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THE JOURNAL OF THE REAL ESTATE INSTITUTE OF VICTORIA

REIV.COM.AU

MARKET UPDATE Melbourne shrugs off price falls PRACTICE NOTES Get it in writing

THE ESTATE AGENT DECEMBER 2013

Christine Nixon

Awards gala

Sell-out night with a touch of the Logies

How to break the glass ceiling

Skeletons in the closet

Legal and ethical obligations

How to beat stage fright

Mastering public speaking

Enzo Raimondo taps into online delivery of real estate data and sales

Digital

coup

National licensing

REIV president warns of strangulation by red tape

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WELCOME TO A NEW ERA THE REIV MEMBERS’ APP HAS ARRIVED

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Contents

11 ‘In less than two months, 200,000 people have actually taken the time to register online … it confirms we’re delivering a service people want’  REIV chief executive Enzo Raimondo

Cover story ENZO RAIMONDO REIV INNOVATOR

REIV’s CEO discusses soldtoday.com.au, the latest in a series of digital initiatives

Features

16

Riding the surge The market has improved but some sectors are performing better than others Story by REIV Research

19

Top cop clues Former police commissioner Christine Nixon on helping women achieve their potential

Story by Anthony Black

Story by staff writers

20

Collecting laurels More than 1200 celebrate the industry’s awards night in style Story by Annie Reid

26

Tale of the tape How a measurement error landed an agent in court

30

Making good calls CEOs reveal how staff are often the difference between success and failure

20

Story by Nancy Rainbird

Story by Amy Birchall

38

Stigmatised property What are an agent’s obligations if a property has been the scene of a trauma? Story by Meri Siracusa and Dan Flynn

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38 The Estate Agent ❘ December 2013

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Oc, opo Letter Editor’s

Regulars 5 CEO Report 6

Bulletin

9

President’s Report

10 REIV Focus 16 Market Update 25 The Prophet 28 Leadership 34 Best Practice 40 Course Schedule

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42 Tech Talk 43 Life Class 44 Master Sales 48 Interaction 50 REIV Directory

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Editor’s letter ANTHONY BLACK: The editor of Estate Agent began his journalism career in Geelong in the early 1990s before emerging as a talented young journalist at the Sunday Herald Sun. He eventually became business editor of the publication where he wrote extensively on real estate. In more recent years, he has become known as a prolific freelancer working on many prestigious publications including Company Director, BRW and In The Black.

In a bold but necessary development the Real Estate Institute of Victoria is taking full control of the publication and distribution of its own auction results. After nine years, the REIV is no longer collating and providing auction results free-of-charge to Melbourne’s Sunday newspapers. In a digital word it is often remarked that content is king. The REIV in taking control of its data is creating the opportunity to exploit its intrinsic value. The REIV is now running its own 4

The Estate Agent ❘ December 2013

auction results and private sales website soldtoday.com.au. Since launching it in August, the REIV has already built a database of 200,000 subscribers. Every Saturday night, soldtoday.com.au emails auction and private sales results to computers, tablets and mobile phones for free. The REIV is proud to say it delivers the results before anyone else. It’s quite an achievement in a short period of time. Some say an REIV auction results website is long overdue. After all, it’s the REIV and its real estate agency members that devote time and resources to generating this valuable industry information. They own it, so why give it away for free? The REIV has the experience, technology and expertise to become a dominant force in the auctions and broader real estate space. The REIV has a competitive advantage, as it’s long enjoyed a reputation in the community as a trusted source of accurate information. The REIV has been the peak professional association for the industry since 1936. Newspapers no longer enjoy the mortgage they once did on delivering

information. The internet, still in its infancy, is the information highway and people enthusiastically embrace it with each new computer, smart phone, app and tablet launched on the market. Australians love real estate. Owning your home will always be a goal for most people. Also, Australians enthusiastically embrace new software and hardware technology so soldtoday.com.au is ready to provide information on demand to a hungry real estate audience. Importantly, a strong REIV can become even stronger if all real estate agents get behind soldtoday.com.au and actively promote it among their peers and the wider community locations in which they work. It appears that over the years, real estate agents have been working hard to generate information for the benefit of third parties. Perhaps the final word should go to real estate agent Brad Teal, who features in this issue. Teal says: “Those of us in real estate should fight harder to protect our own interests.”

Anthony Black


Our Update

Oc, CEOopo Report

ENZO RAIMONDO: The chief executive officer of the REIV since 2000 is a former CEO of the Real Estate Institute of South Australia. He is also a director of RealestateVIEW.com.au, an innovative online property listing site in which the REIV is the controlling shareholder; a Member of the Australian Institute of Company Directors; a Fellow of the Australian Institute Of Management; and a Member of National Association of Realtors (USA).

Each spring buying weekend there are about 2500 auctions around Australia and these two cities account for about 90 per cent of those. More than 50 per cent are in Melbourne. Although we are at present collecting only about 70 per cent of Sydney auction results, this is increasing and we anticipate it will continue to do so

Buyers and all those interested in the property market are now able to keep abreast of the latest auction results thanks to a timely free service provided by the REIV. The weekly e-mail alerts service, which the REIV plans to expand to include weekday sales results, operates through free subscriptions via the soldtoday. com.au website. Already it has been expanded to Sydney, in partnership with the REINSW. The website and alerts service were created to inform consumers about the market, providing them with valuable pre-purchase research data and enabling them to track particular properties. It also provides tools to allow the reader to make up their own mind about the state of the market. This was also part of a defensive strategy devised by the institute to protect real estate agents from the pirating of their data or the monetising of it by third parties. As media companies moved to align their reporting of property results with their own commercial interests – Fairfax owns Australian Property Monitors, now reporting auction results for its publications – or to base them on

national commercial decisions, as with News Ltd’s alignment with RP Data, it was important for the REIV to give the public direct access to its results. By signing up on the soldtoday.com. au website, subscribers receive e-mailed auction results every Saturday night – no more waiting to read them in the newspaper on Sunday morning. They can specify one or more suburbs for which they want to receive the results and these can be in Sydney, Melbourne or both. Sophisticated software differentiates the results by suburb ensuring that subscribers receive only the results they want. However each e-mail also includes a link to the full list of results, offering easy access for those who want a broader view. The results reported include those for which the price is undisclosed, although those results do not include the price. Usually this is at the vendor’s request – although the auction takes place in public some vendors do not want a wider group of people to know their property’s selling price. Privacy principles require that agents respect their request not to disclose the price. Since the move by print media away from publishing REIV results, we have

EA THE ESTATE AGENT

Estate Agent is published for the Real Estate Institute of Victoria by LandEd Publishing.

Publisher Tom Skotnicki, Director LandEd Publishing tomskot@netspeed.com.au +61 419 581 874 Editor Anthony Black anthonyblackmedia@gmail.com Senior Writers Leon Gettler, Besa Deda, Dina Ross, Annie Reid, Kylie Skotnicki

held a very successful campaign to promote the soldtoday.com.au service. This has included using billboards, radio and online advertising and has resulted in the rate of subscriptions increasing from about 15 a day to more than 200 a day. Each spring buying weekend there are about 2500 auctions around Australia and these two cities account for about 90 per cent of those. More than 50 per cent are in Melbourne. Although we are at present collecting only about 70 per cent of Sydney auction results, this is increasing and we anticipate it will continue to do so. The REIV is a regular commentator on the Victorian property market and, with the REINSW, this commentary will be extended to the Sydney market. This provides consumers with timely, credible and impartial market commentary and helps build a relationship of trust between the buying and selling public and the agents. We want that trust relationship to mean that it is to the agents the public turns for information about the state of the market and for advice. In keeping with this building of trust, the intention is that the soldtoday.com.au service will remain free to the public.  Enzo Raimondo

Design and Production Pagemasters: Art Director Anita Belia Advertising Tom Skotnicki, Director LandEd Publishing tomskot@netspeed.com.au +61 419 581 874 Cover photograph Rob Nicki

The views and opinions expressed in articles and columns of Estate Agent are those of the writers and do not necessarily represent those of the Real Estate institute of Victoria or LandEd Publishing

The Estate Agent ❘ December 2013

5


Bulletin

BY Annie Reid, eabulletin@gmail.com

It’s a weird world out there. We’ve discovered you can build a house out of LEGO. It only takes 3.3 million pieces. And like oils, Macca’s ain’t Macca’s. Some McDonald’s overseas serve beer. But not here.

not pulling your leg

Here are some juicy details about our favourite building block. LEGO was conceived by carpenter Ole Kirk Christiansen, who lost his business and began making toys from surplus lumber. LEGO is derived from leg godt – Danish for play well. As of this year, LEGO has made 560 billion pieces and is the largest producer anywhere of rubber wheels. The tallest LEGO structure ever made is 94ft (28.65m) comprising 465,000 bricks, while a real house was made from 3.3 million LEGO pieces in 2009. Only 18 out of every million pieces fail to meet the company’s high standards.

Open and closed

NEW APP TO KEEP RENTERS HAPPY

A new app to help renters has hit the digital property space. Launched by Consumer Affairs Victoria, the RightRent smartphone app helps tenants to better connect with landlords. It has information on rights and responsibilities, email templates for requests such as repairs, help with breaking leases and getting back the bond. It’s available for iPhone and Android users from iTunes or Google Play stores. “This is great tool for people who are renting privately, to be able to access assistance easily and get information about theirs and their landlords’ rights and responsibilities,” REIV’s vice president Sophie Lyon said. 6

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Blockbuster video chain will close 300 stores in the US by January. The brand is expected to move to a streaming-only model. The group once had 9000 stores but filed for bankruptcy in 2010 due to competition from movie delivery services. Australia’s Blockbuster stores are franchise-owned. According to Franchise Entertainment Group, which owns Blockbuster and Video Ezy, there are about 420 stores across both groups in Australia.

MACCA’S AIN’T MACCA’S

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Recently, a novice Sydney agent was supervising his first open for inspection. And then this happened: “It’s this guy’s first open inspection. He’s got it all happening, the car’s cleaned, brochures ready, clipboards ready. Achingly keen to please, the youngster bounds upstairs to check all is in place, connects with a low beam and half knocks himself out. The doorbell rings and he’s standing there with blood trickling down his head … he left in an ambulance.” Not the best start to the campaign. If you have any horror stories you’d like to contribute, send them in to us at eabulletin@gmail.com.

... and the credits roll

You may think McDonald’s is the same everywhere, but no. Beer is served in McDonald’s in France, Germany, the Netherlands and Austria. In Japan, fries come in the “Mega Potato” size; in China, you can’t order an apple pie – it’s pineapple pie; in Pakistan, you can order a Chicken Big Mac, or a McAlooTikki in India. Should a successful franchise here cater for regional tastes like McDonald’s does? We think Macca’s might be on to something here.

tools of the trade

Genworth has launched the online LMI Toolkit to help investors and borrowers understand lenders’ mortgage insurance. The free knowledge hub comprises apps, videos, case studies and webinars with information about LMI and the mortgage market. It will be regularly updated with new material, content and tools. Visit genworth. com.au/lmitoolkit/ to get started.

The Estate Agent ❘ December 2013

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Bulletin

The hired help

They say good help is hard to find, but some butlers in the US are really doing it tough. Agencies in the US are reporting an increase in advertisements for hired help, with staff expected to provide a level of service akin to Buckingham Palace or a five-star hotel. It’s not uncommon for roles to include live-in couples, live-out housekeepers, stewards for yachts and chefs for the summerhouse. But when a butler in the US can earn anywhere up to $200,000 a year, perhaps these roles are worth their weight in gold. Thinkstock

commissions at the core in big apple

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Gary Peer, director at Gary Peer & Associates, flew to the Big Apple recently on a mission to meet real estate movers and shakers with the Property Profile Group. He visited seven agents over three days and saw first-hand the 6 per cent commission rate schedules and traditional advertising campaigns funded by the agent, not the vendor as is the case in Australia. “In my view, we’ve a more effective model because in the US, you don’t get the same

energy, focus and commitment. We’re working hard and have more creative energy for our vendors, because they’re funding it and we have the budget,” Gary told EA. He said New Yorkers loved the concept of our system, but also loved their model of earning 6 per cent commission. He also learned some key stats: New York’s largest agency manages 60,000 tenants and some of the big players employ between 200 and 400 sales agents.

