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The internet is a game changer for the real estate industry. Fortunately, many developments have been positive for both home buyers and home sellers. Marketing costs have reduced while the quality of promotion per property has improved. Email has made communication with a critical mass of qualified buyers easier, quicker and cheaper than ever before. That’s the upside. Here’s the downside: the Internet never stops connecting the dots and it never forgets.
What that means is your property has an un-erasable digital footprint. A digital footprint is a databank of information collated over time on any property that has been advertised, sold or withdrawn from the market in the past. This includes information on every property on the market right now.
There are positives and negatives here for both buyers and sellers. And you need to know them. Every property listed in Australia is promoted on at least one of two major real estate websites realestate.com.au and domain.com.au. Both of these sites are either owned or controlled by large media companies.
These same media companies also have ownership or affiliations with the two main real estate data companies in Australia — RP Data and Australian Property Monitors. Both provide detailed information about the real estate market which is quoted and re-quoted in the media. While the accuracy of that information is quite good, the right to collect it and use it is somewhat controversial.
Very few people know these companies automatically share everything there is to know about the quarter of a million properties advertised every week in Australia. Whenever your property is put up for sale, auction or rent, the price and the name of the agent you are using and the date the online advertisement was uploaded is automatically recorded in that property’s history. If a property sells or not, if it is passed in at auction or withdrawn from the market, is also recorded. This is your property’s digital footprint — its ‘reputation’, there for anyone to see.
The downside is how that reputation may be perceived. All this public information is forming a ‘pseudo credit rating’ for your property. The less activity recorded against your property the better off you are because less information is gathered. However, when more activity (buying and selling or attempting to buy and sell) is recorded, the more likely people are to assume that something is wrong with your home.
Here’s one way your home could acquire a less than savoury reputation. The previous vendor overpriced the property and had a low motivation to sell. They experienced a lengthy campaign as they tried to find a buyer who would pay an above market price. The vendor may have even had multiple pricing strategies and used several different agents to obtain a sale. Unfortunately, this entire process was recorded against this property’s advertised history. By the time the vendor lowered their selling price to match the current market price, buyers had already tracked the property’s past advertising history. Under these circumstances, the vendor’s negotiating power was compromised.
And it is all there for potential buyers of your home to see when you’re ready to sell. Besides official real estate data records, a quick search on Google will also reveal:
• previous rental or sale ads
• development applications submitted to council
• reported events at the property such as rowdy parties, breakins, triple murders or the discovery of methamphetamine labs
• businesses that have been run from the property
• any previous publicity of any kind which the property may have attracted.
If the major Sunday papers turn up to do a story on your auction success or failure, potentially up to a million people can read about it online the next day.
And that is just the free information. You can also pay a fee to access the entire advertised history of a property or you could scour independent property analysts’ research on property histories.
Here’s an example of how everybody’s reputation precedes them in the internet age.
Gary and Denise finally found a perfect property in the chic inner west Sydney suburb of Leichhardt. It appeared to meet all their buying criteria and it was affordable. After a four month property search, they had finally found the one. However, before securing the property, Gary had a bit of a look around online. The property had sold four times in eight years. Rightly or wrongly, he concluded from this information alone that there was something amiss and passed on buying it. Gary may believe that knowing the transaction history of the home saved him from buying a lemon. The owner of the same home may also believe that the same information presented without any other context robbed him of finding a genuine buyer and negotiating a successful sale.
While information of itself is neutral, each end user will form their own opinion about what that information means to them. Buyers will always look for some advantage in negotiations if the respective property has a ‘tainted’ market history. It is crucial that homeowners are aware of this and ensure they don’t damage the reputation of their major asset.
Protecting the value of your property 
There are two important things you can do to avoid having your pricing and advertising history used against you. The first is to never include the address of your property when marketing it.
The second is to consider promoting the property without a published price. Early in your campaign, have the agent verbally quote your price expectation to buyers. If buyers think the price is incorrect, at least you won’t have to change your published pricing strategy later.
Another prudent marketing strategy is to only publish a price after you have received some genuine market feedback from fair-minded buyers. Promoting your property publicly with the wrong price, be it too high or too low, will put you at a major disadvantage.
Good or bad? 
Given the huge impact digital information now has on the property market, it begs the question: is the availability of all this information good or bad? The answer is: neither. The availability of information is here to stay and how people interpret it is not controlled. Buyers and sellers will form correct and incorrect conclusions from the same information according to the circumstances they find themselves in.
Often the digital footprint can help buyers make better choices yet many can also rush to conclusions without having the full picture.
Buyers will often form their offer on the basis of what the owner previously paid for the property and assess the general market growth (or deterioration) since that point in time. On one level, this seems logical for a buyer. As a seller, this process of determining value can seem unfair particularly if they happen to have paid below market value for the property.
If the seller has made substantial renovations since buying, all of these costs may not be reflected in the buyer’s offer.
None of this may be recorded in the digital footprint. This is exactly why both the buyer and the seller can’t rely on the Internet to be the font of all knowledge. So buyers: beware of a half-told truth. Sellers: beware of your home’s online reputation and do what you can to prevent misinterpretation.
Because the internet never forgets.
<hr>
 
