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The catch-cry of the property buyer – “save time, money and stress” – has been used over and over within this specialist industry sector since the first of these agencies appeared in New South Wales in the mid-1990s. Interestingly, this area of the real estate industry remains largely unknown. A quick internet search reveals that that there are a total of around 50 buyers’ agents in NSW, 20 of whom are accredited members of the REBAA (Real Estate Buyers’ Agency Association of Australia). Of the total number only 20 or so appear on a web search, and these tech-savvy businesses appear to have the lion’s share of the market. 
There is something intriguing about buyers’ agents. They appear seemingly out of nowhere at open inspections with clients in tow, and at many auctions nowadays their presence is noted with alarm by prospective bidders who hadn’t thought about bringing one with them. This does seem like a killer tactic if you are determined to buy that ideal property and scare the daylights out of the competition at the same time. 
But the question is: who really needs a buyers’ agent? After all, buyers have been successfully purchasing property for themselves for centuries without needing to engage a professional to do it for them. 
My industry colleagues and I constantly face the same arguments, and to a certain extent they do make sense until you understand our logic. 
Here are some of them from both points of view: 
The buyer: 
<ul>
<li>Why would I engage a property buyer in what is clearly a buyers’ market?</li>
<li>I wouldn’t engage a property buyer because I have purchased before and always got the best price.</li>
<li>I know the market very well and don’t need to pay for someone to advise me on that score. </li>
</ul>
The Agent: 
<ul>
<li>Even in a buyers’ market an experienced buyers’ agent can ensure that 1) you have been provided with extensive market information related to your proposed purchase and are able to make an informed decision on price, and 2) endeavour to buy the property for you at the best possible price (and not the price the vendor or his real estate agent had anticipated). Expectation is one thing; reality is another. </li>
<li>From our viewpoint everyone needs the best advice they can get when investing large amounts of money in purchasing either a home or investment property. It is not enough to rely on the mother-in-law’s advice (with great respect to those lovely ladies). There are a number of critical factors that can affect the successful negotiation of a purchase (at auction or by private treaty), but the best known of these are market knowledge, the emotional cost factor, nerves on the day and negotiation skills. </li>
</ul>
If you had a toothache would you pull the offending thing out yourself just to save money? Would you represent yourself in court, or try to fix your broken boiler at home? As buyers’ agents we believe you should have a professional on your side of the fence. The vendor will have retained a real estate agent, whose only objective is to get the highest possible price he can for your property. What about you? In your own best interest you need representation too. 
Pulitzer Prize-winning humourist Dave Barry said about negotiating: “I strongly advise you to use a broker, for the same reason that I'd advise you to pay somebody else to repair your automobile transmission, namely: no matter how incompetent or overpaid this person is, he or she can't possibly screw things up as badly as you would if you did it yourself.” 
On the more serious side John McGrath of McGrath Agents said: “Often seen as ‘the other side of the coin’, buyers’ agents comprise a very professional industry group. The majority have spent a large part of their careers working as real estate agents before changing roles and have gained invaluable market experience as well as perfecting their negotiating skills.”
Engaging a property buyer may be one of the best decisions you have ever made.
Tim Mansfield is founder and principal of Sydney-based buyers' agency <a href="https://www.primepropertybuyer.com/" target="_blank">Prime Property Buyer</a>.
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Engaging a buyers' agent will level the playing field