Tasmania has doubled its first-home buyer grant to $30,000, effective immediately, to boost construction activity and turbocharge the incentive. The scheme will run until December 2014. the best and the rest

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An annual report recently released by Coldwell Banker looked at more than 1900 real estate markets in America, rating the most expensive and most affordable four-bedroom, two-bathroom homes. Malibu, California, emerged as the most expensive at $2.1 million, followed by Newport Beach and Saratoga, also both in California. Properties in southern California and those nestled around Silicon Valley are the hottest property, while on the affordable front, homes in Cleveland, Ohio, tipped the scales at just over $63,700. The Estate Agent ❘ December 2013

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Bulletin

rise of the Milliondollar suburbs

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In Sydney, only one in five households are snapping up the traditional detached home that once typified the “Great Australian Dream”. For the first time, new research also shows a rise in Sydney of suburbs in the million-dollar club. There are now 123 Sydney suburbs with a million-dollar median price range, across four distinct regions – the eastern suburbs, lower north shore, northern beaches and inner west. ‘’We are seeing Sydney operate at a different level to other markets in Australia,’’ says APM’s Andrew Wilson. We conducted a straw poll with Melbourne agents, who guessed there were about 10 suburbs with $1 million median range. Our REIV property research shows that this figure is actually 42, covering all sales in the past 12 months ending September 2013. East Melbourne is the highest, with a median of $2,480,000, followed by Toorak and Deepdene.

Like to sell your rent roll? Right now is the perfect time to sell. If you would like a confidential discussion about your rent roll call me today and together we can plan your selling strategy. We have a wide range of genuine buyers ready right now to negotiate confidentially and discreetly. Ross Hedditch Telephone: 9380 5999 Mob: 0418 321 952 rhedditch@bdhsolutions.com.au bdhsolutions.com.au 8

BDH SOLUTIONS ROSS HEDDITCH

REIV_V1

The Estate Agent ❘ December 2013

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President’s Report Neville Sanders, President REIV

Proposed changes threaten to strangle agents with red tape

​T

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he move to national licensing of real estate agents is an issue of vital importance to the profession in Victoria. It should not be rushed; as much consensus as possible between government and the profession before implementation should be the goal. So far, that consensus has not been achieved. There are many hurdles to overcome on key issues such as conduct harmonisation and ensuring any new system does not create extra and unnecessary red tape. The reform proposals overseen and released by the Council of Australian Governments in July this year were a bitter disappointment to the industry and were condemned by the REIA on behalf of real estate agents nationwide. In September, a report on their potential impact – the Decision Regulation Impact Statement: Proposal for National Licensing for Property Occupations – was released. There were some improvements; for example, the plan to deregulate non-residential sales has been abandoned, but the reform proposals are still not good enough. The REIV represents more than 2100 estate agencies, employing more than 10,000 people. Although we support a move to a national occupational licensing system which improves mobility and efficiency for agents, we will not support a flawed system which creates problems for our members. Outstanding problems must be resolved to ensure efficiency actually improves, before the proposals are implemented. Otherwise, we are likely to see a system creating as many problems as it solves and requiring amendment after its introduction. Among the problems is the separation between licensing and conduct harmonisation. Conduct relates to issues such as trust accounting, standards of behaviour, rights to commissions, conduct of auctions and information requirements. At present,

these are governed by many pieces of legislation with inconsistencies between states and territories. How can a single licence operate efficiently and effectively in such circumstances? While the national licence would supposedly ease mobility for agents, we already have mutual recognition between states and most agents move upwards within a state, rather than across borders.

Why include us with gasfitters, plumbers and airconditioning installers when a move to the second tranche would include us with related occupations such as valuers and conveyancers? For those who do move states, introducing a national licence without reforming the conduct laws means they still must be aware of differences between legislation from state to state. We believe conduct harmonisation must be dealt with concurrently with national licensing and that the National Occupational Licensing Authority (NOLA) has overstated the supposed productivity benefits of increased mobility.

We also believe the proposals have no net economic benefit for Victoria. Instead of our present single licence, enabling agents to sell across sectors, multiple licences will be introduced – extra costs and extra red tape for Victorian agents. Interstate labour mobility is presented as a key basis for the reform, without considering the loss of mobility from changing the Victorian single-licence structure to a multiple licence. The timeline for the introduction of the first wave of national licensing reforms was overly optimistic – NOLA has conceded this. Also, the inclusion of property occupations in this first wave makes no sense. Why include us with gasfitters, plumbers and airconditioning installers when a move to the second tranche would include us with related occupations such as valuers and conveyancers? This would provide time for outstanding issues to be resolved, including finalising conduct harmonisation, working for consensus between NOLA and the industry and alignment of property services in the various states. This includes tackling the issue of licences for business broking, for which it is necessary to be a fully qualified agent in Victoria, but for which a lower-level licence is available in other states. The current plans would give Australia a flawed, one-size-fits-all scheme, described by the REIA as a “lowest common denominator of a scheme” designed to meet an arbitrary bureaucratic timetable. Not only is substantial redrafting required to avoid extra red tape and the loss of the excellent Victorian single-licence system, more realistic cost-benefit analysis is required as is concurrent handling of the issue of conduct harmonisation. The Estate Agent ❘ December 2013

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REIV Focus

Richard Earle Director Jellis Craig Hawthorn

No property bubble yet: pressure on prices Petrol prices, traffic congestion, lack of infrastructure shaping market What is your view today on the state of Melbourne’s residential property market?

Auction clearance rates in Melbourne have been consistently strong for the last quarter (July to September). The clearance rate in a normal stable market is somewhere between 60 per cent and 75 per cent. Competition is strong and will get tougher in 2014.

When did the housing recovery begin and is it sustainable?

The housing recovery began about a year ago after a relatively long subdued period in a struggling economy. I think this recovery is sustainable because of low interest rates. Property between $500,000 and $1.5 million is going to be sought after for many years to come.

Do you think house prices will rise in the next year? Yes. Increasing demand for property with land amid limited supply is a key factor in pushing up prices. Apart from the natural growth cycle, an increasing number of overseas residents settling in Melbourne is also driving demand. A lack of infrastructure, rising petrol prices and increasing traffic congestion means buyers are fiercely competing for property close to work, schools and public transport. I think residential property prices on average will increase between 5% to 7.5% in the next 12 months in what I expect will be a flat inflationary environment. Houses are expensive today, but they will be even more expensive.

Is there any evidence yet of a bubble in the residential property market?

I don’t think the market is red hot. There’s been a bit of pent-up demand in the past two years, which is now unleashing itself. Real estate figures aren’t pointing 10

to a bubble at this point. But people’s desire to own property, or upgrade, is consistently pressuring demand.

What is your view on where interest rates may be heading in the next 12 months? I’m no economist, but I can’t see any logical reason why interest rates would dramatically rise in the short term unless the economy starts to improve more rapidly than the Reserve Bank anticipates. Low interest rates encourage more people to enter the housing market. Tenants do their sums to see if the monthly rent could be better spent on mortgage repayments.

What our grandparents considered important, such as a backyard vegetable garden, appeals to today’s buyers. Is there a danger low interest rates could encourage buyers to financially over-extend themselves? Yes. Young buyers have to be careful because low interest rates don’t last forever. Interest rates go in cycles. Buyers should factor higher interest rates into their budgets before buying. After buying a property, pay more than the minimum amount to build a buffer in case of emergencies. Also, withdrawing from auction bidding too early isn’t necessarily the most effective strategy. I have seen couples miss out on a property for the sake of one bid. Then they spend the next six months searching for another property at much higher prices in a strong market.

What is noticeably different about Melbourne’s residential market today than 20 years ago?

Melbourne’s residential property market

has markedly changed because today’s society is far more multicultural. Today’s buyers aren’t competing in the same property markets as their parents. Buyers on average incomes shouldn’t expect they are simply entitled to own a home. To own a home, many people have to plan and sacrifice lifestyle to meet mortgage repayments. The days of mortgage repayments accounting for between 30% and 40% of income are coming to an end. In future, expect mortgage repayments to extract a much higher percentage of income due to demand pushing up prices.

What major factors should young buyers carefully consider when entering the housing market?

First and foremost, young buyers should weigh up whether their employment is secure. Also, they should be ready to meet the mortgage if unforeseen issues arise. In terms of property, buying an inner-city home close to public transport and schools tends to offer the best capital growth prospects because of consistent solid demand and limited supply.

What pitfalls should buyers avoid?

Don’t pay too much for a property just because it offers a good view. You might buy a fantastic one-bedroom flat with a terrific view of the city, or the sea, only to discover a new apartment block is going up in a year’s time, which will eventually obscure or hide that prized view. And you would be staggered how often that happens. Also, buying property on main roads limits future capital growth prospects because of constant traffic. Buying single-level accommodation in a quiet street with a backyard will be far more attractive if you want to sell in future. What our grandparents considered important, such as a backyard vegetable garden, appeals to today’s buyers.

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Oc, opo Cover Story

Agents are back in charge of their data and keen to promote it. By Anthony Black

Subscribers sold on REIV’s new website A One-stop shop: Enzo Raimondo says the new REIV website has opened doors to new business.

ttracting traffic to a new website and building an audience generally takes time. But not in the Real Estate Institute of Victoria’s case. From a standing start in August, the REIV’s new site soldtoday.com.au has built a database of 200,000 subscribers living in Victoria and NSW.

Every Saturday night soldtoday.com.au emails auction and private sales results to computers, tablets and mobile phones. All the daily real estate action, including the clearance rate and expert market commentary, is at subscribers’ fingertips from early evening and, Continued on page 12

The Estate Agent ❘ December 2013

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Cover Story

Continued from page 11

more importantly to REIV chief executive Enzo Raimondo, it beats the Sunday newspapers to the punch. Raimondo can hardly hide his delight at the rapidly growing audience. “In less than two months, 200,000 people have actually taken the time to register online,” he says. “That’s most satisfying because it confirms we’re delivering a service people want. “People in Melbourne talk about two things at dinner parties – property and football. Delivering the auction and private sales results on a Saturday night makes for a good conversation piece. “Channel Nine actually announces our clearance rate during its 6pm news bulletin. “We are delighted with the response to soldtoday.com.au because so many people have joined in such a short period of time. As more people become aware of our new site, the numbers will grow exponentially.” The decision to publish auction and private sales results online was to some degree forced on REIV. Until recently,

Philip Webb: Believes an REIV auction results platform is long overdue.

REIV had been collecting, collating and providing auction results free-of-charge to Melbourne’s Sunday newspapers. But the papers decided to part ways with the REIV after nine years. Raimondo was disappointed with the outcome, but accepted the publishers’ decisions, which were not entirely unexpected. Months ago, the rumour

People in Melbourne talk about two things at dinner parties – property and football. Delivering results on a Saturday night makes for a good conversation piece

mill had been humming that the papers would pursue other plans without REIV. The bush telegraph didn’t escape Raimondo’s attention and he quietly prepared for an online future. “We had Plan B in place if the newspapers decided to go their separate ways,” Raimondo says. Besides, REIV already had access to a Melbourne call centre, Data Response, employing about 20 people on Saturday to chase, collate and deliver the auction results. So the infrastructure was mostly in place when soldtoday.com.au was still on the drawing board. Also, while Australian call centres are becoming an endangered species, Raimondo is proud to employ Victorians. “Unlike other data providers, we didn’t go to the Philippines, India or Malaysia to outsource our call centre operations,” Raimondo says. “We’ve made a conscious decision to employ Victorians. “In terms of costs, it’s a lot more. But we’re happy to have people employed here rather than overseas. “Even though we’re a small organisation, we want to help other Australian companies – people that work and live in Australia.”

Good fit

Raimondo says soldtoday.com.au is a

A FAST AND FREE SERVICE Enzo Raimondo says it costs REIV about $1 million a year to collate and provide auction results. “The call centre costs us about $700,000 a year just for using it on a Saturday,” he says. “Then there’s wages, email database management, software development, etcetera. It’s a substantial investment.” So what do you get from Raimondo’s $1 million? A fast, reliable, easy-to-use and convenient real estate service. And, as Raimondo constantly emphasises, it’s a free service delivered only hours after the last hammer has fallen on a Saturday afternoon. “Our subscribers get the auction and private sales results before they are 12

published anywhere else,” Raimondo says. “We have proven over the past nine years that the REIV can collect 90 per cent plus of all auctions in Melbourne and 500 to 600 private sales each week.” According to the REIV website, there were 912 residential auctions held in Melbourne on the weekend of September 14-15, for a clearance rate of 74 per cent. Raimondo says he would have built soldtoday.com.au much earlier had it not been for his commitment to provide auction results to the newspapers. But now he sees his new site as a competitor to all real estate data providers. He believes he has the most effective platform to compete with established players and any newcomers.

