, I want to finish writing this blog and I want to move on!

© All Rights Reserved

Week 3 (cont'd)

I received an enquiry from a lady late yesterday. She asked if she could come to view the apartment today. I tried to get her to come on Saturday (along with any other people, all at once) but they were going back home, out of town, so I agreed. Reluctantly.

And I held my breath, mentally preparing for another 2 hour ordeal.

She came along with her husband early this afternoon. They seemed like nice people. It transpired that they have recently sold a property about 500 metres from here. They bought it off the plan about 10 years ago, so would have made, at a minimum, a 40% capital gain on it, and the selling price would have been around $1.1m.

So they have cash in the bank.

They are looking for a pad in the city, somewhere they can stay when visiting, which they do often. This would be perfect for them, given they lived in the area for nearly a decade.

They told me almost immediately that they were interested in it. I have already send them a copy of the contract. Now I'm sitting back and awaiting a nice, juicy offer.

© All Rights Reserved

Week 3 (cont'd)

The old Greek man came to view the apartment on Monday. By Wednesday I had an offer from him.

Below is the offer, in it's entirety, which arrived via email:

"Hi xxxxx

I liked the unit but worried about ongoing RTA works in the area. Under the circumstances, I will offer $400k for the unit.

Regards"

That is the sum total of the communication of this man's offer for my apartment.

I don't know about you, but my first thought upon reading this was - 'What kind of a rat-bastard psychotic would make an offer on a property worth several hundred thousand dollars in this manner?'

Sure, he was not the most articulate man I have ever met. He was no lawyer in a $3,000 suit. But still, this is utterly ridiculous. And I'm only talking about the manner and form of his offer.

The amount offered is quite another matter.

My preference is always to talk to people rather than communicate in writing. If at all possible, I will always prefer to speak in person or alternatively on the phone. Emails and letters are to be used only when absolutely necessary.

In this case, I decided to reply to this fool by email. I decided it was not worth me spending 20 cents on a telephone call, not to mention my time - and oxygen.

In writing that email, I had to muster up every last bit of self-control and professionalism in order to keep my reply to this prick polite and non-insulting. I won't reproduce the entire reply, but here is some of it:

"Hi Michael

Thanks for your email.

I'm afraid I cannot accept your offer as it is well below my asking price, well below the current market value, and indeed below the cost of the apartment (including improvements) to me. I listed the apartment at "Offers Above $439,000".

I literally meant offers above ..."

I went on to explain how the RTA works have no bearing whatsoever on the apartment; I summarised other properties on the market and compared their prices to mine; I reiterated the great location and quality of my apartment, and the fact that no work needs doing whereas in most other apartments certain repairs and maintenance are necessary for them to be liveable. Finally, and perhaps my frustration came through, I told him I had already rejected 2 offers of $427k and $431k.

Unsurprisingly, I have not heard from him since.

---

I got a call yesterday from a lady who saw my ad on the 'Buy It Privately' website. She came this morning to view apartment.

It took nearly 2 hours of my time, and by the end of it she had told me her entire life story, and she cross-examined me to such an extent that she knew mine. I am confident she knows more about me than some of my friends.

I think she was single and lonely. I have no idea whether she was genuinely interested in the apartment or whether she was simply killing time.

She was incredibly nosy. She noticed each and every last detail of the apartment and our furniture and photos and decorations. She even made me tell her where we got two of our Balinese statues.

After she left, I had to take paracetamol and ibuprofen to clear my headache. And I was late for lunch with my wife.

God dammit. From now on, strict 15 minute viewing sessions only!

© All Rights Reserved

Week 3

Last Thursday was 2 weeks since the apartment was advertised. This week was fairly depressing until yesterday. This is because I didn't have a single enquiry all week until yesterday. Real Estate showed 300 hits yet not a single enquiry - until 3.30pm yesterday.

The potential buyer, a young bloke, came this afternoon to view the apartment and liked it instantly. He didn't ask many questions. It appeared he had seen apartments in the area previously. He said his father would be coming tomorrow to look at it as well.

I spoke to his father later who confirmed he'll be coming tomorrow. I emailed some details to him. As I suspected, they're Greek (obvious from the surname). That explains the guy telling me that his father always encouraged him to get into property and have his first one paid off before he turned 30. Good on him.

Let's see if an offer comes out of this.

© All Rights Reserved

Relentless Agents 2

I got back to the agent from yesterday and asked her to come here at midday today to view the property and to talk further. She was from Alan Stanton Real Estate in Double Bay.