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In my last article I covered the<a href="https://www.propertyobserver.com.au/residential/the-mad-%E2%80%93-and-very-fashionable-%E2%80%93-expressions-of-interest/2011110652221" target="_blank"> method of sale by “expressions of interest”</a>, so in this one I am expanding on the wider subject to discuss the system of sale by tender. 
According to Wikipedia, <a href="https://en.wikipedia.org/wiki/Tender_offer">‘A tender offer is a corporate finance term denoting a type of takeover bid’.</a> The site doesn’t even consider it as a means of selling residential property. So clearly this system is really going to confuse everyone in the residential market. 
Or will it? This is actually a very effective mechanism for the sale of high-value property where there is genuine uncertainty about the potential price. The fact is that appraising the value range of most properties is fairly easy to do. You do your research, investigate recent comparable sales, talk to the neighbours to get their feedback (who will of course add 30% to their own estimates, which you then deduct) and Bob’s your uncle. 
But what if the property isn’t so easy to appraise, either by the vendor or by the agent? And what if there are no recent comparable sales or current listings to go by? What if the property is a deep-waterfront with its own jetty in Point Piper and the question is not what it is worth but what someone will pay for it? (A classic contradiction in terms). 
This is when you go to tender, and the system offers significant advantages: 
<ul>
<li>No ceiling set on asking price </li>
</ul>
<ul>
<li>Tenders only attract genuine buyers and encourage them to offer their best price </li>
</ul>
<ul>
<li>Flexibility of terms and conditions of sale –the vendors set the most beneficial terms for themselves such as “settlement period up to 12 months”, but can also allow the buyer to include incentives that may be deal-breakers. i.e. “I’ll pay you $5 million and throw in my Ferrari”. </li>
</ul>
<ul>
<li>Confidentiality - Tenders submitted are confidential and the final sale price of the property or buyer’s name are not generally disclosed to the public </li>
</ul>
<ul>
<li>Tender only requires one bidder where auction requires two or more to push the price up </li>
</ul>
<ul>
<li>Sense of urgency – Tenders have a start and finish date </li>
</ul>
<ul>
<li>Tender submissions may be limited to buyers who pay a refundable cash deposit as a sign of good faith (weeding out tyre-kickers) </li>
</ul>
So what happens if the tender falls flat on the closing day and there is no clear winner? This is when the parties (and their agents) are now in a perfect position to negotiate and close the deal based on the most favourable conditions on the table.
Tim Mansfield is founder and principal of Sydney-based buyers' agency <a target="_blank" href="https://www.primepropertybuyer.com/">Prime Property Buyer</a>.
 
 
 
 
 
 
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Tenders 101: A guide to understanding the tender process

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Possibly the maddest – but fashionable – phrase used in the marketing of million-dollar homes in Sydney’s exclusive eastern suburbs is the ubiquitous for sale “by expressions of interest”.
You can imagine eager buyers as they leaf from page to page of glossy images of luxury properties along the sparkling harbour foreshore in the weekly dose provided by our very own local Wentworth Courier.
Well, of course it’s obvious, reasons the somewhat puzzled buyer. “Expressions of interest” just means that I should phone the agent and say that I am interested. He or she will give me a price and I’m well on my way to owning the pile I have always dreamed about.
But wait a minute, what if the agent can’t give me a price range because he or she doesn’t actually have one? And hang on again – what if the vendors have agreed to the wording of “by expressions of interest” because they have such an outrageous price in mind that the agent doesn’t dare to print it?
Well, no worries, concludes the interested buyer. What I’ll do is phone the agent and make a completely outlandish expression of my interest and see what he says and that will get the ball rolling for sure.
Now of course I have a fair idea that my dream home is worth about a million (based on the mother-in-law’s invaluable advice and my own research in the same street) so what I’ll do is phone the agent and say, “OK, $750,000, and that’s my best offer”. And crikey, this does get a response as I am clearly a real buyer and worth at least two minutes of his busy schedule.
His instant response is “Sorry, I don’t know the actual asking price, that’s why we are asking for interesting expressions. I mean even the vendor doesn’t know what he wants exactly but I’ve already got a firm offer of roughly over $750,000. Why don’t you try in the mid-ones?” So the buyer replies: “You mean the vendor is looking for twice what I just offered?” A pause and he replies “No, but you are somewhere in the ballpark”.
In these circumstances I feel for the vendor, the agent and the prospective buyer. Before I morphed myself into a buyers’ agent and worked as a real estate sales agent I loved the old system of “for sale by private treaty”. I understood the term and everyone else involved was on the same page from day one. There was actually a price tag on a property then, but clearly times have changed!
Tim Mansfield is founder and principal of Sydney-based buyers' agency <a target="_blank" href="https://www.primepropertybuyer.com/">Prime Property Buyer</a>.
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The mad – and very fashionable – 'expressions of interest'