“Soldtoday.com.au is a fresh project,” he says. “We have promoted the site on radio, on billboards and at 120 bus, tram and railway platforms. “The REIV has transitioned from providing auction information to major print outlets to publishing it online ourselves. We are catering to where the public is searching for information. “While people of my generation might still enjoy buying a paper, my two sons – one’s 27, the other’s 25 – have never bought a paper in their lives and I don���t think they’re ever going to. “Every time they look for information, whether it’s property or anything else, it’s online and usually on their iPhone. Online is the way of the world.”

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Oc, opo Cover Story

Brad Teal: Strong advocate for real estate agents controlling their own information.

good fit as links to REIV’s major website and its other online portals, including realestateview.com.au and propertydata. com.au, as well as providing news content, expert advice and views on anything real estate. Browsers can search for rental properties, houses for sale, real estate agents and home loans. Sharp images accompany the content. Propertydata.com.au provides detailed suburb reports, median prices, demographic data and latest street sales. People can also search for businesses to buy, commercial premises, rural properties and holiday rentals. REIV is now a one-stop shop. “If you’re an agent who has to do valuations and appraisals, we have 11 million records,” Raimondo says. “We keep the cost of data down. Agents in Victoria pay a lot less for REIV data than their counterparts in NSW. “Online is dynamic. You can see a photo of a property, its floor plan, the outside, the inside, the aerial view – everything.” If the recent past is any guide, Raimondo says soldtoday.com.au should have a database of 500,000 subscribers by June next year. “That’s now our new target after the great take-up so far,” he says. Raimondo believes the target is readily achievable, helped by Melbourne and Sydney’s love affair with property. He says 90 per cent of all auctions in Australia happen in Melbourne and Sydney. “Our strategy is to get eyeballs to our clearance rate, to our real estate agents and our other interlinked websites, such as realestateview.com.au,” he says. “We’re going to drive leads to our agents. We’re getting the message out there that soldtoday.com.au is the go-to site for auction results. “It’s about converting traffic on all our websites to leads. There’s little or no benefit to our agents if someone briefly looks at a property online, then leaves our site for another. “We want people to click on a property and then click on the agent. We want people to email, call or request a

The great thing about all REIV websites is the content is constantly updated and regularly checked for accuracy. Any error is quickly identified and corrected via an effective reconciliation system brochure from an agent. “We feel an integral part of an agent’s role is to inform their clients about what’s happening in the marketplace. An agent value-adds by confirming a client’s research.”

The agents

Philip Webb has spent more than 40 years in the real estate industry. He believes an REIV auction results platform is long overdue. It’s a matter of real estate agents looking after their own interests.

The crux of Webb’s argument is that real estate agents own the industry information they generate, so it’s appropriate for it to be delivered by an industry body, such as REIV, for the benefit of all stakeholders and subscribers. For too long, Webb says, REIV and agents had been giving away their information for the benefit of newspaper publishers and their readers. Webb says soldtoday.com.au has a competitive advantage over other Continued on page 14

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Cover Story

The great thing about all REIV websites is the content is constantly updated and regularly checked for accuracy. Any error is quickly identified and corrected via an effective reconciliation system Continued from page 13

auction data collectors because most real estate agents will by loyal to REIV. “Having our own auction results website is a good way to head off the competition,” Webb says. “I believe our competitors will struggle because most agents will only provide auction results to soldtoday.com.au “And why feed our information to opposition data providers to make money out of it? Of course, a few will. “But most agents will support soldtoday.com.au and I would encourage all agents to do so. “Soldtoday.com.au is a terrific initiative because it represents the long-term interests of our industry by providing valuable, relevant and instant information to our audience. “Information is most valuable when you can get access to it immediately, like on a Saturday night.” Brad Teal Real Estate has grown from a single office in Essendon in 1987 to an eight-office network servicing the broader north-west of Melbourne. Teal, too, is a strong advocate for real estate agents controlling their

own information. For years, Teal says, agents have been giving away their information. And when agents needed information, databank providers would charge a fee for information agents had initially given them free. Teal says REIV’s decision to establish soldtoday.com.au is no different to the Australian Football League or any other industry association representing the best interests of stakeholders by owning and controlling content. “Property data is one of the most valuable things the real estate industry can own,” Teal says. “Those of us in real estate should fight harder to protect our own interests.” Teal says a great strength of soldtoday. com.au is it reports private sales so subscribers have access to all of Saturday’s market action. “So soldtoday.com.au provides a full market appraisal,” Teal says. “It informs whether a property has sold before, at or after auction. The site is efficient. It’s instant and it works. “The great thing about all REIV websites is the content is constantly updated and regularly checked for accuracy. Any error is quickly identified and corrected via an effective reconciliation system. “So people using REIV websites know they can trust the data.”

A competitor

Eyes on the road: One of the 120 bus, tram and railway billboards promoting soldtoday.com.au

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REIV has been the peak professional association for the industry since 1936. It has 2100 real estate agency members. Raimondo says REIV’s credibility, knowledge and experience appeals to the public and will make it a competitive force against the likes of realestate.com.au and Domain. He says REIV’s online portals make it Australia’s third biggest property site in terms of traffic and content. Raimondo describes realestate.com.au as the “monopoly player” in the property space.

ADs advantage Enzo Raimondo is exploring advertising opportunities for soldtoday.com.au and believes his site would particularly appeal to banks, mortgage providers and other financial institutions. “We will make money from our new site because we already reach a lot of people and are growing,” he says. “Australians love real estate so we are in the right space for advertisers to grow with us and capture market share. And we will deliver what we say we’ll deliver. “We, at the REIV, have a lot of passion and we have a lot of fight in us. We’re dedicated to making sure we get to where we want to go.”

“Can we compete with realestate. com.au in terms of content and traffic? Not today. “Can we take market share in some segments from them? Yes we can. “We can take market share in niche segments. They could be geographic locations, such as regional cities or rural towns. Or, they could be in specialist areas of real estate, such as commercial and industrial businesses. “I do not subscribe to the theory that because there’s a monopoly, nobody else can disrupt them. I think talented, dedicated and hard-working people can disrupt any monopoly.” Raimondo’s view was supported during my interview with Virgin Australia chief executive John Borghetti last year. After Borghetti was appointed CEO in 2010, he devised a strategy to compete with Qantas in the more lucrative business travel segment. Qantas dominated business travel before Virgin entered the space in January 2011. Borghetti said: “In any business, when you enter an almost monopolistic market, there’s only two things that are guaranteed. The monopolist will wind up losing market share and the new entrant will win some. “The only question is how much? When you see a monopoly, you think, I could take a crack at that.”

The Estate Agent ❘ December 2013

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Market Update

Housing hits new peak

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elbourne’s housing market has recovered from the price falls of the past two years, with the latest September quarter median house prices showing a new peak. The median house price – $595,500 – exceeded the previous peak of $559,000, set in the December quarter 2010 (seasonally adjusted), confirming talk of a “sellers’ market”, and that the market is in a strong growth phase. So, too, the higher-than-expected September quarter increase of almost 9 per cent (seasonally adjusted) showed a clear increase in demand, up from a revised $547,500 in the June quarter. (See table).

Melbourne has shrugged off the price falls of recent years, hitting a new peak in the September quarter, but affordability pressure could apply the brakes

While the figures are optimistic, some caution is warranted and it is important to consider the many stories which comprise the overall market and therefore the whole-of-city figure. Also, there are indications this growth level may not be sustained long-term. Prices are rising rapidly and affordability pressures may start to

Some banks have begun increasing their fixed-term interest rates and first-home buyer numbers are already at the lowest level in almost a decade

counterbalance the low-interestrates driver. While the Reserve Bank maintained the cash rate at a record low – just 2.50 per cent – in November, some banks have begun increasing their fixed-term interest rates and first-home buyer numbers are already at the lowest level in almost a decade. In regional Victoria, the median house price of $308,000 was up only slightly – 0.8 per cent seasonally adjusted – but the major centres of Geelong, Bendigo and Ballarat showed strong growth. Clearance rates averaged more than 80 per cent in each of those centres during the quarter. But the average number of days on the market for a private sale in regional Victoria was 111 – up three days on the previous quarter. In Melbourne, the strongest growth in September quarter median prices was concentrated in several inner and middle suburbs: Balwyn, Brighton East, Ascot Vale, Balwyn North and Footscray. Several million-dollar sales boosted these prices. (See table). The middle suburbs showed the highest growth in house prices: a 7.1 per cent increase to $656,500 (seasonally adjusted). The outer suburbs recorded a 3.8 per cent increase, peaking at $452,500, and in the inner suburbs the median rose by 3 per cent – just below its 2010 March quarter peak. At suburb level, there is substantial variation: Coburg, Newport and Williamstown are still below their peak while Balwyn, Brunswick and Yarraville are above. Montmorency, Mount Eliza and Pascoe Vale remain

The Estate Agent ❘ December 2013

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Market Update

below their peak, while Doncaster East, Glen Waverley and Mulgrave are at their peak. The growth in unit and apartment median prices, including townhouses, was slower, with the median price up 4.8 per cent in the September quarter (seasonally adjusted) from $459,500 to $481,500. As with houses, there was considerable variation between suburbs: a median price of $795,000 for units in Brighton, for example, compared with $295,000 for affordable Frankston. Melbourne’s outer suburbs recorded the highest increase in unit prices, up 4.1 per cent to $371,500. For the inner suburbs the increase was 2.5 per cent, with the middle suburbs recording a 1.7 per cent increase. Both city and regional rental

Increased demand was supported by positive state indicators including population growth, consumer sentiment, clearance rates and number of sales

vacancy rates dropped. The Melbourne rate fell from 3.4 per cent in June to 2.9 per cent in September, mainly because of a reduction in vacant properties in the middle and outer suburbs. Vacancies in the inner suburbs were more stable but remain the highest within the metropolitan region. In regional Victoria, the vacancy rate also fell this quarter from 3.7 per cent

Strong Growth Phase Seasonally adjusted

Sept 2013 quarter

to 2.7 per cent, with the largest decreases in Geelong, Ballarat and Bendigo. The September quarter’s increased demand was supported by positive state indicators including population growth, consumer sentiment, clearance rates and number of sales. Victorian consumer sentiment rose 11.4 per cent, the nation’s largest improvement. And the number of sales in the quarter was up 10 per cent on last year. With several “super Saturday” auction weekends underway this quarter and far more homes listing for auction than in the same period last year – factors which can push up median prices – REIV’s seasonally adjusted December quarter medians will provide important comparative data.

Rental Vacancy Rates (%) % chg to last quarter

Jun 2013 quarter

% chg to quarter last year

Sept 2012 quarter

Metropolitan Melbourne

Sep 2013

Jun 2013

Inner total

3.1

3.3

Melbourne

House

$595,500

8.8%

$547,500

14.9%

$518,000

Inner (0-4km)

4.0

3.7

Unit

$481,500

4.8%

$459,500

9.6%

$439,500

Inner (4-10km)

2.9

3.2

Middle (10-20km)

3.0

3.6

Outer total

2.5

2.9

Outer (20+km)

2.5

2.7

Outer (Mornington Peninsula)

2.2

3.7

2.9

3.4

4.9

5.5 3.1

Regional Victoria House

$308,000

0.8%

$305,500

0.0%

$308,000

Top 10 House Price Growth in Quarter (Original) Suburb

Sept 2013 median

Jun 2013 median

Quarterly change

Melbourne total

Balwyn

$1,750,000

$1,380,400

26.8%

Regional

Brighton East

$1,352,500

$1,165,000

16.1%

Geelong & Barwon Region

Ascot Vale

$803,000

$707,000

13.6%

Bendigo & Loddon

1.9

Balwyn North

$1,252,500

$1,108,000

13.0%

Ballarat & Central Highlands

2.3

4.0

Footscray

$622,500

$553,000

12.6%

Wimmera

1.3

n/a

Camberwell

$1,450,000

$1,300,000

11.5%

Shepparton & Goulburn

2.2

2.4

Reservoir

$542,500

$490,000

10.7%

East Gippsland & Wellington Shire

3.2

2.1

Port Melbourne

$997,500

$903,000

10.5%

Warrnambool & Western District

5.3

4.9

Mitcham

$640,500

$580,000

10.4%

Mildura & Mallee

n/a

1.8

Yarraville

$739,000

$670,000

10.3%

Albury-Wodonga

1.6

1.6

Latrobe Valley – South & West Gippsland

n/a

6.5

Regional Victoria total

2.7

3.7

2.9

3.5

State Victoria total

The Estate Agent ❘ December 2013

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Marketing Dina Ross, T20

How to master fear of public speaking

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DISCOVER YOUR INNER PRESENTER Many people feel they have to put on a false persona when presenting, thinking this makes them come across as more professional. But this can be perceived as bullish or even aggressively arrogant. Stripping away the need to “put on a tough face” and being honest and, above all, approachable allows you to discover the real “you”. This is not only more attractive to the general public but also allows you to interact more confidently with your peers.

