Real Estate Sales

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GUEST OBSERVER
It is regrettable that an unfortunate minority was giving the industry a ‘bad name’ and misleading consumers by purporting to be buyer’s agents.
I warned home buyers and investors not to be lured by slick advertising promising deals that were too good to be true.
We always get concerned whenever we see mention of anyone advertising ‘free buyer’s agent services’.
Red flags instantly start waving when words like “the seller pays the fee not the buyer” and “we will find your perfect investment property for free” appear on websites.
Ultimately property advisors will act for whoever is paying their fee.
Calling yourself an independent “buyer’s agent” while selling property is simply dressing up the wolf in sheep’s clothing.
True buyer’s agents have a fiduciary duty by law to act in the best interests of their clients and this is legislated in each individual state’s real estate law.
Buyer’s agents are licensed professionals who specialise in searching, locating, evaluating and negotiating the purchase of property on behalf of buyers. They do not sell real estate. They are engaged independently and paid for by the buyer to act on their behalf.
REBAA is Australia’s largest independent alliance of buyer’s agents who act on behalf of buyers in property transactions.
The association’s accredited buyer’s agent logo is synonymous with professionalism and best practice and its members are committed to stringent ethical standards.
Each REBAA accredited agency must also carry professional indemnity insurance. REBAA accredited agencies across Australia display their accredited agency logos on their websites to help buyers clearly identify bonafide buyer’s agents.
As a buyer you always need to ask if there is a vested interest in anything. Why are they wanting to act for you for free?
Usually it’s because they want to buy developer stock or take their fee from the vendor – hardly exclusive or independent advice.
Essentially, these “free buyers agents” are selling agents in disguise.
They have a huge financial incentive to help you buy that property and that’s not necessarily in the investor’s best interest.
Consumers should carefully check the credentials of any buyer’s agent and confirm they are firstly licensed and ask questions about their experience, time in industry, research methods, and how they are paid.
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For a list of accredited agencies in your local area <a href="https://www.rebaa.com.au" target="_blank">click here</a>. 
Rich Harvey is REBAA president and can be contacted <a href="https://www.rebaa.com.au" target="_blank">here</a>.
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jchancellor-FAypfDUnLy