She called me at 11.41am (under 20 minutes before the agreed time) to tell me that she had done some research and found that because an apartment in my building had sold for $411k, my apartment was overpriced. She said she wanted to list my apartment accordingly - in the low $400's.

I reminded her that the first thing I asked her when we spoke yesterday was whether she was familiar with this area. I told her that she had no idea what she was talking about, as she did not take into account properties currently on the market or the precise location or condition of the properties she was quoting, or the condition of my property and the improvements made. I told her not to bother coming here and that I did not wish to deal with her company.

This is the usual trick Real Estate Agents pull. To them, there is no material difference between selling a property for $450k as opposed to selling it for $400k.

In this instance, given the above prices, the difference in their commission would have been 1.25% of $50,000, or $625.

So they would rather sell it quickly for $400,000 and take $5,000 in commission (and move on to the next poor sucker) rather than put in more time and effort and sell for say $450,000 and take $5,625 in commission.

To me the difference is $50,000. To me that is a lot of money. To them the difference is $625. It's pocket change. It's nothing to them.

With incentives like these its no wonder most of these bastards do what they do. And it is also the reason why I am trying to sell the apartment myself.

© All Rights Reserved

Relentless Agents

I received another call from yet another agent today. They say they will list and market my property with no upfront costs and will charge me 1.25% in the event of a sale. No sale, no commission. No other costs to me.

They're based in the eastern suburbs of Sydney.

Should I list with them? Do I have anything to lose if I can obtain a higher price than I otherwise might through them?

I'm thinking of having them over to view the property and to chat in more detail, but not listing with them until I give it another month of trying myself. The apartment has only been advertised for 13 days ... it will be 2 weeks tomorrow. Already I've had about 8 people through to look at it, and one offer.

Bastard agents. "Every time I think I'm out, they PULL me back in."

© All Rights Reserved

Google is Great

I got a call late last night (10.30pm!) from a woman who saw my ad Gumtree. She said she wanted to come tonight to view the place, but then messaged me to say she wouldn't be coming today and would call to make alternative arrangements.

I still haven't replied to the agent with overseas buyers. I am torn between principle and greed...

I read an article in the SMH today detailing how Google is adding an application to Google Maps to make it easier to search for properties - both to rent and buy. Looks like they take property details from various sites and incorporate that information into their own Google Maps service.

You need to go to Google Maps, click on "Show Search Options" and select "Real Estate" from the drop down box which appears. Then simply search for a suburb you're interested in.

For the moment Domain have said they will not be making their listings available to Google, and I presume Real Estate will do the same. Bastard monopolistic vampires.

These two obviously realise that Google may end their dominance of the property advertising market. For what its worth, I sincerely hope that is the case. As I've stated previously, greater (and fairer) competition is better for society as a whole. The end result is that prices come down with greater competition.

While on the Google Maps real estate pages I came across this site and listed my property on it for free: www.buyitprivately.com.au.

I also saw an ad for this site: www.nocommission.com.au.

Looks like they offer a fixed-fee service whereby you list your property with them (they are Real Estate Agents - and appear to be the kind we like) and pay a fixed fee of between $5k and $6k (depending on the package) upon the sale of your property. You also pay, upfront, between $1,300 and $2,300 for what they call administration and marketing costs. So, the total cost of selling through these guys would be between $6,300 and $8,300; or between 1.6% and 2.1% for a $400,000 property.

These guys certainly seem like a better option if you cannot do it yourself and have to sell through an agent. And if they survive (or thrive), you watch, the huge commissions currently charged by Real Estate Agents will definitely come down.

This has to be one of the silver linings of the current recession - prices coming down for many goods and services. And when the good times return, as they inevitably will at some point in the future, I doubt whether these prices/costs will increase. I think that once prices have fallen they tend to stay there.

Of course, only time will tell.

However, in my euphoria I must also admit my apprehension about the fact that Google is becoming so huge and powerful in almost everything online. So far, they have not abused their power (that I am aware of) and have largely been a force for good. If their philosophy remains unchanged, we will all be better off. Lets hope it does.

What did Lord Acton say...?

"Power tends to corrupt, and absolute power corrupts absolutely."

© All Rights Reserved

Week 2

I've had an agent pestering me all week to list with him, and yesterday (Saturday) had 3 more people come through. On of them, a young woman, came to look at the place after her father viewed it the night before. There was another young lady and a young guy with his girlfriend.