Know your audience

How do you get your audience on-side straight away? Engaging stories, personal anecdotes, startling statistics or memorable quotes are great ways to capture your audience’s attention. Too many presentations suffer from being over-long, over-burdened by facts or too theoretical. Know your audience: tailor-make your presentation to suit their needs.

Do your homework

They say you only have 30 seconds to win over an audience. Consider your voice: do you speak in a monotone or do you vary your speech pattern with light and shade? Eye contact is also crucial; no one wants to feel left out. Be aware of gestures, too: pointing, for example, is often done for emphasis, but it can come across as intimidating. Rehearse, rehearse, rehearse. As Winston Churchill memorably said: “The secret to a great off-the-cuff dinner speech is three months’ preparation.”

I once trained a marketing manager who read his speech while looking at his slides, turning his back on his audience. I quietly asked his fellow trainees to walk out, so he was left speaking to an empty room 18

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hey say public speaking is the 10th most nerve-wracking item on the average person’s “Things That Terrify Me Most” list (coming, unsurprisingly, after death, illness, divorce, creepy crawlies and redundancy). And yet real estate agents are usually considered a confident group of individuals. Communicating enthusiastically about property portfolios, revving up crowds at auctions or conferring with peers and sales teams are intrinsic parts of their job description. However, the ability to share information clearly and with conviction eludes many real estate professionals. Speak to members of the public about their experiences when buying or selling a house, and you sometimes hear they felt agents were “too pushy” or even “arrogant”. That can translate into presentations as well. The dividing line between appearing passionate and confident or just plain insufferable is a thin one. But it doesn’t have to be this way. Presentation skills training from one of the many organisations which offer this service is an excellent way of ensuring style matches content. Whether you’re hosting internal or external events, speaking at an industry conference, receiving an award or making a corporate presentation, training can transform your public persona for the better. And even if you’re a seasoned presenter, you can still benefit from refresher training. All speakers are different, but as a presentation trainer, I’ve discovered they often share similar problems and anxieties.

Don’t risk a walkout

I once trained a marketing manager who read his speech while looking at his slides, turning his back on his audience. I quietly asked his fellow trainees to walk out, so he was left speaking to an empty room. If you read your slides, your audience will think you’re not in control of your material. Slides or video are prompts for your argument but should never take over your presentation or supplant you as the main focus.

Nerves your friend

Most of us get nervous before we present, but there’s nothing wrong with a touch of adrenalin – it keeps you on your toes. If you’re familiar with your material and have rehearsed and asked for feedback from colleagues, you’ll be in an excellent position to present with confidence. Think about the presenters you admire. What did they do to make you remember them? What you recall is probably their conviction, their enthusiasm and the fact they obviously enjoyed sharing information with you. If you believe in what you’re saying and communicate this to your audience, you will be well on your way to making memorable presentations.

The Estate Agent _ December 2013

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12/10/13 5:55 PM


Profile

Christine Nixon’s rise to the top is an inspiration for all women

Ex-police chief lays down law: Stay focused and go forward

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ictoria’s former police commissioner and chair of the Victorian Bushfire Reconstruction and Recovery Authority strongly advocates nurturing talent, particularly among women in corporate life. Having spent her whole career overcoming challenges and creating opportunities both for herself and many other women in leadership roles, she was especially qualified to talk about Surviving and Thriving in a Male Dominated Industry and was an exceptional speaker at the REIV Women’s Series earlier this month. “I run many workshops for women leaders in the making,” she says. “One of the first issues that I tackle is that of ‘limitation’. Women can and should reach their full potential. There are many myths regarding ‘top girls’. You commonly read articles in the media saying women don’t seek out leadership positions, or don’t want to be considered as leaders. Debunking these myths is one of the first steps to climbing the corporate ladder.” Christine Nixon admits she sought out leadership roles from a young age. The daughter of a police officer, she grew up in NSW and took every chance she could to make a difference, whether it was as a 15-year-old Sunday school superintendent or running a local youth group two years later. Undeterred by her father, who told her the police force was “not a good job for a woman”, she joined the NSW Police while studying part-time at Sydney and Macquarie universities. “When I became a police officer in the 1970s, there was limited scope for women in the force, but for me that was an impetus for success.” Winning a scholarship to Harvard, Nixon completed her Masters of Public Administration, and acknowledges her two years there created a firm foundation for growth, honed by a Leadership course at the prestigious Aspen Institute.

A firm believer in continual education and skill development, she added a multi-disciplinary quiver of strategic arrows to her bow, including organisational reform, risk management, corruption prevention, emergency management and human resource management. By the time she was appointed assistant commissioner in 1994, she had developed a formidable resume.

Women need to look at their scorecard, recognise and celebrate what they’ve achieved, plan ahead, seek mentors, look to the future. I also believe in the adage, ‘To whom much is given, much is expected’ “Change is never easy,” she admits. “When I started in the NSW Police Force, there were 130 women officers and 8000 men. However, by building support networks, enlisting advocates, creating an environment where change can flourish, obstacles can be negotiated. “By the time I left, women accounted for some 20 per cent of the force.” This optimistic outlook led her to apply for the role of chief commissioner of Victoria Police, a job she didn’t believe she would get. “But I thought – why not? I had the

experience and I had something very positive to offer.” She was appointed in 2001. Nixon is proud of the changes that happened under her leadership at Victoria Police. A monolithic 19th century organisation was transformed into a 21st century force. “Victoria Police is more agile, flexible and effective today,” she said. “Under my stewardship crime rates diminished, there was a reduction of serious accidents on roads and more women saw the police as providing a real career path.” Yet Christine Nixon has been both praised and criticised. Her time as chair of the Victorian Bushfire Reconstruction and Recovery Authority was fraught with controversy. She was vilified by the media for her actions and she admits it was a difficult time for her and her family. “Over the years, I had developed a pretty tough skin, but I am human,” she said. “Still, I learned through that experience. You cannot define yourself through your failures. You need to build on them, reflect, consider, recognise what is fact and what is ‘spin’, develop a clear focus and move forward. “At times like this your support networks are vital. They stay with you and encourage you to carry on.” Today, Christine Nixon is as entrepreneurial as ever. She has written a book, Fair Cop, and in addition to her workshops, she’s in demand as a consultant both for government and the corporate sector, adding this to a busy public speaking schedule. “Women need to look at their scorecard, recognise and celebrate what they’ve achieved, plan ahead, seek mentors and look to the future. I also believe in the adage, ‘To whom much is given, much is expected’.” Find out more about the REIV Women’s Series: reiv.com.au/inspire The Estate Agent ❘ December 2013

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Awards

A touch of Logies as industry stars share their big night The 2013 REIV Awards for Excellence were a sell-out as 1200 gathered at the Crown Palladium to celebrate. By Annie Reid

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ictoria’s most prestigious property night celebrated another year of shining stars at the REIV Awards for Excellence 2013. More than 1200 industry professionals gathered to wine and dine at the Crown Palladium ballroom and battle it out for the annual property awards. The sold-out event had a Logiesesque look and feel this year, with a 20m screen welcoming guests as they entered the ballroom, and livestreamed videos and voiceovers throughout the evening along with host and television personality James Mathison working the tables with banter and laughter. Jodi Sanders, REIV’s general manager (learning and development) said the event was fantastic. “We also re-oriented the room so there was no bad seat and everyone felt they were closer. It was a lot of fun and many people said it was the best they’d ever been to,” she said. Enzo Raimondo, the REIV’s chief executive officer, said: “With finalists in 30 categories, the awards were hotly contested. Receiving an REIV Award for Excellence confers immeasurable benefit to the career and business of individual professionals and agencies.” With Mathison keeping the awards moving along, guests were also encouraged to hit the dancefloor to popular band Popcorn. Gary Peer, director of Gary Peer & Associates, had plenty of reasons to dance. The group picked up four prizes: the Corporate Promotion Award

Big night: REIV CEO Enzo Raimondo.

(Multiple Offices), the Innovation Award, the Communications Award and one of the most highly sought of the night – the Large Residential Agency of the Year Award. All 40 staff attending jumped up on stage with Peer to accept the award, with Mathison’s running slide on his elbows proving a real crowd-pleaser. “It’s an incredible thrill,” Peer said. “It was actually our first year of entering the awards and I was so proud to be up against the juggernauts of the industry with offices everywhere. “At the end of the day we get to recognise the whole team.”

We have a lot of fun on camera and give each other a bit of a hard time – all tongue in cheek, of course! 20

No one has been with him longer than his business partner and oldest friend Phillip Kingston. The two launched the company in 1986 with a shared vision to create a thriving, local agency where they both grew up. Now, 27 years later, they have added a new office in Inkerman St, St Kilda, and new business partner Jeremy Rosens. Peer credits the group’s success in part to their “innovative, different and entertaining” weekly television program GPTV which is streamed through their website and includes a market wrap and light entertainment. “We have a lot of fun on camera and give each other a bit of a hard time – all tongue-in-cheek, of course!” Another agent held in high regard is industry stalwart Geoffrey Crowder, who has sat on the REIV member council for 45 years, and is a fellow of the Real Estate Institute of Australia and fellow of the Australian Property Institute. He won the President’s Award, presented by REIV president Neville Sanders. Crowder was a former director of his family business Crowder Real Estate. Launched in 1952, it’s credited with establishing much of the Frankston CBD and development on the Mornington Peninsula before he sold it about seven years ago. His son, Michael, joined forces with Matt Nichols, from another successful real estate family, to establish Nichols Crowder Property Solutions in 2007. Geoffrey Crowder joined as a part-time consultant on commercial property and special projects. Today, he celebrates 54 years in the industry. “We’ve always fought tooth and nail to not only meet standards, but lift them,” he said.