Buyer beware 'free' buyer's agents: Rich Harvey

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GUEST OBSERVER
I grew up working in the family business in the hospitality industry.
At 12 years old I would work during the school holidays picking up glasses, and then as I got older, I was given more responsibility. I really had to work my way up the ranks; I went from picking up glasses to working in the cellar, then behind the bar, as a bar manager and finally into management where I looked after a number of hotels. 
I made the change from hospitality to real estate after I was in a nasty incident outside one of the hotels I was managing. I was escorting one of my clients to the train station as he was worried he would be attacked by a group of young men, sure enough, they turned up carrying weapons. It was a pretty close call; I was nearly stabbed.
At the same time, all of this happened, my wife and I were looking to move homes. We contacted a number of agents and detailed our requests like number of bedrooms, bathrooms, location, etc. I was amazed at the response. Of the agents that did get back to me, only one showed us anything that resembled what we were asking for.
I think that is a problem with our industry; some agents get caught up pushing the stock they have rather than listening to what the client is telling you. It was then I thought I could do this better.
It wasn't until I was 31 that I got into real estate. I started at LJ Hooker Double Bay as an agent; I convinced the owner to give me a job by telling him that if he wasn’t happy with me within the first six months, he wouldn't have to fire me, I'd walk out.
For three years I door knocked, and letterbox dropped every day. I was persistent and kept going until every person in the area had seen my face.
Our industry is a tough one to start out in. Building trust with clients without a proven track record is hard. You can't rely on family friends; you've got to prove yourself first.
I began selling $150,000-$200,000 one bedroom semis in Dover Heights. I'll never forget those days; it was a lot of hard work, long hours and dedication.
I was one of the oldest rookies working in the patch; most of the agents in the area had 10-15 years more experience than me. They didn't notice me; I wasn't a threat, I was nothing to them for a long time.
The most memorable sale I've ever done also happens to be the most pivotal of my career. About seven years into my real estate career I sold the Coogee Bay Hotel for $14 million. Having years of hotel experience under my belt, I had a distinct advantage over other agents who had tried to sell the property before me.
We sold the property to an investor from Vanuatu and negotiations went for 48 hours straight.
That sale received huge media coverage and cemented me as a key player in the multi-million dollar sector. The calls started coming in, and I haven't looked back since then.
Playing in the high end of the market is all about dealing with personalities and emotions and listening to what they want, which is very similar to selling real estate at any property price. Over the years I've intuitively learnt to read personalities and determine the best way to deal with that person by their character.
I've met and worked with some fascinating people. However, Kerry Packer has been the most intimidating.
I've always been driven by ambition and a desire to provide a certain lifestyle for myself and my family. I grew up with three brothers; the youngest went on to run a very successful business, the other is an ex-wallaby player and the eldest was a great athlete; competition was a huge part of our childhood.
My father was an unbelievable salesperson, he did his business deals with a handshake and that was a binding agreement in his eyes. I watched him for many years and was always in awe with how he acted in business.
When I was 16, he sat my brothers and me down and said to us I'm lending you my name, never dirty it. He told us that our word was our bond and we should always uphold it. I'll never forget that, and his words have shaped me as a businessman and as a person.
Success is important to everyone; I think we are all striving for success. For me getting to number one was the greatest challenge for me, I don't like running second. I started out as a 35-year-old rookie agent and wanted to build something that made me proud. Now LJ Hooker Double Bay is one of the country's leading real estate offices working in the $10 million-plus sector. We strive every day to stay at the top of our game because no one wakes up wanting to be number two.
Now I want to pass on my 30 plus years of real estate experience to an intern.
Just like me, they could be a 31-year old rookie wanting a career change or they could be fresh out of school and raring to start their career with a bang.
If this could be you visit <a href="https://www.milliondollarintern.com.au" target="_blank">milliondollarintern.com.au</a> and post a 60-second video of yourself selling something, anything. Just show your personality.
The successful candidate will win a <a href="https://www.urban.com.au/news/66987-interns-sought-in-job-offering-with-lj-hooker-s-bill-malouf" target="_blank">three-month, paid position</a>. 
Over 100 people have registered their interest so far with 7 video entries submitted. Two more weeks of the competition remain.
 
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From pubs to penthouses; Bill Malouf’s climb to the top

