Puzzle Finance Blog


Five things sellers hide at open homes


Open homes are a chance for buyers to look through a property to see if it is suitable, but they’re also a chance for savvy sellers to hide the unsavoury features in their residence.

Buyers may initially look around open homes to get an idea of how they feel about the property, but they should also aim to look for “deal breakers” upfront.

Remember to ask the real estate agent about anything you are uncertain about and be prepared to seek the services of a building and pest inspector as you undertake your due diligence.

Here are five things sellers try to hide and how to spot them.  

1) Termite damage

When you’re in a property that has been freshly repainted, look very carefully, warns wHeregroup buyer’s agent Todd Hunter.

“Painting is the biggest giveaway, especially when one or two rooms in the property have been repainted recently,” Mr Hunter said.

“This can conceal a repaired termite-damaged wall or water-leakage problems from a ceiling,” he said.

Be sure to get a thorough building inspection, including a termite inspection with thermal imaging, to make sure you can see beyond the new coat of colour.

House Search Australia’s Jacque Parker warns fresh paint can also hide mould issues, which are not always obvious to a buyer.

Key things to be on the lookout for are “bubbling” and “staining” on the new paint – get your building inspector to use moisture meters to know what’s happening for sure, Ms Parker said. 

2) Structural damage

A big red flag should be raised when you are denied access to to an area of the house, Ms Parker warns.

“We’ve noticed that, clutter aside, sellers who have something to hide will block [or] lock access to manholes, sub-floor spaces and under-house areas to avoid inspectors being able to accurately report on any issues here,” she said.

These issues can be wide-ranging, from pest damage and structural damage to drainage issues and poor DIY attempts.

Ask the vendor to make these areas available for your inspector and attend yourself if possible, she said. 

3) Rising damp

Dampness and leaking problems usually leave a nasty mildew-type musty smell and astute buyers would be able to pick up on this straightaway, warns Wakelin Property Advisory associate director Jarrod McCabe.

“Rising damp, dry rot, leaking roofs and rotting stumps often present symptoms that the unscrupulous vendor will try to hide,” he said.

Some sellers will try to hide these issues with strong-smelling air fresheners.

These smells may make you feel at home, but be on your guard if you suspect they could actually be masking something else.

“Brewing coffee or baking bread is often touted as a way to make a property seem homely, but the motivation may be more malign – to perfume damp smells,” Mr McCabe warns.

Managing director of Cohen Handler, Simon Cohen, also warned against strong scents at an open home, including scented candles.  

4) Poky spaces

Some rooms are so small as to be unusable, but that won’t stop sellers from trying to convince you otherwise.

Clever styling and furnishings can trick a naive buyer into thinking a space is larger than it is very quickly, chairman of WBP Property Group Greville Pabst​ warns.

“Many buyers are not equipped with the experience and information required to interpret and understand the complex factors that make or break a smart property purchase,” Mr Pabst said.

There’s a big difference between “perceived” space and actual space available.

“Some pressed vendors will remove furniture or ornaments and hang mirrors to make the space of a property look bigger,” he said.

Instead, look at the square metres listed or on the floor plan and compare how it stacks up with similar properties you have seen.

If you see fancy new furniture then be on alert, Mr Cohen recommends.

“New furniture is another really effective way of making an older house look new. It can be difficult for buyers to look beyond the impressive furniture and actually spot the bigger issues with the property,” he said. 

5) Noise and natural light issues

Natural light and noise issues are hard to fix in a home so they’re not looked upon favourably by buyers.

Unsurprisingly, sellers want to make their home seem as quiet, well positioned and brightly lit as possible.

“Vendors try to hide poor outlooks by keeping blinds down or switch on every light in the hope you don’t notice the poor natural light,” Mr McCabe said.

Don’t be afraid to open the blinds to take another look and, while you’re there, ask to open the windows. Sellers may be minimising the noise from next door by keeping them shut and playing music, he said.

The noise issue may also be affected by the time of day of an open home – take note of the time of the open for inspection, Mr Pabst recommends.

“Particularly for buyers that are not local to the area, this is something that can mislead the ill-informed,” he said.

“Vendors attempt to sell a certain lifestyle by placing their opens at certain times of the day when traffic is less congested and the area is more quiet.”

Visit the area multiple times at different times of the day and the week to get a more accurate picture of what it would be like to live in the home.

Posted by Jennifer Duke - Domain (Fairfax) on 2nd February, 2016 | Comments | Trackbacks | Permalink
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How to sell a home in Australia while it is being rented


Selling a property is usually a stressful enough time in someone’s life, but when you’re selling a tenant’s home it can be even more difficult.

While many agents prefer to sell a property with vacant possession, without a tenant, some renters can benefit your sales campaign, Xenia Ioannou​, principal of Alexa Property Group said.

“Some tenants are an asset – their furniture is beautiful, their decor matches the property and the prospective buyer has a feel for what the home would be like with their own furniture,” Ioannou said.

It also means a landlord isn’t holding a property without any rental income.

However, the opposite can also be true – messy tenants who are unco-operative can make selling a home tricky, she said.  

Communicating with tenants

Most tenants will be understanding when it comes to selling time, but the most crucial thing for property managers is to ensure they keep the tenants in the loop about what is happening.

“Ethically, the tenant should be the first to know. The agent needs to organise inspections with them. It works to give them predictable dates and advanced notice,” Ioannou said.

In all states and territories, real estate agents and landlords are allowed to sell the property and host inspections with prospective buyers, provided the tenants are given the correct notice periods.

Sending a letter to the tenant advising them of the landlord’s rights around inspections and selling the property can help avoid problems upfront.

“It’s about working with the tenant, rather than fighting with them,” she said.

“One property we sold was a million dollar property and the tenants had a junk food habit,” she said.

The home had soft drink cans, takeaway packets and  rubbish over the bench tops whenever they visited. The carpets were also dirty.

Tenants are required to keep the property reasonably clean during the inspections. However sometimes an alternative approach can work.

“We paid to have the carpets steam cleaned at our expense and gave them the incentive of a box of Krispy Kremes​ at the end of the [sales process] if they kept the property clean,” she said.

A box of doughnuts set them back $50 and proved a good enough incentive to get them to keep the place clean.

Movie tickets and even reduced rent in some instances can help.

Usually, it is the sales agent who will speak to the tenant and negotiate with them. For those who have chosen their property management agency to also sell the property, this can make things easier as the tenant will be familiar with the agency, she said.  

Location, location, location

Selling with a tenant in the home also depends on the location and the expectation of likely future buyers.

Ray White Kellyville’s Sanjeev Kumar said western Sydney suburbs and other investor heartland locations, such as postcode 2770, had a lot of renovator and investor buyers who wouldn’t be too concerned about a tenant being in the property already.

Some would be keen to keep a good tenant in the property to ensure no vacancies from day one, provided their rent is kept at a competitive market level.

When a home is sold, the lease is automatically transferred to the new owner.

“But in the Hills [District] a lot of buyers are owner occupiers and if they have to wait eight months to move in, there’s a chance they’ll buy something else,” he said.

“If they’re on a month-to-month lease and they’re not accommodative it can be better to let the tenant go.”

In a fixed lease situation, it can be worth considering delaying the sale until close to the end of the lease. With settlement factored in, many landlords will wait until the lease has three months left before putting the home on the market.

“A tenancy agreement overrides a sale, so we try to sell properties within the last three months of a tenancy agreement. If the buyer wants to renew the lease, they can,” Ioannou said. 

Legal matters

States and territories across Australia differ around the legalities  of selling while a tenant is in the home.

Tenancy laws dictate how much notice must be given before a showing, the hours a showing can be held and the maximum showings that can be held in a period of time. Usually, tenants are allowed to refuse an open home.

In some states and territories, such as Queensland and NSW, an on-site auction cannot be held at a house without the tenant’s consent.

Laws also vary around photographing a rental home for sale and the use of signboards out the front of the home.

The Tenants NSW fact sheet said tenants may ask for a rent reduction, but it is not a requirement that landlords agree.

Posted by Jennifer Duke - Domain (Fairfax) on 2nd February, 2016 | Comments | Trackbacks | Permalink
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How to find a good financial planner


A financial adviser's role is to help you establish your financial goals and develop a plan to achieve them over time.

Talking about your personal finances and swapping ideas about budgeting and investing with friends is one thing, but in many cases getting professional help makes a great deal of sense.

Not that you should get excited and think that a financial planner will solve all your troubles by offering you some get-rich-quick scheme. Indeed, if he or she does, you should grab your purse and run for the hills.

An adviser's role is to help you establish your financial goals and develop a plan to achieve them over time. As the Australian Securities and Investment Commission notes, professional advice can be particularly helpful at times of big life changes, such as starting a family or receiving an inheritance.

The challenge is finding a suitable adviser whom you can trust. The recent string of financial planning scandals has shown that, sadly, untrustworthy and incompetent advisers are around.

One of the first factors to consider is a planner's level of education, says Tanaya Bendall-Green, of Strategies for Life in Queensland.

It is not the case yet, but from 2017 the government is proposing to require advisers to hold a degree, pass an exam and spend a year developing their professional skills.

So finding an adviser with a degree in a relevant discipline such as finance, economics, accounting or financial planning is a good start.

Happily there is now an ASIC register ( www.moneysmart.gov.au) that lists all advisers' qualifications, any professional bodies they are a member of, details about who owns their operating licence and whether they have ever been the subject of disciplinary action by the regulator.

Don't be afraid to ask lots of questions of someone with whom you could end up sharing a lot of personal information and whom you need to feel confident has the skills and right ethical standards to take care of you. Write the questions down before you strike up an initial conversation. In other words, become a journalist!

The questions should include how much experience they have and who their client base is. Some advisers are generalists, but others specialise in certain types of clients, such as retirees, young savers or professions with particular tax needs. It might be comforting to know that the adviser has experience with people in a similar position to you.

How they charge is another important issue. Will they charge you a flat dollar fee or a percentage of your portfolio of assets? How often will you be billed?

Will they charge you for an official statement of advice plus a separate fee to implement a savings and investment program, or will the implementation fee be included in the statement fee? (A statement of advice contains details of what has been recommended.)

As Bendall-Green points out, you should also ask what level of service you can expect. How many meetings a year?

It is worth taking the time to ensure you have a good overall picture of the person who might end up knowing more about you than almost anyone else.

Planning financial security for the family

Mel Liu first sought advice from a financial planner as a newlywed.

"We were thinking of the future as we were about to have kids," says Liu, who is the finance manager of a national not-for-profit organisation in Sydney. 

"We wanted to get an idea of what the different products were out there."

Nine years and two children later, the advice Liu and her husband, a commercial manager, received has proven sound. The managed portfolio they established after the consultation has done well, "though that's probably a combination of good advice and timing of the market as much as anything", says Liu.

"We sort of knew what we wanted and he advised the best thing to do given our risk profile. We had a mortgage and were planning to have kids and keep living in Sydney."

The most difficult aspect in the whole process had been one which would be familiar to many – finding a planner they could trust and with whom they felt comfortable. 

The one they saw had been recommended by their mortgage broker. 

Liu, 43, has decided to next seek advice from the Brisbane-based planner her parents have used and been happy with for many years.

And that visit is imminent.

"We're at that stage of our lives now that we would like some information on how to best save for the kids' education and how to clear the mortgage," says Liu.

"We're also ready for more long-term planning, even though retirement's a long, long way away."



Read more: http://www.theage.com.au/money/her-money/how-to-find-a-good-financial-planner-20160202-gmjpng.html#ixzz3z2Y5XXU2
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Posted by Sally Patten - The Age on 2nd February, 2016 | Comments | Trackbacks | Permalink
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Five questions you need to ask your financial institution today


A LITTLE curiosity goes a long way if you want to save money at your financial institution.

There’s a good chance you’re paying too much for financial services. Asking a few direct questions may get some of that cash back.

Canstar spokeswoman Justine Davies says there are a lot of useful things your bank could tell you if you just ask.

“It’s really frustrating that, in the competition to win new customers, banks can sometimes forget to look after their existing customers,” she says.

Here are five questions to get the ball rolling.

1. HOW LOW CAN YOU GO ON MY MORTGAGE?

Davies says mortgages are most people’s biggest debts and small interest rate changes make big differences. Canstar’s database shows a two per centage point difference between the lowest and highest rates.

“Half a per cent saving on a $300,000 mortgage could be around $90 a month, so jump online, see what’s on offer in the market, then ask your bank to match it,” she says.

“Even if they can’t match it, you might be able to negotiate a much lower rate.” Follow the same process to boost term deposits and online savings account interest rates.

2. WHY DOES MY CREDIT CARD COST SO MUCH?

Australia’s average credit card interest rate is an exorbitant 17 per cent. Banks don’t often tell customers about low rate options — under eight per cent — or zero-interest balance transfer cards, Davies says.

“Ask your bank to work out for you the cheapest way of repaying your debt.”

Consumer finance specialist Lisa Montgomery says you should ask if your credit card is the right one for your spending patterns.

“Banks have a range of products, whether you’re collecting reward points, paying it off every month, or (you’re) a revolver who is left with a balance every month,” she says.

3. WHAT IS MY LOYALTY WORTH TO YOU?

It’s much cheaper for banks to hold onto existing customers rather than go out and fight for new ones, so use this to your advantage.

“Ask if they would give you discounts if you brought more financial products to them,” Montgomery says.

“Is there a discount if you make them your major financial institution? Ask them what sort of value they’re going to add.”

4. HOW CAN I GET AHEAD?

Building wealth delivers you a secure retirement and the ability to pay for life’s rich experiences, and financial institutions are experts in money matters.

Montgomery says you should ask if they have any suggestions about creating a wealth plan. “Often with lenders and customers it’s a bit of a set-and-forget mentality and we don’t realise we can create wealth with them,” she says.