The Estate Agent ❘ December 2013

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Oc, opo Awards

It was one hell of a shock. Michael had tricked me into going and everyone already knew about it for two weeks. I had absolutely no idea He’s also worked hard to gain the respect of staff, as well as the other members of his family. “It’s important to be there on your merit and working with your family fosters the sense of ongoing relationships you work towards with your clients,” he said. As for winning the award, Crowder was kept in the dark. “It was one hell of a shock,” he said. “Michael had tricked me into going and everyone already knew about it for two weeks. I had absolutely no idea.” These days, Crowder is happy living with his wife, horses and dogs on a 23 acre farm in Mt Eliza. Barry Plant Manningham’s director, Spiro Drossos, also knows what it’s like to step into big shoes. He took over from one of the biggest in the business – Barry Plant – in 2009. Drossos took out the Residential Salesperson of the Year (Principals) Award, while his colleague Eva

Evangelidakis, won the Corporate Support Person of the Year Award. “I’m very proud of my office both ethically and professionally. It’s very exciting to be recognised by the REIV and it’s important for staff to be recognised too,” Drossos said. With 11 years’ experience with Barry Plant Manningham, Drossos has spent the last four of those developing, sustaining and growing the business. Part of his strategy was to open an office in Ringwood late last year and focus on coaching and mentoring staff. He says the biggest challenge has been changing to a strategic role after sales. “We are the market leader in the municipality and I feel a lot of pride in my work. Some of my team were also finalists, and it’s great to see the guys flourish, lift and become successful.” The group’s Manningham and Ringwood offices occupied three tables

Livewire: Awards host James Mathison.

at the awards. “We had a brilliant time,” Drossos said. “It was run really well and there was enough time afterwards too to enjoy it all.” For many of the other awards presented, a clear trend emerged: marketing with strong social media and innovative technology strategies. Continued on page 22

The Estate Agent ❘ December 2013

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Awards

Clockwise: Jodi Sanders from REIV Learning and Development with Eva Evangelidakis of Barry Plant Manningham; Gary Peer and team; Senior Auctioneer or the Year Jeremy Tyrrell from Ray White Corporate; Geoff Crowder and team; Salesperson of the Year Spiro Drossos from Barry Plant Manningham. Continued from page 21

Renee Reynolds’s leasing business, Release Property Management (Geelong), won the Small Residential Agency of the Year, finding favour for its progressive systems and procedures. The agency offers features such as QR codes on its boards, enabling prospective tenants to access property information instantly, as well as visual walkthroughs on properties. It also produces in-house videos released through YouTube featuring property inspections and condition reports. “We were the first agency in our region – Geelong – to introduce QR codes. We like to be different and keep challenging ourselves,” Reynolds said. So far the strategy is working. Reynolds has opened an office closer to Melbourne in Lara, and has expanded

her team to 12 since launching six years ago. Her team has now managed 1000 properties and also increased its market share. The online exposure has opened the door for interstate and overseas inquiries. Her leasing manager, Claire Sim, also won an award this year – the Achievement Award. “It’s just great recognition,” Reynolds said. “It gives the staff a great boost and acknowledgement for their hard work for the year.” From its head office in Canterbury, Fletchers is also pushing the technology envelope, according to communications co-ordinator Sarah Lowry. Fletchers won Website of the Year, following a complete overhaul and relaunch of its site last year. Chris Chapman, senior associate at

We were the first agency in our region – Geelong – to introduce QR codes. We like to be different and keep challenging ourselves 22

Fletchers’ Eltham office, won Residential Salesperson of the Year (Non-Principals). “Our internet strategy is really important to us. We have a live feed from our Twitter and Facebook accounts and allow more shared links for clients to get in touch with us,” Lowry said. Fletchers also has a strong video focus through its television channel – Fletcherschannel.tv – with more than 90,000 views on YouTube. Featuring property videos, team profiles, market reports and corporate section, the videos also include interviews with property vendors and auctioneers. The content is shared through LinkedIn and Google+, with the overall look adhering to a responsive design for easy use on different devices. “We take any opportunity to film and it’s a great way to connect with buyers and potential vendors, as well as allow the consumer to have more control. As a result, we have a high

The Estate Agent ❘ December 2013

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Oc, opo Awards

Left to right: John Piccolo, Corporate Promotion Multiple Offices Award, Woodwards; Novice Auctioneer of the Year Nicholas Goold of Hockingstuart Glen Iris; Daniel Wolman from Colliers International won Young Agent of the Year; Medium Residential Agency of the Year, Jellis Craig Doncaster.

number of return visitors as well as more opportunities for appraisals.” Director of Jellis Craig Doncaster Andrew Keleher has looked even further afield to engage staff. The agency picked up the Medium Residential Agency of the Year Award. “We have pledged through our corporate office to help raise money to build an orphanage in Taiwan,” Keleher said. “Our business is very focused on

our staff. We try to build our culture and help each other out.” Other initiatives included taking staff for two nights to the Gold Coast, as well as presenting job-sharing opportunities. The agency launched in 2011 and won the same award last year, as well as increasing its staff from 11 to 18. “We have improved from zero to 15 per cent market share in a couple of years,” he said.

As the well-fed and well-heeled crowd headed home after a fun-filled evening, thoughts turned to 2014. Jodi Sanders encouraged people to start thinking about next year’s awards. “We really encourage people to enter the awards. They offer a valuable experience from a learning and development standpoint, and can really help with planning for the following year. But book in early, because it may sell out again,” she said. For more photos of the awards night see pages 48-49.

Another weekend of Open Houses making you feel like this? Then consider a new career as a Vendors Advocate. • Would you like to focus more on listing and negotiating, as well as get your weekends back? • Are you passionate about bringing a better class of agent to a wider range of vendors? We’re looking for an experienced Estate Agent or Agents Representative, with the highest of integrity to join our rapidly expanding and exciting business. We receive over 7000 calls a year from vendors enquiring about our service. Remuneration is the best in the industry and further opportunities exist for career minded people. If you’re keen to put more flexibility, variety, professionalism and fun into your real estate career, give Ben Reid from Ian Reid’s Vendor Advocacy Australia a call for a confidential discussion today on 9430 0000 or 0433 95 77 33. The Estate Agent ❘ December 2013

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PUTTING THE 'EDGE' IN KNOWLEDGE

Continuing Professional Development (CPD) equips you with skills, expertise and experiences to help you achieve the best possible outcomes. The REIV offers a diverse range of specialty courses, training and events. You will be awarded CPD points for participating in both formal and informal learning activities. Find out more: www.reiv.com.au/CPD

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THE STANDARD FOR SUCCESS

12/10/13 5:47 PM


The Prophet Besa Deda Chief Economist, Bank of Melbourne

Housing’s steady climb to continue Melbourne, Victoria strong performers

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ptimism surrounding the Australian housing market has built steadily over the past year. This more buoyant mood has helped fuel a recovery in house prices across most of the country. Melbourne is one of the stronger capital city performers for growth in housing prices. Dwelling prices rose by more than 6 per cent in the year to November for Melbourne, according to the latest data. Only Sydney and Perth recorded stronger growth. The current strength of the Melbourne housing market may be a surprise for some because fears of oversupply have been bandied about. There certainly has been strong building activity in Victoria in recent years, which is in contrast to many other states. Indeed, more dwellings have been built in Victoria than in any other state or territory. This building activity in Victoria over recent years has contributed to a small oversupply of dwellings in Melbourne, namely for apartments in some pockets. However, overall demand for housing remains robust with the acceleration of population growth in Victoria. The low-interest-rate environment is also spurring demand. It was a major factor behind the current upswing in housing. Low interest rates have also driven an improvement in the affordability of housing. Lower borrowing costs have also increased the attractiveness of housing as an investment, along with the prospect of capital gains now that house prices are increasing. Investor demand has received a lot of attention as a major driver of the current upswing in housing, particularly for Sydney. There has been plenty of investor interest in Victoria, too. Annual growth in new loans for investor housing was running at above 25 per cent in the year to September in Melbourne. By comparison, growth Australia-wide was over 20 per cent.

Indicators suggest the current upswing in housing has further to run. Auction clearance rates in Melbourne are running at close to 70 per cent, up on the clearance rates of around 60 per cent a year ago There is, however, some risk investor demand for residential property in Melbourne will begin to cool. Rental markets are not as tight as they once were and vacancy rates have edged higher. Taken with higher values for homes over the past year, rental yields have fallen and would make residential property less attractive for those investors looking for highyielding assets. However, we expect the hope of capital gains will continue to sustain investor interest in the Melbourne market. Owner-occupier demand is another important leg in the housing recovery, and is also beginning to pick up. We think that owner-occupiers will take a more important role in supporting housing in the coming year now that housing is more affordable. It appears Melbourne house prices will end the year around 6 to 8 per cent higher. Next year, we expect the Melbourne housing market to post gains of around 5 to 8 per cent.

Near-term indicators suggest the current upswing in housing has further to run. Auction clearance rates in Melbourne are running at close to 70 per cent, up on the clearance rates of around 60 per cent a year ago. We believe the Reserve Bank will not cut the cash rate any further. But we do expect the Reserve to keep rates low, which means the housing market will remain well supported next year. We do not expect a change in interest rate settings from policymakers at least until late 2014. Over the next six months or so, the unemployment rate should still drift higher – in Victoria and nationally. The slightly higher unemployment rate could limit the gains in house prices, but low interest rates should ensure further increases in dwelling prices are in prospect. Residential housing next year will continue to be bright spots in the Australian and Victorian economies. The Estate Agent � December 2013

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Leasing

Robust disclaimers provide level of defence in disputes Relying on third-party services presents danger if their information is wrong or challenged. By Nancy Rainbird

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ow did a discrepancy in the listed size of a property lead one agent to court? It is so easily done. You check the different pieces of marketing material, sign them off and distribute them. But what happens if the property dimensions are not consistent in each item? Just what are the ramifications for an agent in this situation? In a recent case, a client entered into a contract for sale, but one business day after the auction, the buyer contacted the agent to explain that his lawyer’s office had discovered a discrepancy between the actual size of the land and the stated size of the land in the flyer

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accompanying the advertising brochure for the property. Some time before the sale, the agent had bought property information from a well-known online provider. The agent relied on this online information when calculating the width of the property and these incorrect calculations appeared in the

Care should be taken when using information provided by thirdparty service providers. You have to come to your own conclusion about dimensions of property

promotional flyer in question, but nowhere else. The flyer did happen to contain a disclaimer and warning, and the contract contained the correct boundary measurements (in feet). In addition, the contract included a disclaimer. However, the general principles that apply to misleading and deceptive conduct claims arising in a real estate context are that although the basic principle of property law is caveat emptor (buyer beware), a real estate agent will be responsible to the buyer for any loss flowing from a misrepresentation made by the agent.

The Estate Agent â?˜ December 2013

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Oc, opo Leasing

Although the facts differ between the two cases, they both go to prove that agents should always use robust disclaimers This is regardless of the fact that the contract for sale includes clauses to the effect that the buyer can not claim compensation for any alleged deficiency in the area of measurements of the land. An agent, however, is not liable if the buyer’s actions break the chain of causation, or if it is shown that the buyer did not rely on the representations of the agent. The courts, including the High Court, have made it clear that every case must be considered on its own facts. In the current claim, the misleading description of the land arose from inaccurate information provided by a third party. The leading case in the area is the High Court case Butcher v Lachlan Elder Realty Pty Ltd [2004] 218 CLR 592, where the agent had reproduced a

surveyor’s diagram that was (unknown to the agent) inaccurate. Although the facts differ between the two cases, they both go to prove that agents should always use robust disclaimers. They must ensure that the disclaimers are large enough to be read, included on every document that contains any information about a property and make it clear that the agent is relying on information provided by a third party and has not checked the accuracy of that information. Regardless, care should be taken when using information provided by third party service providers. Ultimately, you have to come to what is essentially your own conclusion about the dimensions of property.

Third Party Insurance

❚ Always use robust disclaimers. ❚ Ensure the disclaimers are large enough to be read. ❚ Include the disclaimers on every document that contains any information about a property. ❚ Make it clear the agent is relying on information provided by a third party and has not checked the accuracy of that information.

Disclaimer

While care has been taken preparing this article, and the information contained in it has been obtained from sources that Realcover believe to be reliable, Realcover does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose that the article may be used. Realcover accepts no liability for any loss or damage (whether caused by negligence or not) resulting from the use of this article.

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Leadership

Bridging the generation gap D

emographics are reshaping management. The managers are getting younger. Demographers say Generation X and Nexters make up about 45 per cent of the workforce. As a group, these 18-to-41 year olds equal the same percentage of the workforce the Baby Boomers compose. The difference is that the boomers are more likely to be retiring over the next few years.