I think all of them liked it, but Female 1 (whose father also looked at it) said she liked the view from a studio apartment a lot better. I tried to impress upon her that the studio would be tiny, and that she couldn't live in the view, or store her things in the view - to me livability is more important than the view. I don't know if that is genuinely what she thought or if she was trying to dampen my expectations before making an offer. Time will tell.

The other two I think both liked the apartment and I think at least one of them (Female 2) will make an offer. She said she liked the bedroom and was concerned about safety and how long it would take to get to the city. She currently lives in Pyrmont and walks to work. I wanted to tell her that it would take her as long to get to work from here (by bus) as it does on foot from most places in Pyrmont, but got side-tracked and didn't say it.

Now turning to the agent - he saw my ad on Gumtree and has been calling incessantly. He said he will charge me 1.6% + GST and that he has a lot of overseas investors who trust him to provide advice and introduce them to properties.

I keep thinking that if this is true, I could be missing out on buyers with a lot of cash who might pay more than market value. I could tell him I'll only accept offers say above $470k (therefore getting me more than what I otherwise might, even after his commission).

Is that just me being greedy? I know for a fact that I don't trust this guy, purely because he is a Real Estate Agent.

I have to decide whether I sign with him on a non-exclusive basis, hence I only pay him if I accept an offer from one of his clients. I could simply sell to somebody myself rather than through him and am not tied to him in any way, shape or form. I have to decide and get back to him by tomorrow. He says he is prepared to bring 3 people to view the apartment tomorrow (Monday) afternoon.

I'm in a real bind here. I had set out to prove that this thing can be done without bastard agents. What to do... What to do?

Reminds me of Al Pacino's line from The Godfather III: "Everytime I think I'm out, they PULL me back in!"

© All Rights Reserved

Gumtree

Gumtree is a funny site. I once saw a 2-line ad saying - I kid you not:

"Pot Dealer Wanted".

That was the heading. The ad itself said something along these lines:

"Reliable pot dealer wanted. Please reply by email if this is you."

Now, this person was not the brightest star in the galaxy, given that they left an electronic trail leading straight to their computer, but hey, if they were craving for a ganja high and their usual dealer was (presumably) in prison, what else were they supposed to do?

Gumtree is very popular. And useful if you want to buy or sell second hand furniture, in fact anything. I urge people who have never heard of it to check it out. I also urge the owners of Gumtree to pay me for spruiking their site.

But I digress.

I listed my property on Gumtree 2 nights ago. I could have listed it for free (anybody can), but that would mean that every subsequent ad which is posted would send my ad further down the list. So I decided to pay $15 which buys me an advertisement at the top of the page for 7 days so that every time anybody searches for 'Properties for Sale' on the site, mine will be at the top of the first page.

I had 2 rather strange enquiries from the Gumtree ad, as well as a one-liner asking simply and succinctly: "how much?"

Going to the link pasted on my Gumtree ad which would take him to the Private Point website with my listing and all the information he may require was too much for this literary genius.

One woman called me saying she wanted to buy my apartment (she was literally prepared to buy it, without having seen it) provided that I sell on the following terms:

$5k deposit;

Monthly repayments for 24 months (amount of installment to be determined);

Balance of the purchase price payable in 24 months time, with settlement occuring at that stage.

She said she was an investor and was going to have the apartment leased. (The methodology described here has a corresponding method whereby the investor would then sell the property under a scheme known as a Wrap Mortgage. It is promoted by a guy named Rick Otten, among others. More about this in a later post.)

In my opinion a vendor would have to be very desperate and very stupid to agree to those terms (is there such a thing as desperately stupid?).

What if property prices fall in 24 months? What if the purchaser simply stops paying me at some point in the 24 month settlement period? What if their tenant stops paying rent, the purchaser cannot afford to pay me, and I cannot repossess the property because some bleeding-heart judge refuses to order the tenant to vacate? (let alone the time and stress that would be involved if things got ugly... I always tend to think of the worst case scenario as my starting point. God knows where I would be today if I took more risks).

So I wrote to her saying I would agree only if, given the inherent risks to me, the following terms are agreed to:

Selling price of $480k;

Deposit of $60k

Monthly repayments of $4k (greater than the current monthly minimum mortgage repayment)

She politely (and sarcastically) thanked me for crunching the numbers (I actually pulled the figures out of my a... I mean, thin air) but said she wouldn't be able to pay more than a $5k deposit.