Most banks and credit unions have financial planners, but watch out for slick sales tactics, and speak to different planning businesses before deciding on one.

5. SHOULD I LOOK AT YOUR PACKAGES?

Many banks offer package deals where you can bundle home loans, credit cards and transaction accounts into one package for an annual fee, which may cost around $400 but the interest and fee savings far outweigh the cost.

“Your bank should be able to look at all your current costs and give you an estimate of how much you would save on a package,” Davies says. Originally published as Five questions you need to ask your bank

Posted by Anthony Keane - News Corp Australia Network on 29th January, 2016 | Comments | Trackbacks | Permalink
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How to make sure the apartment block you are buying into is not going broke


It might have taken you years to find that perfect apartment: north-facing, solid brick walls and a sparkly new kitchen.

But just as you turned on the taps to check the plumbing and scrutinised the floor boards for signs of water damage, you need to think about the state of the entire apartment block before buying into it.

The lobby might have flashy new tiles and the windows might be squeaky clean, but it’s important to scratch below the surface and make sure the building is being run well and there is money to spend in case things go wrong.

Buying an apartment is obviously different from buying a house. As the owner of a house you are solely responsible for the repairs on your property, from replacing leaky pipes to cutting down dangerous trees.

If you own an apartment, you rely on a collective – the owners corporation – to make sure the broken-down elevator is fixed or the dirty windows are cleaned.

Before signing on the dotted line, it’s important to look into the building’s strata scheme to detect any problems there may be, explains Darel McBride, the managing director of online building inspection network Easy Path Inspections.

“The key things you should be looking for is the administration and the sinking fund,” McBride says.

The sinking fund is a pool of money reserved for emergencies and major works on common property.

“A lot of people ask me how much money should be in a sinking fund, and if there’s some kind of formula, but it really depends,” McBride says.

The more facilities the building has, the more costs there will be, and a prospective buyer should factor in things like elevators, gardens and swimming pools.

There might also be a good reason a sinking fund has little money in it, and that could be if major works were recently undertaken.

A sinking fund should also come with a long-term maintenance plan, which should mention major repairs the building will require over the next 10 years as well as the expected costs.

But prospective buyers interested in a unit in a building with less than about 10 apartments, may be surprised to find there is no 10-year plan at all.

That’s not necessarily a bad thing, according to McBride.

“While bigger apartment buildings should have a 10-year plan, we tend to find smaller schemes don’t tend to have one,” McBride says.

He says owners in smaller apartment buildings tend to wait until things need to be repaired and when the time comes it is still practical to sit down and have a discussion together.

Strata insurance is also something all prospective buyers should investigate, says McBride, but be sure to clarify how exactly it relates to the building.

“You need to know exactly what the strata insurance covers, not just that the strata plan has insurance.”

A clue that there may be problems with the management of the building or its finances, is when repairs are being skipped, and Annual General Meetings (AGMs) are a great way to find these things out, says McBride.

“With AGMs we are looking for a history of events in the past and what issues have been raised but haven’t been fixed.”

He says the AGM minutes should effectively go back to the beginning of the plan, but he says looking back three to five years is a good idea. Darel McBride’s advice to those buying an apartment:

1. Don’t bother with a pest inspection for an apartment in a building. A pest inspection will only ever be for that particular unit and you can’t see what’s going on in other units anyway.

2. Instead, look at a strata inspection report and it should tell you whether there has been an annual pest inspection.

3. A building inspection is also limited to the one apartment not the entire block, but a strata report will alert you to any building problems that have been raised, and any repairs that have been completed or overlooked.

Posted by Ingrid Fuary-Wagner - Domain (Fairfax) on 29th January, 2016 | Comments | Trackbacks | Permalink
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Home buyers' tips for bidding at auction


Many people find auctions scary but it's still the most common way to sell a house in Australia. 


If you are wondering what to wear to bid at an auction, there is no shortage of advice on Google.

A sundress printed with cartoon pirates is not one of the suggestions but it worked for me.

When we bought our house in November 2014 the market was still going gangbusters.

It's cooled since then – in my home town of Sydney, property prices dipped 2.3 per cent in the fourth quarter of 2015 compared with the previous quarter, according to the CoreLogic RP Data Home Value Index. Across all capital cities the fall was 1.4 per cent.       

Mind you, prices as of December 31 were still up 11.5 per cent year on year in Sydney and 7.8 per cent across all capital cities. And if, like me, your main motivation is buying a home for your family for the next decade and beyond, the short-term fluctuations don't matter too much.

It's now officially a buyers' market, but by and large house hunters still need to deal with auctions – a genuinely scary prospect for many people.

Auctions remain the most popular method to sell residential property in Australia and there's a lot to be said for them; an auction is arguably the most transparent and straightforward way to determine market value.

If your end goal is to buy a home, you need a strategy for how to deal with auctions.

I don't think it matters what you wear. But some of the auction advice we got from seasoned real estate types was genuinely useful.

A common practice is to hang back while the early bidding gets under way and jump in when it starts to slow down. The risk is that the hammer can fall very quickly and there's no going back once it does.

Instead I was advised to either stand right in front of the auctioneer and call out loud and clear so he (it's nearly always a he) can't miss you, or to bid early so he would know I was there. Once you've pegged yourself as an actual bidder, the real estate agent won't leave you alone and there's almost no way the auctioneer would end the auction before checking back in with you.

At some auctions you'll get a bottle of bubbly as a reward for being the first bidder, so why not?

The most important advice was for the pointy end of the action.

If you are buying the place with another person, make your decisions beforehand. If you are standing there conferring over whether you can bid a few grand more, you may as well be wearing a sign saying "I'm close to my limit".

When the rival bidder drops down to increments of one or two grand, don't follow suit. Come back confidently with another five grand even if it's your last bid.

If you're determined to avoid auctions, you'll have better prospects now than at any time in the past three years.

The second-best time to make an offer on a property is a fortnight to 10 days before the auction. If you make an offer too early, you're just giving them "market feedback" to set the auction strategy and price expectations; too late and most vendors would prefer to wait and see what happens on the day.

The first-best time is, of course, after the property has already passed in at auction. That wasn't an option for us in a bull market, but it is now and three of my friends have recently succeeded this way.

We have no regrets and the pirate dress is now hanging in the built-in wardrobe.

Caitlin Fitzsimmons is the editor of Money. This is a new weekly column.

Read more: http://www.theage.com.au/money/home-buyers-tips-for-bidding-at-auction-20160115-gm6rny.html#ixzz3yOwcnhqw
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Posted by Caitlin Fitzsimmons - The Age on 27th January, 2016 | Comments | Trackbacks | Permalink
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Banks get picky with mortgage deals, with lower interest rates given to cashed-up owner-occupiers


New figures reveal a widening gap between the interest rates that banks offer owner-occupier borrowers with big deposits and what they're ready to give other types of borrowers in the home loan market.

Last year saw the reemergence of a two-tier mortgage market, in which investors are charged more than people paying off a loan for a house they live in. This had been the norm at many banks until the late 1990s.

The trend resurfaced after property investors copped two rounds of interest rate hikes from the major banks in 2015, compared with one interest rate rise for owner-occupiers, as lenders sought to slow rapid growth in housing investment lending.

Now, analysis from RateCity shows that in the past six months banks have become increasingly picky about which types of borrowers receive the sharpest interest rates, reserving the best deals for owner-occupiers with bigger deposits.                               

The data shows banks have even cut the interest rates offered to owner-occupiers who have a deposit of more than 20 per cent, while charging other types of borrowers more.       

RateCity analyst Peter Arnold said the average interest rates being offered to owner-occupiers with a 20 per cent deposit have dipped by 0.07 of a percentage point since June, to 4.35 per cent. 

"There's a lot more variation in the market, with tiered pricing," Mr Arnold said. "These borrowers are basically paying less than they were back in June."                               

In contrast, other types of borrowers are offered higher interest rates than they were six months ago, RateCity found. Its figures cover the rates banks are advertising for new customers, rather than what banks charge their existing borrowers.

For property investors with deposits of less than 20 per cent, the average rate on offer has increased to 4.9 per cent from 4.68 per cent, it says.

This means that property investors, especially those with smaller deposits, are being charged interest rates as much as 0.55 of a percentage point higher than owner-occupiers.

Interest rates offered to owner-occupiers with deposits of less than 20 per cent have also edged up, albeit by only 0.03 of a percentage point, to 4.71 per cent.

The changes have occurred because banks are competing more fiercely for owner-occupiers, as the regulators will not let them expand their loan books more quickly than 10 per cent in the investor market.

At the same time, banks are keen to attract borrowers with big deposits, because these tend to be lower-risk loans.

The changes in bank credit policies, including tighter lending to housing investors, is one reason experts are forecasting softer conditions in the housing market in 2016.

Commonwealth Bank economists last week forecast house price growth between 0 and 2 per cent in Sydney and Melbourne this year, citing the softer lending to investors as one factor behind the slowdown.

Read more: http://www.theage.com.au/business/banking-and-finance/banks-get-picky-with-mortgage-deals-rewarding-cashedup-owneroccupiers-20160125-gmdx28.html#ixzz3yJV8C0py
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Posted by Clancy Yeates - The Age on 26th January, 2016 | Comments | Trackbacks | Permalink
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Road testing first home buyer saving techniques


Saving for a home deposit is one of the biggest hurdles on the ladder to home ownership, so it’s no surprise there are plenty of suggestions for how first time buyers can pinch their pennies to push their funds that little bit further.

But not all advice is created equal. I road tested some of the most commonly suggested savings techniques to see what can actually help you pump up your savings.

Finder.com.au’s consumer advocate Bessie Hassan said their 2016 Savings Survey found that 13 per cent of all Australians were saving for a home deposit – with 26 per cent of Gen Y actively saving.

“You’ll usually be required to have at least 10 per cent of the total purchase price of the property to use as your deposit,” she said.

But knowing how much you need to save is not enough, Mortgage Choice chief executive John Flavell said.

“For those trying to save for one particular item or goal, it is important to first look at your whole financial situation and see whether or not there are simple adjustments that can be made to help you save money,” Mr Flavell said.

“Things like bringing your lunch to work every day; going out for dinner just once a week; and/or cutting unnecessary costs like pay TV can all help bring your spending into line and boost your savings,” he said.

Ms Hassan recommends setting aside your savings first, monitoring your bills, increasing your earnings, shopping around for good deals and selling unused household items to get ahead.

Overall, trying out a few of the tips allowed me to save $54.90 a week. Provided I could stick to it, extrapolated out that’s $2854 in a year. It’s not exactly going to buy a home any time soon, but it certainly comes in handy in addition to other savings being made on a regular basis.

Tips I didn’t try out included moving back in with my parents or taking on more work, both of which are not currently viable.

Here are the changes I tested out, and their varying levels of success.

Not buying a daily coffee. Saving: $22.40 a week.

Everyone has their own poison and mine is coffee. The idea of going without buying it from my favourite morning cafe, even for a week, is fairly painful. All up, with every coffee I don’t buy, I’m saving about $4 a day. Given my habit has spanned out to multiple coffees in work hours, I decided to give up buying at least one extra cup a day.

I admit to cheating a little bit with this – we now have free coffee in the office and I have a fancy coffee machine at home that doesn’t get nearly enough of a work out, so I’m never far from a good low-cost brew.

If I make it at home, such as on the weekends with my coffee machine, I’m using OXFAM’s fair trade coffee beans that I buy for $29.95 a kilo. At about 10 grams a serve, that’s 30 cents a cup. A carton of Bonsoy costs $4 and it lasts for about a week costing me 50 cents a cup if I made it every day myself. Often I’ll now opt to make one in the evening, rather than heading to our local Starbucks.

At 80 cents a cup, it’s a saving of $3.20 a day. And that’s before calculating my habit of pouring any change I usually get from the cafe into the barista’s tip jar. Seeing the savings makes it worth it, but I do admit to missing the luxury in the morning.

Selling unwanted items. Saving: $13.15 (once off). 

I really tried hard at making some money out of my old stuff. I listed anything I no longer wanted or needed but was still in good condition on buy/swap/sell pages through Facebook. When that didn’t work, I went to the traditional site for selling: eBay.

I managed to sell a dress for $15.50 with about $8 in postage and handling. But given eBay charges close to 10 per cent fee on the combined item sale price and postage and handling, I only walked away with $13.15 after the $2.35 invoice. Not fantastic. Even worse when you consider what I initially bought the dress for. On the plus side, it is extra cash on something I would have thrown out.

Given the time it took to upload the item, including ironing it, taking photographs, writing a description and setting up an eBay account, I’m not convinced by this approach. I tried listing a few other things, none of which sold.

Luckily, I combined the drive to the post office with a package that needed picking up so there wasn’t the extra petrol cost.

If you have lots of items to sell, particularly of higher value, you might have more luck. Otherwise, the old-school garage sale approach might be more successful.

Cancelling unnecessary subscriptions. Saving: $12.50+ a week. 

I’ve already cut back in the past and subscriptions and membership costs definitely isn’t an area where I spend a lot, with no gym memberships, magazine subscriptions or other major expenses. But I did manage to find some areas to cut back.

While I draw the line at cancelling my Wi-Fi, I did cancel my iPad plan, saving $50 a month. I also looked into reducing my mobile phone bill, but given I use it for work and leisure, claiming some back on my tax each year, it wouldn’t be worthwhile.

One area my household has become over-subscribed for is for on-demand movies and shows – we subscribe to both Stan and Netflix and like both for different reasons. At some point we will have to make a decision to cut back on one of them (potentially saving around $10 a month). Until then, making a conscious decision not to cancel has made me more conscious about cutting back on entertainment in other areas – reducing renting films on iTunes, easily costing $4.99 a film, and from the local movie store.

Taking leftovers for lunch. Saving: $20+ a week. 