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The concept of buyers’ agency is a relatively new one in Australia. The first of these agencies only surfaced here in the mid ’90s, and there are only about 100 in the whole country. 
As a result it’s not surprising that I am often asked the question “What is the difference between a buyers’ agent and a real estate agent; aren’t they the same thing?” 
Curiously the answer lies somewhere in between, but the simplest definition in layman’s terms is: 
<ul>
<li>A buyer’s agent is a licensed real estate agent who acts exclusively for the buyer in real estate transactions. His or her duty is to negotiate the best or lowest possible price for a property while acting in the best interest of the client. </li>
</ul>
<ul>
<li>Real estate agents (known as the listing or selling agents) act exclusively for the seller of a property. His or her duty is to negotiate the highest possible price for a property while acting in the best interest of the client.</li>
</ul>
It is important to note that real estate agents (selling agents) charge their own fees on the sale of a property to their clients, and buyers’ agents charge a separate fee for the successful purchase of a property. Each is bound by respective ethical and fiduciary industry regulations, and there is no conflict of interest.
Most buyers’ agents previously worked the “other side of the coin” as real estate agents, so clearly they know the tricks of the trade. In many cases they have also worked in specific suburbs and areas for many years. The relationship between the two is symbiotic (of mutual benefit) and results in a win-win outcome for all stakeholders involved in real estate transactions. 
Successful buyers’ agents have close working relationships with a large number of real estate agents whom they have known and dealt with personally over a long period of time. They are constantly in touch with them in the search process for their clients.
Do you remember your natural science classes and the bit about the bees and the flowers and how they help each other? In this case the different agents dance to a constant tango of communication involving “I’ve got a buyer to $1 million, what have you got for me?”, and “Just listed a beauty and it’s a perfect match for your buyer”.
At the end of the day the buyers’ agent, who has great connections in the industry and the real estate agent, who works closely with them are both going to benefit in favour of their respective clients.
I have to admit that I prefer to work with real estate agents I know personally. This is especially important when negotiations begin on a purchase because it cuts out a lot of bullshit and so called “killer tactics”. I’ve been there, done that, and just want the best possible deal for my client!
Tim Mansfield is founder and principal of Sydney-based buyers' agency <a href="https://www.primepropertybuyer.com/" target="_blank">Prime Property Buyer</a>.
 
 
 
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Selling agents and buyers' agents work together but have opposing goals

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We can’t all be Mark Zuckerberg of Facebook with his 800 million members. But you have to admire the guy. He is just about to become the 28th wealthiest person in the world and he is only 28 years old. But we can and should be inspired by him. He realised only a decade ago that new technology and the internet was the way to go in the 21st century, and he has built his dream from there.
He used the internet to do something that we can all do now on the web. We can communicate directly either by email or through our websites and blogs to a targeted audience that is interested in what we have to say.
It is still all about old-fashioned “networking”. And it is still about communicating with other human beings and getting our own message out to them. But nowadays it is also very much about using the world wide web as well, and it costs absolutely nothing. The trick is to use social media, which refers to “the process of gaining website traffic or attention through social media sites”.
What has not changed in so few years is that social and business networking still works very much on the ground and person-to-person, and this means building your own brand by word of mouth and personal recommendations. But it now has to include your own branding on the web. It won’t be very long before you just say a search phrase out loud like “find me a real estate agent in Sydney” and the wall of your living room will light up with the answer from your favourite avatar.
According to a comment on Wikipedia this is how the network effect works:
“Network effects become significant after a certain subscription percentage has been achieved, called critical mass. At the critical mass point, the value obtained from the service provided is greater than or equal to the price paid for the service.”
The mind boggles after reading this quote, so what does all this mean for you as a real estate agent?
Read my tips below and decide for yourself . . .
<ol>
<li>It’s a new year, so get your critical m’ass moving! Don’t sit around waiting for things to happen to you. Make them happen instead. </li>
<li>Build your own personal brand. At the end of the day it’s your own hard work and effort and you deserve the <a href="https://en.wikipedia.org/wiki/Kudos">kudos</a>. </li>
<li>Start by building your own network, and don’t just rely on your agency’s database (you don’t control it and they are usually out of date anyway). </li>
<li>Don’t listen to your boss’s insistence that you stay glued to your desk all day long on the phone. The “bums on seats” theory for real estate agents does not work. You need to get out there in your own market area and work it constantly. Talk to people, buy them a coffee, rub shoulders with them, tell them what you do and how you can help them. The real estate business is a “hard contact” game. If you don’t make an effort to meet and engage with people, they won’t know who you are! </li>
<li>Work smart. Get rid of the BS in your work-life and use every minute of the day to achieve your own dreams. No one else can do it for you. </li>
<li>Create your own blog or website and get yourself up on the web! There are simple and totally free ways to start branding yourself and get promoted online almost overnight. If you are interested (and you should be!) contact me by email and I will send you a couple of tips that will probably change your life for the thank you-much-much-better. </li>
<li>Befriend a buyers’ agent! These guys will introduce you to a qualified buyer for your listing and save you a lot of time and effort, so work with them. You can read an article I wrote recently about this by clicking on the following link: <a href="https://www.propertyobserver.com.au/residential/selling-agents-and-buyers-agents-work-together-but-have-opposing-goals/2011112052436" target="_blank">‘Selling agents and buyers' agents work together but have opposing goals’</a> </li>
<li>Be good to people every single day, and help them in whatever way you can. Make an effort to show that you are not just interested in yourself. If you take a genuine interest in other people they will always help you down the track. </li>
<li>Don’t lose your confidence or give up halfway through your efforts to build your own network (or achieve your own dreams) – it can take months or years. People who don’t want to be in it are not important; it is the ones who are in it that will give you the business. </li>
<li> NEVER give up! If you are finding it hard to get listings or a sale doesn’t go as well as you hoped, keep on trying. Your efforts will be rewarded sooner or later, so hang in there.</li>
</ol>
Tim Mansfield is founder and principal of Sydney-based buyers' agency <a href="https://www.primepropertybuyer.com/" target="_blank">Prime Property Buyer</a>.
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Ten new year tips for real estate agents