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The result: more boomers will be working for younger managers. Some of them might end up working for managers young enough to be their children. This can lead to tensions. A 2009 study by Mary Hair Collins, Joseph Hair and Tonette Rocco found older workers expect less from their younger supervisors than do younger workers. Older workers also don’t think much of the management skills and leadership abilities of these younger bosses. Peter Cappelli, a professor at US business school Wharton, has found older workers are more likely to be discriminated against by younger managers. “If you look at the research on older workers, you see an incredible amount of discrimination against them, bigger than race, bigger than gender,’’ Cappelli said. A case in point is Allan Gibson, a 65-year-old who retired from fulltime employment almost three years ago. Gibson had a career that spanned 47 years across three of the major financial institutions – Westpac for about 34 years, eight years with the ANZ and then four years with the CBA. “It was probably not until I reached the age of around about 50 that I started to encounter a shift between working for older managers, older than me at the time, to what then

emerged as a changing workforce in terms of younger managers in positions,’’ Gibson said. “I have to admit it never worried me, although at times, I sensed a degree of immaturity by some of those managers.” He says immaturity often came out

Letting go of age stereotypes can create a better working environment. By Leon Gettler as a lack of awareness of the bigger picture. They would see a shortterm benefit without a long-term assessment of what else needed to happen. “They were being driven by a marketing desire to achieve a desired outcome, usually with a sense of personal gain by way of bonus or incentive, and making them look good at the expense of good management,” Gibson said. Juliet Bourke, a national lead for diversity inclusion and consulting partner at Deloitte, says managers, and for that matter the older workers, need to leave stereotypes at the door. “People often relate to each other in terms of age, and age is a proxy for something else,’’ Bourke says. “That something else being hierarchy, we assume if someone is older we should be giving them greater deference. It can also be the stereotypes around young and dynamic and creative versus ‘can’t teach an old dog new tricks’.”

on for young and old Ben Willee, the general manager of advertising agency Spinach, says smart companies would see the older worker as a valuable resource. Unusually for an advertising agency, 80 per cent of the Spinach workforce are in their late 30s and above and 15 per cent are in their 50s. He says with training budgets cut back since the GFC, older experienced workers are now more critical than ever. “We’re finding in the advertising industry there is often this desire to do something new for the sake of doing something new at the expense of doing something right, that is proven to sell product,’’ Willee says.

“The older workers are really good at what we call “crap testing”. Older workers are good at saying: ‘What’s the benefit for consumers? How does that help me sell more product and change perceptions?’ “Smart companies recognise the value of that experience and choose where and when to overlook that and calculate what risks to take. Management gurus tell you that the most successful and productive teams have that combination of all those personality types and here at Spinach we try very hard to have a range of skills and personality types because it means the best results for your clients.”

The Estate Agent ❘ December 2013

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REI20011_A4_EA Mag_b.eps

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Put your clients ahead of the game

In real estate, market knowledge is everything. Imagine how your clients will feel when you give them the inside word on real estate results, which puts them ahead of the game. Simply direct them to soldtoday.com.au to sign-up for free property email alerts every Saturday. Now that’s a result for both them and you too.

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Management

The decision makers

CEOs reveal some of the most successful business decisions come from having great staff. By Amy Birchall

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he most crucial role in any enterprise is usually that of the chief executive, because she or he is responsible for determining strategy and providing leadership. And while the choices they make may not always have ideal outcomes (as the leadership teams at Lehmann Brothers, General Motors – before their 2009 Chapter 11 bankruptcy – and Kodak may attest), each business leader has a unique approach to decision-making. Take Amazon founder Jeff Bezos, for example. He believes informed decisions are so important he makes his senior executives read six-page printed memos, called narratives, in silence for up to 30 minutes at the beginning of meetings. He claims this helps the company make better decisions because it guarantees the group’s undivided attention and promotes clear thinking. “Full sentences are harder to write. They have verbs. The paragraphs have topic sentences. There is no way to write a six-page, narratively structured memo and not have clear thinking,” Bezos told Fortune. The late Apple chief executive Steve Jobs believed good staff needed to be trusted to make decisions, rather than allowing only those at the top to call the shots. “If you want to hire great people and have them stay working for you, you have to let them make a lot of decisions and you have to be run by ideas, not hierarchy. The best ideas have to win, otherwise good people don’t stay,” he said. We asked CEOs, start-up founders and global directors about how they make decisions. Some, such as the newly appointed Australian global CEO of research agency Millward Brown, Travyn Rhall, said the

biggest challenges were making and implementing decisions quickly. Others said they based their decisions on extensive consultations with employees. None admitted to acting on gut feeling or intuition alone.

“Stay true to your vision and the principles on which the business is founded”

Rebecca Law, founder, Nourish Co

Difficult decisions are no stranger to social entrepreneur Rebecca Law, who abandoned a high-level corporate career to found marketing business Nourish Co. midway through last year. “I was a senior marketing manager, and had the opportunity to take a significant promotion at a senior leadership level. I realised if I took the promotion, I’d be on that ladder forever. So I decided to jump off,” she says. Within six months, she went from earning nothing to bringing in six figures, and says smart decisions have played a key role in her success.

“Two years ago, I developed a set of principles that both define how I live my life and the foundations of our business. One of these principles is courage – too often I have seen decision-makers take a safe position or avoid making tough decisions at the expense of great opportunities. “At Nourish Co., we make decisions that might not always seem sensible, but as long as we can say we’ve acted with courage we’re happy to take the chance,” she says. “Stay true to your vision and the principles on which the business is founded, and you won’t ever regret a decision, even if occasionally they don’t turn out as you planned.” An emphasis on consultation throughout the decision-making process is particularly important for Stephen Borg, global director of strategy and market development at electronics manufacturer AOPEN. “The decision process varies depending on the urgency and impact of the decision, but at any level I always encourage collaboration, whether that be with clients, partners or other team members,” he says. “Our business is fast-moving, so decisions often need to be made quickly. This means you have to rely on a mixture of gut feeling and a deep understanding of the market to make a decision.” Borg leaves difficult decisions until after morning exercise. “I get most clarity during that time and it takes away some of the emotion of the decision. It helps me to avoid knee-jerk reactions,” he explains. Founder of financial product comparison website Finder.com.au Fred Schebesta adopts a similar

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Management

The leaders Rebecca Law

Gary Swart

Dean Ramler

Social entrepreneur and founder of marketing business Nourish Co.

CEO of the world’s largest online workplace, oDesk

Chief executive of Australia’s leading online furniture retailer, Milan Direct

Stephen Borg

Fred Schebesta

Tom Howard

Global director of strategy and market development at electronics manufacturer AOPEN

Founder of financial product comparison website Finder.com.au

Co-founder of travel search website Adioso

approach. He asks others for input before making decisions, particularly when the outcome will directly affect them. He also seeks evidence that the outcome of the decision will align with company goals. “If there’s no evidence to back up this decision, it never hurts to create some and conduct a small experiment to guide the final decision,” he says. Gary Swart, chief executive of the world’s largest online workplace, oDesk, believes making any decision is better than no decision at all. Whether the outcome is positive or negative, he says that once a decision is made, “everyone on the team must get behind it”. Other business leaders, such as Dean Ramler, chief executive of Australia’s

MAKE DECISIONS EASIER Consider more than one alternative option. Ohio State University professor Paul Nutt studied strategic decisions and found leadership teams considered just one alternative option in 70 per cent of important strategic decisions. This is despite evidence that the odds of making the right decision are improved by 6 per cent when considering two alternatives rather than one. Recognise uncertainty and doubt. McKinsey & Co director Olivier Sibony says: “Corporate cultures and incentives reward the kind of decision making where

leading online furniture retailer, Milan Direct, claim that familiarity with every aspect of the business means it is easy to make smart decisions.

“You have to rely on a mixture of gut feeling and a deep understanding of the market to make a decision”

Stephen Borg, Global director of strategy and market development, AOPEN

“When team members come to me for assistance, I can quickly make a decision that steers Milan Direct in the right direction because I’m all over the finer details of the business,” Ramler says. “Some people would call this ‘gut feeling’, but I would say it is more about an understanding of your

you take risks and show confidence and decisiveness, even if sometimes it’s really over-confidence.” Create an environment where people can speak up. Sibony explains: “If you’re an experienced executive, you’ve already influenced your people, consciously or unconsciously … ask subordinates if anyone disagreed with them about a recommendation they bring to you. If everybody agreed, that’s a sign that there may have been ‘groupthink’.” Adapted from McKinsey Quarterly, April 2013

business that allows for quick decision making.” The decision-making process can also vary depending on a company’s size and revenue. For Tom Howard, co-founder of travel search website Adioso, making decisions on a lean start-up budget presents its own unique challenges and opportunities. “When you’re cashed-up, it’s very easy to make decisions that involve throwing money at problems. But by staying scrappy and lean, you can only ever make decisions that cost little money, and so all you have to think about is which of your options will deliver the biggest upside,” he says. Adioso, which was founded in 2008 and received seed funding from Silicon Valley and travel industry investors, almost went broke after its founders were unable to access the airline data required to build the product. Howard says looking for the best outcome with the fewest downsides helped keep the business afloat. To compensate for a lack of airline data, they redesigned the product. “When faced with the decision of whether we should persist in building the company, it actually turned out to be pretty easy – the cost of continuing was just more of our time and enough funds to cover our living expenses, while the upside was we’d be ahead of the curve in the travel market and be in a position to generate huge growth and success.”

Reprinted from Management Today, an Australian Institute of Management publication.

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Superannuation Craig De Vries, Superannuation Division of Sothertons Melbourne

Buying property through super: Big benefits but there are strict rules

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s investors flock back into the property market, one of the more popular means of purchase is using self-managed superannuation. However, while it provides a means of using retirement savings to develop a property portfolio there are several accounting and legal issues that need to be addressed. Many business owners, and in particular owners of real estate businesses, will have a self-managed super fund (SMSF). By using the superannuation legislation to their advantage and giving consideration to their fund’s investment strategy, members of SMSFs may acquire a property under a limited recourse borrowing arrangement. A limited recourse borrowing arrangement allows assets of an SMSF other than the property being acquired to be protected if the fund is unable to meet its borrowing obligations. Where the balance of the borrowing arrangement is greater than the value/ sale proceeds of the property, the lender’s recourse will be limited to the value/sale proceeds of the property. However, banks may require additional security outside the SMSF. Taxpayers looking at setting up a SMSF should be aware of the accounting, taxation and audit requirements of running a fund. To ensure SMSFs are cost-effective many commentators believe $250,000 is generally the accepted minimum balance for setting up a fund. This will depend on personal circumstances. Superannuation funds receive concessional taxation treatment which increases their after-tax buying power. As superannuation funds are subject to income tax at 15 per cent on earnings and contributions, and 10 per cent on discounted capital gains, their after-tax buying power is considerably higher when compared to other holding structures such as companies,

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trusts and individuals. When super funds and their members start a pension phase, earnings supporting the pension will be exempt from tax, further adding to the benefits of investing in SMSFs. When combining the after-tax buying power of super with the lower taxation rates, the ability to grow super at a faster rate is more effective through compounding earnings or compound interest. For example with an after-tax earnings rate of 6 per cent a year, the fund’s capital will double every 12 years. Banking and lending institutions are very active in promoting their services to SMSFs and will usually restrict loanto-valuation ratios to 65 per cent of the property being acquired. While a fund with assets of $250,000 will be eligible to acquire a property with a

When super funds and their members start a pension phase, earnings supporting the pension will be exempt from tax, further adding to the benefits of investing in SMSFs market value of about $600,000 using a borrowing arrangement, trustees will need to be aware of the upfront compliance costs. The flexibility of borrowing arrangements allows SMSFs to borrow from related parties which may be related companies, discretionary trusts or family members. Such borrowing arrangements can be tailored to specific needs of properties being acquired and also provide an opening to additional taxation planning opportunities. Before entering into a borrowing arrangement, trustees of SMSFs should consider the cashflow implications of the rental returns and plan their debt reduction strategies.

Based on the loan-to-valuation ratios and rental yields for commercial and residential properties, some SMSFs may be in a situation where their property is negatively geared, resulting in a cash flow deficit. As with any good negative gearing strategy, the long-term rental returns and capital growth of the property must exceed any rental losses, with the goal of receiving positive cash flow rental returns in the future. The features and limitations of a limited recourse borrowing arrangement generally appeal to property investors rather than property developers. The super legislation places restrictions on modifying properties held under borrowing arrangements to ensure the integrity of the super system. Restrictions are governed to ensure borrowed funds cannot be applied to improving a property as distinct from repairing and maintaining the property. Repairs and maintenance or improvements may be funded from cash held by the SMSF but any improvements must not fundamentally alter the property. Common examples of situations which are not permitted under a borrowing arrangement include subdividing a block into multiple titles, building a house on a vacant block and demolishing a house to be replaced with strata title units. Where trustees of SMSFs are considering improving or substantially altering the property these may only become permissible when all borrowings have been repaid. The ability to borrow through super funds to buy property has been permitted since September 2007. Many property owners before then were restricted to holding their geared properties in discretionary trusts or their personal names while their SMSFs would hold their un-geared properties. Property owners outside super can transfer the ownership of a commercial property from a related party to a SMSF.