A sushi roll or two for lunch may not seem like a big cost, but even this is upwards of $5 every work day. Replacing this with leftovers saves both time and money, particularly as I am a chronic over-estimator when it comes to cooking.

Despite the container, anything liquid-filled tends to leak and food with avocado goes brown fast, so it also depends on what we’re eating for dinner as to whether my leftovers can go the distance. It can get a bit boring to eat the same thing for several meals and lunches in a row, and it’s nice to have lunch with colleagues, so I admit to falling back into the habit of buying lunch on the odd day.

Conservatively, this reduces my expenses by $20 a week. But if you’re buying expensive lunches then you could save a lot more.

Four rules to consider There are four things to remember if you want to pump up your piggy bank. 

1. Shop around (and with a purpose)

There are certain unavoidable expenses – cat and dog food, kitty litter and cleaning products come to mind – but there are many things you can likely do without. The trick is to know the difference between the two.

When most people grocery shop, they add non-essentials into the trolley as they see them. By writing a list, when heading to the shops you’ll go to the aisles only where those items are. If you don’t see the chips on special and the “new exciting product” then you won’t buy it. To make a list also involves planning what you’re going to eat that week – and sticking to it – which helps with avoiding waste at home as well.

2. The ‘seven day’ rule

A trick that has saved me countless dollars is to never buy non-essentials straight away. Instead, I wait a week before deciding to purchase. Often by the end of this time period, I’m no longer that interested in buying it at all.

Add the item to the basket on the account and see how much the total is, with the shipping cost added to the total. Then think about it for seven days. This has saved me from numerous instances of “buyer’s remorse”.

3. Be accountable

Another lifestyle change worth making is to be accountable to someone else for your money. If you have a partner with whom your finances are tied, particularly a frugal one, it is worth committing to telling them about what you spend each day.

But you don’t have to be loved-up with a financial guru to find a great accountability buddy. Even a budget diary that you keep to yourself will keep you accountable, because no one likes to realise just how much they spent on magazines or bottled water in a month. Or you can speak to a good friend with similar goals.

4. Understand your savings account

Many avid savers will have their funds in a high-interest savings account, but few actually understand the quirks of each account and what fees they may be paying.



For instance, some accounts require you to deposit a certain minimum each calendar month and make no withdrawals to get a high interest rate. For some, making a withdrawal can bring your interest to 0.01 per cent, with a charge for taking the money out. This means being over-zealous with deposits and then needing to take money out when things get tight is a bad approach for this type of account. Plan ahead carefully to get the most from your savings account.

Posted by Jennifer Duke - Domain (Fairfax) on 25th January, 2016 | Comments | Trackbacks | Permalink
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Do vendors need a reality check in 2016?


  TELL ’EM they’re dreaming.


It’s the sentence plenty of potential buyers could be saying this year as sellers suffer from price point jetlag after 2015 dished up a hot real estate market in some corners of the country.

Just six months ago when prices were riding high in Sydney and Melbourne, sellers were setting the price agenda. But those vendors who took their time deciding to sell, could now be in price shock as values begin to cool.

Cameron Kusher, senior analyst with CoreLogic, said postcodes will play a key role in whether buyers or sellers are in the driver’s seat in 2016.

Skyrocketing property prices in 2015 became a Sydney-based syndrome, with Melbourne riding the wave also.

By the end of 2015, Corelogic reported an 11.5 per cent annual change in dwelling values for Sydney and 11.2 per cent movement in Melbourne. That far outweighed the 7.8 per cent change in dwelling values for all combined capitals.

But according to Kusher, that’s all about to change.

“Definitely sellers are not going to have it as much their way as they have over last few years in Sydney and Melbourne,” he said.

“Most years are years of contrast but generally what we’re going to see is slower growth, buyers will have more choice and sellers will have to be more realistic about their prices,” he said.

“This year is not going to be as easy for sellers, certainly not in Sydney and Melbourne,” he said.

“But when you move outside those markets, conditions for sellers haven’t actually been that great, generally. You might actually see sellers gain a bit more power in some markets, particularly if people from Sydney or Melbourne start looking elsewhere to buy,” he said.

While our two biggest capitals look set to have a more lacklustre year than last, Mr Kusher said there were plenty of mini markets where property prices were still on the up and up — even if ever so slightly.

“I think the south east corner of Queensland, parts the Sunshine Coast, Gold Coast and Brisbane will continue to do well — I’ve got to note, however, that the rate of growth in any of those places isn’t going to hit what we’ve seen in Sydney or Melbourne, but housing demand will pick up in those markets,” he said.

The analyst said other areas to watch in 2016 include Australia’s regional cities.

“As people get priced out of Sydney they’ll look to Newcastle or Wollongong. You’ll see more demand going into those markets as well. And similarly in Victoria you might see areas like La Trobe Valley, Bendigo, Ballarat and Geelong have demand starting to pick up as people are priced out of Melbourne,” he said.

“And Canberra; we’re also seeing some value rises as well. We’re starting to see a bit more activity coming into the Canberra market. That market hasn’t done very well over the last five or six years,” he said.

But as Australia is a nation of extremes, so are our diverse real estate markets. Mr Kusher said there were two cities where values could still be heading down.

“I think Darwin and Perth are on a similar trajectory. You might see the rate of decline slow, but I still think those markets are going to be hamstrung by what’s happening in the resource sector,” he said.

“We’re seeing rental rates in those cities fall rather sharply and migration to those markets has slowed rather dramatically, so I think there are some more tough times this year in both of those cities,” he said.

Posted by Kirsten Craze - news.com.au on 23rd January, 2016 | Comments | Trackbacks | Permalink
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Property expert Peter Koulizos shares his top tips for buyers and sellers in the 2016 real estate market


 

RESEARCH is the key to successful buying in the real estate market.



And with market conditions tipped to change in 2016, doing your homework has never been more important, according to property lecturer and author Peter Koulizos.

“Once you have done your research on the area and on the property, you are in a much stronger position to negotiate,” Mr Koulizos said.

And for those considering selling, Mr Koulizos recommends his “five Ps” formula of preparation, presentation, people, performance and price.

See his tips below:

TOP FIVE TIPS FOR BUYERS ● Research the location

Is this the right suburb for you? Is the area full of young families or is it a great area for retirees?

Are the houses in the neighbourhood old but well-kept or are they old and run down?


If the surrounding properties are not of a good standard, it can give you an indication of the demographic in the area and it can also limit future capital growth.

Research the amenities

If you have a young family, are there schools nearby?

If there are a number of drivers in the household but only one car, is public transport easily accessible?

Do you need to be close to medical facilities?

Research the property

There are many aspects of the property that are within view but there are some that are not so obvious.

Is the building, especially its electrical and plumbing connections, of a good standard? If you are not sure, get a building inspection.

If the property is a character or period home, it could be heritage-listed. How do you find out? Check the paper work.

Research the price

You don’t want to be paying too much for the property so you need to find out what the market value is.

The best way to do this is to compare the prices of similar properties that have sold over the Past few months. By similar, I mean in a similar location (preferably the same suburb), similar sized allotment, similar sized home and in a similar condition.

Once you have found at least five comparable properties, you can calculate an approximate value of the property you want to buy by determining whether the other comparable properties are better/worse than the property you want to buy.

Negotiate


Knowing the selling price of comparable properties gives you the edge, as you can back up your offer with recent sales.

This will help ensure you don’t pay too much and it will also show the agent and owner that you are an educated and informed buyer who is prepared to buy at the right price.

TOP FIVE TIPS FOR SELLERS

Preparation

As soon as you decide to sell your home, you need to prepare.

Make sure all the searches and documents are organised well in advance so that if you are lucky enough to get an offer you are satisfied with in the first week or so, the papers are ready for the buyer to sign straight away.

The longer you leave the signing of the paperwork, the greater the chance the purchaser will cool off.

Presentation

This is critical. The best chances of selling your property are in the first few weeks of being on the market.

You want to not only attract potential purchasers to your property but you also want to include the “wow” factor so that they return for a second look.

Make sure the property is clean, tidy and uncluttered.

People

You need to select the right person to sell your property. I suggest you contact three local agents and ask them for an appraisal.

Do not necessarily appoint the agent that promises they can sell your property for the highest price. Some real estate agents will say that to entice you to list with them.

Look for the best performing agent (see next point).

Performance

A good performing agent should be well dressed. Their promotional materials, including signs and brochures, should be professional and encourage potential buyers to take the next step.

One of the most important measures of a good agent is one that responds in a timely manner. If they are returning your calls and responding to your emails promptly, they are probably doing the same to the potential buyers.

Price

In the end, it comes down to price. If you haven’t presented your property well, you can expect a lower price. If you have selected the best agent for the job, you will expect them to get the best price for you.

A common mistake is to set the initial asking price too high. This could result in the property staying on the market for a long time. The longer it is on the market, the less likely you are to sell it at that price.

You are better off advertising the property for just a little more than it’s worth and giving yourself some room for negotiation rather than asking for a ridiculously high price and dream that someone will come along and buy it.

Posted by Christine de Sliva - News Limited Australia Network on 22nd January, 2016 | Comments | Trackbacks | Permalink
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ATO crackdown on rental properties, holiday homes


Australians who rent out their holiday homes for just a few weeks a year, but try to claim full-year deductions on their tax returns have come under fire from the Australian Taxation Office.

The ATO is stepping up its focus on rental property owners, in particular holiday home owners, and will soon write to 1000 owners who may have incorrectly claimed deductions for initial repairs to recently acquired rental properties.

The ATO told Fairfax Media that last year it had sent out letters to 500 postcodes across Australia, reminding people to only claim the deductions - including maintenance and mortgage interest -  they are entitled to, for the periods the holiday home was rented out or was genuinely available for rent.

A spokeswoman said most taxpayers that received these letters have subsequently reduced their claims.       

A key concern in regard to holiday home owners, is when people make claims for expenses when the property was not genuinely available for rent. 

Stuart Wagschall, of Thomas Davis & Co, Accountants in Sydney said: "Holiday home investors should be aware that the ATO appears to be taking a broad approach in monitoring rental deductions."

"Where relevant, it may be prudent for holiday home investors to take this opportunity to review the rules surrounding holiday home tax deductions to ensure that any risks or issues are addressed in a timely manner. It may also be a good idea to review records now so that you are prepared should the taxman come knocking." Deducting repairs

But it's not just holiday homes that are under focus. "We are also commencing some work to address rental property owners incorrectly claiming deductions as well," the ATO spokeswoman said.

The ATO's taxation statistics for 2012-13 show that 1.26 million people deducted losses made on investments (including mortgage interest) from their overall income, from a total of 12.77 million individual tax returns lodged for the period.

A common mistake for rental property owners was claiming deductions for initial repairs to rectify damage, defects or deterioration that existed at the time of purchasing a property, the ATO said.

"It's important for taxpayers to understand they are not entitled to claim a deduction for repairs to their rental property for issues that existed when they purchased it, even if they carried out these repairs to make the property suitable for rent," she said.

"The cost of these repairs is instead used to work out any profit, or capital gain, when the property is sold."

Holiday house owner Derryn Timms, who rents out her four-bedroom house "Char-ree-leera" in the coastal town of Eden, halfway between Melbourne and Sydney, is determined not to become alarmed. 

"We'll be handing on their letter to our tax accountant," said the 59-year old callisthenics teacher. "We won't think about it. It's something we don't want to know about; let the experts sort it out."

There are likely to be plenty of other owners, however, who will be panicking. It's an industry for both holiday and short-term rentals that, in a 2014 BIS Shrapnel report, was said to generate an estimated $31 billion in economic activity and support 238,000 jobs.  

Property Owners Association of Australia NSW president John Gilmovich says that at a time when there's talk about tax reform for property owners, there's bound to be plenty of confusion about the rules. "I think there would be certain property owners who'll fall into that category," he said. 

"There's also confusion about the whole Airbnb debacle and tax too, and we've been lobbying for regulation on that market, like the regulation that exists for other property investors. But it will be difficult as there are no central registers."

-with Sue Williams 

Posted by Nassim Khadem - The Age Business Day on 22nd January, 2016 | Comments | Trackbacks | Permalink
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When a home buyer doesn’t have finance


After nervously waiting weeks to sell your life’s biggest asset – the family home – the price is negotiated, the contracts are inked, and all you need is word that the buyer has their finance approved.  But the news isn’t good. Your agent tells you a bank has rejected your buyer’s loan application. 

Or worse, you haven’t heard back from the buyer and the sale is about to become unconditional.

That nightmare became reality for one Yarra Valley resident, when the sale of their three-bedroom house fell through because the buyer couldn’t obtain finance, and kept delaying their promise to provide a letter from the bank to break the contract. 

Professional driver Mark, 32, who didn’t want his surname published, said the buyer paid $1000 upfront to secure the property just before Christmas, but failed to pay the deposit after the cooling off period. 

The sale was made subject to finance, with a deadline set a month later because of the holiday interruption, and their house was left on the market – under contract – for weeks. 

“We don’t know where we sit, what happens if it comes January 22 and legally she has to buy it,” he said. 

“I don’t [want] to go down the road of taking her to court to get the money.”

Mark said he couldn’t put a deposit down for a new house until he sold his. He eventually ended the contract after receiving a letter from the mortgage broker, and his home is now back on the market. 

It is a familiar story for many Melbourne vendors who sold their homes, only to find the buyer could not obtain finance.  

Nelson Alexander sales director Arch Staver believed more subject-to-finance sales had fallen through – particularly in the first home buyer market – at the end of last year because banks changed lending criteria and tightened the belt across the board. 

A buyer who received a pre-approval in the middle of last year, he said, may later find the bank had revised down that offer. 

Calculations from lender ME show a couple with two children and a combined annual base gross income of $115,000 were able to borrow a maximum of $619,500  – that amount has now dropped to $556,300. 