<img style="float: left;" alt="real-estate-uncovered-book" height="193" width="200" src="/images/stories/2013/10/01/real-estate-uncovered-book.jpg">This is an exerpt from the book Real Estate Uncovered: A probing look behind the facade of Australia’s property world by Peter O'Malley and published by Authors First.
The book is on sale now.
Peter O'Malley is sales consultant with <a target="_blank" href="https://www.harrispartners.com.au/">Harris Partners Real Estate Agents</a> and has been successfully selling real estate in Sydney's Inner West since 2000.
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Watch your tracks, the digital footprints your property leaves beind: Peter O'Malley

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2013 will be remembered as the year the Sydney property market came back to life. After three tough years where prices went backwards, buyers were suddenly the ones on the back foot as a number of factors combined to create fierce buyer competition. The competition was most noticeable on inner city houses under $1.5 million and apartments under $700,000.
There are a number of factors that could be credited for causing such a stellar year in the property market. In reality, it was probably not one particular factor that caused the market rally, rather a number of factors combining to cause a perfect selling environment.
Interest rates hit an all time low during 2013 as the RBA cut the cash rate to 2.5% in August. This cycle of rate cuts has seen the cash rate go from 4.75% in November 2010 down to 2.5% within three years. Whilst there were other factors that assisted the housing market in 2013, nothing had the positive impact on property as the record low rates did. Commentary is split as to whether the next move in 2014 will be up or down though.
Unemployment held at reasonable levels throughout the year, peaking at 5.7%. This was lower than predicted and was a determining factor in supporting the property market. Low interest rates are not much good to someone whom is unemployed. Indeed, the weakest housing market in Australia is in Tasmania where unemployment is stuck above 8%. This proves that unemployment is a bigger determinant to the fortunes of the housing market than interest rates, a point that is often lost in commentary.
Self-managed super funds entered the market in dynamic fashion in 2013. As the returns on bank deposits went down, SMSFs went looking for risk. Many people have bought real estate now that their SMSFs can borrow against an asset. This added an influx of new buyers into the market competing with home buyers and traditional investors. More buyers entering the inner city market that already faces chronic supply issues helped pushed prices up. As prices went up, the sentiment toward property became more positive, creating a positive feedback loop.
Chinese buyers entered the Sydney market place in a big way in 2013. To see another sector of buyers enter the marketplace that was already experiencing near perfect conditions added further fuel to the market. Agents across Sydney reported amazing sale prices where Chinese buyers fixated on a particular location and just kept bidding the price up. The emergence of Chinese buyers entering the market place was no media beat up. One only had to witness an open house or two to realise the presence of strong Chinese buying.
The stock market’s performance is often under rated when it comes to the property market. The All Ordinaries begun the year at 4,664 and pushed up to over 5,200 by December 2013. In the middle of 2012, the All Ords was at 4,135, giving stock market investors a 30% return in 18 months. Whilst interest rates inspire many in the sub $1.5 million bracket to buy real estate, the prestige end of the market is more susceptible to the stock market performance. For the first time since 2007, the prestige end of the market came to life. Whilst many vendors of prestige properties actually sold for less than they had bought back in 2007, the mere fact that transactions were taking place was a positive sign.
Many were surprised to see the property market perform so well in 2013 in the face of a deteriorating economy, global uncertainty and increasing government debt. But perform well it did.
 