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From 1 July 2016 Australian residents selling real estate with a market value of $2 million or more will need to apply for a clearance certificate from the Australian Taxation Office (ATO) to ensure amounts are not withheld from the sale proceeds.
Where a valid clearance certificate is not provided by settlement, the purchaser is required to withhold 10 percent of the purchase price and pay this to the ATO.
Background
In May 2013 the government announced that it would introduce a 10% non-final withholding tax on payments made to foreign residents who dispose of certain taxable Australian property with a market value above a specified threshold. The new legislation for this measure became law in February 2016.
The types of taxable Australian property this applies to include vacant land, buildings, residential and commercial property, leaseholds and strata title schemes.
What this means for purchasers
Where a foreign resident disposes of Australian real property with a market value of $2 million or above, the purchaser will be required to withhold 10 percent of the purchase price* and pay it to the Australian Taxation Office (ATO) unless the seller provides you with a variation. Australian residents will need to provide a clearance certificate otherwise a withhold of 10 percent of the purchase price will apply.
What this means for sellers
Australian resident vendors who dispose of Australian real property with a market value of $2 million or above will need to apply for a clearance certificate from the ATO to ensure amounts are not withheld from their sale proceeds.
All transactions involving real property with a market value of $2 million or above will need the vendor and purchaser to consider if a clearance certificate is required.
If a purchase price negotiated between a purchaser and vendor is on an ‘arm’s length basis’, then the purchase price may be used as a proxy for market value.
* Note: The legislation specifies that the 10 percent withholding is on the ‘first element of the cost base’. However, as purchase price is understood by vendors and purchasers, and in many instances will be equal to the ‘first element of the cost base’, we have used the term purchase price for simplicity.
When will this apply?
The new withholding regime will apply to contracts entered into on or after 1 July 2016 for the sale of property with a market value of $2 million or above.
What if there are multiple purchasers?
The market value of all purchasers’ interests in the transaction must be aggregated in examining whether the $2 million market value threshold has been reached. If the aggregated purchase price is $2 million or above, each purchaser must withhold in proportion to their percentage of the total purchase price.
What if there are multiple vendors?
If there are multiple vendors disposing of the property, it is the total market value of the property that determines whether withholding is required by the purchaser.
That is, if the market value is $2 million or above then the purchaser must withhold 10% of this (remembering that the purchase price may be able to be used as a proxy for market value).
If the purchaser has not been provided with a clearance certificate or a notice of variation from any of the vendors, the purchaser must withhold 10% of the purchase price.
The amount of withholding will be in proportion to each vendor’s interest in the property, with the total withholding equal to 10% of the property’s market value.
If any of the vendors provide a clearance certificate or a notice of variation then the amount withheld by the purchaser on that vendor’s proportional interest in the property must reflect this. The purchaser must consider each vendor’s circumstances separately in determining the amount to withhold from each vendor.
Clearance certificates
All real property transactions with a market value of $2 million or above will need the vendor and purchaser to consider if a clearance certificate is required.
Where a clearance certificate is provided, the purchaser is not required to withhold an amount from the purchase price.
Vendors need to provide a clearance certificate to the purchaser on or before the settlement of the transaction.
A clearance certificate must be valid at the time it is provided to the purchaser.
Clearance certificates are valid for 12 months, and can be used by the same vendor for the sale of multiple properties while valid.
Who can obtain a clearance certificate?
Only a vendor who is an Australian resident* can be granted a clearance certificate by the ATO.
* Note: Residency status for tax purposes is not the same as that for immigration purposes, or for the Foreign Investment Review Board (FIRB). If you are unsure, seek professional advice.
What if the vendor does not provide a clearance certificate?
If the vendor fails to provide the clearance certificate by settlement, the purchaser is required to withhold 10% of the purchase price and pay this to the ATO.
This means Australian resident vendors of real property with a market value of $2 million or above must apply for a clearance certificate to ensure no funds are withheld from their sale proceeds.
When can an Australian resident vendor obtain a clearance certificate?
An Australian resident vendor may apply to the ATO for a clearance certificate at any time when considering the disposal of real property. This can be before the property is listed for sale.