“In the last eight to 12 months, all the major lenders … had been working closely with the [Australian Prudential Regularity Authority] to ensure that lending standards don’t deteriorate when we have a combination of record low interest rates and house price growth,” general manager of credit risk Michael Hendricks said.  

“And so part of those processes have been looking at how banks take into account, and make assumptions around, living expenses and types of non-stable income – bonuses and overtime – so really making sure that we maintain a good focus on affordability.”

Aussie Home Loans has recorded a 11 per cent drop in the number of loans to investors over the December quarter compared to the same period in 2014. There was a 6.5 per cent rise in first home owner loans, and a 5.7 per cent jump in purchases by owner-occupiers. 

Mortgage Choice spokeswoman Jessica Darnbrough said much of the tightening over the past six months had been around investment policy and pricing.

Some of those changes, such as banks increasing buffers to ensure a buyer can meet the repayments comfortably, have also affected owner-occupiers, she said. 

Werribee-based agent James Antonio at YPA Estate Agents said two-thirds of the agency’s sales this year had been subject to finance.

But usually only one or two of the conditional sales fell through a month, he said. 

Offers subject to finance weren’t “rock-solid deals”, he said, so it could be difficult for vendors if there were multiple offers on the table. 

Posted by Christina Zhou - Domain (Fairfax) on 22nd January, 2016 | Comments | Trackbacks | Permalink
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Master reverse Feng Shui to nab a bargain in competitive housing market


House hunters competing with Chinese buyers should study Feng Shui so they can do the opposite. 

We all know the Chinese have a large presence on the Australian property scene today. Chinese buyers snap up nearly one in five new properties in Sydney, and one in seven in Melbourne, according to research by Credit Suisse. Sometimes they pay very high prices for seemingly average places, like the unremarkable house in Eastwood, a Sydney suburb with a large Chinese community, that sold for  a million dollars over its reserve in 2013.

Chinese areas have also experienced strong growth in recent years, with popular areas like Chatswood and Epping outpacing the Sydney median price growth rate. We have the stability, land, convenience and time zone that many Chinese buyers crave. This situation is pretty scary for a buyer. You could pay for building inspections, get a solicitor and then be trumped by more money than you'll ever earn in your life.

Luckily there's a whole selection criteria for homes that means nothing to many Australians. That discipline is known as Feng Shui and it's something that buyers in Chinese influenced markets should know about, simply so they can do the opposite. Studies by the  Asian Real Estate Association of America have found that 79 per cent of Chinese investors there will pay more for a house with good Feng Shui, so avoiding this premium is critical in finding a bargain.

Reverse Feng Shui is actually quite zen. It's a science of disbelief – it's the yang to the Chinese yin. It is to hold knowledge without accepting its truth and, in actual fact, do the exact opposite. It's about harnessing negative energy to get more home for your money.

1. Make for the curves

The bendy, winding roads that are so popular in modern suburban developments are said to bring bad health. The same is true for T intersections and cul de sacs. In general, if headlights are flashing in the front room, you can feel that negative energy coming through in the form of downward price pressure.

2. Street lights shine on a bargain

Homes just above street lights might make those final steps to the front door safer, but to Feng Shui masters that's a no-no, even if your windows are not made of paper. A quick look at Google Street View can reveal these "bargain beacons".

3. Follow the pointers

Anything pointing at your home, from building corners to TV antennas are said to bring a pointy stabby vibe to your house. So although they also provide a slight risk to running children and drunk homecomers, embrace the apex and let these objects point you to your new bargain home.

4. Good things come in fours

The number eight is very auspicious, associated with good fortune, so steer clear of the eighth floor, and head to the fourth floor, where the number four sounds like "death" and is very bad luck. If the views are no good from the fourth floor, the 14th or 24th will work just as well. Same applies for four as a street number.

5. Go with the flow

The main door should never be aligned with the back door, say the Feng Shui masters. This is a particularly good one for buyers, as no amount of strategic arrangement of plants and waterfalls can compensate for this fundamental floor plan flaw. Find a place with the front and back doors aligned and you can rest easy knowing that the only thing flowing out will be competing buyers.

6. Be open minded to open plan

The kitchen should not be visible from the front door, nor should the entrance to the bathroom. This leaves most open plan layouts wide open to practitioners of reverse Feng Shui.

7. Embrace your inclination

Ground sloping steeply away from the house is a big no-no for Feng Shui and is another hard fact that can't be overcome with decorating or renovations. Sloped blocks are actually a bargain when it comes to square metres of yard space though, and can offer some terrific vistas.

8. Take all necessary steps

A staircase leading down to the entrance is said to carry all good fortune down from upstairs and out the front door. This is a very common feature, though, of the grand Victorian terraces that crowd the inner suburbs of Melbourne and Sydney. A conveniently located staircase could be the feature you need to bring a chic urban townhouse within your grasp.

Luke Metcalfe is the founder of Microburbs, a data start-up that provides detailed information on demographics and amenities for nearly every property in Australia.

Read more: http://www.theage.com.au/money/saving/master-reverse-feng-shui-to-nab-a-bargain-in-competitive-housing-market-20160113-gm4qgj.html#ixzz3xriTcNP7
Follow us: @theage on Twitter | theageAustralia on Facebook

Posted by Luke Metcalfe on 20th January, 2016 | Comments | Trackbacks | Permalink
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Nine tips for hiring reliable tradespeople


 

Finding reliable, valuable tradespeople is arguably the most integral part of any home project.

Whether it’s a brand new build, renovations, or a simple day job, don’t enter a contract before observing the following guidelines.

1. Ask to see their licence 

Most tradespeople are required to carry a licence that verifies their position. 

Trades such as electrical, plumbing and building also require formal qualifications, most commonly a TAFE certificate that’s completed through an apprenticeship. 

An exception is sub-contractors, such as tilers or pool installers, who can work for someone that holds a licence. 

“It’s more important to verify the tradesmen’s licence rather than qualifications, as the licence can be revoked or disqualified by the governing body in the event of a breach,” says Chantel Gilbert, general manager at Bluegum Electrical.

Most tradesmen will list their licence details on their website or business card.

“It is a legal requirement for the electrical industry to list your REC on any form of advertising,” Gilbert says.

Each trade’s governing body should have a list of registered contractors for their state, where clients can confirm if a licence is current.  

2. Don’t compromise on insurance

According to electrician and resident tradie at WorldSkills Australia Dave Arnold, there are two types of insurance tradespeople should have.

“If a tradie gets injured on the job, their income protection will cover their own losses, but their liability insurance will cover any damage that occurs to your property during work,” Arnold says. 

“Insurance certificates need to be current and valid for the duration of the project works,” says Johanna Seton, home improvement expert at hipages.com.au.

“Public liability insurance is compulsory and gives liability protection against third party injuries and property damage caused by the contractor.” 

3. Insist on a written quote

According to Gilbert, you are entitled to know what you’re getting, and for what price, before you commit to a tradesperson. 

“You don’t need to know every screw that’s being used, but I suggest you know a few key things like what is being completed or installed, the location… what’s included/involved in the work, and the price including GST (ideally price per task if appropriate),” Gilbert says. 

“It is entirely reasonable to ask for a written, itemised quote, no matter the value of the job. This gives you recourse if things go wrong,” Seton says. 

“For larger jobs this should be a contract. Each state has slightly different requirements regarding the value of a job that requires a contract.”

Confirm with your tradesperson before work  starts whether your quote is fixed or merely an estimate, and whether or not it includes GST. 

Regardless of how good the reputation of the supplier is, always get multiple quotes from different suppliers and ask why the prices differ. 

“This will help you get a more competitive price, understand what’s involved in the job better and the quality of any products and parts you are purchasing,” says Nick Sertis,  chief executive of The Quote Company.  

On occasion, there will be unforeseen additional work required. If this occurs, your tradesperson should let you know as soon as possible.

According to founder and architect of Undercover Architect Amelia Lee, quotes can change when works don’t  begin on the specified date, don’t reflect the actual scope of the job, or something unexpected is discovered that requires extra labour or materials. 

4. Verify any reviews

As the saying goes, don’t believe everything you read. 

Some service providers may post fake reviews to ensure potential clients will discover glowing reports from multiple sources.

“Check Facebook reviews, reviews on Product Review, and anywhere else you can find them,” Sertis says. 

“Try also contacting those who have left reviews for the tradesperson and ask them for more details on the job.”

When searching for a tradesperson’s name online, be wary of those who appear to be behind a string of different business ventures. 

“They may be trying to cover a trail of destruction from previous businesses and industries,” Sertis says. 

“Ask the tradesperson for references in the area and then follow up with them yourself. If you’re new in town, a perfect way to meet new people!”

5. Value professionalism

Tradespeople are not exempt from being professional in the workplace, both in their appearance and conduct. 

Some traits to be wary of are a lack of communication and regular tardiness. 

“Another one is a one-man-van claiming to do everything – domestic, commercial and industrial,” Gilbert says. 

“It’s very unlikely one person is actually experienced and an expert in all three, so choose a tradesmen that knows what they’re good at.”

Tradespeople who don’t provide a clear timeframe of their arrival should be avoided. 

“It’s certainly not acceptable to be late on an ongoing basis without reason, [and] it is completely unacceptable to be late without communication!” Gilbert says.

“This should occur prior to the appointment, not after the time has come and gone.”

“I also think the appearance of a person is important… If they present professionally, you’re more likely to have a professional experience with them,” Arnold says.

A tradesperson’s general manner can also be a good indicator of their professionalism down the track.

“If you don’t feel comfortable communicating with them, then it’s a good sign there could be challenges later,” Lee says. 

“Even though it may be a small job, finding someone who’s likeminded and who you can imagine having in your home and making a cup of tea for is a good indicator too!”

6. Never pay upfront

According to Seton, it is extremely unwise to pay a business for work that has not started 

“The Domestic Building Contracts (DBC) Act of 2000 governs payments and deposits for building projects, providing guidance for consumers and contractors alike. Smaller contracts ($3500 to $20,000) should not incur deposits of more than 10 per cent, inclusive of labour and materials,” Seton says. 

“Projects over $20,000 require a  5 per cent deposit with phased progress payments. Deposits can be negotiated for works costing less than $3500.”

Final payment should not be requested until the job has been completed and you are satisfied with all work in accordance with current regulations. 

Payments for materials, however, are reasonable. 

“It is very reasonable for home owners to provide the funds to the tradie or builder to purchase the materials required for the project,” says Troy Everett bricklayer and resident tradie at WorldSkills Australia. 

7. Request a completion date

A completion date should be provided by the tradesperson before works begin and should only be strayed from due to unavoidable conditions such as weather delays. 

“Changes should only be due to unforeseen circumstances, not because the tradesmen picked up a better job,” Gilbert says. 

“Clear communication regarding when the tradesmen will be on site should avoid unnecessary delays.”

8. Beware of cash jobs

Be wary of any tradespeople who insist on cash payments with a cheaper price tag that excludes GST, as this can be a huge risk for your insurance.

“Although you might feel like you’re beating the tax man by saving on GST, it’s important to receive a tax invoice or receipt for the work completed,” Gilbert says.

“My favourite quote is, ‘If you think it’s expensive to hire a professional tradesman just wait till you hire an amateur!” 

9. Know your rights 

If works are unfinished or not complete to a satisfactory standard, your tradespeople should be held accountable.

The first thing to do in this situation is raise your concerns with the tradesperson or company. 

“You can also withhold your final payment until the agreed work has been completed to standard,” Gilbert says.

“If all attempts to do this fail and the tradesperson seems to be deliberately avoiding you, the next step is to take it to your state or territory’s consumer protection agency,” Sertis says. 

The ACCC lists these all here.

Posted by Amelia Barnes - Domain on 19th January, 2016 | Comments | Trackbacks | Permalink
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Customer loyalty doesn’t pay off


LOYAL home loan customers are missing out on cut-price deals being offered to new customers if they sign up. 

Multiple home loan lenders have rolled out falling rate deals already this year — Suncorp and AMP are among those who have dropped their rate deals on both fixed and variable home loan products, new analysis by financial comparison RateCity shows.

But the findings show many of the deals are for new borrowers only and are not being offered to a lenders’ existing customer base.

RateCity spokeswoman Sally Tindall said it was great to already see new discounted home loan deals creeping onto the market this year but loyal customers were being left out.

“Special introductory offers and new low-rate products are designed as a marketing tool to attract new customers, not retain existing ones,’’ she said.

“It can feel like a slap in the face for loyal customers but that doesn’t mean you have to just cop it.

“If you are a long-serving customer, find out what rate your bank is offering new customers, because if it’s different you’ve just got yourself a bargaining chip.”

According to RateCity data Suncorp dropped their three-year fixed owner occupier package deal by 20 basis points to 4.29 per cent but the deal is only available to new borrowers.

New figures show on a standard $300,000 30-year home loan the average standard variable rate is 4.64 per cent and the monthly repayments are $1546.

On an average, three-year fixed rate are 4.39 per cent and the monthly repayments are $1501.

1300homeloan director John Kolenda expects borrowers to enjoying more rate drops this year and forecasts the Reserve Bank of Australia will lower the cash rate from two per cent in the coming months.

“We might see the cash rate reduce because of all the headwinds which includes in China and stockmarket,’’ he said.

“I think we are likely to see a cut in the first quarter of this year or definitely in the second quarter.”

The RBA board meets in February for the first time this year in 2016.

St George senior economist Hans Kunnen said the falling rates signalled “competition and the hunt for market share” by lenders but said the low rates won’t last forever.

“People might start talking about the possibility of a rate hike towards the end of the year and that could spook people,’’ he said.

Posted by Sophie Elsworth - The Daily Telegraph on 17th January, 2016 | Comments | Trackbacks | Permalink
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Expert tips on renovating to add value to your home in 2016


Renovating for a profit looks easy enough on television but in real life, it’s a science that takes research and practice to perfect.