I replied suggesting she go and jump off the nearest tall building.

Another reply to my Gumtree ad asked why I am selling the property and went on:

"but I am equally interested in finding out why you have chosen to sell it privately and on Gumtree. It strikes me as somewhat unusual, particularly given the competitive nature of the inner west real estate market".

My first thought was 'Isn't it bloody obvious?'. It also crossed my mind that this person could be a Real Estate Agent themselves.

So I replied and said that I wanted to cast a wider net in terms of advertising, and pointed out that he/she saw my ad and responded, in addition to at least 2 others thus far, and the fact that the ad had 62 hits in 48 hours, clearly showed that it was worth doing. I also said (lied) that I have listed with an agent as well although not exclusively.

I also stated in my reply: "It may be unusual but there is no law saying vendors MUST use a real estate agent!"

I have invited them to call me to arrange a time to view the apartment and discuss any other queries. Nothing as yet, unsurprisingly. And I won't hold my breath.

In conclusion, I feel Gumtree is worth advertising on because it takes a few minutes and costs only $15 (for 7 days 'top billing').

Lastly, to the owners of Gumtree: feel free to contact me and I'll give you an address where you can send me the cheque.

© All Rights Reserved

First Offer

I got an offer today from the investor. He offered $420k. He said he could go a little bit above that, but with difficulty. He tried to tell me that a similar apartment in the ground floor of the same building which sold for $411k suggests that my apartment was overpriced.

I spelled out for him why that ain't so:

1. Mine is on Level 3 and has a nice view of the park and some water as well (I hate it when agents say 'outlook' instead of view);

2. Nobody except for Spiderman is going to climb up 3 floors into my apartment, unlike a ground floor apartment, which have been known to have break-ins;

3. My bamboo floors are a lot better looking, practical, tenant-proof (for want of a better term) and durable than the old and worn out carpet in the apartment downstairs, which has been tenanted for years - not to mention more expensive at $95 a square metre;

4. I've just had my apartment painted;

5. I have installed a 2nd deadlock and a peephole in the from door - therefore increasing safety;

6. I have installed a small fireproof safe which is bolted into the concrete slab;

7. I spent nearly $1,000 on installing fly-screens on the balcony doors.

I also think my apartment is larger at 50 sq m internal + balcony (about 10 sq m) + carspace (about 10 sq m = total about 70 sq m) . In my opinion the apartment downstairs was smaller, but I don't know if that is my impression/estimation or it really is smaller.

I went to view it on Saturday when the agent had an open home. It was damp and cold and dark and just generally digusting. It had a larger courtyard than I have a balcony, but with trees and plants all around, all that means is a lot of cleaning for the resident. Also, in the summer they will have a far bigger cockroach / insect problem than somebody 3 floors up.

And when I asked the agent what the size of the apartment was, she said it was 71 sq m. It took a couple of follow-up questions for us to establish that 71 sq m was the total area as listed on the title (i.e. including the courtyard and carspace). I then specifically asked what the internal living area was, excluding the courtyard and carspace, and she said she didn't know.

Her reply was disingenuous.

I think the dodgy cow knew exactly how much the internal area was but refused to say it. Which is typical of Real Estate Agents. They will never say anything negative about the property at all. I mean, I just asked a factual question and she refused to answer.

Given the large courtyard, and presumably similar sized carspace, the internal area of that apartment would have to be smaller than mine if the total area was 71 sq m. Unless my logic us faulty!

I also talked him through what else was for sale in the area. All of which he was aware of. There is another apartment in a different building up the street on level 3 of a building without lifts. It also looks like it was tenanted (not well looked after), has a view of the building across the road, has old worn out carpets and is listed at $480k. They'll probably get $450 to $460k - unless the buyer sees my apartment first!

The conversation was cordial and we wished each other the best of luck.

I was annoyed with his offer initially but having thought about it, I don't blame him for having a crack. Gotta be in to win.

© All Rights Reserved

The Empire Strikes Back

I received an email today from the agents through whom I listed my property on various websites. They told me that REA Group, which owns and operates realestate.com.au, wrote to them saying that from today onwards they would not accept advertisements from agents representing 'private sellers' - defined as anybody who is selling a property without using licensed Real Estate Agents (and therefore paying through the nose for the privilege of being taken for a ride by dodgy Real Estate Agents).