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There is an important relationship between selling agents and buyers’ agents in the property industry, and this association is based on trust and integrity. At the end of the day we work together in the best interests of our respective clients and it is a win-win situation all round. 
As a former real estate sales agent I have to admit I often fell into the comfortable habit of “list, market and wait for the buyers to contact me”.  This was the equivalent to being a trapdoor spider waiting for its prey to show up and swallow it. But complacency is a fatal mistake unless you are an arachnid. 
As well, the other strategy in those days was to offer conjunctions to other agents and hope they would solve my problem for me. 
But nowadays there is a brilliant option that you should use for every property on your books, not just because it will benefit you but because it will benefit your client. And it costs you nothing! It is simply to work with a buyers’ agent. 
You can even include this tactic in your marketing pitch for listings and you will be pleasantly surprised to see that vendors welcome this strategy with open arms. After all, it doesn’t cost them anything and hugely increase the chances of finding a buyer. And it is a great option to flogging your extensive and out-of-date client database to prospects; no one ever bought that strategy. 
Real estate agents should recommend prospective buyers to buyer’s agents simply on a goodwill basis, and this is good practice for you. 
As an example, imagine that you have been dealing with a buyer who wants a specific type of property but you don’t have a suitable listing currently on your books. This is the perfect opportunity to demonstrate your desire to help them and initiate an on-going close personal relationship in the future. 
There are important benefits to you: 
<ul>
<li>You have done a favour to the buyer by demonstrating your desire to help them with no personal gain, and they will appreciate your selfless advice and integrity as an agent. Sooner or later they will come back to you. </li>
</ul>
<ul>
<li>The client may go cold on you and begin dealing with another agent (most likely a competitor). So it is better to use the opportunity to refer them to a trusted buyers’ agent who you know will look after their best interests. They will remember you for this. </li>
</ul>
<ul>
<li>The buyers’ agent will reciprocate the favour in future by personally recommending you as a real estate agent as you have now established a relationship based on trust and goodwill.</li>
</ul>
 
So talk to your favourite buyers’ agent about your listings and what you have coming up (don’t wait for them to contact you). Build up a close working relationship with them and grow your reputation by recommending buyers’ agents you know and trust. 
Everyone wins!
Tim Mansfield is founder and principal of Sydney-based buyers' agency <a href="https://www.primepropertybuyer.com/" target="_blank">Prime Property Buyer</a>.
 
