HI mate...see this in the SMH that I just picked up? Its scary if true and Neil Jenman is pretty well on the ball.
"PROPERTY'S PAINFUL TRUTH
Sydney first, others will be next.
by Neil Jenman
A story on page 3 of Monday's Sydney Morning Herald (August 21, 2006) has probably become the most talked-about property article of the year.
Suddenly, the painful truth of Sydney's property market can no longer be denied, covered-up or buried under self-serving industry spin.
All the recent real estate cliché words– such as 'soft landing', 'correction', 'adjustment', 'plateauing,' have been swamped, tsunami-style, with one truthful word – CRASH.
The first two words in the Herald headline were 'Housing Crash'. And the first paragraph proved this was no media beat-up. A home in Sydney's western suburbs which had been bought at the peak of the boom in 2003 for $450,000 had been re-sold for $260,000 – a 42 per cent price fall.
The owners, who had been unable to keep up the payments on their mortgage of $405,000, saw it sold by the mortgagee for $260,000.
Another painful truth is now becoming evident in the property market – negative equity (where the amount of the loan exceeds the amount of the value), in this case $145,000.
This one sale is not an isolated case. Of 16 sales checked by the Herald, more than half had sold for less than their previous sale prices.
Another property which sold for $257,000 in 2003 was re-sold for $156,500.
So why do the "official figures" not show these drastic price falls? Well, two reasons – first, as everyone in-the-know knows the real estate industry distorts and twists its sales results.
As finance journalist, Michael Pascoe, wrote in crikey.com.au last week, "A Sydney Century 21 real estate agent has broken one of the golden rules of his profession: never admit there's anything wrong with the market as it's always a good time to buy." The agent had confessed that "there's absolutely nothing happening out there".
Such honest comments are not welcome among the real estate crowd.
The second reason that the "official figures" do not show the true decline in property prices is because the affordability crisis has forced so many first-home buyers out of the market. Consequently, with fewer lower priced homes selling the overall figures are distorted. The prices appear higher.
Also, many sellers who cannot achieve the price they want simply withdraw their homes for sale. Just because they refuse to sell it doesn't mean their homes have not dropped in price.
For example, in another western Sydney suburb an investor who was told back in 2003 that he could sell his property for "around $320,000" was told last month that he "may get $200,000". He decided not to sell. Such price falls do not show up in the official figures.
And the price falls are not confined to the western suburbs of Sydney.
Yesterday, an agent from the inner-city suburb of Balmain said, "I would go so far as to say that the market is dropping weekly at the moment."
In Sydney, the spin-doctors are finally silenced. Many agents who urged people to keep on borrowing and buying, borrowing more and then buying more are now handling the distressed and mortgagee sales. Spin or no spin, some agents never lose.
Meanwhile, in other parts of Australia, the spruikers (agents, property experts, investment advisers or whatever they call themselves) are telling buyers that the Sydney market is different and that their area is not going to be affected by a downturn. Don't believe them.
Haven't you ever noticed that the people urging you to buy real estate are the people who are selling it?
Just remember: the property boom began in Sydney and then spread across the nation.
The same will apply with the property crash."
Bert: Sydney Property market?
There was a article in one of the papers on the weekend about the number of homes being repossed. Very disturbing. I don't really follow it up here (due to the stupid prices) but there are people that borrowed there ass off and with higher petrol prices and Intrest rates going up there in big strife.
One of the guys I work with had the same problem with a investment property he was trying to sell. He would have lost money on it.
One of the guys I work with had the same problem with a investment property he was trying to sell. He would have lost money on it.
Interesting article.
I am a real estate agent in Canberra. I do not work for a "Jenman approved" agency.
Neil Jenman in my opinion is a drama queen and whenever A Current Affair wants to have a dig at real estate agents, they get him on their show.
The Canberra market has just seen a 3% rise in prices in the last quarter.
The low end of the market is extrememly vibrant and record prices for particular suburbs are still being acheived.
Canberra and Melbourne in particular in my opinion go hand in hand with Sydney to a degree.
Our market (Canberra) died in the arse in late 2003 after two consequtive rate rises. People like Jenman came out and predicted a crash in the market all over Australia.
What you had then was a downturn in buyer confidence and buyers sitting on the hands waiting for the prices to drop. Remember to in NSW the state goverment brought in that stamp duty tax for investors on the profits they made after selling their properties. This took a lot of investors out of the market (investors tradionally being up to 53% of the market). Thankfully the government took that stupid tax away.
During 2004 the market was very slow. Average listing times blew out. More stock came on the market and people did have to consider a lower price to get their homes sold. In the ACT, the local government announced stamp duty concessions for first home buyers two months before they were due to start, which caused all the first home buyers to stop looking until the concessions came in and those who had bought just before it was announced pulling out of purchases to wait the two months until the concessions started. Then we had a federal and territory election in October. Elections always slow the market.