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Superannuation Oc, opo

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The features and limitations of a limited recourse borrowing arrangement generally appeal to property investors rather than property developers. The super legislation places restrictions on modifying properties held under borrowing arrangements These transfers are becoming a regular feature of many tax planning strategies and are generally applied to situations where the property is unencumbered. Where trustees of an SMSF are considering transferring a commercial property from a discretionary trust to an SMSF, the property needs to be distributed to the beneficiary or beneficiaries of the trust first. This will trigger capital gains tax

and associated GST and stamp duty implications should be considered to determine if exemptions are available. On distributing the commercial property to a beneficiary or beneficiaries of a trust, members of the SMSF must consider how the transfer of the property will be executed. This transfer from the members to the SMSF must comply with respective contribution limits and acknowledge

any additional GST or stamp duty implications which may arise. The transfer of the property may be facilitated by using a mixture of in-specie contributions, capital gains tax exemptions (in limited circumstances) or a limited recourse borrowing arrangement. Where transfers are facilitated under a related party or unrelated party loan, stamp duty will need to be carefully considered to ensure members are aware of the costs and benefits with the transfer. The above comments are not intended as advice and you should seek advice from your taxation professionals. The Estate Agent â?˜ December 2013

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Best Practice

Get it in writing: avoid payouts and litigation Spencer Pascal and Kristen House from TressCox Lawyers explain how agents can protect themselves against liability

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Offers made on a property You’re engaged to sell the vendors’ property. The property is on the market for several months as a private sale and some offers are made well below 34

the write way…

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o much of an agent’s work depends on verbal communication, but agents need to recognise the importance of the written word in self-protection. Without the written word, questionable claims against an agent can suddenly have foundation. In our work defending claims against agents we see a heavy reliance on verbal communications. When it comes to a dispute, without a written record agents are at risk of the communication being considered as not happening. Agents need to consider how best to communicate in certain circumstances and whether communication needs to be made in writing, often in addition to a verbal conversation. This can be as easy as a simple follow-up email to a person confirming the telephone conversation or making a file note of a conversation. By doing so, an agent has sufficient evidence to substantiate what was communicated to another party, if ever doubted. We recognise it simply isn’t practical to put everything in writing, so agents need to employ judgment when deciding whether to communicate verbally or in writing. When information being conveyed or received is critical to a transaction, we recommend it be communicated in writing, or if verbally, a detailed file note kept of what you have informed the other person. Based on previous claims, as well as common questions from agents, we have identified some typical circumstances agents may encounter.

We would hope you would be able to produce some sort of written documentation, be it a letter ... or a note on the back of a scrap of paper the asking price. You telephone the vendors when these offers are made and the offers are rejected. Due to a lack of interest in the property the vendors take the property off the market. Several months later the vendors relist the property for sale and the property is sold at auction below the asking price. The eventual sale price was also below several of the offers made when the property was initially listed for sale. The vendors claim you had not notified them of two of the best of the offers made during the private sale period and that if they had been notified, they would have accepted one of those offers. The vendors then seek compensation for the difference between the best of the offers made and the eventual sale price. Your ability to substantiate that you had communicated the offers to the vendors depends on your

records of the communication. Here, we would hope that you would be able to produce some sort of written documentation, be it a letter to the vendor confirming the offers or a note on the back of a scrap of paper on your desk, to substantiate that you conveyed the offer to the vendors. Without any documentation the vendors’ claims are likely to be proven. Property management instructions You have been provided with a power of attorney to act on behalf of an overseas owner as property manager for his premises. You enter into a new lease on behalf of the owner as the current lease is due to expire. During telephone conversations with the owner you understood that you were to re-let the property, however, the owner is now claiming that he never gave you those instructions and he actually intended to move into the premises at the expiry of the current lease. The owner is now looking to you to make payment to the new tenant to end the lease, as well as meet his costs of living elsewhere in the interim. Again, here a simple email confirming your instructions or note of your telephone conversation would be your saving grace, instead you are facing a payout to an unhappy owner. Write to protect yourself and your clients. Simple practices of writing a letter, email, file note, or perhaps by requiring a client to initial a document can save you a large headache and lengthy litigation, and will be extremely persuasive to a court when the he-said, she-said arguments have reached boiling point. If you want to protect yourself, get it in writing.

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Oc,Best opo Practice

Tripping over a step: who is to blame? Here, the outcome of a claim against a Victorian agency is reviewed. The claimant fell during an open-house inspection Obviously, the agency had no control over the design and presence of the step inside the vendors’ home The claimant’s claim was for NonEconomic Loss under Part VBA of the Wrongs Act 1958 (Vic). The vendors’ insurers also received notice of the claim. In her statement of claim, the claimant alleges that the vendors and/or the agency owed a duty to the claimant to ensure her safety whilst inspecting the premises. The claimant alleges the agency and the vendors breached that duty by: ❚ Creating or permitting a hazard (the step) to exist on the floor surface at the premises (the claimant alleges that the step was “hazardous”, “difficult to see” and/or “unexpected”); ❚ Failing to take adequate precautions for the safety of the claimant; ❚ Failing to have in place any warning or other visual cue (such as a safety strip at the edge of the step); ❚ Failing to provide a handrail adjacent to the step; ❚ Failing to have any or any adequate system in place to warn the claimant of the presence of the step; and ❚ Permitting “large numbers” of people into the premises, the presence of which impeded the view of the step.

The only area the agency could be exposed to liability, in our view, could have been a finding of liability in that the hallway in which the accident happened was congested by a large number of people and consequently she was unable to see the step on which she fell. Hardly a strong case. Overall we were of the belief that the claimant would face difficulty in establishing liability against the agency. Obviously, the agency had no control over the design and presence of the step inside the vendors’ home. In those circumstances, we would argue that any liability for the claimant’s injuries should rest with the vendors. The court may have taken the view that in deciding to hold the auction inside the property the agency should have employed some safety measures to draw the attention of persons gathering inside the home to the presence of the step.

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Facts and circumstances The agency’s employees were the listing agents for the residential property during the auction campaign. The agency’s director decided to hold the auction inside the property because of very hot weather. The weather conditions gave an opportunity to “show off” the property’s air-conditioning to prospective buyers. There had been a large amount of interest in the property during the marketing campaign. Photographs obtained from the agency’s files show the property was a very attractive, renovated period home. There was a crowd of 30-60 people inside the home immediately before the auction. The claimant attended the property on auction day with her daughter. She had not inspected the property during the auction campaign. She was known to the agency as a local who often inspected homes. She had not registered an interest in buying the property with the agency. The claimant says she fell on a step in the entrance hallway of the home. None of the agency’s employees witnessed the incident. On entering the property to investigate the source of a noise the agent observed the claimant being helped up from the floor near the step by her daughter. The agent inquired if she was OK. The claimant said she was fine and said words to the effect she didn’t see the step. The agency later received a letter from the claimant’s solicitors. The letter stated the claimant “fell while the house was open for inspection and auction. The inspection and auction were managed by your business”.

In the end the claim was settled for a sum that was a lot less than originally asked for. Terms are not to be disclosed and the court records show an order that the claim was dismissed as against the agency.

The Estate Agent ❘ December 2013

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Best Practice

Balancing act to get price right for agencies In June’s edition of The Estate Agent, Robert Lissauer from Sothertons looked at how agency businesses are valued. This is his conclusion Asset-based valuation approach The asset-based approach determines the value of the business, taking into account the market value of the underlying assets and liabilities. This approach includes the following: ❚ Going-concern method; ❚ Orderly realisation methodology; and ❚ Liquidation method. The going-concern method values the underlying assets by assessing the market value of each asset and liability on a going-concern basis. This may include incorporating a value for intangible assets not recorded on the balance sheet (brand names, intellectual property and other identifiable intangibles) to reflect the profitability, market position and attractiveness of the business. This approach is commonly used where the value attaches to the underlying assets and not on the operations of the business. The orderly realisation approach involves the amount likely to be distributed to shareholders on the assumption the entity would be liquidated with the funds from the sale of its assets, after payment of all liabilities, including realisation costs, being distributed to shareholders. The liquidation method is based on the same principles as above except that in the orderly realisation method, the assets are realised in an orderly manner, whereas the liquidation method assumes the assets are sold within a shorter timeframe and below a price that would be achieved using an orderly realisation method. Selection of valuation approach After a careful review and analysis of the financial performance of the business, the valuer will adopt one of the above valuation methodologies. 36

On a going-concern basis, this decision will be based on the normal practice of valuing commercial businesses from the cashflow or profit generated from normal operations. In executing one of the earningsbased methodologies, it is recommended pre-tax earnings be used, as this will eliminate any potential for distortions that may arise from the specific debt and tax structuring of the particular agency.

The real estate industry has historically adopted the “rule of thumb” valuation methodology to establish the agency value and price at which an exchange of ownership will occur Where the methodology yields a business value that is either less than the value of the net operating assets or an insufficient rate of returns on net assets, the valuer will consider using the net assets approach as a going concern. Industry specific valuation method, or rule of thumb The real estate industry has historically adopted the “rule of thumb” valuation methodology to establish the agency value and price at which an exchange in ownership will occur. Valuations using this method typically value the whole real estate agency by capitalising the property management fees generated from the rent roll. The value of the agency is determined by the success or failure of the management of the rent roll. Property sales activity that constitutes the major source of agency revenue and profit is deemed irrelevant for valuation purposes.

This approach leads to inconsistency in comparative valuations of agencies. A real estate agency that has developed a strong residential sales business model, adopting fair and ethical sales practices leading to healthy sales commissions and profits, but which has a relatively small rent roll, is heavily discounted by the rule of thumb method. Other agencies that have adopted a property management focus with smaller residential sales activity leading to smaller overall agency profits are overvalued by the market. The comparative market values have no nexus to the rates of returns achieved by these real estate agencies. A robust valuation approach – earnings based methods The earnings valuation methods outlined above take into account the whole economic activity of the real estate agency. The revenue and profit derived from sales activity is not discounted but is restored to its proper importance when determining the value of the business. The valuation process begins with an assessment of the normalised future maintainable income that can be attributed to the whole business. This usually requires a historical analysis of past profit results. As stated above, judgments and adjustments are made about the historical profits. The valuer will form an opinion regarding the likely future maintainable earnings (FME) in the foreseeable future. The FME can be calculated in several ways. The most common, but not necessarily the most accurate, is taking the average of the past historical normalised profits. This calculation weights each historical year equally, regardless of the trend in profit performance. Other calculations

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Oc,Best opoPractice

This calculation weights each historical year equally, regardless of the trend in profit performance prescribe a different weight to more recent profit outcomes compared to earlier years. The valuer will use the calculation he or she determines to be suitable for that business. Once the FME has been calculated, an earningsbased valuation method requires a capitalisation rate to be applied to the FME. The most contentious and subjective part of the valuation process is determining the capitalisation rate for the business. This determination must take into account the overall industry risks as well as the specific business risks for that real estate agency. The outcome of the valuer’s deliberations will be a capitalisation rate that is equivalent to a rate of return that the market would expect for that business in that industry. The valuer can assess the capitalisation rate for the business by comparing the rate of return for that agency with generally acceptable and recognisable rates of return for alternative investments in the economy. Each alternative investment will produce its own rate of return. The most common and recognisable alternative investment is the rate of return on a secured government 10-year bond. This investment is often regarded as a “risk-free” rate of return. Other forms of investment

will produce market rates of return at higher rates as the level of risk increases. The higher the perceived risk of the investment, the higher the expected rate of return. The capitalisation rate, developed by the valuer of the real estate agency, must be assessed within the context of the known rates of return in the market for alternative investment. If the valuer judges that the capitalisation rate for

the agency is acceptable given the identifiable risks, it is applied to the FME. The outcome is a value of the whole business including the sales and property rental activities.

way forward The real estate industry must now follow the example of other industries that have abandoned the rule of thumb valuation methodologies. The industry must engage in a conversation with the agents and the major stakeholders (banks, franchisors and the peak industry bodies) to redefine the meaning of real estate business value and how that value should be measured.

The Estate Agent ❘ December 2013

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The above has been prepared by Sothertons Melbourne to provide you with general information only. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information only. We recommend you consult with your accountant to discuss your personal needs and situation.

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12/10/13 5:28 PM


Legal Meri Siracusa, Special Counsel and Dan Flynn, Partner – TressCox Lawyers

Skeletons in the closet: Is there a duty to declare?