Buyers agent Patrick Bright of EPS Property Search says renovators looking to make a profit should aim to achieve an average of $2 return on every dollar spent over the course of a home reno. The big question is ‘how?’

Here are some expert tips on renovating to add value in 2016 and beyond.

Open plan v privacy                                                 

Open-plan living is a feature demanded by most buyers. However, Bright says, “there is such a thing as being too open and having no definition”.

“I’ve seen some renovations where they’ve just ripped out a second lounge room and opened it right up with the rest of the house. It’s not really the wisest thing to do, as you’re reducing your total living space.”

Bright advises home-owners with multiple interior living spaces to combine two areas as an open-plan area and strategically renovate additional spaces as a separate, private retreat.

Following this simple renovation rule of thumb, Rhoni Whitelaw and her partner recently renovated their 140-year-old, three-bedroom Glebe property purchased in late 2012.

The couple swapped the bathroom and kitchen on the ground floor and opened up the dining areas to create a multipurpose eating area filled with light.

Upstairs, the renovators had the same option of creating open-plan living, but instead opted to “keep the lounge room-sitting area to provide a private space in the house”.

“We are part of a bigger family, so we wanted to create spaces where you could enjoy family time and have private space,” says Whitelaw.

Recreating the outdoors

The Sydney-based couple also renovated to connect their outdoor space to their new interior eating area on the ground floor, by installing bifold doors opening from their kitchen out onto their small backyard. An awning was installed to provide shelter outside.

Melinda Woodford, stylist at online homewares retailer TheHome.com.au says all things being equal, this move should add value to the property as buyers demand courtyards that are “an extension of the home”.

Another way to boost the value to an outdoor space is to add shrubbery.

“If you don’t have green fingers, some lush plants in colourful pots will go a long way in making the outdoor space inviting,” Woodford says.

Adding shrubs or trees at the front of a house, and even a pathway to the property, will also add extra value if done well, as first impressions count.

Defining space

Renovators with large outdoor areas are encouraged to “re-define” smaller parts of the space to boost the purchase price of the property.

“If you have one big paved or grass area, break it up and put a pergola over one part of it so that it is a defined entertaining area,” says Bright. “And if you’ve got room to do it, whack in a built-in barbecue, so that the space becomes a ‘barbecue entertainment area’.”

Other outdoor amenities to increase the value of your home:
  • A small pool plunge pool that is part of the outdoor living room.
  • A carport.
  • Super-tidy garage spaces, with painted floors for your car and built-in storage space.
  • An outdoor kitchen.
  • A remote controlled garage.
  • An automated louvre roof instead of a pergola.

Attention to detail

Licensed Real Estate Agent at Richardson & Wrench Mosman Neutral Bay, Geoff Grist, believes the overall aim of any renovation worth it weight is provide a property with a homely “ready to move in” look and feel.

One easy way to do this is to give your rooms and the property exterior a fresh lick of neutral-coloured paint.

Other value-adding details that won’t cost the earth:
  • Airconditioning
  • Proper ducted-ventilation for the bathrooms and laundry
  • Heated floors in bathrooms
  • LED lighting and smartphone control automation
  • Security systems linked to your mobile
  • Music systems streamed through ceiling speakers
  • Large bathroom tiles
  • Polished floorboards
  • New carpet
  • Butler’s pantry in kitchen to provide an accessible but concealed space for appliances like a Thermomix.
  • High quality branded kitchen appliances and a built-in dishwasher and fridge that match the kitchen, if the house is pitched at the higher end of the market.
“Buyers want to picture themselves in a home,” Grist says. “So if a renovation means that a buyer can picture themselves living in a property, then they will pay a premium to live there.” 

Home renovator, Tanya Southworth agrees. She and her husband just sold a two-bedroom fibro holiday house in Culburra on the NSW south coast. Having bought the property for $350,000 11 years ago when the property market attracted a high purchase price, the aim of the renovation was to upgrade the house and make the couple’s money back.

A renovation of $70,000 saw the couple open up the space between the granny flat and main house to create one spacious property, put floorboards throughout the property, upgrade the bathroom, laundry and kitchen, and add an attractive garden.

The house sold last November for $450,000 in just three weeks. Southworth says the biggest selling point of the property was that it was ‘move in’ ready.

“The real estate agent said the place looks like a home,” Southworth says. “I think that was because we focused on making it look like a lovely place that we could enjoy.

“Always make sure that if you are going to live in the house and renovate, that your renovations are going to provide you with a good lifestyle. If you get use out of your renovations, then you will feel like it is money well spent and others will see that too.”

Download our Renovation Checklist for more tips on adding value to your home. 

Posted by Yasmin Noone - Domain (Fairfax) on 5th January, 2016 | Comments | Trackbacks | Permalink
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Why borrowers are now starting to fix their interest rates


  MORTGAGE customers are concerned interest rates will creep up in 2016 and are turning to fixed rate loans for the first time in years.


And investors continue to be stung with higher interest rates than owner occupiers as the banks tighten the screws on housing lending.

Investors who are locking in their loans are paying on average 19 basis points more than owner occupiers — the average three year fixed rate for owner occupiers is 4.35 per cent.

Aussie Home Loans has reported a tripling of customers locking in their loans — climbing from just 13 per cent in June to 38 per cent in November.

The Australian Prudential Regulation Authority announced a tightening on home loans — particularly investor lending — in mid-2015 and the ripple effect has been felt by borrowers who have experienced rate rises in recent months.

One of the nation’s largest broking networks Australian Finance Group’s spokesman Mark Hewitt said they has also recorded a spike in customers locking in their loans.

“Fixed rates peaked at 21.7 per cent of our business in the June quarter in 2013,’’ he said.

“They have been declining as a share of our business ever since until this current quarter where they have risen from 11.3 per cent to 13.2 per cent.

“This is an indication that borrowers are thinking that an interest rate rise may be around the corner.”

Mortgage Choice also reported in October a four-year low of customers locking in their loans at about 14 per cent but has consequently seen its first increase in November since 2011.

RateCity analysis shows on a $300,000 30-year loan the average-three year fixed rate for an owner occupier is 4.35 per cent compared to 4.54 per cent for investors.

The site’s spokeswoman Sally Tindall said investors have been hit hard with rate rises resulting in many fixing their loans.

“The majority of property investors have taken a double hit this year with the introduction of higher rates in July and August, followed by the rate hike initiated by the major banks in October,’’ she said.

“Fixed rates in particular are becoming extremely competitive this summer with lenders such as the Bank of Queensland and Freedom Lend are offering three-year fixed rates under four per cent.”

The Australian Securities Exchange Rate Indicator which monitors market expectations of the official cash rate is predicting just a 13 per cent chance the Reserve Bank of Australia board will drop the cash rate to 1.75 per cent when it means for the first time in 2016 in February.

Posted by Sophie Elsworth - News Limited Network on 5th January, 2016 | Comments | Trackbacks | Permalink
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New Year’s resolution: how to save money for a house in the new year


Saving for a first home is undoubtedly going to be on the list of many for 2016. 

Saving enough for a deposit may seem out of reach, but there a few ways to ensure you’re on track. Photo: Glenn Hunt

Yet, putting away even 5 per cent of a deposit for a median priced home in Australia can be a tall order. 

Here are six steps to achieving your goal for next year.

Know what you can afford

Just like any other goal on your resolutions list, the first thing you need is to work out what the goal looks like.

Not only should you be looking at a percentage of the property value, but you also need to consider extra costs, such as pro-rata rates, to ensure you are saving enough. The best way is to work out a dollar-value figure, a tangible goal that is easy to understand.

ME head of home loans Patrick Nolan said rising property prices can continually push the goal posts further away.

“While 20 per cent is regarded as the ideal deposit, many lenders will let you borrow up to 95 per cent of your home’s value − so you may only need a deposit of just 5 per cent,” Mr Nolan said.

To do this, you need to work out how much you need. A broker or lender can explain your borrowing capacity, so when you know what type of home you want, you should have a quick guide.

Don’t forget to consider:
  • Land tax (for some investment properties) 
  • LMI, which stands for Lenders Mortgage Insurance (usually applicable when a deposit is less than 20 per cent of the purchase price)
  • Stamp duty
  • Cost of inspections
  • Solicitor fees
  • Minor costs (postage fees, costs of obtaining a bank cheque)


Add all these costs together with your required deposit and you should have a savings figure in mind. Consider any grants that may be applicable that could revise down your required deposit.

“Legal fees, home and contents insurance, moving costs – it all adds up. The big cash drain is often stamp duty,” Mr Nolan said.

“It’s based on the price you pay for your home, and it’s a fair bet you could be looking at duty costing several thousand dollars,” he said.

Set a savings goal

Now you know what total you need, work out how much you need to put aside regularly to reach this goal. 

Firstly, put a time figure on the goal, such as “by the end of the year”.

Using your desired savings figure, divide it by how many pay cycles you have in the year. For instance, if you need to save a further $25,000 by 2017 and you are paid once a week, you will need to save $480 a week, or close to $500 out of every pay packet.

At this point, you will want to reality-check your aim. Is it going to be possible to save this amount? If it isn’t, you may need to lengthen the date for when you hope to have this figure saved or look for cheaper ways to enter the market. Understand your budget

You may already be very familiar with how much you save and spend, but all too often household finances go unchecked. 

Find out whether your current budget aligns with your savings goal.

To set a realistic budget, you must first know what you are spending. Keep receipts and records of expenses for a few weeks and you will quickly find out where your money goes.

One way to do this is to spreadsheet your weekly expenses so you can see at a glance where your biggest costs are. If you’re more frugal than you think, you may find saving the desired amount far easier. For most, this will be a much-needed reality shock.

If your current budget doesn’t match your savings goal can can make changes. 

Reduce your expenses

For most, finding a few extra dollars is going to be about cutting costs. While you want to allow yourself some treats, you will likely need to rein in your spending significantly.

Whether it’s downgrading a phone bill, bringing in another flat mate or cancelling a subscription, these funds could be channelled into your savings and bring you one step closer to your goal.

Some make sacrifices even if they can reach their savings goals without doing so, using the opportunity to get to their goal even quicker.

With your budget in front of you, look for unnecessary spending. Be honest with yourself about what you can cut to save money, such as buying lunch during the week.

You can then look at services you need and consider shopping around for cheaper alternatives, such as low-priced internet or a lower-priced gym membership.

Selling unwanted items

Most people have a few unused knickknacks around their home. Not only are these unnecessary clutter, but they could also be sold on for cold hard cash to beef up your savings account.

You may want to consider a garage sale if you have a lot to get rid of, but you could also use Gumtree, eBay and Facebook buy/swap/sell pages to move larger or more expensive items, such as furniture. 

You may have a few unwanted gifts after Christmas, so get ready to put your marketing hat on and get some money for your unneeded junk. Push your savings further

Many first home savers will have some savings. If you have accrued a substantial sum it’s time to consider where you can put it for the best outcome. 

The first consideration is a high-interest savings account, usually a go-to for those wanting flexibility with their money but keen to have it accruing funds. Familiarise yourself with the rules around minimum deposits, fees and withdrawals to ensure you are getting the most bang for your buck. This may require shopping around through different savings account providers.

If you currently have $20,000 and plan to deposit $1000 a month for 12 months, you will find that with some accounts you can earn up to $920 over that period. Lower performing accounts may only provide half that figure, with rates from 2.5 per cent up to 3.55 per cent available. 

You could also consider investing your money in shares, bonds or another form of lower-priced investment. However, there is a risk involved and there limited investment options for small sums.

Seek financial advice to mitigate your risk ahead of time.

Another common way for savers to get the most out of parked money is through a term deposit account. Term deposits are similar to high-interest savings accounts, but can be useful for those tempted to access their savings, because the funds cannot usually be accessed without a penalty. For those intending to keep money in one place over the long-term, some good returns are available.

Often, though not always, term deposits can offer a higher interest rate and you can choose the duration.

Consider alternatives

During the savings process, it’s also worth considering other ways to get into the market in case your savings fall short.

You could consider:
  • Guarantor loans
    First home buyers who have not accrued a big enough deposit may be able to ask a parent to stand “guarantor”. Effectively, the bank’s security is the parent’s existing home’s equity.
     
  • Joint venture
    If you can’t afford to buy alone, you may want to team up with a partner, sibling or friend to buy a property. Bear in mind there are difficulties with being a co-owner and you should discuss the implications of being financially tied to someone else. Make sure everyone is aware of their responsibilities.
     
  • ParentAssist loan
    For those parents not willing to stand guarantor but still keen to be involved in the purchase, a ParentAssist loan allows parents to provide their child with up to 20 per cent of the purchase price. These funds are then repaid at a lower interest rate to the parent, while the home buyer also pays back the mortgage on the rest of the funds.
     
  • MoveUp2
    This new product allows relatives to co-invest in a first home buyer’s purchase, allowing them to increase the deposit and minimise fees for those borrowing more than 80 per cent. Effectively, family members become investors in the property before the first home buyer pays out MoveUp2 after three years.

Posted by Jennifer Duke - Domain (Fairfax) on 5th January, 2016 | Comments | Trackbacks | Permalink
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Is this the future for a modern mortgage?


WHEN is a discount, not quite a discount? That’s when it is actually a “deferred discount” which slashes 25 per cent off your mortgage — for now.

There is a new breed of home loan scheme on the block after developer Horizon Housing and lender Bank Australia joined financial forces to create a mortgage initiative that lets buyers “put off” 25 per cent of their mortgage until the day they actually sell up and move on. However long that may take.

Kyle Topp and Christina Stig, both 23, will get the keys to their brand new pad in Murwillumbah, NSW, in February. Once they begin mortgage repayments, the pair will only chip away at 75 per cent of their house-and-and package’s purchase price.