However once the elections were out of the way, the market in the ACT has steadily picked up and this year buyer activity has been great. This has been because in my opinion, the "crash" did not happen as it was predicted, rents are going up and now first home buyers get stamp duty concessions and the $7000 grant, a big chunk of their upfront costs are covered.
Sadly, people who have the Bank's foreclose on them, lose to right to have any say when the property is sold, and the Bank is not interested in the house selling for its correct market value. All they care about is getting their loan repaid. They are easy sales. Buyers who are aware that it's a mortgagee in possession sale will not pay top dollar because they figure they will get a bargain, the agent also is keen to get it sold in fear of losing the listing if it does not sell. They are also in every case auctioned, a method of sale that Mr Jenman does not like.
If people are staring down the barrel of the Bank selling them up they should list their property prior to action happening. Then the vendor has a say in what price they get and the Bank will genrally give them a bit of extra time to sell once they know the home has already been listed.
With rate rises this year and more people falling foul due to being over committed these type of slashing in prices will occur. If a house is worth $350,000 and the people only owe $240,000, the Bank sells the property as mortgagee in possession, the vendor has no longer has any rights, you can guess what price the Bank will accept. $240,000 plus enough to cover legal costs, agent costs and the extra to cover the additional default interest and bank fees. The Bank is not interested in pushing a buyer to $350,000 because it will take longer to sell and it is not in the Bank's interest to see the vendor walk away with thousands of dollars in equity. The Bank looks after no 1 and that is it.
As far as Neil Jenman, he has a number of agencies following his methods and beliefs in relation to selling houses, which are noted as "Jenman Approved" agencies.
I personally do not agree with their methods. As an agent my job is to get the vendor the best price. Mr Jenman has written a best seller book on how not to pay too much for a house. The Canberra agency who follows his methods state on their web site as a message to buyers to call them if they want buy a house at a fair price, or words to that effect.
They don't believe in advertising, they don't put pictures of their listings in their windows, they don't do open homes, they don't put all of their listings on the internet and when they do they don't put the address on it. They do not give any information of the houses they are selling over the phone.
They rely on people walking into their office or seeing the for sale sign. They do not show a buyer the house until they have an interview and the agent decides that they are in a position to see it.
We refer to their methods as trying to sell a home by magic. How can you sell a house if you don't advertise it? It's hard to sell a secret! What then happens is it stays on the market and the agent then starts to blame the price for it not getting interest. Then they start to hound the vendor to drop their price.
The way they promote themselves is to scare the shit out of people that all the other agents are going to screw them. I had one their agents do a presenation in my home, they told me that if I had an open home I'd get burgalled and because the agent would let anybody in then I wouldn't be covered by insurance. They told me my home would lose value if the sun faded a picture of my house in the window because people would think it would be an old listing. "Don't sign anything!!, until the agent signs all these guarantees". Their agent told me that if they couldn't achieve a certain price I didn't have to pay a commission. That certain price was still $40,000 under their market appraisal! Big deal! In my opinion it's a big toss.
I strongly believe, vendors should not sell houses for a fair price, they should sell it for the best price they can get. That's what they pay an agent for. An agents job is not to tell buyers methods of how not to pay too much for a house, its job is to provide service and get every single cent the buyer is prepared to pay for that house.
Mr Jenman has said if I remember that buyers should get a formal valuation done on a property before they buy it. Why would you suggest that when an agent's job is to get the best price for the vendor, the person who is paying the agent. If someone is prepared to say $400,000 for a house and I then tell them to get a valuation and it comes in at $395,000, I've potentially cost my vendor $5,000. (In my experience less than 5% of valuations come in at less than purchase price because the valuer instead of trying to determine a figure is doing the valuation to prove what the buyer is paying is reasonable and comparing that figure to past sales).
Sure as hell too that buyer will be a seller in the future and they won't get me to sell their home because they remember how I gave them tips on how not to pay too much and they won't want their buyer given the same tips cause they will want the "best" price when they sell.
Let me ask you. Would you want to hire an agent that is forecasting doom and gloom and filling your buyers heads with stuff that the market is going to crash and to be careful on what they're paying? If they're saying that to the buyer can you imagine what they're saying the their vendors to get them to reduce their expectations on what they're going to get for their house! They accuse other agents of conditioning vendors, if this isn't conditioning I don't know what is.
I would want a positive agent who believes they can get the "best price".
In finishing I would say that these instances would be isolated and could very well be situations where the Bank has foreclosed on people. Huge drops like that seem to be very large and I have not personally come across anything like that in Canberra. My opinion is that the Balmain agent probably works for one of neil Jenman's approved agencies and is not trying to contradict Mr Jenman's statements.
In 2004 people did see a bit of a drop in prices, but buyer activity is now very good.
As far as the "first home buyer" market, this year every home in this bracket I've sold have had buyers all over them, all achieved more than my market appraisal, all bar one achieved the asking price (4 exceeding the asking price) and sold very quickly.
