Working out what work to do.

One question we are commonly asked by clients is ‘how much should we spend on the house before we sell?.’

Obviously every case is different but generally speaking people need to be very careful with this as we often see thousands sometimes tens of thousands of dollars wasted on pre-sale renovations.
In my experience there are 2 types of properties that attract alot of interest and get high prices in Sydney, renovated homes and un-renovated homes.

If you own a classic period home on a good street that hasn’t had any work done to it in decades chances are you are going to have hordes of interested young couples that have watched television shows like ‘The Block’ and they will be champing at the bit to  create their own dream home. Suffice to say many of these young couples have never been through a renovation and often have no idea of the cost both in time & money a renovation requires. All of this amounts to potential packed homes selling for top dollar in the current market.

On the other hand a recently renovated home with all of the ‘bells & whistles’ will attract buyers (many of whom who have renovated before!) that will pay a premium for a completed product. The catch here is that Sydney-siders will pay handsomely for quality but will turn their nose up at cheap renovations, good properties get good prices.

There is a third type of property and that is the ‘in-betweener.’ These properties have often had bits & pieces done over time, maybe an extension in the 70’s, a pool in the 80’s, a bathroom in the 90’s and so on. Its this category where people have to be careful. If your home is like many Australian homes that is a patchwork of renovations and you want to sell be extremely careful before you spend vast sums of money on modernising the property.

The fundamentals have changed with time for example open plan is in, formal dining is out. If your property has a dated floor-plan then spending $30,000 on a new kitchen could be a complete waste of money. Our office once sold a house in the prestigious harbourside suburb of Clifton Gardens and the owners insisted on replacing the kitchen before sale. The purchaser was  a young cashed (or perhaps mortgaged) up executive who had grand renovation plans.....1 week after settlement the former owners drove past and there was most of the kitchen – on the nature strip.

When you go to sell your home, presentation is key but that doesnt mean renovation. Focus on making your home welcoming & make sure it sparkles. Tidy up the front garden, plant some flowers, consider painting, lose the heavy old curtains that prevent natural light from coming into your home and clean those windows!
You will be surprised by what clever tidying up will do to the impression that your home makes rather than trying to guess what the next generation wants in their kitchen.

David Murphy owns an independent real estate agency in Sydney’s lower north shore – feel free to call ON 02 9968 2088 or email with questions david@davidmurphy.com.au

Look before you leap...

Before a real estate agent can show prospective purchasers (legally) through your home there are two pieces of paperwork that you need to have in place. The first is a contract of sale, which is normally prepared by a solicitor or conveyancer – on rare occasions people opt to do their own legal work (it was Lincoln who famously said ‘He who represents himself has a fool for a client!’).

The second piece of paperwork is called an agency agreement. These agreements confirm the terms under which your agent has been appointed and legally authorize the agent to perform duties on your behalf.

But be warned. These agency agreements are designed solely for the protection of the agent, not you.

In real estate, it’s all about getting the listing. If you work as a selling agent you simply have to get listings or you will not survive. The Sydney market is one of the best in the world so it stands to reason that if you can find and secure stock (ie properties) you will make sales.  Not surprisingly, the competition amongst agents for listings is fierce.

What many sellers don’t realise is that the agreement you sign with an agent is a very powerful document. And surprisingly, many people don’t read the whole document – until it’s too late. On one hand, I’m not surprised that this happens as an average agency agreement is about four pages in small print. However, you simply must know what you are signing before you sign it!

What can go wrong? Plenty. We regularly meet consumers that signed an agreement with an agent without realising that even if their property didn’t sell they would be slugged for thousands of dollars in expenses. We also meet people who sign agreements with agents that have exclusive periods (ie only that particular agent is permitted to sell the property) that exceed four months. Which raises the obvious question: if an agent is promising you that they already have buyers and will sell your house in two weeks, why on earth are they asking you to sign a 16 week agreement?

A very well known ‘premium’ franchise signs people up from 30 days prior to the auction and then 90 days after the auction. Why? Why do they need 90 days after the auction if they’re so confident that it will sell either prior to or at the auction? Very good question…and this is where it gets interesting or sinister – depending on how you are looking at it.

No matter what you have been promised by the agent prior to signing the agreement – once you have signed the agreement, you are trapped. It’s very common to hear people say the agent was great and then the minute they signed, things changed and the agent started talking the price down.

 It’s worth asking your agent if they’d be prepared to add a dismissal clause to the agreement – stating that if you, the seller, are not happy with the service, the agent will cancel the agreement within three days of being notified in writing. If they are not prepared to add the clause, then you have to ask yourself why not?