 
 
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The reciprocal relationship between buyers' agents and selling agents

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In a previous article published here entitled <a href="https://www.propertyobserver.com.au/residential/selling-agents-and-buyers-agents-work-together-but-have-opposing-goals/2011112052436">Selling agents and buyers' agents work together but have opposing goals</a>, I covered the definition of these agents’ respective roles in today’s property industry and how the two work together.  But what about vendors’ advocates? 
If real estate selling agents act for the seller, buyers’ agents act for the buyer, where on earth do vendors’ advocates fit into the equation? Surely they must be the same thing as real estate agents – after all, doesn’t the selling agent represent the vendor? So what is the difference? 
Firstly, they are all licensed agents but have different roles in property transactions. In Australia buyers’ agents have only been around for about 15 years, and their alter-egos, the vendors’ advocates have only recently begun to emerge in their specific role in our property industry. To further confuse the issue, buyers’ agents and vendors’ advocates are often the same person, although by definition they never sell real estate themselves. 
Vendors’ advocates are independent agents who act exclusively for the seller of a property. They offer a value-added service including: 
<ul>
<li>A written market appraisal of the property including local comparable sales and current listings to establish a market value range </li>
</ul>
<ul>
<li>Advice and recommendations for selecting the best real estate agent in the locality </li>
</ul>
<ul>
<li>Advice on real estate agents’ exclusive sale agreements and proposed commission fees </li>
</ul>
<ul>
<li>Recommendations on the best method of sale – auction or private treaty </li>
</ul>
<ul>
<li>Advice on strategy and proposed marketing campaigns </li>
</ul>
<ul>
<li>Vetting and screening buyers' offers presented to the seller through their appointed real estate agent</li>
</ul>
In the US advocates have been around for decades and are widely used by both sellers and buyers, but in Australia the concept is relatively new and falls into a grey area that is still unclear to many consumers.
The issue comes down to two reasonable questions: 
<ol>
<li>Why would a seller engage a real estate agent (acting as a vendor’s advocate) to then recommend another real estate agent to sell their property? </li>
</ol>
<ol>
<li>Isn’t there an inherent conflict of interest involved in this process? </li>
</ol>
The answer to the first question is that a vendor may decide to engage an independent professional to advise him on the whole process and look after his interests in the sale. He may be based overseas or simply doesn’t have the time to arrange the sale himself. 
The answer to the second question is much trickier and lies in understanding who actually benefits from the transaction. 
Brief research of fees charged by vendors’ advocates in the Australian states of New South Wales and Victoria reveals that many do not charge a fee to the seller. They are paid a conjunction fee or “referral fee” by the real estate agent they originally recommended as the best agent to exclusively sell a property. 
The issues involved with this arrangement are: 
-          The vendors’ advocate may be tempted to recommend the selling agent who pays her the highest split of the final commission, or choose an agent with whom she has a good relationship (but who may not necessarily be the right person for the job in terms of achieving the best sale price for the client). 
-          There can be confusion between who is actually handling the negotiation process, and in whose interest. 
-          If the vendors’ advocate is receiving a split of the sales commission the real estate agent’s motivation may be degraded. If offered a listing they will usually take it even if their fee is reduced, but will they then give the sale 100% of their effort? 
 
 
Other vendors’ advocates charge a fee directly to the vendor (usually about 0.5% of the sale price). This system avoids a conflict of interest, allowing the vendors’ advocate to act independently and without bias for the client, and it encourages the selling agent to put his best effort into the sale for the benefit of all stakeholders.
Either way the fact is the market for vendor advocacy is growing at a fast rate in Australia. If vendors feel they can benefit from this new service by engaging a property professional, then why not? 
The service is ideal for vendors based overseas and anyone else who needs independent advice in the sale of what is often their most valuable asset – their home.
Tim Mansfield is founder and principal of Sydney-based buyers' agency <a target="_blank" href="https://www.primepropertybuyer.com/">Prime Property Buyer</a>.
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Why you might use a vendor's advocate