With the internet now, buyers are more educated than ever, they will generally look at a number of homes, study the market and know what they're prepared to pay. It's then up to vendor if it's a deal. That's the vendor's right.
I respect all of my competitors in my field however I do not agree with the methods Neil Jenman's approved agencies market homes.
I wonder if these stats he's plucking out of his bum are from the agencies following his methods. If so maybe they should look at the way the do things in relation to the way they market homes. Negative agents generally get negative reactions.
I'll get off my soap box now. I am passionate about my job, I don't lie to people because and I have worked hard to build myself a good reputation which I wish to keep. Mr Jenman always comes out with huge accusations in relation to what other agents do and he has his right to an opinion.
My opinion is that Neil Jenman looks for headlines, he is a drama queen and he thinks every one is fraudulent except for him.
I personally would not get one of the agency's that follow his rules and methods to sell my home.
I am a real estate agent in Canberra. I do not work for a "Jenman approved" agency.
Neil Jenman in my opinion is a drama queen and whenever A Current Affair wants to have a dig at real estate agents, they get him on their show.
The Canberra market has just seen a 3% rise in prices in the last quarter.
The low end of the market is extrememly vibrant and record prices for particular suburbs are still being acheived.
Canberra and Melbourne in particular in my opinion go hand in hand with Sydney to a degree.
Our market (Canberra) died in the arse in late 2003 after two consequtive rate rises. People like Jenman came out and predicted a crash in the market all over Australia.
What you had then was a downturn in buyer confidence and buyers sitting on the hands waiting for the prices to drop. Remember to in NSW the state goverment brought in that stamp duty tax for investors on the profits they made after selling their properties. This took a lot of investors out of the market (investors tradionally being up to 53% of the market). Thankfully the government took that stupid tax away.
During 2004 the market was very slow. Average listing times blew out. More stock came on the market and people did have to consider a lower price to get their homes sold. In the ACT, the local government announced stamp duty concessions for first home buyers two months before they were due to start, which caused all the first home buyers to stop looking until the concessions came in and those who had bought just before it was announced pulling out of purchases to wait the two months until the concessions started. Then we had a federal and territory election in October. Elections always slow the market.
However once the elections were out of the way, the market in the ACT has steadily picked up and this year buyer activity has been great. This has been because in my opinion, the "crash" did not happen as it was predicted, rents are going up and now first home buyers get stamp duty concessions and the $7000 grant, a big chunk of their upfront costs are covered.
Sadly, people who have the Bank's foreclose on them, lose to right to have any say when the property is sold, and the Bank is not interested in the house selling for its correct market value. All they care about is getting their loan repaid. They are easy sales. Buyers who are aware that it's a mortgagee in possession sale will not pay top dollar because they figure they will get a bargain, the agent also is keen to get it sold in fear of losing the listing if it does not sell. They are also in every case auctioned, a method of sale that Mr Jenman does not like.
If people are staring down the barrel of the Bank selling them up they should list their property prior to action happening. Then the vendor has a say in what price they get and the Bank will genrally give them a bit of extra time to sell once they know the home has already been listed.
With rate rises this year and more people falling foul due to being over committed these type of slashing in prices will occur. If a house is worth $350,000 and the people only owe $240,000, the Bank sells the property as mortgagee in possession, the vendor has no longer has any rights, you can guess what price the Bank will accept. $240,000 plus enough to cover legal costs, agent costs and the extra to cover the additional default interest and bank fees. The Bank is not interested in pushing a buyer to $350,000 because it will take longer to sell and it is not in the Bank's interest to see the vendor walk away with thousands of dollars in equity. The Bank looks after no 1 and that is it.
As far as Neil Jenman, he has a number of agencies following his methods and beliefs in relation to selling houses, which are noted as "Jenman Approved" agencies.
I personally do not agree with their methods. As an agent my job is to get the vendor the best price. Mr Jenman has written a best seller book on how not to pay too much for a house. The Canberra agency who follows his methods state on their web site as a message to buyers to call them if they want buy a house at a fair price, or words to that effect.
They don't believe in advertising, they don't put pictures of their listings in their windows, they don't do open homes, they don't put all of their listings on the internet and when they do they don't put the address on it. They do not give any information of the houses they are selling over the phone.
They rely on people walking into their office or seeing the for sale sign. They do not show a buyer the house until they have an interview and the agent decides that they are in a position to see it.
We refer to their methods as trying to sell a home by magic. How can you sell a house if you don't advertise it? It's hard to sell a secret! What then happens is it stays on the market and the agent then starts to blame the price for it not getting interest. Then they start to hound the vendor to drop their price.