It appears these bastard agents have seen the writing on the wall and are scared shitless about losing their dominant hold over the real estate market in this country. Apparently they have been pressuring REA to act by not allowing anybody but full-commission charging Real Estate Agents to list their properties on the site.

Now REA states in its own advertising that realestate.com.au is so popular that:

1. More people use their site than the next 15 competing websites combined (!);

2. 9 out of 10 Real Estate Agents use their site;

3. Their site lists more active properties than any other site.

Even is this is half true, they have a dominant position in the market for online advertising of real estate. Therefore their dominant power in the market comes with certain responsibilities, chief among them is not to abuse their dominant position.

By not allowing private sellers to list properties on the market and by marginalising smaller, discount Real Estate Agents (the kind we like), they are clearly in contravention of the Trade Practices Act. I have heard of some other discount agents who were using realestate.com.au to list their clients' properties but REA had cancelled their service agreements and had refused to list any further properties from them.

Now I don't entirely believe REA's claims as stipulated on their own website.

Domain.com.au is also a major player in the market, and whenever I have searched for properties I look on both websites and have almost always (with a few exceptions) found properties are listed on both websites. In several years of regular searches I could probably count on one hand the number of properties that were on Domain and not on Real Estate, and vice-versa.

Most agents I have spoken to list on both websites. I could be wrong and I am no expert in this area but it seems reasonable to me that REA have roughly 50% of the market, give or take a few percentage points.

However, that would not absolve them from prohibitions under the Trade Practices Act not to abuse their market power. 40% to 50% of the market (where 2 players effectively control the market) is still a dominant position, which if abused could lead to adverse consequences for consumers.

All I am saying is that it should be easier for people like myself to list on both sites - or go through a Real Estate Agent if they so wish.

For example, I am sure there are people who for whatever reason would choose to go through a Real Estate Agent rather than do the work themselves. I myself would go through an agent if I suddenly had to leave town and was unable to attend to the selling of my property.

As an analogy, imagine if Bunnings and Mitre 10 were the only 2 sellers of hardware and building materials. Lets say Bunnings, for arguments sake, is the biggest of the two (Bunnings has far more stores therefore some people effectively have no choice but to go to Bunnings).

Imagine of one fine day Bunnings suddenly decides it will not sell anything to private individuals - you must be a certified tradesperson (builder, carpenter, plumber etc) in order to be able to buy anything from Bunnings. As a result a lot of people who perform minor repairs and maintenance on their homes now MUST employ a tradesperson - resulting in higher costs, and other inconveniences.

This is essentially what REA is doing by forcing sellers to go through Real Estate Agents in order to maximise the exposure of their properties.

There should be a choice. Any market performs at its optimum where there is ample competition and choice. This is what Adam Smith spent his life's work arguing for.

Incidently, Adam Smith also warned of monopolies (and duopolies and oligopolies) and the harm they can do to society through raising prices simply because they can, resulting in those companies making 'abnormal profits' (abnormal being above the level they would have made in a competitive environment).

What I don't understand is: Why is REA acting in this manner? Surely they will still get the same number of ads, at the same prices, if private sellers are allowed to list their properties on realestate.com.au. Why are REA so hell bent on protecting Real Estate Agents?

Sure, a lot of these agents would be out of work if more and more people decided to do what I have done and list their properties without going through agents. That is the bottom line. But that would be a good thing. From my understanding of economics, that would mean that the out of work agents will be forced to do something more productive with their lives - and society as a whole would benefit.

At the moment all they are doing is charging like wounded bulls for what is in effect very little work - either in time or effort. As I alluded to in an earlier post, selling real estate is not rocket science.

Vendors simply increase their asking price to recoup their costs, resulting in the buyers of properties having to pay more.

Therefore, Real Estate Agents are directly responsible for inflating Australian property prices by about 3%. In other words, every purchaser would probably pay 3% less for their property if Real Estate Agents were taken out of the picture.

To illustrate:

A property worth $500,000 is overpriced by $15,000;

A property worth $400,000 is overpriced by $12,000;

A property worth $300,000 is overpriced by $9,000;

A property worth $1 million is overpriced by $30,000.

Thousands of dollars from every property transaction are lining the pockets of Real Estate Agents.

Please excuse me. I have to go and puke.

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The Importance of Being Well Informed

One of the most difficult and critical things when selling your home will be the setting the price. This is what I asked myself: At what price should I be listing my property?