When you sign with an agent, the high point of the relationship shouldn’t be when they get your signature, but rather when contracts are exchanged for a price you’re delighted with.

David Murphy owns an independent real estate agency in Sydney’s lower north shore – feel free to call ON 02 9968 2088 or email with questions david@davidmurphy.com.au

The house is ready....are you?

According to wikipidia ‘The endowment effect is the hypothesis that a person’s willingness to accept compensation for a good is greater than their willing to pay for it once their property right has been established.’ In the world of real estate this means we all think our home is worth more than it really is.

Given that I have been selling real estate for well over a decade, I expected that I would be immune to this phenomenon. However, as the last coat of paint is rolled onto the walls of my own home, I find myself day dreaming at what the property may now be worth (despite the fact it was bought at the height of the boom and our original renovation budget has doubled).

When it comes to our homes, the endowment effect costs average Australians millions of dollars a year in squandered opportunities. Our homes are normally our biggest assets and we are emotionally attached to them. It’s impossible to be objective about the market value of a place where you watch your children take their first steps or where you bowled Dad out in that legendary game of back yard cricket.

Combine this with a market where more and more real estate agents than ever are competing for less and less sales, and you have a recipe for disaster.

Most people call in three agents and ask one simple question: ‘what is it worth?’ Knowing their answer will affect their chance of getting the listing, the agents normally give the owners an ‘optimistic assessment’, ham up how many perfect buyers they have on their books, and before the house even hits the market they’ve painted the scene for a fever pitch auction.

At this stage most people go on the market and their ability to recognize a good offer is all but gone – and who can blame them? But the worst is yet to come…

Your property is likely to be worth the most the first day it is put on the market. The best buyers spot it quickly and turn up immediately – these buyers are ready and if it’s what they are looking for, they will pounce. As the seller, you are in a very strong negotiating position – you own the product and it’s brand new to the market.

This is where the disaster normally unfolds – the overconfident seller meets the best buyers in the market and rejects their early offers. The expectation is that next week there will be even more but in most cases the next week there are less. Ask friends and you will find this happens all the time.

The greatest challenge that home sellers across the globe face is finding out how much their beloved home is worth before putting it on the public market.

So how do you find out? Either call an independent valuer before you select an agent, or when interviewing agents ask them to propose a sliding scale on their commission – going from best case to worst case.

A sliding scale will reveal to you where the agent really thinks the house will sell and this is exactly what you need to know before you start. 

The truth about cats & dogs

According to the Australian Bureaus of statistics (& the RSPCA) pets are part of the family in 63% of Australian households. The same sources state that Australia has the highest level of pet ownership in the developed world.

 Coupled with some of the most expensive real estate on the planet this has created an interesting issue for pet owners. The dream of owning the quarter acre block in Australia’s capital cities is fast becoming just that. More & more of us are now living in more affordable strata title properties like apartments, duplexes & townhouses. Many experts predict this trend will continue and in the future the big back yard will be for the very few that can afford it.

So where does this leave our pets? We have recently been seeing a growing trend of strata title buildings enforcing a ‘no pets’ policy, leaving a lot of potential buyers wary and in many cases existing owners frustrated by the restriction.

 The irony here is that many people living in strata buildings believe that by saying ‘no pets allowed’ are protecting the value of their asset but I would suggest as an experienced selling agent there is very strong evidence to the contrary.

Recently our office was selling a garden apartment in Neutral Bay and the amount of initial interest in the property was very high (mainly from young couples & downsizers – the majority of which had pets). On the strata records there was clear evidence of an anti pet sentiment in the building and many buyers simply walked away – in this case it probably lowered the sale value of the property by 5-10% which in real terms meant $50,000-$100,000.

Obviously the common sense rule needs to apply with animals and above all the welfare of the animal should be paramount, clearly a neglected dog barking all day in a block of apartments is not acceptable to anyone (at the very least for the poor animals sake!).

 When deciding on rules there are often things that are not considered by owners corporations. For example, most pet owning purchasers are owner occupiers & its fair to say that most buildings prefer owner occupiers due to owners corporation involvement & stability (we have seen far more problems caused in buildings by people rather than pets).

 In the interest of full disclosure, I live in small strata building on the lower north shore & have very happy neighbours and an even happier rescue dog so you could certainly question my objectivity on this issue. However, from a real estate perspective I would suggest that owners corporations think twice before applying a ‘no pet policy’ because it just might lower the value of your property.