The way they promote themselves is to scare the shit out of people that all the other agents are going to screw them. I had one their agents do a presenation in my home, they told me that if I had an open home I'd get burgalled and because the agent would let anybody in then I wouldn't be covered by insurance. They told me my home would lose value if the sun faded a picture of my house in the window because people would think it would be an old listing. "Don't sign anything!!, until the agent signs all these guarantees". Their agent told me that if they couldn't achieve a certain price I didn't have to pay a commission. That certain price was still $40,000 under their market appraisal! Big deal! In my opinion it's a big toss.
I strongly believe, vendors should not sell houses for a fair price, they should sell it for the best price they can get. That's what they pay an agent for. An agents job is not to tell buyers methods of how not to pay too much for a house, its job is to provide service and get every single cent the buyer is prepared to pay for that house.
Mr Jenman has said if I remember that buyers should get a formal valuation done on a property before they buy it. Why would you suggest that when an agent's job is to get the best price for the vendor, the person who is paying the agent. If someone is prepared to say $400,000 for a house and I then tell them to get a valuation and it comes in at $395,000, I've potentially cost my vendor $5,000. (In my experience less than 5% of valuations come in at less than purchase price because the valuer instead of trying to determine a figure is doing the valuation to prove what the buyer is paying is reasonable and comparing that figure to past sales).
Sure as hell too that buyer will be a seller in the future and they won't get me to sell their home because they remember how I gave them tips on how not to pay too much and they won't want their buyer given the same tips cause they will want the "best" price when they sell.
Let me ask you. Would you want to hire an agent that is forecasting doom and gloom and filling your buyers heads with stuff that the market is going to crash and to be careful on what they're paying? If they're saying that to the buyer can you imagine what they're saying the their vendors to get them to reduce their expectations on what they're going to get for their house! They accuse other agents of conditioning vendors, if this isn't conditioning I don't know what is.
I would want a positive agent who believes they can get the "best price".
In finishing I would say that these instances would be isolated and could very well be situations where the Bank has foreclosed on people. Huge drops like that seem to be very large and I have not personally come across anything like that in Canberra. My opinion is that the Balmain agent probably works for one of neil Jenman's approved agencies and is not trying to contradict Mr Jenman's statements.
In 2004 people did see a bit of a drop in prices, but buyer activity is now very good.
As far as the "first home buyer" market, this year every home in this bracket I've sold have had buyers all over them, all achieved more than my market appraisal, all bar one achieved the asking price (4 exceeding the asking price) and sold very quickly.
With the internet now, buyers are more educated than ever, they will generally look at a number of homes, study the market and know what they're prepared to pay. It's then up to vendor if it's a deal. That's the vendor's right.
I respect all of my competitors in my field however I do not agree with the methods Neil Jenman's approved agencies market homes.
I wonder if these stats he's plucking out of his bum are from the agencies following his methods. If so maybe they should look at the way the do things in relation to the way they market homes. Negative agents generally get negative reactions.
I'll get off my soap box now. I am passionate about my job, I don't lie to people because and I have worked hard to build myself a good reputation which I wish to keep. Mr Jenman always comes out with huge accusations in relation to what other agents do and he has his right to an opinion.
My opinion is that Neil Jenman looks for headlines, he is a drama queen and he thinks every one is fraudulent except for him.
I personally would not get one of the agency's that follow his rules and methods to sell my home.
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billyduckworth
- Club Captain
- Posts: 3044
- Joined: Fri Sep 01, 2006 11:16 am
- Location: Adelaide
Hi Billy, to be honest I'm not fully aware of how the markets are in rural areas.
I spoke to one of my colleagues today who looks after rural areas in surrounding NSW after seeing your question and I searched the internet for Cobram prior to talking to him.
He said in rural areas or smaller country towns where there isn't a high poulation the level of buyers that are around would not be as high as what you'd get in Canberra, Sydney, Melbourne etc.
The prinicpals though are the same as everywhere.
There are generally five reason as to why a house does not sell.
1. Pricing - if the price is too high a buyer may be loathe to make an offer or people may choose not to look.
2. Vendor Motivation - if the vendor is not in a hurry they may knock back offers or they're or not going to sell/prepared to wait until they get a desired price.
3. Something wrong with the house - too much work, poor presentation, bad building report, structual problems, steep block, small backyard, white ants etc.
4. Location - could be a main road, steep block, next to a rail line, shit looking neighbours etc
5. The Agent - poor marketing, no follow up, poor management etc.
Real estate is very much affected by supply and demand. If there are a lot of houses for sale and not many buyers then vendors may have to look at a lower price to make it more competitive to attract a buyer. If there is little demand then it will take longer to sell. If there are not many listings and lots of buyers, buyer competition pushes the $ up.
Billy, hang in there. We are entering what we call the silly season which is generally late September early October to just before Santa.
Once the footy's finished, the last lot of school holidays are over, the flowers start to come out, the weather gets a bit warmer, generally buyers come out of the woodwork. People like to buy and get settled before Christmas, extra buyers come due to transfers in work such as public servants, school teachers etc looking for properties and settling in for the new year.