<hr>
 Peter O'Malley is sales consultant with <a target="_blank" href="https://www.harrispartners.com.au/" rel="nofollow">Harris Partners Real Estate Agents</a> and has been successfully selling real estate in Sydney's Inner West since 2000.
He is also the author of Real Estate Uncovered: A probing look behind the facade of Australia’s property world.
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It was a very good year: 2013 in review

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EXPERT OBSERVATION
As the property market continues to recover this spring, buyers and sellers are well advised to focus on five key areas that will largely shape the market’s performance. 
Leading into spring, the market conditions seemed to be improving week to week.  
The recovery to date has not been linear across market segments. Some niche markets such as inner-city houses have rebounded strongly whilst apartments in suburbia continue to struggle.
Generalised commentary such as ‘Sydney house prices’ won’t help a Birchgrove home buyer nor will ‘inner city apartments’ assist someone looking to downsize to a waterfront apartment. 
Stock levels/days on market – vendors benefited whilst buyers were left frustrated by the historically low stock levels over winter.
Market pessimists claimed the economic fundamentals were weak – but when there are more buyers than sellers, vendors hold the advantage regardless of the fundamentals.
Sometimes the market can play the other way – whereby the fundamentals are healthy but the market is over supplied with stock, giving buyers an advantage.
The recovery in Perth will look this way when their State economy shows strong improvement, the housing market will initially lag until excess stock levels are cleared. 
CoreLogic monthly index – normally, you would not suggest an index would influence the performance of a market. It is normally the other way around; the market shapes the index’s reading. 
The CoreLogic monthly index accurately tracked the downturn and has quickly become the most credible source of the market performance.
In recent months, the index has shown the market tracking positively which then feeds into buyer confidence.  
With money being cheap and readily available, buyer confidence is the final requirement for the market recovery to really take hold.
We have already seen many sales that suggest the market recovery is becoming more aggressive and reflective of early 2017. 
The CoreLogic monthly index is where many commentators, forecasters and buyers will take their cue. 
Rental market – the inner west rental market is falling, across the housing and apartment market. This is likely to impact the market in one of two ways.
Firstly, demand will be muted as investors are less likely to be interested in buying a rental property at a time of falling income.
Secondly, existing landlords may be tempted to sell by the higher sales prices on offer, at a time of lower rental returns. This could potentially add to stock levels (supply).
We have already seen this trend over winter as a disproportionally high number of landlords opted to sell rather than re-let their property as it became vacant.  
Bidders per property is without doubt the best metric to measure market depth. During the downturn, finding one fair and reasonable offer was a feat for vendors. This is why many properties were either ‘Prior to Auction’ or were simply ‘Withdrawn’.
When faced with an environment of one or no buyers, trying to engineer a competitive auction is optimistic. 
In recent times, the number of bidders has increased enormously. We are regularly seeing up to 5 or 6 bidders per property, highlighting depth in the market which will ultimately push prices higher. 
The apartment market has copped an absolute shellacking since the Opal Tower cracked last December.
Interestingly, buyers have still shown a propensity to purchase apartments, albeit with added caution.
If there is one common denominator in the high few profile instances of defects, it is high rise apartments less than 7 years old. This will inadvertently make older, established apartment blocks more appealing to home buyers.
A complete loss of buyer confidence in the apartment market would be catastrophic for the market and the economy. Hopefully this can be avoided.
PETER O'MALLEY is sales consultant with <a href="https://www.harrispartners.com.au/" target="_blank">Harris Partners Real Estate Agents</a> and has been successfully selling real estate in Sydney's Inner West since 2000.
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Peter O'Malley

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