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Under the common law principle of caveat emptor, or “buyer beware” there is a recognised duty upon a buyer of a property to be satisfied about what he or she is going to purchase. The doctrine assumes that the purchaser has acquired the property together with all defects either as to title or quality. 
Over the years most Australian states have introduced statutory regimes for seller disclosure in residential property transactions. In New South Wales Section 52A of the Conveyancing Act 1919 requires a seller of residential property to disclose a range of matters covering defects in title and defects in quality of title through a combination of documents and certificates attached to the proposed contract of sale, and these are generally related to easements and that the property is sold free of encumbrances, etc. There is no requirement to disclose other defects (such as structural ones) irrespective of their impact on the value or use and enjoyment of the property. 
So where do”‘stigmatised” properties come in to all of this? These are properties where a murder, suicide, violent crime or other horrific event has occurred on the property at some stage. The term can also include properties that are haunted or even have a resident poltergeist – and the stigmatisation effect can last for decades or even centuries. 
Let’s face it. Nobody wants to live in a home where something awful has happened. But how do we know if a property has this type of history? The seller is clearly not going to explain the gory details to anyone, and in some cases not even to the selling agent. And agents and sellers cannot be held liable for not disclosing nonmaterial, or nonphysical, defects about a house, and they don’t have any obligation to disclose “latent defects” to the buyer even if they materially affect the physical health or safety of individuals on the premises. 
But in reality the fact is that in these cases the onus of responsibility may come down to the selling agent. The reason for this is that he or she has a moral (if not legal) obligation and a duty of disclosure to inform prospective buyers that the events that occurred in the property may affect its value. It comes down to what did you do or say, or not do or say, that affected a decision to buy? 
Real estate agents need to keep in mind that anything that could affect a purchaser’s decision to buy must be disclosed under the Material Fact section of current legislation. A Material Fact can be defined as “A fact that would be important to a reasonable person in deciding whether or not to proceed with a particular transaction”. 
Schedule 1 (3) of the Property, Stock and Business Agents Regulation 2003 also states that: “You must be fair and reasonable to all parties, and must not mislead or deceive any parties in negotiations or a transaction.” 
In other words, caveat actor, or “agent beware”. If you don’t disclose events that happened in a property you are selling that may affect its value you are open to be blamed and possibly taken to court. 
Below are a few tips if you decide to list a stigmatised property: 
<ul>
<li>Separate fact from fiction, and determine the impact disclosure will have on you as the selling agent, the seller, the buyer, and price of the property. </li>
</ul>
<ul>
<li>Don’t take the listing (or keep it) if the seller refuses to disclose stigmatised information or prevents you from discussing it. </li>
</ul>
<ul>
<li>Maintain trust with your buyers by disclosing the facts as you know them. </li>
</ul>
<ul>
<li>Don’t be silent, and don’t misrepresent. It's not just a matter of what you say. It can end up being about what you didn’t say.</li>
</ul>
 Tim Mansfield is founder and principal of Sydney-based buyers' agency <a href="https://www.primepropertybuyer.com/" target="_blank">Prime Property Buyer</a>.
 
 
 
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Murder and mayhem: What an agent should disclose if a property has an unsavoury past

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The wide diversity of people’s trades and professions ensures that everyone can earn a living in their own way. 
Each of us has something different to offer, from the carpenter to the doctor. We have our tools of the trade and we have our special skills, and we use these in daily life to earn our bread and butter. 
When the carpenter uses his hammer, the doctor his stethoscope or the writer his pen, they offer specialist skills which others do not have. They also have the benefit of years of experience and are talented in what they do. They have all learnt their skills “the hard way”. That is, they have gained experience by learning from their mistakes along the way. 
It is not enough to hold a hammer in your hand or wear a stethoscope around your neck unless you know how to use it. And in the case of politicians if their tongue is their skill, let them be silent unless they know when and how to use it. 
One of the greatest skills of all is the art of negotiation. 
We learn instinctively to negotiate from the time we are born and we build and hone this skill as time go by. But let’s face it: negotiation is not everyone’s forte. You have to learn how to negotiate. You need to have competed and lost and won many times over before you have the advantage over an opponent through experience. 
In real estate transactions win-win negotiation is paramount. When the stakes are high and you have to admit you may not be the best negotiator in your own interest I recommend you engage a buyers’ advocate (or buyers’ agent) to do the job for you. 
buyers’ agents know their stuff. They have learned the hard way how to close a winning deal and they have earned that special skill of successful negotiation.
Tim Mansfield is founder and principal of Sydney-based buyers' agency <a target="_blank" href="https://www.primepropertybuyer.com/">Prime Property Buyer</a>.
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Buyers' agents are experts in negotiation