Also talk to your agent and request a meeting at your home to discuss what they are going to do, what you should do to help things along.
If you've been on the market some time, in this meeting check out your thoughts of your agent to see if they are still motivated to sell your home and not passed it off as too hard, listing agreements give agents a certain time to sell your home, if your not satisfied shop around and consider giving another agent a go. Changing agents may mean your off the air for a week or two but if you've been on the market for some time a break, or a change of approach from a new agent could just what your house needs. A house having a break for a week or two I've found can cause a interested party that has not made an offer to enquire what has happened.
Telling your agent that your considering a change of agency could also snap your agent in to line.
Good luck Billy, I hope you get to sell your home soon and you achieve the result your after.
Thank you too for asking me.
I spoke to one of my colleagues today who looks after rural areas in surrounding NSW after seeing your question and I searched the internet for Cobram prior to talking to him.
He said in rural areas or smaller country towns where there isn't a high poulation the level of buyers that are around would not be as high as what you'd get in Canberra, Sydney, Melbourne etc.
The prinicpals though are the same as everywhere.
There are generally five reason as to why a house does not sell.
1. Pricing - if the price is too high a buyer may be loathe to make an offer or people may choose not to look.
2. Vendor Motivation - if the vendor is not in a hurry they may knock back offers or they're or not going to sell/prepared to wait until they get a desired price.
3. Something wrong with the house - too much work, poor presentation, bad building report, structual problems, steep block, small backyard, white ants etc.
4. Location - could be a main road, steep block, next to a rail line, shit looking neighbours etc
5. The Agent - poor marketing, no follow up, poor management etc.
Real estate is very much affected by supply and demand. If there are a lot of houses for sale and not many buyers then vendors may have to look at a lower price to make it more competitive to attract a buyer. If there is little demand then it will take longer to sell. If there are not many listings and lots of buyers, buyer competition pushes the $ up.
Billy, hang in there. We are entering what we call the silly season which is generally late September early October to just before Santa.
Once the footy's finished, the last lot of school holidays are over, the flowers start to come out, the weather gets a bit warmer, generally buyers come out of the woodwork. People like to buy and get settled before Christmas, extra buyers come due to transfers in work such as public servants, school teachers etc looking for properties and settling in for the new year.
Also talk to your agent and request a meeting at your home to discuss what they are going to do, what you should do to help things along.
If you've been on the market some time, in this meeting check out your thoughts of your agent to see if they are still motivated to sell your home and not passed it off as too hard, listing agreements give agents a certain time to sell your home, if your not satisfied shop around and consider giving another agent a go. Changing agents may mean your off the air for a week or two but if you've been on the market for some time a break, or a change of approach from a new agent could just what your house needs. A house having a break for a week or two I've found can cause a interested party that has not made an offer to enquire what has happened.
Telling your agent that your considering a change of agency could also snap your agent in to line.
Good luck Billy, I hope you get to sell your home soon and you achieve the result your after.
Thank you too for asking me.
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The Man from Bomberland
- Champion of Essendon
- Posts: 10058
- Joined: Wed Aug 30, 2006 10:32 pm
- Location: Brisbane
My dad is a real-estate agent and he too hates him with a passion. Little media tart prick he is.bombercol wrote:Interesting article.
I am a real estate agent in Canberra. I do not work for a "Jenman approved" agency.
Neil Jenman in my opinion is a drama queen and whenever A Current Affair wants to have a dig at real estate agents, they get him on their show.
Bombers till' I die
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Filthy
One of the great things I love about BT is the divergence of views from footy to politics to money to this subject...evrything is open for discussion and as long as its intelligent, its a fantastic forum. I have an open mind on everything except 5 things a) The Rodent b) Hatred of the AFL esp. Vlad & Adolf c) Hatred of Carlton and Collingwood d) Anybody having a go at us without good and logical reasons. e) Andrew Bolt is a mad, untalented, dangerous dickhead.
Anyway re Jenman. I have 2 Real Estate mates. One uses Jenmans methods and swears by them. The other doesn't and despises him like TMFBL's dad and Col. (When socialising...I make sure the 2 aren't there!!)There is no middle ground with him. I like to read his web page and then make my own mind about whatever he is on about.
One of his best articles is this one:
http://www.jenman.com.au/NewsArticles1.php?id=190
One of the pricks involved screwed a member of my family. The old saying "what goes around etc" is never so true or satisfying.
Anyway re Jenman. I have 2 Real Estate mates. One uses Jenmans methods and swears by them. The other doesn't and despises him like TMFBL's dad and Col. (When socialising...I make sure the 2 aren't there!!)There is no middle ground with him. I like to read his web page and then make my own mind about whatever he is on about.
One of his best articles is this one:
http://www.jenman.com.au/NewsArticles1.php?id=190
One of the pricks involved screwed a member of my family. The old saying "what goes around etc" is never so true or satisfying.