How can an Australian resident vendor obtain a clearance certificate?
To obtain a clearance certificate, a vendor who is an Australian resident (or their representative) must complete an online ‘Clearance certificate application for Australian residents’ form. This form will be available on ato.gov.au/FRCGW from 27 June 2016.
A PDF version of the clearance certificate application will be available for contracts that are to be signed and settled within the first two weeks of July 2016. Otherwise, vendors should be encouraged to wait and use the online form from 27 June 2016.
If the vendor is automatically assessed as an Australian resident, a clearance certificate will be issued electronically within days of the application being submitted.
If there are data irregularities or exceptions, some manual processing may be required and the clearance certificate will be provided within 14–28 days.
Higher risk and unusual cases may require greater manual intervention and could take longer to process.
Variation applications
Where the vendor is not entitled to a clearance certificate, but believes a withholding of 10% is inappropriate, they can apply to the ATO for a variation. Reasons for a variation could include:
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<li>a foreign resident not making a capital gain on the transaction (for example, because they will make a capital loss or a CGT rollover applies)</li>
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<li>a foreign resident not otherwise having an income tax liability (for example, because of carried-forward capital losses or tax losses)</li>
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<li>a scenario where there are multiple vendors, only one of which is a foreign resident.</li>
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A variation application can be made using the ‘Variation application for foreign residents and other parties’ form. This form will be available on ato.gov.au/FRCGW from 27 June 2016.
A PDF version of the variation application will be available for contracts that are to be signed and settled within the first two weeks of July 2016. Otherwise, vendors should be encouraged to wait and use the online form from 27 June 2016.
In the majority of cases (where the ATO has all the required information and the application is successful), the notice of variation will be provided within 28 days.
The notice of variation should be shown to the purchaser before settlement to ensure the reduced withholding rate applies.
Does the withholding need to be provided prior to settlement?
No. The withholding does not need to be provided until settlement, and it is provided by the purchaser out of the purchase price, not in addition to the purchase price.
Is the transfer of ownership affected?
No, the withholding does not affect the transfer of ownership between the vendor and the purchaser.
In some cases the vendor may wish to postpone settlement if they have not yet obtained a clearance certificate or notice of variation, to avoid the purchaser withholding 10% of the purchase price and paying it to the ATO. In this scenario, the terms of the contract will apply as normal with respect to delays at settlement.
What do I need to consider when selling a property?
Where you are engaged by a vendor you need to know what the purchase price will be to determine whether this measure applies. If the purchase price is below $2 million, and it has been negotiated on an arm’s length basis, then no action is required.
If the purchase price is $2 million or above and the vendor is an Australian resident vendor, you should let them know they will need to obtain a clearance certificate from the ATO to avoid 10 percent of the purchase price being withheld at settlement.
If you are unsure about the purchase price because the property is going to auction, you should let the Australian resident vendor know they will need a clearance certificate if the purchase price reaches $2 million.
If the purchase price is $2 million or above and the vendor is a foreign resident, you should let them know that 10% of the purchase price will be withheld at settlement by the purchaser and provided to the ATO. You should advise them they may be able to vary the amount that is withheld at settlement in certain circumstances, and direct them to the Variation application for foreign residents and other parties form.
You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).
What if there is a short settlement period?
The same rules apply irrespective of the length of the settlement period. However, if there is a short settlement period you should advise the vendor they will need to obtain a clearance certificate or notice of variation (as appropriate) as soon as possible if they wish to avoid 10 percent of the purchase price being withheld at settlement.
More information
The Australian Institute of Conveyancers was extensively involved in the consultation process for this measure. As such, the ATO is not aware of any inconsistency with the terms of each state’s Conveyancing Act.
This fact sheet contains general information. More detailed information about foreign resident capital gains withholding payments is available <a href="https://www.ato.gov.au/general/capital-gains-tax/in-detail/calculating-a-capital-gain-or-loss/foreign-resident-capital-gains-withholding/" target="_blank">here</a>. 
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jonathanchancellor-7SQnKwU6yx