“I was pretty sceptical at first; I guess I thought it was too good to be true,” Mr Topp said.

“I thought, hang on how are they going to make their money? What if we don’t move out for years?” he said.

“But I did lots of research and unloaded question after question on both the Horizon sales people at Hundreds Hills estate and Bank Australia,” he said.

Mr Topp said the couple would not have been able to buy their dream home without the scheme.

“It made a really big difference to the size of the deposit we could put down and it means we could bump up the amount of bedrooms and change other things,” he said.

“But most of all it meant smaller payments for us. And one day when we sell we know we’ll be OK to pay the 25 per cent because our home has already gone up in value,” he said.Horizon Housing chief executive officer Jason Cubit said the company, which is a not-for-profit affordable housing provider, said there was really only one “catch” in the scheme that seems too good to be true.

“Well, I guess the catch is we’re a charity. Our aim is to help people into housing, but we will be expecting our money back at some point,” he said.

Mr Cubit said the company was working off the principle that Australians stayed in a home for an average of 10 years.

“We’ve got no set timeline, we’ve just done the numbers and I guess we’ve just taken that gamble,” he said.

Not just available to first-home buyers, the rare home loan setup does come with plenty of fine print. There are eligibility criteria based on income, but once potential buyers meet those requirements, the scheme’s rules are simple.

“The mortgage arrangement allows eligible buyers to service only 75 per cent of their land cost, greatly reducing repayments on their homes and breaking the rental cycle,” Mr Cubit said.

The deferred 25 per cent of the home loan will be covered by Horizon Housing, payable when the owners sell the property, and it does not accrue interest or any charges.

Although the Horizon Second Mortgage Scheme is only available to buyers house hunting at the Hundred Hills development in Murwillumbah on the far north coast of NSW, Mr Cubit said the aim was to expand the scheme to other projects in other states.

“We’re not quite there yet, but we’re working on launching the scheme in a few other states across the country,” he said.

This is the income criteria for the Horizon Housing Innovative Mortgage Scheme:

● One adult — $59,111

● Two adults — $81,722

● Three adults — $104,333

● Sole parent with 1 child — $81,779

● Sole parent with 2 children — $101,385

● Sole parent with 3 children — $120,991

● Couple with 1 child — $101,329

● Couple with 2 children — $120,934

● Couple with 3 children — $140,541

Posted by Kirsten Craze - News Limited Network on 4th January, 2016 | Comments | Trackbacks | Permalink
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Expert panel: The most common questions buyers ask, answered


As city property prices continue to soar, it’s becoming more difficult for first home buyers to enter the market.

“According to recent Australian Bureau of Statistics figures and assuming a loan to value ratio of 90 per cent, the average Australian first-time buyer is paying $395,222 for their first property and borrowing $355,700,”  property and financial commentator Peter Boehm says.

“Assuming an interest rate of 5 per cent and a 25-year term, this equates to $2080 per month in mortgage payments.”

It’s not all bad news, however. We asked our expert panel to weigh in on the most frequently asked (and heavily debated) buying questions, revealing some surprising responses.

Expert panel

Q: Is it better to buy an established home or off-the-plan property?

Singh: For first home buyers, buying off the plan may be a more attractive choice as all states (except for Tasmania from January 1, 2016) provide grants on new homes only (up to a certain purchase price). Buying a new property has the advantage of lower maintenance costs than an established home.

Boehm: My preference would be for an established home based on four key advantages. One, you can move in sooner; you don’t have to wait months or perhaps even years for your off-the-plan development to be completed. Two, existing homes usually have better character and location. Three, typically they have better opportunity for improvement or changes to reflect your lifestyle and family needs … Finally, with established or existing homes, it’s easier to track and analyse price movements over time. This is not possible with new off-the-plan developments that have no history. 

Elbanna: Buying off the plan allows you time to save more of a deposit, and, if the market continues to grow, this allows you to benefit from free equity [because] you lock in a price today, but don’t pay for the property until it is completed a year [or so] later.

Valentic: I advise my clients to be wary of developer incentives such as “free cars” or “free holidays” to try and sell their new stock as this will usually be loaded into the purchase price.

Q: Should you buy your first home as an investor or an owner-occupier?

Boehm: Why not use an investment property to help buy your first home? If you buy wisely, you can use the growth in your investment property’s value and your increased equity to help fund your deposit … As an aside, even when you buy somewhere to live, you still need to keep an eye on potential capital growth (just like you would with an investment property) as for many, your home represents a major part of your retirement nest egg.

Valentic: We’ve seen an increase in first home buyers purchasing in more affordable pockets and renting in the inner city or living at home. However, there are [depending on your location] 50 per cent stamp duty concessions for purchases up to $600,000 available for first home buyers who purchase a property as their principal place of residence.

Q: Is it better to buy a one-bedroom apartment in an inner-city suburb or a three-bedroom home in the outer suburbs for the same price?

Packham: As a rule of thumb, land appreciates in value whereas buildings depreciate in value … For this reason I would encourage buyers to purchase a three-bedroom house in a suburban area as opposed to the one-bedroom inner-city apartment. On average, units and apartments provide a slightly higher rental yield but the suburban home with land underfoot will traditionally offer the greater long-term capital growth … A buyer also needs to be mindful that the apartment building may have hefty strata fees payable for the maintenance of the building and for common services such as elevators. Many of these costs can blindside unsuspecting first home buyers.

Boehm: As a general rule … everything being equal [such as affordability, location, lifestyle needs] I would probably go for the three-bedroom home in the city’s outer suburbs because it is likely to yield better growth opportunities. This is because it has a land component (and land appreciates in values whereas buildings depreciate) and it will be attractive to a broader purchaser base such as singles, couples, and families because of its [larger] size.

Elbanna: Buy in places people want to live, and buy the best you can afford. 

Valentic: Due to overdevelopment, inner-city apartments aren’t seeing great capital growth … For example, Melbourne’s middle-ring suburbs have seen great capital growth over the last 12 months and we’ll continue to see this trend into 2016 … Whatever location you choose to purchase in, it’s important to buy something with a point of difference such as an outdoor living space and off-street parking as this will set you apart if and when you choose to sell.

Q: When can I afford to buy my first home?

Boehm: The best way to work out what you can afford to buy is to work out what I call your “spending power”. This is calculated by [determining] your borrowing power (how much you can afford to borrow), your deposit (how much you can save), the additional costs of buying (usually about 5 to 7 per cent on top of the purchase price such as stamp duty and legal costs), plus any government grants and concessions … The key to remember is that no matter what your salary is, never overcommit yourself because the last thing you want is to become a slave to your mortgage.

Valentic: The ability to buy your first home is more about your overhead expenses than it is your actual income. For example, if you plan to purchase and rent out the property, there are plenty of options in Melbourne’s middle-ring suburbs where properties are neutrally or even positively geared, meaning you’ve got less money coming out of your pocket every month because the rental income will cover your mortgage repayments.  

Q: What price range should be I looking at for my first property if my annual salary is $50,000, $80,000 or $100,000?

Packham: Basing it on a single applicant with no other liabilities, $50,000 would be $225,000 to $275,000, $80,000 would be $425,000 to $475,000, $100,000 would be $525,000 to $575,000.

Q: Is renting really ‘dead money’?

Singh: If you are planning to rent long-term and not buy, research by the Reserve Bank of Australia indicates that households renting may be potentially better off than households deciding to purchase their first home, as those renting will have higher surplus income to invest in other assets … Lenders Mortgage Insurance (LMI) is really dead money, so sometimes it can be worth renting until you have a 15 or 20 per cent deposit to avoid paying LMI.

Boehm: It’s not all bad news when you rent, because there are a number of benefits [such as] there’s no home-loan debt, it’s usually cheaper than buying, there’s greater flexibility (you can move much more easily) there’s less risk (you’re not financially exposed to things like interest-rate increases, capital loss, default and adverse credit reporting), you’re not responsible for repair and maintenance costs, and given less money is directed towards meeting housing costs, you can use this spare cash for other things like spending, investing or saving. 

Q: How can I protect myself when buying off the plan?

Boehm: In my view, the best way to protect yourself is to not buy off the plan. This is because there are many risks … [For example] you’re buying something that is intangible; the finished product might not be what you expect or what is marketed in the glossy brochures. The value of your property might go down. If this happens you still have to complete the deal that could cause serious financial difficulties if your lender subsequently reduces the amount they are prepared to lend on the property. The developer may cancel the contract under certain situations (these will be included in the purchase contract) and so you could be left with nothing. The design and dimensions might change as a result of council requirements on things like open spaces and boundaries. You might not like the finished product; for instance, your city view might be blocked by a new development, there could be noisy foyers … If the developer has fulfilled their obligations, there is very little you can do to remedy these issues.

Muir: Developers and agents have their own interest in your purchase, but a good property lawyer is there solely to protect you. Make sure you double-check the plans and schedule of fixtures and finishes in your contract because these are all that you have to rely on – the artist impressions and marketing material of your soon-to-be-built property are just for show. Always engage a building inspector before settlement to inspect the property and to make a list of defects that the developer must fix during the defects rectification period.

Valentic: If you’ve chosen to buy off the plan, do your due diligence and compare what properties are selling for per square metre (internal measurements only) in the immediate area.

Q: How can first home buyers successfully bid at auction?

Singh: As a greater proportion of properties are “passed in” in this market, if you have the highest bid, then you will have the first shot at negotiating with the vendor. So if you are interested and the price is within your budget, make sure you make a bid. If you still feel uncomfortable about bidding at an auction, you may want to consider finding a buyer’s advocate or agent who can bid on your behalf at auction.

Q: How can first home buyers get themselves the best home loan?

Singh: First home buyers should be confident when negotiating their home loans with their lender or mortgage broker, as often the lenders need your business more than you need theirs. Some of the items you may be able to negotiate with lenders include reduction on the interest rates advertised … request the lender or mortgage broker to waive any early termination fees, and consider receiving other benefits including a redraw ability and offset facility.

Posted by Amelia Barnes - Domain (Fairfax) on 4th January, 2016 | Comments | Trackbacks | Permalink
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Top five tips for buying well in 2016


Restrictions on bank lending are having an impact on the market, as is continued speculation of a property market bubble, so property buyers need to be astute in 2016.  Buying a property is one of the biggest purchases most people are likely to make and many still view property as the key vehicle for their retirement savings nest-egg. For savvy investors who do their due diligence and seek advice from professionals, property continues to present a sound investment choice.

In spite of APRA’s clampdown on investor lending, investment loans remain affordable on an historic basis, so opportunities are there for the taking.

Property investors need to be guided by sound information to make the best decisions possible in a complex borrowing and investment environment.

Here are five ways to navigate the 2016 property market.

1. Do your research

Doing your homework and some thorough research is more important than ever when looking for an investment property.

Although Sydney and Melbourne are extremely hot, the Australian property market is made up of many markets and smarter investments can be made in different cities.

Borderless investors who are prepared to look beyond their home state will definitely be the theme in the Sydney market.

The key to becoming borderless is research.

To ensure a smart buy in any market, research extensively before making any property investment decision. Independent information from online property portals can give you a good idea of the investment performance outlook in these areas, such as average rents, property value and demographics.

2. Don’t be afraid to drive a hard bargain

The property finance arena and lending landscape have changed over the past few months.

As property is one of the highest-value transactions you can make, you should shop around to find the most attractive and suitable loan.

Rate comparison services can help you find the best loan deal. Better still, work with a savvy mortgage broker, who can be invaluable in securing appropriate finance, especially when some banks have tightened up their lending policies.

A professional mortgage broker will do the research and explain the options.

Don’t be afraid to ask hard questions and to ask for a discount. You may be surprised to find that many lenders are willing to give you a discount to get your business.

3. Be creative

In hot markets, smarter investors are always looking for ways to outsmart the competition. 

“Rentvesting” (where you rent while buying an investment property) has become a popular way for young people and some first timers to beat affordability issues. With this approach, you can still live in a more expensive location, where the cost of renting is less than paying an owner-occupier mortgage. Then you can invest in another more affordable location, where you’ll get help paying off your loan in the form of rental payments by your tenant.

The benefit of rentvesting is that you have at least one foot in the property door, so your money is working harder for you. And in the meantime, you can still live where you want to.

If you have a family member or a close friend who is also keen to crack the property market, you may want to consider co-purchasing. Co-ownership can be a powerful way to beat affordability constraints too, but make sure you set up a formal agreement between parties so everyone goes into the investment with their eyes wide open.

4. Be strategic

Investing in property should always be considered a long-term investment, unless you are looking to speculate, which we would recommend against. Consider every property purchase as another important step in your financial journey and select property based on how it will add to your overall wealth and retirement plans. 

We recommend investors conduct an annual review of their property investment portfolios, as part of an overall long-term investment strategy.

Property is not transactional – it is a high-cost, long-term investment strategy. You need also to make sure that you can afford to service your mortgage repayment over the long term.

5. Seek professional advice

Property investing, unlike other asset classes such as shares, is not recognised as a financial product by ASIC, and remains without any regulatory framework. Unfortunately this offers unscrupulous operators and spruikers the chance to make significant financial gains and tempts many to put self-interest ahead of their clients’ best interests.

To avoid becoming a victim to any unscrupulous operators, you need to seek professional advice from someone with formal property investment qualifications.

Ben Kingsley is the chief executive of buyer’s agency and advisory Empower Wealth and chairman of the Property Investment Professionals of Australia

Posted by Ben Kingsley - Domain (Fairfax) on 4th January, 2016 | Comments | Trackbacks | Permalink
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Maximum loan sizes slashed: how banks are cracking down on borrowers


Major banks have lopped tens of thousands of dollars off how much they are prepared to lend home buyers reflecting tougher lending standards as property prices weaken.