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dodgey
- Champion of Essendon
- Posts: 9616
- Joined: Thu Aug 31, 2006 8:07 am
- Location: In the Bar having a Punt
don't have any real estate mates ( my cousin is one in the bush and he hates the job), but I got to know one when we bought/sold a few years ago.
when we were selling we invited agencies to "estimate" our house and land. One agency said they could get me $30K over what we eventually sold for. One guy came in and sold his 'spiel' very well simply by saying "That we put your House photo in all our branches around here, not just the local one"..... sold it within a week for $7.5K MORE than the minimum I wanted. That mightn't sould like much, but considering we had already "bought" our next house, we needed it cleared up quickly...and it was. i have since sent through a bit of business to him and just before Xmas he turned up with a Slab of Crownies for me and some Vodka Mudshakes for the wife as thanks for the business.
That one thing got me tha they advertised Cranbourne houses ( where I live) in other suburbs ( the people who bought our house were in Frankston and looking at buying there) and yet other agencies have an "area" and only place houses in the window and newspaper advertisements for that area. We were the 3rd house in our old street sold to people NOT originally looking in Cranbourne....seems simple enough, but then again, I'm Not a real estate agent
when we were selling we invited agencies to "estimate" our house and land. One agency said they could get me $30K over what we eventually sold for. One guy came in and sold his 'spiel' very well simply by saying "That we put your House photo in all our branches around here, not just the local one"..... sold it within a week for $7.5K MORE than the minimum I wanted. That mightn't sould like much, but considering we had already "bought" our next house, we needed it cleared up quickly...and it was. i have since sent through a bit of business to him and just before Xmas he turned up with a Slab of Crownies for me and some Vodka Mudshakes for the wife as thanks for the business.
That one thing got me tha they advertised Cranbourne houses ( where I live) in other suburbs ( the people who bought our house were in Frankston and looking at buying there) and yet other agencies have an "area" and only place houses in the window and newspaper advertisements for that area. We were the 3rd house in our old street sold to people NOT originally looking in Cranbourne....seems simple enough, but then again, I'm Not a real estate agent
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jimmyc1985
- Champion of Essendon
- Posts: 5869
- Joined: Wed Aug 30, 2006 11:33 pm
- Location: Position A
Excellent post Bombercol, and i can't disagree with whatever you say regarding the state of various property markets around Australia.
What i do take issue with is how you describe the process of a mortgagee's sale; your description is a long, long way from my understanding of the truth. I had a lecturer who, during the early 90's when mortgagee sales were being enforced everywhere, was the Chief Legal Counsel of one of the Big 4 banks, and if he read what you said about the process of a mortgagee sale, he'd probably try to hunt you down (but he'd also forgive you because he's an Essendon supporter
).
The fact is that banks are very tightly regulated in the way they conduct a mortgagee's sale. They can't conduct a 'firesale' way below market value, as you say is the case. In fact, in Victoria, they aren't allowed to sell a property without 'having regard to the mortgagee's interests', and there's also the requirement that mortgagee's conduct the sale in 'good faith' with respect to the mortgagor's interests. I won't bore you with examples, but there's been instances in Victoria where, in spite of the fact that the property sold for a fair market price, mortgagees have been penalised for not putting sufficient advertising in newspapers, or where (again, even if a good price was obtained) the mortgagee has been sanctioned for selling the property to a 'related party', e.g. someone who has close associations with the mortgagee.
Another thing that often gets overlooked in this argument is that banks very rarely lose anything, even if they can't recover the principal outstanding on a mortgage following a mortgagee's sale. Why? They force the mortgagor to take out mortgage insurance, which means that even if banks are facing a loss following their sale of a property, the mortgage insurance company steps in and pays the bank any shortfall that may be outstanding. This concept, in conjunction with the regulations imposed on mortgagee's that I've already described, means there's basically no motivation for a bank to conduct a poor mortgagee's sale. They're usually very, very vigilant in the way they conduct mortgagee sales these days - of course, that's not really because they give a hoot about the aggrieved mortgagor who gets kicked out of their home, but they are vigilant in order to protect their own hides.
As I said, what I've described is 'my understanding of the truth'. I don't have practical experience in the real estate market to support my theoretical understanding of how mortgagee's sales are conducted, as you would obviously have in your line of work. But, even without any practical experience, I'd still say that it's a least an exaggeration on your behalf the way you desrcibed mortgagee sales.