Property 101:  July 1 start date for foreign resident capital gains withholding payments

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PRDnationwide has released research claiming customers got a better result when they pay the full real estate commission rates.
The PRDnationwide research compared the median sales prices achieved by Purplebricks and online DIY sites like buyMyPlace.com.au and forsalebyowner.au against those achieved by traditional agents in Sydney, Melbourne and Brisbane dating back to 2014.
On average PRDnationwide found that Sydney traditional agents achieved 19.7 percent higher house prices and 3.8 percent higher unit prices,
It found Brisbane traditional agents achieved 8.3 percent higher house prices and 4.2 percent higher unit prices.
Melbourne traditional agents achieved 10 percent higher house and unit prices.
"Overall traditional real estate is achieving higher median prices than disruptors," claimed Diaswati Mardiasmo, national research manager at PRDnationwide.
"Based on this data, it's appropriate to coin the term 'when you pay peanuts - you get monkeys'.
"Although vendors might be paying higher commissions it would appear they are getting much better results under the traditional model and the accountability that it creates," she told The Australian Financial Review.
Ryan Dinsdale, Purplebricks Australia CEO, dismissed the research carried out by its competitors.
"The opinion of our customers is what we focus on as a business. We launched Purplebricks because up until now, Australians haven't had a choice in how they sell their home and we saw a growing demand for a fairer, more transparent offering," Mr Dinsdale told the Australian Financial Review.
"Since we launched in September 2016, we have saved our customers over $5 million in fees and our experts have achieved sales prices our customers are clearly delighted with as they have rated their Purplebricks experience 9.4/10 'Excellent' on independent review site Trustpilot.com.au."
Purplebricks, which does not have real estate offices but does use estate agents, charges a flat fee of $4500-$5500 including marketing and advertising costs. It also provides customers with 24/7 access to their own listing via an online platform that also allows them to engage with potential buyers.
They've recently been <a href="https://www.urban.com.au/news/64375-purplebricks-low-cost-model-not-working-in-australia-first-national-ceo" target="_blank">attacked by the First National CEO</a>, however Property Observer did notice a recent success in Melbourne when a <a href="https://www.urban.com.au/expert-insights/buying/66864-purplebricks-sell-melbourne-studio-apartment-for-187-700" target="_blank">studio apartment sold</a> for $187,500, the most affordable across the city that weekend.
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j.ballantyne1990-6AQqhLzZaK

Traditional agents secure higher prices than the disruptors

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Ray White chairman Brian White has reported record June sales. Australasia's biggest property group, Ray White recorded total sales of $4.3 billion in June 2017.  
"We just had our biggest June ever, it was 20 percent above June last year and its our third highest of any month on record."
June 2016 sales were noted as at $3.6 billion which given the Federal election was seven percent lower than June 2015.
"The property market has been remarkable across the world and Australia is no exception, but one of the things that can occur when there are expressions of concern or expressions of doubt is that people start thinking of getting back in," <a href="https://www.raywhite.com/blog/white-paper/white-paper-june-2017/" target="_blank">Mr White said</a>.
June's strong results suggested any talk of the property market easing appeared to be premature.
"For a month that can often disappoint, this June was a special one.
"Our June result was underpinned by particularly strong activity in New South Wales – which recorded $1.3 billion in sales revenue –  and Victoria which produced $606 million this month.  
"The Lower North Shore team headed up by Geoff Smith and Richard Harding wrote $120 million in their first month of trading at Ray White – which is certainly a debut to remember!" Mr White said.
The Queensland result of $776 million was well up on last year, evidencing of a firm trading market.
Ray White's May was the second strongest month ever for the Ray White Group.  
The group has actually now recorded four personal bests in the financial year with November, March, May and June sales.
The May sales revenue came in at $4.4 billion, compared to $3.74 billion in April.
The figure was the second highest ever month for the group, after March came in at $4.6 billion.
In the year to May, Ray White had finalised a total of $40.9 billion, which includes all residential and commercial sales in Australia and New Zealand, plus Indonesia and Rural.
 
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Ray White secures record June sales

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The NSW Government has launched an online portal for estate agents to tender for NSW Government contracts.
The new scheme is designed to make the procurement process simpler and to create a pool of service-ready real estate agents.
Brett Newman CEO of Property NSW said agents appointed to the scheme will have the opportunity to work with Property NSW on the sale of a range of under-utilised and surplus government-owned assets.
“The new scheme boasts a number of improvements including the ability for real estate agents to apply to join at any time and the option for agents to apply for specific regions, levels and types of work which best suit their expertise,” he said..
“Importantly, the new scheme supports small and medium enterprises by allowing agents to update their profile as their sales experience grows, increasing their eligibility to deliver larger and more complex projects.
“The NSW Government is committed to efficiency and digital innovation, this scheme meets the expectations of businesses operating in the digital age, and will lead to greater efficiency.”
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