A couple with combined income of $120,000 purchasing an investment property will have to make do with up to $80,000 less from a major bank than they would have had a year ago.

Tighter lending policies are also affecting owner-occupiers. The maximum loan size for the same hypothetical couple buying a home to live in has fallen by up to $65,000, according to calculations by mortgage broker Homeloanexperts.com.au.                                                                 

The sharp decline in customers "borrowing power" highlights the impact of tighter bank credit policies, which were introduced during 2015 amid regulators' concerns that mortgage lending had become too risky.        

In recent months, these tougher policies are thought to be a key reason for a sharp slowdown in the housing market, which has resulted in lower auction clearance rates and a dip in prices in Sydney and Melbourne.

The latest data from Corelogic RP Data shows Sydney prices fell 1.2 per cent in December while national house prices were flat.                                                                 
 
While national prices have not fallen since the boom started in 2012, the rate of growth has slowed to 7.8 per cent in the 2015 calender year compared to 8.5 per cent in 2014. 

To measure the impact of tougher bank lending policies, Homeloanexperts calculated the borrowing power or maximum loan amount for a couple earning $60,000 each, with two children.

It calculated how much several major banks would lend the couple for investment property, and an owner-occupied home, in December 2014, compared with December 2015.

The comparison included Commonwealth Bank, National Australia Bank and Westpac. The broker was not able to access comparative figures for ANZ from 2014.

While each bank has different lending policies, the pattern is clear. The couple would have been able to borrow far more money a year ago then they can today.

Commonwealth Bank, for instance, could have lent $640,000 as a housing investment loan a year ago, compared with $560,000 now - an $80,000 reduction.

Westpac would have lent the couple buying an owner-occupied home $645,000 a year ago, but this amount has fallen to $580,000 - a $65,000 reduction.

Mortgage broker Christina Parnham said the reduction was mainly because banks were requiring that prospective borrowers be tested against how they would cope with higher interest rates. This is despite the fact that actual interest rates being charged by banks fell over 2015. 

"You're going to have to be able to service the loan at about 7.5 to 8 per cent," she says.

At the same time, banks have adopted more conservative assumptions about how much money customers will need to live on.

Previously, she said many lenders assumed certain customers had set living expenses a month. Now they are being forced to use more sophisticated indexes for measuring how much people need, and these are generally tougher.

Some banks are also taking a closer look at individuals' specific circumstances to determine their spending patterns, after the corporate watchdog said many banks were wrongly assessing customers' living expenses.

These tougher credit standards from banks  caused the value of new housing investor lending to drop 20 per cent in the September quarter, and the share of loans going to investors was the lowest in two years.

Read more: http://www.theage.com.au/business/maximum-loan-sizes-slashed-how-banks-are-cracking-down-on-borrowers-20151222-glt9xv#ixzz3wIyHHKeu
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Posted by Clancy Yeates - The Age on 4th January, 2016 | Comments | Trackbacks | Permalink
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Weak property market? Here’s how to sell your home


The “sting has come out of the tail” of the property market, according to John McGrath, chief executive of recently floated estate agents McGrath. 

“Unlike previous periods of market correction the buyers are not seeking bargains; they’re just not prepared to pay the premium levels that were being achieved earlier in the year,” he says.  

While no one is talking about a dramatic house-price correction in 2016, experts including Mr McGrath agree that cooler winds are set to blow through the housing market in the coming months, meaning selling your home at auction is no longer a “fait accompli”.

What this means, says Angus Raine, executive chairman of Raine & Horne, is that vendors are required to do a little more work to ensure that their properties stand out from the crowd and adopt a different mindset.

1. Be realistic

Firstly, be realistic about your expectations and try to not be emotional. Also, it’s best to block out memories of your neighbour’s property selling way above expectations only a few months ago, because the market has changed.

According to John McGrath, when assessing value, vendors need to understand what is the right price for the property “without the hysteria that was driving many sales over the past year or so”.  

It may also be a worthwhile exercise to consider things from the buyer’s perspective.

“Twelve months ago, buyers were panicking due to the fast-paced nature of the market and rushing into things through fear of missing out altogether. They now have time to make a more measured approach and can now properly analyse what represents a market price,” Douglas Driscoll, chief executive of real estate agents, Starr Partners, says.

Angus Raine’s advice is for home sellers to write down their worst-case result, a reasonable result and best-case scenario and try and operate within these parameters.

2. Research your market

“To help your pricing, check out similar properties currently on the market for sale. Also consider the properties that haven’t sold in your patch – the chances are that the owners have priced them too high,” Mr Raine says.

According to Mr Raine, gaining an understanding of market conditions is now a very straightforward task thanks to the many free property websites that are available to consumers and by speaking to a reputable estate agent. 

“In 2016, there’s really no excuse for not doing your homework, and knowing the value of your home,” he says.

Leanne Pilkington, managing director of estate agents Laing+Simmons, agrees: buyers should listen to their agent, but also do their own research.

“Look at what is on the market at same time so you can see for yourself what you are competing with. And rather than wearing your owner’s hat, pretend you are looking to buy something,” Ms Pilkington says.

3. Choose your real estate agent carefully

Anyone can sell ice-cream on a hot summer’s days, but can you sell it in winter? The same goes for estate agents and property.

“Earlier this year almost any agent could sell property, but that has definitely changed over the past couple of months,” Douglas Driscoll says.

He advises vendors to choose an agent who can demonstrate local knowledge and a comprehensive track record in your local area.

“Also, be prepared to pay a little extra commission for the right agent – it will be worth it in the long run as they are almost certainly going to achieve a better sale price for you,” Mr Driscoll says.

Apart from a good track record, agent longevity is also important, according to Chris Wilkins, director at Sydney agents Ray White Drummoyne, so stick with agents who have sold property in similar conditions before.

Mr Wilkins also advises selecting an agent dedicated to one clear method of sale rather than one who promises to do “whatever it takes” to secure a sale, which he says is just a way to win business.

When choosing an agent, vendors should also not be afraid of grilling them a little about their experience, how they would market your property to get the best result and even who the target market would be.

“Talk to the agent about where the buyer will come from and how they will target that demographic,” Ms Pilkington says.

It’s also worth heeding the advice of someone who has been working in a market that has been cooling for sometime like Rebecca Freeman, of LJ Hooker City Residential Perth. She suggests vendors research the most active agents in the market.

“Those with the most listings in their marketplace will always have the best understanding of the market trends and what is on the shopping list of buyers. They’ll be able to advise on any styling or additions that will appeal to buyers,” Ms Freeman says.

4. Get your marketing right

The general rule, according to Angus Raine, is that in a more competitive market, vendors need to be prepared to spend more on print and online advertising to attract the right buyers to their property.

But he says, there are other ways to attract attention such as through a newspaper article if your property comes with an interesting twist, or backstory, and has some great photos showcasing its best features. “This is a great way to promote your property to a wider audience,” Mr Raine says.

“Also if your real estate agent doesn’t know his or her real estate editor at the local community newspaper, ask them why not. You could be missing out on a great way to promote your property.”

Douglas Driscoll suggests vendors work closely with their agent to generate the right marketing mix. “In a cooling market, you cannot simply rely on internet advertising, so consider what other channels could prove beneficial.”

This might mean social media for a younger demographic or more traditional advertising for older investors.

“Make sure the type of advertising you use will get the most inquiries from your buyer demographic,” Ms Pilkington says.

5. Spend money on presentation

While tales of falling-down wrecks or uninhabitable hovels selling hundreds of thousands of dollars above their reserves grabbed headlines at the peak of the market, in general presentation is important to securing a good price in all market conditions.

But it’s particularly important in times of weaker demand and more patient buyers.

“In a stable market, presentation will help to move a property faster. Therefore it’s critical that you repair broken windows and doors. Likewise, a fresh coat of paint and some simple landscaping can add street appeal to your property,” Mr Raine says.

Inside the property, he says clutter is a big turn-off. “Also remove personal items such as family photos and knick-knacks so that potential buyers can picture themselves in the property.”

Paul Bond, director of real estate agents Hodges Sandringham, suggests vendors decorate their home to appeal to a broader market and clean up the front garden so the house has “great street appeal”. 

Depending on your budget, you could also consider using a home stylist to make your home stand out. “Home stylists are not as expensive as a lot of people assume and can help work wonders,” Mr Driscoll says.

6. Don’t rule out selling at auction

While tumbling auction clearance rates may be turning off vendors, according to Perth agent Rebecca Freeman, there is a misconception that auctions are only for hot markets.

“An advertised price can often be one of the biggest deterrents to engaging buyers; buyers can rule themselves in or out of contesting a property based on a figure, without making a thorough examination of its value or opportunities.

“An auction will always find the market value of a property and will capture the widest interest,” she says.

But as with agents, choosing the right auctioneer is vital during weaker market conditions. 

Edwin Almeida, managing partner of Just Think Sydney Real Estate, says buyers should insist that the auctioneer inspects their home before the day of the auction, rather than as he claims many auctioneers do, just rely on a few minutes briefing from the estate agent prior to the auction.

“How can the auctioneer you have entrusted to be on the front line for you on the day of sale and perform at their very best when they are not familiar with your property and all it has to offer?” he asks.

7. Offer flexible terms and don’t rule out the first offer

If you’re not selling at auction – or have tried and failed – Angus Raine suggests one way to get a buyer over the line is to adjust the terms of the sale instead of the price.

“There might be situations where it’s necessary to negotiate a lower price to win a buyer. However, offering an extended settlement date or accepting a smaller holding deposit will often assist in getting the sale across the line faster,” he says.

Mr Raine also says it can be a mistake to hold out for a better price, as many vendors tend to do, if they get an offer within the first few weeks of the property hitting the market. 

“Keep in mind that the first offer that comes your way, is often the best.”

This story was originally published by  The Australian Financial Review .

Posted by Larry Schlesinger - Domain (Fairfax) on 2nd January, 2016 | Comments | Trackbacks | Permalink
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Banks exploit your personal data to stave off competitors


Arriving at the mechanic to pick up the car from a service, your phone buzzes with a text message. It's the bank, and it is getting in touch to offer you a loan for the $1500 repair bill you're about to get.

The bank's algorithms have calculated an interest rate which, based on your previous borrowing patterns and its view of you as a credit risk, it thinks you may accept.

If you want the loan, you can tap your phone and the money will be wired to the garage in seconds.

It may sound far-fetched, but transactions like this are probably only a few years away, as banks eye the huge potential to enmesh themselves more deeply in consumers' lives, and fight off lower-cost competitors.       

Thanks to advances in computing power and customers' embrace of digital finance, banks know more than ever about what their customers are up to: whether it's browsing the web, shopping online, visiting the mall, or interacting on social media.

Already, they are busily harnessing this vast amount of data to sell products to customers before they ask for them: pushing travel insurance to someone who's just bought airline tickets, or suggesting a home loan to the newlywed couple. But over the coming years, it is set to get much more tailored to the individual, and far more widespread.

As the traditional business of banking faces growing competition from new digital rivals, experts predict banks will increasingly be pushed into targeting customer "experiences" as they seek to remain relevant, and highly profitable.

Inevitably, however, this will involve a tension between what customers regard as the bank being helpful, and when it veers into the territory of 'Big Brother'. The fight for relevance

While the big banks' power and profits are immense, a recurring theme at recent annual general meetings was that digital disruption is occurring at breakneck pace, and they are taking it seriously.

"While business has always had to deal with change it has never had to deal with the incredible pace of change and the speed of disruption we see today," outgoing chief executive of ANZ Mike Smith told shareholders.

The traditional functions of a bank are pretty simple: taking deposits, arranging payments, and lending money to borrowers. However, there is growing competition in many of these areas from technology-based firms such as peer-to-peer lenders or indeed Apple Pay. Technology also means many of these functions performed by banks are becoming commoditised. They can be done more cheaply, with lower profit margins.

It is against this backdrop that lenders are eyeing off something they have in abundance: financial information about their millions of customers.

The explosion in digital banking has meant the banks' information about their customers has ballooned. And advances in technology mean they can analyse it in ways that were previously impossible, to ensure they remain relevant.

"Providing just purely a transaction environment – processing your credit card transaction and storing your holdings of money – that's becoming commoditised," PwC's analytics leader, John Studley, says.

"Where the game will be played in the future is in terms of products and services and making sure they're contextually relevant to customers. And so all the banks are working quite furiously on building their big data capabilities to capture and harness better information about their customers to do that."

It is a similar mantra from chief executives like Westpac's Brian Hartzer. He argues the country's second biggest home lender is not primarily a manufacturer or mortgages, but a company that helps people buy a home.

Geraldine McBride, a National Australia Bank director, has also outlined this type of strategy in response to digital disruption, which she said was "the biggest fear of company boards".

"Yet banks have the opportunity to become major financial hubs by participating more broadly in their customers' lives," she said in a March interview with Fairfax Media.

So, how might banks further spread their tentacles into the economic lives of consumers?

An Accenture report of 2014 suggested they need to be more like online retail giant Amazon, with its ability to recommend products before you've even looked for them.

ANZ Bank, for instance, has invested in trying to predict what its customers will want, so that it can ping them with offers.

Customers buying overseas flights with their credit card will be targeted with offers to buy foreign cash or travel insurance.

Further in the future, it could aim to directly contact customers who it thinks are in the market for a credit card, based on their search behaviour on the bank's website. After identifying the customer, the bank's systems would determine how best to contact that person – an email or a phone call, say – based on what they've said before.

The pictures in that email could be generated to target the individual's spending habits – so that someone who's been spending overseas on their cards receives photos of foreign getaways in the promotional material.

ANZ's managing director of products and marketing, Matt Boss, says this type of personalised marketing is not far away.

"This is where we're going with our program. To be able to communicate at a one-to-one level, be able to have the content that is relevant to them in the channel they want at the time they want," he says.