What i do take issue with is how you describe the process of a mortgagee's sale; your description is a long, long way from my understanding of the truth. I had a lecturer who, during the early 90's when mortgagee sales were being enforced everywhere, was the Chief Legal Counsel of one of the Big 4 banks, and if he read what you said about the process of a mortgagee sale, he'd probably try to hunt you down (but he'd also forgive you because he's an Essendon supporter
).The fact is that banks are very tightly regulated in the way they conduct a mortgagee's sale. They can't conduct a 'firesale' way below market value, as you say is the case. In fact, in Victoria, they aren't allowed to sell a property without 'having regard to the mortgagee's interests', and there's also the requirement that mortgagee's conduct the sale in 'good faith' with respect to the mortgagor's interests. I won't bore you with examples, but there's been instances in Victoria where, in spite of the fact that the property sold for a fair market price, mortgagees have been penalised for not putting sufficient advertising in newspapers, or where (again, even if a good price was obtained) the mortgagee has been sanctioned for selling the property to a 'related party', e.g. someone who has close associations with the mortgagee.
Another thing that often gets overlooked in this argument is that banks very rarely lose anything, even if they can't recover the principal outstanding on a mortgage following a mortgagee's sale. Why? They force the mortgagor to take out mortgage insurance, which means that even if banks are facing a loss following their sale of a property, the mortgage insurance company steps in and pays the bank any shortfall that may be outstanding. This concept, in conjunction with the regulations imposed on mortgagee's that I've already described, means there's basically no motivation for a bank to conduct a poor mortgagee's sale. They're usually very, very vigilant in the way they conduct mortgagee sales these days - of course, that's not really because they give a hoot about the aggrieved mortgagor who gets kicked out of their home, but they are vigilant in order to protect their own hides.
As I said, what I've described is 'my understanding of the truth'. I don't have practical experience in the real estate market to support my theoretical understanding of how mortgagee's sales are conducted, as you would obviously have in your line of work. But, even without any practical experience, I'd still say that it's a least an exaggeration on your behalf the way you desrcibed mortgagee sales.
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billyduckworth
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Thanks for your reply, Bombercol. I think the main thing is that the market is very small in a small town - there aren't a lot of buyers out there and you just have to wait for the right one to come along. We don't have to leave until the end of the year (moving overseas next year), so I guess we'll just hang in there for the moment and hope, as you say, that the silly season starts soon.
What an interesting thread this has become...I live in Perth and wasn't too interested in reading about the Sydney Real Estate Market but I noticed today that there has been a bit of traffic through here and thought I should take a look.
It's been a bit of an eye opener reading the different thoughts of a range of people with different degrees of knowledge on the subject. I feel that I've learned a thing or two so thanks to all who have contributed.
It's been a bit of an eye opener reading the different thoughts of a range of people with different degrees of knowledge on the subject. I feel that I've learned a thing or two so thanks to all who have contributed.
"You can quote me on this... He is gawn" - bomberdonnie re Hurley's contract status 25 February 2012
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Boyler_Room
- Champion of Essendon
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Ahh good to see a few got in before me.
Jenman is a tool. Simple as that. People that follow "his method" (which is absolute bullshit) are just sheep that need something or someone to "follow".
Jenman is a tool. Simple as that. People that follow "his method" (which is absolute bullshit) are just sheep that need something or someone to "follow".
Former Captain of Kakadu Kangaroos - Inaugural OD Champions
Duckling Finance
Making Dreams Come True
Finance Consultant
Duckling Finance
Making Dreams Come True
Finance Consultant
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Boyler_Room
- Champion of Essendon
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jimmyc1985 is right when it comes to mortgagee in possession. Banks are reluctant to repossess and sell homes for a couple of reasons.
They're not in the property business, they're in the finance business. They don't want to hold property unnecessarily so they'll always try and come to some sort of arrangement with the borrower. Occasionally you'll deal with someone in a bad mood or who just plain doesn't really understand their job... or that's just gung-ho and thinks that their job is to "do people in".
Jimmy is also spot on regarding lender's mortgage insurance, although there are a few lenders out there who don't use traditional mortgage insurance. Majority of them are covered by one of the big mortgage insurers, which means even if they do happen to sell the home at a loss (less than what is owed to them) then they recoup these funds from the insurer.
Another point is that the bank does NOT retain any proceeds exceeding the amounts owed to them. These funds are returned to the borrower or their Trustee (if they are in Bankruptcy).
They're not in the property business, they're in the finance business. They don't want to hold property unnecessarily so they'll always try and come to some sort of arrangement with the borrower. Occasionally you'll deal with someone in a bad mood or who just plain doesn't really understand their job... or that's just gung-ho and thinks that their job is to "do people in".
Jimmy is also spot on regarding lender's mortgage insurance, although there are a few lenders out there who don't use traditional mortgage insurance. Majority of them are covered by one of the big mortgage insurers, which means even if they do happen to sell the home at a loss (less than what is owed to them) then they recoup these funds from the insurer.
Another point is that the bank does NOT retain any proceeds exceeding the amounts owed to them. These funds are returned to the borrower or their Trustee (if they are in Bankruptcy).
Former Captain of Kakadu Kangaroos - Inaugural OD Champions
Duckling Finance
Making Dreams Come True
Finance Consultant
Duckling Finance
Making Dreams Come True
Finance Consultant
I worked as a lender at the CBA and as a mortgage broker prior to getting into real estate.