This is a relatively manageable task which need not arouse any fear or loathing whatsoever.

The important thing is to do your research ahead of listing in order to determnie your listing price and strategy, as well as tidy your property up for the sale.

There are literally hundreds of websites which provide advice about how to make your home presentable and ready for sale.

In a nutshell, tidy up! Get rid of clutter. Spend time and perhaps a little bit of money to repair and maintain anything that looks tired or damaged. Make sure the place is clean. Hang fresh towels in the bathroom and kitchen. Change/replace lightbulbs if needed. Clean the front and backyards. Mow your lawns and spruce up the garden.

Personally, I would not brew fresh coffee or bake bread on open days... these tired cliches may work, but come on! Almost everyone knows about these techniques. I feel these are cheap tricks you should stay away from. As a buyer it would put me off. To me it would be obvious that this vendor is either desperate or consciously trying to manipulate me.

What I would do (and indeed did do) is have some pleasent soft music playing in the background. Something slow, so that people coming through will subconciously slow down, relax their breathing and ultimately spend more time viewing your property. Make sure it is not too hot or too cold inside. Open all doors and windows (including internal doors) for fresh air. Get rid of any unpleasent smells, and in fact introduce some fresh fragrance into your home.

The idea is to try and 'attack' potential buyers through every one of their senses. The key is to be subtle. Don't overdo it.

With price, get to know every similar property in your area that either has sold in the last 6-12 months or is currently on the market (i.e. your 'competitors'). Go to open homes and check out the properties which are in competition with yours. (Real Estate Agents do this all the time). Be objective - how do those properties compare to yours? What are other vendors listing their properties at? Be honest with yourself - would a buyer find these properties more or less attractive than yours? Therefore, how does your price compare to the competition?

Most importantly, read everything you can get your hands on about this subject. Watch TV shows like 'Selling Houses Australia' and make notes. Once you go through this exercise you will invariably obtain an understanding of the market and you should then be able to nominate a reasonable price at which to list.

In addition, you can always contact 2 or 3 local agents, tell them you're thinking about selling and ask them to provide you with a price which they think the property can reasonably achieve.

Trust me, the bastards will come running. Once you get what you want, you are under no obligation to list with those agents.

This may seem like a ruthless or even nasty thing to do - but its just business. Those same agents would not think twice about lying to you or ripping you off. Indeed, lying and cheating is how most of these people make their living - and they do it very well. So don't feel bad. It is business. And everything is fair in love and business (=> business is war).

Next, decide how to state your asking price. For example, if you simply name a price (say $450k), people will invariably make an offer below your nominated price.

Personally I was confident that my property would be in demand and made a decision early on that I would not sell for less than $440k. I then listed it as "Offers above $439k". ($439 sound better than $440, although there is no difference really. This is why retailers list products at $9.95 instead of $10.)

My intention was to keep time wasters away (a time-waster being anybody who is offering me less than $440k - I'd rather not sell below this price).

Another potential strategy is to nominate a range, for example "Offers from $440k to $460k". But I don't like it. Seems ambiguous.

Then sit back and wait for offers to roll in. Once an offer is received, take it seriously and make a decision as to whether you will accept it. Take your time. Don't be greedy but don't sell yourself short either. You can always simply tell the buyer that you are not prepared to sell for that price but would be keen if they increased their offer. If they love the place, they will come back with a higher offer. Or you can tell them that you have already received a higher offer and they will have to better the other offer if they want the property (in which case, don't lie as you could lose the only offer you have).

If you're uncomfortable with negotiations, seek help from your lawyer or a discount agent who specialises in this kind of service. Don't pay them too much though!

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Sunday

After an action-packed few days, nothing further happened today. No calls or emails or enquiries. Has a rather anti-climactic feel to it.

To make matters worse, I didn't win the Lotto.

I realised today - we have grown attached to this place. I guess because it was our first home and because of the blood, sweat and tears we expended in getting it to it's current state (refurbishments, dealing with dodgy contractors and all the associated stress, not to mention a the lawyer who was the tenant when we bought the place. She refused to vacate on the agreed date and refused to pay the full rent owing).

It has all been a valuable learning experience... always take vacant possession when buying a property.

I'm looking forward to moving into a larger place.

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Saturday

2 nights ago I finally got around to visiting the agents through whom I am advertising on various websites, including the 2 biggest - Real Estate and Domain.