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Last week the former Commonwealth Bank CEO Ralph Norris went out on an apparently shaky limb with his brave statement that a budget surplus is "an almost mindless commitment". But he should be applauded for his strong belief. It is that same strength of conviction that will hold a branch firmly to a tree of thought and ensure that millions of Australians can safely join him on it. 
The analogy that comes to mind in relation to the federal government is that of the captain of the ill-fated Titanic who ignored all warnings of the danger of hidden icebergs along the route and even put on speed, until the ship inevitably hit one and disappeared below the icy water. 
There is a fundamental flaw in the government’s plan to achieve a budget surplus. It is simply that while on the journey toward that final destination, it runs the risk of demoralising the entire population through spending cuts. 
The policy of “give with one hand and take away with the other” is a recipe for disaster, and the inevitable nemesis will be a crushing defeat at the next general election. 
When people lose hope in the future they lose their spirit and their drive to move forward. They languish and procrastinate while hoping to hear any good news at all that will signal them to optimism. The Aussie spirit has always been based on hard work, enthusiasm and a determination to succeed. The final objective of all of us is to own our own home, but the current property market has almost stalled. 
In a worthy attempt to “to ease the pain of the market” Tim McKibbin, CEO of the Real Estate Institute of New South Wales (REINSW),<a href="https://www.propertyobserver.com.au/tax/pay-as-you-go-stamp-duty-scheme-needed-for-first-home-buyers-reinsw/2012041654290" target="_blank"> has proposed pay-as-you-go stamp duty for first-home buyers</a>. This idea and a suggestion of cutting red tape and loosening planning controls are both positive, but it remains to be seen if the NSW government will actually introduce them. 
Let’s face it, we cannot point the finger solely at the GFC or Europe and America’s economic woes. The federal government has to accept a large portion of the blame for our own financial malaise, and they need to do something about it in positive terms that the nation can take as a series of immediate initiatives to stimulate the economy. 
The truth is that the current feeling of pessimism has little to do with unemployment or the closure of factories. Interest rates are lower than they have been for decades. So why is there a feeling of doom and gloom? 
It is about the perception that people have of the economy and the future ahead. We are actually saving more money than we have for years, for the simple reason that we are too scared to spend it. Each of us of course has a different perception of the value of money, so one dollar to me may be worth two to someone else, or vice versa. 
In 1947, Abba Lerner wrote an article entitled “Money as a Creature of the State”, in which he commented that economists had largely abandoned the idea that the value of money was closely linked to gold. He argued that responsibility for avoiding inflation and economic depression lay with the state because of its ability to create or tax money. 
No truer word said.
In last week’s news I was delighted to read a comment by the straight-talking John Symond of Aussie Home Loans who coincidentally supported the suggestion I made in a recent column entitled <a href="/property-observer">W</a><a href="/property-observer">ith pessimism lingering in the property market, the RBA must cut rates in May</a> that the RBA cut the cash rate by 50 basis points next month. He also called for “an injection of good news and an injection of confidence”. 
What the central bank does later on in the year will again depend on inflation figures. The point is that it needs to take bold action now to stimulate the economy and restore vital confidence. 
The following quote reminds me of the onerous responsibility held by the Reserve Bank of Australia and the duty of fair play by the banks to avoid profiteering: 
“A prince, who should enact that a certain proportion of his taxes should be paid in a paper money of a certain kind, might thereby give a certain value to this paper money; even though the term of its final discharge and redemption should depend altogether on the will of the prince.” Adam Smith, Scottish pioneer of political economy (1723-1790) in An Inquiry into the Nature and Causes of the Wealth of Nations.
Tim Mansfield is a 30-year global  veteran in the real estate industry and Founder and CEO of Sydney-based buyers’ agents <a href="https://www.primepropertybuyer.com" target="_blank">PrimePropertyBuyer</a>. You can follow Tim on Twitter by clicking <a href="https://twitter.com/#!/tim_mansfield">here</a>.
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Tim Mansfield

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