It is a last resort to sell a family up due to the bad publicity and the threat of ending up on Today Tonight or A Current Affair.
I have seen one situation where the debt exceeded the sale price of the house and the loan was mortgage insured. The insurance covered the difference. What the mortgage insurer then does is place a CRAA default against the borrower an go after the borrower for the money it had to pay out.
If a borrower is declared bankrupt then a trustee will advise the bank and appoint an agent to sell the property. The trustee sets the selling price based on how many creditors have to be paid.
If a borrower is not declared bankrupt and the Bank sells them up, the its the Bank that takes control, appoints the agent and tells the agent what is required to be achieved for the house.
Rules and regulations are different from state to state in my understanding.
A colleague of mine, her father was sold up by the bank. He owed just under $260,000, his property was worth in my opinion $340,000 - $350,000 as I had previously appraised it. The property sold at auction for $265,000 as the agent kindly advertised a mortgagee in posession sale and they were flooded with "bargain hunters".
I have seen reports and am good friends with a mortgage broker. Defaults at present are increasing and the events of Banks foreclosing on people is on the increase.
Most of this is due to expanded policy lending by the Banks such as 100% lending and lo doc lending. Lo doc lending is for self employed people or contractors who don't have sufficient income data to show the Banks.
These loans, the borrowers do not have to prove income, lots have only been self employed a short time, all they do is sign a declaration to say they can afford the payments. The interest rates are higher and lending margins higher as well as they can't be mortgage insured. Max of 75 -80% lend to valuation. It has been reported of large numbers of defaults in this bracket of client.
Also there are vicious lenders such as GE and Liberty finance who do non conforming lending too. Non conforming lending is where borrowers have had poor credit history and have a number of CRAA defaults against them, they can also be self employed and ex bankrupts. These loans too
are at higher rates and lower lending margins. Default interest is extremely high and any type of default is strictly not tolerated. Action from the Bank in these loans can be very quick. This is where foreclosure are increasing.
With rates going up, and years of expanded policy lending to grab that bit of extra business during peak housing times are now starting to catch up with some people.
If there is any money left over, yes these funds go the borrower (if the borrower is not bankrupt), but it is not the Bank's priority to ensure a defaulted borrower get every cnets they are entitled to especially if it slows the process of a sale down. As long as they get their money back that's all the Bank cares about. In these situations the Bank is the vendor and the agent will act in term of the vendor's instructions on what to accept and not accept.
It is a last resort to sell a family up due to the bad publicity and the threat of ending up on Today Tonight or A Current Affair.
I have seen one situation where the debt exceeded the sale price of the house and the loan was mortgage insured. The insurance covered the difference. What the mortgage insurer then does is place a CRAA default against the borrower an go after the borrower for the money it had to pay out.
If a borrower is declared bankrupt then a trustee will advise the bank and appoint an agent to sell the property. The trustee sets the selling price based on how many creditors have to be paid.
If a borrower is not declared bankrupt and the Bank sells them up, the its the Bank that takes control, appoints the agent and tells the agent what is required to be achieved for the house.
Rules and regulations are different from state to state in my understanding.
A colleague of mine, her father was sold up by the bank. He owed just under $260,000, his property was worth in my opinion $340,000 - $350,000 as I had previously appraised it. The property sold at auction for $265,000 as the agent kindly advertised a mortgagee in posession sale and they were flooded with "bargain hunters".
I have seen reports and am good friends with a mortgage broker. Defaults at present are increasing and the events of Banks foreclosing on people is on the increase.
Most of this is due to expanded policy lending by the Banks such as 100% lending and lo doc lending. Lo doc lending is for self employed people or contractors who don't have sufficient income data to show the Banks.
These loans, the borrowers do not have to prove income, lots have only been self employed a short time, all they do is sign a declaration to say they can afford the payments. The interest rates are higher and lending margins higher as well as they can't be mortgage insured. Max of 75 -80% lend to valuation. It has been reported of large numbers of defaults in this bracket of client.
Also there are vicious lenders such as GE and Liberty finance who do non conforming lending too. Non conforming lending is where borrowers have had poor credit history and have a number of CRAA defaults against them, they can also be self employed and ex bankrupts. These loans too
are at higher rates and lower lending margins. Default interest is extremely high and any type of default is strictly not tolerated. Action from the Bank in these loans can be very quick. This is where foreclosure are increasing.
With rates going up, and years of expanded policy lending to grab that bit of extra business during peak housing times are now starting to catch up with some people.
If there is any money left over, yes these funds go the borrower (if the borrower is not bankrupt), but it is not the Bank's priority to ensure a defaulted borrower get every cnets they are entitled to especially if it slows the process of a sale down. As long as they get their money back that's all the Bank cares about. In these situations the Bank is the vendor and the agent will act in term of the vendor's instructions on what to accept and not accept.
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billyduckworth
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