I could have done it online / through the post but I preferred to do the deal in person and pay by cheque rather than credit card. I am paranoid about giving my details and money online to people I have not met in person.

As it turns out, I need not have worried.

The only downside is that the initial enquiry from buyers has to go to the agents. They then send me the potential buyer's details via email.

They say that if we gave my details/telephone number on the ad, the websites could ban them from using the sites. Meant to be for agent's only, apparently. Domain will allow private user's to list but they charge $500/month. Monopolistic corporate vampires.

COST

I spoke to the conveyancer who acted for me when I bought the property who said he'll do the legal work for $750 + the cost of obtaining council certificates etc (around $120). The cost of going through agents for the website listings was $299 (for 3 months) + $44 for the 'For Sale' sign.

The sign they provided is just the corrugated plastic signage without the wooden stake needed to plant it into the ground. I had to go to Bunnings and found a 1.8 metre picket fence (for only $3.60) which will do the trick very nicely. I'll just turn the thing up-side-down, nail the sign into the stake and Baljindar is your great-uncle from your paternal-grandmother's side.

Total Cost: just over $1,200 as opposed to many thousands of dollars if I went through a Real Estate Agent.

The advertisements and pictures went up at 6pm on Thursday night.

Today (Saturday) I had 3 people through the property. One of them was an investor.

I think the 1st lady and the investor are really keen but the 2nd person was either not keen or didn't want to spend as much and won't be taking it further.

One advantage of doing this myself is that I have all the time in the world to show people around; if we are home, people are welcome to come through, any day of the week, any time of the day (or night).

Whereas a Real Estate Agent would only come through (and bring buyers) at his or her convenience. An impatient buyer or a buyer who refuses to tolerate a Real Estate Agent's strict timings would probably miss out and go elsewhere. And if the Real Estate Agent prioritises another property over mine (perhaps because there is a higher commission in it for him/her), then I simply have to wait (or worse miss out) on potential buyers.

I am confident that my 1 bedroom apartment is one of the best on the market right now, so I actually prefer people to go elsewhere and see for themselves what their money will buy on the market before they come here. We have made a lot of improvements since we purchased it.

Here is a list of what we did:

new paint

bamboo floors throughout (with more than adequate acoustic insulation)

small fireproof safe installed for keeping important documents and valuables

fly screens on balcony doors

drawers/cabinets installed to utilise space better and increase storage

Three things I didn't get around to were installing an air conditioner, a storage unit in the garage and another larger built-in wardrobe (there is a lot of wasted space in the bedroom).

The A/c would cost an extra $1,500, storage unit $2,500 or so and the custom-built wardrobe another $1,000. These would make the place more livable and further improve the capital value of the property. If we were staying I would have done all three by the end of the year.

So, it is now the end of the first day of showing/selling the property. Not that I had to do much other than be nice and talk to people and answer their questions and tell them about the property and location.

I'm looking forward to having more people through, and most importantly to some good offers coming in. I listed it as "Offers Above $439k". I would definitely sell at $460k. Lets wait and see if my wish comes true.

Meantime there is a $90 million Lotto draw on Tuesday.

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Selling my first property - no agents required!

We decided now was the right time to sell our property. It is a 1 bedroom apartment in inner Sydney, Australia.

I have hated Real Estate Agents for a long time. They are the scum of the earth, in my humble opinion. I hate the lying, cheating, deceiving, selfish, crooked so-called profession. With a passion.

Hence I decided to try and sell the place myself.

After all, the legal work is done by a lawyer or conveyancer; I will be showing the property and 'selling' it to the buyers myself; I will decide whether to accept an offer or not - why the hell should I pay a real estate agent 3% of my selling price? (in this case, around $13.5k).

So, over the coming days and weeks, I will be posting my thoughts and experiences and hopefully it will help home owners with their decision when it comes to selling their own properties.

Hopefully we will begin a movement of vendors selling without Real Estate Agents. Hopefully all the dodgy people in this industry will leave and try their luck selling used cars or something. Hopefully the remaining Real Estate Agents will see the writing on the wall and start behaving honestly and charging a fair price for their services as opposed to the exorbitant rates currently paid by vendors.

I mean, should we really be paying over $20,000 (which is what a lot of vendors pay) for what, a total of perhaps 10 hours work?

Do these people really expect us to believe they are worth $2,000 A FUCKING HOUR?

Some neurosurgeons don't charge that much. And in my experience, selling properties is not brain surgery.

Wish me luck.

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