Other domestic banks have similar programs, all the while walking a fine line between being useful and creepy.

Westpac told a conference last year it is making millions of dollars in extra revenue by using big data techniques to make targeted offers to customers, though it would not provide further details for this story.

PwC's Studley says within a couple of years, it will be commonplace for banks to routinely target people as they approach key milestones that often involve buying financial services, such as entering the workforce, getting married or having kids.

And these offers will become increasingly tailored to the individual, or at least their demographic.

The chief executive of US software firm Nomis Solutions, Frank Rhode, has talked with local banks about programs that can help set interest rates on mortgages, to remove the haggling that takes place between customer and banker.

"What big data technology allows banks to do is actually mine their history of customers, and behaviour, and say you know what, rather than leaving it to the judgment of the front-line banker to come up with an appropriate discount, let's use the data to guide that front-line banker to present the right offer or a set of offers to the consumer," he says.

Just like the example of the car mechanic, banks are also bound to look for closer tie-ups with other businesses like retailers. Overseas, this is already occurring.

Bank of America keeps tabs on where customers are shopping the most, and promotes discounts to its customers visiting those stores.

In Japan, Studley points out, phone networks are partnering with banks and fast goods chains to send vouchers to customers who use their phone to pay for food.

Commonwealth Bank in 2015 unveiled a new app app that will sense when shoppers are entering a Westfield shopping centre and send them offers from retailers on their smartphone.

All of these moves help banks by putting them in the middle of transactions, allowing them to sell more products to each customer.

The view of many executives is that such cross-selling leads to customers who contribute more revenue, on average, and are less likely to leave. When profit margins are being crunched, it is a tactic that the lenders hope can help preserve the high returns many investors expect. Big Brother is watching

As well as using your financial data to sell you more products, the rise of "big data" allows the financial sector to more closely scrutinise borrowers.

Assessing whether to lend to someone is a process that hasn't changed a great deal over the years. It typically involves looking at payments history, how much debt a customer has, and their income.

Now, banks have far more information at their fingertips, which they are likely to use.

A partner at King & Wood Mallesons, Kate Jackson-Maynes, highlights a range of online lenders in the US that are using customers' online behaviour as part of their loan approval process and in setting interest rates.

Kabbage, a small business lender which has launched in Australia, refers to information from a customer's eBay, PayPal and Facebook page, she says.

Jackson-Maynes also points out that Facebook recently took out a patent on the idea of using the average credit rating of a customer's "friends" to determine how creditworthy the borrower may be.

In Australia, however, fewer lenders are using online behaviour in their credit assessments. It is mainly confined to small business lenders such as Kabbage.

"The key reasons why I believe we aren't seeing more Australian financial institutions and insurers using these new data sources are the 'big brother' factor, the limitations of traditional data analytics, and concerns about the application of current laws to such activities," she says,

Debt collectors are getting in on the act, too, with some reports in the US of debt collection businesses using Facebook not only to locate people, but also harass them.

PwC's John Studley says looking at non-traditional sources of information about customers, such as social media, is bound to become more common.

"Who are the people [who] you interact with on social media, and if those people have a criminal record or have been caught with a criminal record or have been involved with money laundering, or so on, then that might then be something that impacts your credit assessment when the banks look at you as a prospective customer," he says.

Equally, it is likely banks will start to use systems that may alert them to public changes in information about a borrower.

If they recently change their LinkedIn status to someone seeking a job, the bank would be aware of this if they then try to borrow money, for instance.

But there is, of course, a limit to how far these boundaries can be pushed. Accenture's report said banks were the most trusted institutions with customer data – ahead of telecommunications companies or technology giants such as Apple and Google.

At some point, the move to "personalise" interaction with a customer crosses a line and becomes an invasion of privacy.

"Where this can go honestly is as exciting as it is kind of scary," one banking insider concedes.

So far, the experts say banks are well aware of the trust customers place in them, which makes them reluctant to push the boundaries on privacy.

Sharon Rode, industry practice lead for banking at Capgemini, a consultancy, says there probably isn't a lot of "cold-canvassing" of customers for this very reason.

"From a privacy perspective if you have a transaction account, you've got a fair bit of detail about that customer anyway, and they're mindful that when they talk to them they're not seen to overstep the bounds on what they offer," she says.

There is also a legal question over customers' privacy.

King & Wood Mallesons' Jackson-Maynes says that from talking to clients, they are getting more comfortable with the "Big Brother" factor through prominent disclosure about what they are doing.

It's still unclear how the regulatory landscape may need to change in response to the rise of these new data sources, but she says there are calls for regulations to be "massaged" so it "aligns" with the rise of big data.

In practice, banks will probably need to figure out the difference between what is a "helpful" personalised offer, and what is overstepping the mark. And exactly where this line is will vary for different customers.

Frank Rhode, of Nomis Solutions, argues that consumers will gradually become comfortable with the bank knowing more and more about them, because this will become the norm in other parts of their lives. But banks will need to remain vigilant in not taking things too far.

"The whole notion of big data is that you go down to the individual consumer and you have lots of insight and information, but you also need to take a step back and say "Is this fair, is this something that would pass the red face test?' "



Read more: http://www.theage.com.au/business/consumer-affairs/banks-use-your-personal-data-to-stave-off-competitors-20151221-glslyg.html#ixzz3wIxpOJNd
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Posted by Clancy Yeates - The Age on 2nd January, 2016 | Comments | Trackbacks | Permalink
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How landlords can protect their rentals on New Year’s Eve


New Year’s Eve parties aren’t always the elegant affairs that tenants and landlords have in mind.

For those who are worried that some hardcore partying might do their property some serious damage, there are things you can do to protect your asset.

Landlord provider Terri Scheer Insurance executive manager Carolyn Parrella says tenants should be held responsible for anything caused by the tenant and their invited party guests.

“New Year’s Eve parties that get out of hand can leave landlords susceptible to costly damage and clean up bills,” Ms Parrella said.

Here are five ways landlords can protect themselves this New Year’s Eve.

1) Screen tenants

For those who are bringing in a new tenant last-minute, prevention is often better than cure.

“Tenants are entitled to enjoy their time at the property, however it must be done with respect and consideration for the landlord,” she said.

“Including lifestyle questions on the lease application can help to identify and minimise future issues,” she said.

This could include questions about activities undertaken at rental properties, whether they will have regular guests and also history-checks to identify past accidental damage that could have been due to rowdy parties.

2) Enforce the lease agreement

Outline your expectations upfront formally, in the rental contract, so there is no confusion about the minimum expectations.

“A rental agreement may allow landlords to enforce noise restrictions, such as no loud music after 10pm, and a maximum number of guests at the property at any one time,” Ms Parrella said.

“It’s a common oversight by landlords not to use the formal rental contract as a way to outline a tenant’s responsibilities,” she said.

3) Maintain relationships and communication

A positive, open and transparent relationship with tenants is critical.

“Responding quickly to queries and concerns can help build a good rapport with tenants, making them more inclined to treat the property as though it were their own,” she said.

Mutual respect is a powerful balm ahead of time when it comes to partying.

4) Conduct property inspections

Having a property manager undertake non-negotiable inspections scheduled before and after holiday season is a must.

“Regular inspections can provide early indications of a tenant that may fail to fulfil their rental agreement obligations if accidental or malicious damage is identified,” she said.

“This also shows the tenant that the landlord has an active interest in the care taken with their property and helps reinforce the conditions under which the tenant has leased the property.”

5) Review insurance coverage

Checking your insurance coverage is useful as a last-resort in case you can’t prevent damage.

“Too often property investors overlook risk management until after a tenant has moved in or when something has gone wrong,” Ms Parrella said.

“Maintaining a specialised landlord insurance policy can protect investors from the many risks associated with owning a rental property and provide peace of mind if the unforeseen should occur, such as malicious and accidental damage, loss of rental income and potential legal liability if someone is injured at the property.”

Posted by Jennifer Duke - Domain (Fairfax) on 29th December, 2015 | Comments | Trackbacks | Permalink
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Conveyancing: What you need to know


Whether you’re a new or returning home buyer or seller who is confused by the legal aspects of transferring property, chances are you’re not alone.

When it comes to buying property, there’s a number of steps to complete before your new home is legally yours. Here’s our top tips for conveyancing to help you better understand the steps, responsibilities and costs involved in transferring a property.

What is conveyancing?

Conveyancing is the process of transferring the legal title of a property from one party to another. It is a necessary part of every property sale, the purpose of which is to ensure that the new owner receives the legal title to the property after the seller has received payment.

Can I do my own conveyancing?

While you’re legally entitled to do your own conveyancing, it can be a highly technical process, often requiring specialist knowledge. More importantly, if there are any issues with the transfer or you make a mistake on the application, it can result in the settlement being delayed or the sale not going through. For these reasons, when buying or selling property it’s recommended to engage the services of an experienced conveyancer or solicitor.

What’s the difference between a conveyancer and a solicitor?

While both conveyancers and solicitors can help you through the process of buying or selling property, only a solicitor is qualified to handle the more complex legal issues than can sometimes arise. Also, if the transaction becomes litigious, a solicitor can act on your behalf to protect your interests.

What are the steps involved in conveyancing?

A typical conveyancing transaction consists of three stages, which take place before, during and after the contract of sale.

1. Before the contract
  • Search for a suitable property.
  • Obtain formal finance approval from your lender.
  • Review the sales contract and make sure you understand it.
The good news is that a conveyancer can help you prepare, clarify and lodge legal documents, including your contract of sale and memorandum of transfer. They will also help you to understand the conditions of the contract and negotiate any special conditions on your behalf.

2. Before contract completion

There are many steps that need to take place before a transfer of property can be finalised. A conveyancer can handle each of these steps for you.

For the buyer:
  • Research the property and determine if the certificate of title has any encumbrances.
  • Put the deposit money for the property into a trust account.
  • Calculate adjustments to the purchase price for rates, taxes and fees.
  • Prepare the land title transfer forms and send them to the seller to sign.
  • Arrange all of the necessary documentation for the transfer of the property.



For the seller:
  • Complete all necessary legal documents.
  • Respond to any requests or questions from the buyer.
Because buyers carry higher risk than the seller when transferring property, conveyance for the buyer is a more complex and comprehensive process.

3. After completion

At this stage, the conveyancer will act on your behalf to exchange the relevant documents and funds, and will send you a final letter of advice confirming the details of settlement. Once the confirmation from the Land Registry has been received, the conveyancer will also notify the relevant agencies that you’re the new owner of the property. How much does it cost?

Conveyancing fees differ from state to state. When you’re ready to move ahead, the best option is to contact your chosen conveyancer to prepare a free quote for you.

There are many steps and details involved in the conveyancing process. To ensure your transaction goes as smoothly as possible, it’s important to work with an experienced conveyancer or team who can get the job done thoroughly and efficiently, while protecting your interests at all times.

Posted by Robert Kean - realestate.com blog on 16th December, 2015 | Comments | Trackbacks | Permalink
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One in three properties pass in at Melbourne’s auctions


Artemio Requizo and wife Maribe were hoping to get top dollar for their Keysborough house when their neighbours’ homes sold above expectation in the hot Melbourne market earlier this year. But when the big day arrived on November 21, their property passed in for less than what they were anticipating, and what their neighbours achieved. 

Mr Requizo ascribes the result to the major banks’ decision to raise interest rates, which he believes has deterred some buyers. 

He and his wife were nervous about hearing about rate hikes, and worried about how it may affect house prices.  But they were still expecting someone to at least meet their reserve.

“But the day of the auction was quite disappointing because the highest bidder only bid $530,000,” Mr Requizo said. 

Their three-bedroom house at  10 Coolibah Place was then relisted for private sale for more than $560,000, and sold a fortnight later for $600,000.

The purchaser was a first-home buyer, who inspected the property days after the auction, and agreed for the couple to continue renting their home of 15 years until their new house in Keysborough’s Somerfield estate is built. 

Listing agent Ben Nguyen, of Barry Plant, said passing the property in, and converting it into a private sale, resulted in a higher sale price and allowed the parties to negotiate on conditions. 

He said passing the property in would also make sense if an agent had interested buyers who were willing to pay more, but don’t want to buy under auction conditions because they need a “subject to finance” clause or want a building inspection report done. 

Compared with a hotter market in autumn, where clearance rates soared above 80 per cent, one in three properties are now passing in at auctions.

In many cases the vendor’s expectations have exceeded what the market is willing to pay, so sellers either need to readjust the price or come up with a strategy. 

Nelson Alexander sales director Arch Staver said there needed to be an ongoing discussion to do something new to spark interest. 

“Because otherwise we’re doing the nonsensical thing of just letting it sit there, do nothing different and expecting a different result,” he said. 

Sellers could ask for buyer feedback from their agent, and be prepared to change the colour scheme or the way a room is set up. 

They could also try a different avenue to advertise their property. 

Hocking Stuart Williamstown director Joanne Royston said if a sale wasn’t reached in about a week, their next plan was usually to set a new auction date.

“When something is for private sale and it sits there for more than a week or two, the property can tend to become stale and buyers wonder why it hasn’t sold,” she said.

“It does make the process very, very difficult because there’s no real urgency for a buyer to actually make a commitment or an offer on the property.”

Setting a new auction date doesn’t necessarily mean it would run through to auction, she said, because the agent could be encouraging pre-auction offers.  

Mr Staver recommends vendors leave their campaign board up after their property passes in.

“The board is a silent salesperson standing out the front of the property, declaring that it’s here, open to business and ready to be purchased.

“Having the board ripped down immediately is an act of emotion.

“If you’re on the market, and you would like to sell the property, you need to be on the market, and part of that means having a board out in front of the property.”

Posted by Christina Zhou - Domain (Fairfax) on 14th December, 2015 | Comments | Trackbacks | Permalink
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