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s an agent, when you become aware a property was the scene of a child kidnapping several years earlier are you entitled to ignore the event? At one time the answer may have been a clear case of caveat emptor, or buyer beware. Though the issue of “stigmatised” property has not been comprehensively legally tested, there is enough evidence to suggest agents and vendors need to beware too. Under normal circumstances, a vendor is only required to disclose certain information which is prescribed for inclusion in a section 32 statement. Traditionally, the onus has been placed on a buyer to make all necessary inquiries regarding a property before signing a contract of sale and the vendor is not obliged to disclose any defects in the property. However, increasingly there is discussion of a duty of disclosure on real estate agents and vendors, particularly in relation to “psychologically stigmatised property”. What is “psychologically stigmatised property”? In 2006, a lovely two-storey cottage at Mornington was advertised under the heading “Seaside cottage charm”. While the cottage may have been charming and may have offered a beautiful interior, the advertisement did not refer to the fact the property was the scene of a horrific and notorious double murder in 2004. A property where some tragic or traumatic event, such as murder, rape, suicide, violent crime or other horrific event has happened is referred to as a “psychologically stigmatised property”. Such a characterisation does not involve a defect as to title or the

physical features of the land. The stigma in such cases is said to emanate from some non-physical defect that causes religious, moral, emotional or psychological discomfort to a buyer. The recent Supreme Court of Victoria decision in Charles Lloyd Property Group Pty Ltd v Buchanan [2013] VSC 148 considered whether there was any duty to disclose to prospective

In Summary Although the law in Victoria is not settled on this issue, care ought to be taken by real estate agents when marketing and selling a property with a gruesome history. Silence as to the history of a property may constitute misleading and deceptive conduct, particularly where the silence is coupled with the failure to correct or qualify statements that lead a buyer into error. If a horrific event happened in a dwelling, there is likely to be a “reasonable expectation” that it will be disclosed to buyers. To avoid future disputes and possible prosecution, real estate agents ought to err on the side of caution and disclose all relevant material facts relating to the history of a property.

buyers whether a property was “psychologically stigmatised” and the effects of silence in such transactions. The question often asked is whether there is a legal obligation in Australia to disclose the gruesome history of a property. In the United States specific rules

The prevailing view in Victoria appears to be that if a buyer makes direct inquiry as to the history of a property, a real estate agent ought to disclose any material facts that are known 38

of disclosure apply to homes with a gruesome history, and in some states, that history must be recorded on the title to the property. This is in contrasted to the position in Australia where a uniform approach does not exist. For example, section 52 of the Property Stock and Business Agents Act 2002 (NSW) makes it an offence for a real estate agent in NSW to conceal a material fact about a property, whether intentional or not, which may impact on a buyer’s decision to buy a property. This legislation does not apply in Victoria. Neither does Victoria have an equivalent provision in the Estate Agents Act 1980 (Vic). At most, real estate agents in Victoria are required to “act fairly and honestly and to the best of their knowledge and ability in the performance of their functions as an estate agent” pursuant to section 11 of the Estate Agents (Professional Conduct) Regulations 2008 (Vic). It is uncertain whether this rule of conduct acts so as to ostensibly impose a duty of disclosure on real estate agents in relation to “psychologically stigmatised property” as the matter has not been tested in the Victorian courts. The prevailing view in Victoria appears to be that if a buyer makes a direct inquiry as to the history of a property, a real estate agent ought to disclose any material facts that are known. In the absence of any such inquiries, there is no general duty of disclosure imposed on real estate agents in Victoria to volunteer such information. A qualification to the above position is the introduction of the Australian Consumer Law which prohibits misleading and deceptive conduct by persons engaged in trade or commerce and requires the use of a “reasonable expectation of disclosure” test.

The Estate Agent ❘ December 2013

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Legal

It was easy to imagine the unease an agent may have in withholding the fact of a murder happening in a dwelling ... which would repel a buyer regardless of cultural, personal or ethnic background

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Taking an ethical stance

Many proponents of reform to the real estate industry refer to an ethical or moral obligation upon real estate agents to disclose the history of a property

during the sale process. In an article published in The Australian on June 30, 2012, the then-president of the Real Estate Institute of Australia, Pamela Bennett, is quoted as saying all real estate agents have an ethical duty to disclose to potential buyers any relevant traumatic events which they know have happened in a house. This stance is consistent with the approach taken by the Supreme Court in the Buchanan case. The balancing act which real estate agents face is to act honestly and fairly in the performance of their functions, while responding to a vendor’s desire

to realise the best possible sale price for a property. This can be difficult to achieve where the natural inclination of a vendor is to avoid any price reduction resulting from disclosure of any stigma that may attach to a property.

Buchanan Case: WHY THE DEVELOPER’S CASE FAILED The Buchanan case involved a property developer who bought 20 acres of undeveloped afforested land in Ballarat intending to subdivide and develop the land. After signing the contract of sale, the developer discovered a young man had committed suicide on the land and the presence of a memorial near the scene of death. The vendor asserted it did not intend to hide the fact of the suicide, rather, he simply did not think it mattered. At the time of discovery, the developer did not assert the property was stigmatised or the suicide and memorial undermined its prospect of subdividing and developing the land. The developer also did not contend the suicide and memorial were material, or that it had been wrongfully undisclosed at the time of the original contract. The developer at this stage did not suggest that it had been misled by the vendor’s silence. Instead, the developer negotiated and executed a deed of variation pursuant to which it entered into new or altered legal relations with the knowledge of the suicide and it obtained an extension of the date for completion of the contract.

The developer failed to complete the contract and the vendor then terminated for breach. The developer issued proceedings against the vendor seeking to annul the contract on the basis the vendor had engaged in misleading and deceptive conduct by failing to disclose the suicide when the contract was first entered into. The developer claimed that had the suicide been disclosed, it would not have bought the land. The issue which the court determined was whether the developer was led into error by the vendor’s silence as to the suicide which happened on the property. The court held that what was fatal to the developer’s case was the making of the deed of variation in the face of the discovery of the previously undisclosed fact of the suicide. The court held that the developer could not then argue that it had been misled by the vendor. The developer’s case was based on mere silence by the vendor, not a half truth, that is, silence coupled with statements that if not corrected or qualified would lead a person into error. For mere silence to attract liability there must be circumstances which give rise to a “reasonable expectation” that if some

relevant facts as to the property exist they would be disclosed to the developer. The court distinguished the facts of the Buchanan case which involved a suicide in a forested area of land to be subdivided from cases involving a horrific event which happened in a dwelling. As to the latter, the court stated that it was easy to imagine the unease a real estate agent may have in withholding the fact of a murder happening in a dwelling, as that was a fact which would repel a buyer regardless of cultural, personal or ethnic background and there would be a “reasonable expectation” of its disclosure. The court was unable to engage in a psychological comparison between a suicide in a forested area of undeveloped land with a horrific event that happened in a suburban dwelling, or the sensitivities of a family home buyer as distinct from land for subdivision and development. Had the Buchanan case not involved an arms-length commercial transaction in which the developer elected to proceed with the purchase of the property after learning of the suicide, the court might well have reached a different conclusion. The Estate Agent ❘ December 2013

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12/10/13 5:26 PM


Course Schedule

Get an REIV qualification Open the door to a career in real estate

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REIV Certificate IV in Frontline Management Commencing December 2013

Commencing August 2014

Classes 9am-5pm at the Camberwell Campus

Classes 9am-5pm at the Camberwell Campus

Cluster

Classes Date

Cluster

Classes Date

Workplace

Tuesday and Wednesday, December 3-4

Workplace

Wednesday and Thursday, August 13-14

Customer Service

Tuesday and Wednesday, December 17-18

Customer Service

Thursdays, August 21-28

Safety

Thursday, January 30

Safety

Thursday, September 4

Management

Thursdays, February 6-27

Management

Thursdays, September 11-25 and October 2

Marketing

Thursdays, March 6-13

Marketing

Thursdays, October 9-16

Presenting

Thursdays, March 20-27

Presenting

Thursdays, October 23-31

Commencing April 2014

Commencing October 2014

Classes 9am-5pm at the Camberwell Campus

Classes 9am-5pm at the Camberwell Campus

Cluster

Classes Date

Cluster

Classes Date

Workplace

Monday and Tuesday, April 14-15

Workplace

Monday and Tuesday, October 20-21

Customer Service

Mondays, April 28 and May 5

Customer Service

Mondays, November 10-17

Safety

Monday, May 12

Safety

Monday November 24

Management

Mondays, May 19-26 and June 2 and 16

Management

Mondays, 1st, 8th and 15th of December 1-15 and Februay 2, 2015

Marketing

Monday, June 23-30

Marketing

Mondays, February 9-16, 2015

Presenting

Mondays, July 7-14

Presenting

Mondays, February 23 and March 2, 2015

reiv.com.au – your first source for REIV events in 2014 40

The Estate Agent â?˜ December 2013

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Course Oc, opoSchedule

Tuesday Classes – Commencing May 2014 Classes each Classes each Tuesday 9am-5pm at the Camberwell Campus Cluster

Classes start

Date of Last Class

Agency and Risk

Tuesday, May 13

Tuesday, May 27

Property Management Tuesday, June 3

Tuesday, June 24

REIV Certificate IV in Property Services (Real Estate)

Property Sales

Tuesday, July 22

Evening Classes – Commencing January 2014

Evening Classes – Commencing July 2014

Classes each Tuesday and Thursday 6pm-9.30pm at the Camberwell Campus

Classes each Tuesday and Thursday 6pm-9.30pm at the Camberwell Campus

Cluster

Classes start

Date of Last Class

Cluster

Classes start

Date of Last Class

Agency and Risk

Tuesday, January 28

Thursday, February 13

Agency and Risk

Tuesday, July 1

Thursday, July 17

Property Management Tuesday, February 18

Thursday, March 13

Property Management Tuesday, July 22

Thursday, August 14

Property Sales

Thursday, April 10

Property Sales

Thursday, September 11

Appraisal and Auction Tuesday, April 29

Thursday, May 22

Appraisal and Auction Tuesday, September 30

Thursday, October 23

Agency Management

Tuesday, June 17

Agency Management

Tuesday, December 2

Tuesday, March 18

Tuesday, May 27

Tuesday, July 1

Appraisal and Auction Tuesday, August 12

Tuesday, September 2

Agency Management

Tuesday, September 30

Tuesday, September 9

Tuesday, August 19

Tuesday, November 11

Friday Classes – Commencing January 2014

Friday Classes – Commencing July 2014

Classes each Friday 9am-5pm at the Camberwell Campus

Classes each Friday 9am-5pm at the Camberwell Campus

Cluster

Classes start

Date of Last Class

Cluster

Classes start

Date of Last Class

Agency and Risk

Friday, January 31

Friday, February 14

Agency and Risk

Friday, July 4

Friday, July 18

Property Management Friday, February 21

Friday, March 14

Property Management Friday, July 25

Friday, August 15

Property Sales

Friday, April 11

Property Sales

Friday, September 12

Appraisal and Auction Friday, May 2

Friday, May 23

Appraisal and Auction Friday, October 3

Friday, October 24

Agency Management

Friday, June 20

Agency Management

Friday, November 28

Friday, March 21

Friday, May 30

Friday, August 22

Friday, November 7

Wednesday Classes – Commencing March 2014

Wednesday Classes – Commencing September 2014

Classes each Wednesday 9am-5pm at the Camberwell Campus

Classes each Wednesday 9am-5pm at the Camberwell Campus

Cluster

Classes start

Date of Last Class

Cluster

Classes start

Agency and Risk

Wednesday, March 19

Wednesday, April 2

Agency and Risk

Wednesday, 3rd September Wednesday, September 17

Property Management Wednesday, April 9

Wednesday, April 30

Property Management Wednesday, September 24 Wednesday, October 15

Property Sales

Wednesday, May 28

Property Sales

Appraisal and Auction Wednesday, June 18

Wednesday, July 9

Appraisal and Auction Wednesday, November 19

Wednesday, December 10

Agency Management

Wednesday, August 6

Agency Management

Wednesday, February 18

Wednesday, May 7

Wednesday, July 16

Wednesday, October 22

Wednesday, January 28

Date of Last Class

Wednesday, November 12

Wednesday Classes – Commencing March 2014

Tuesday Classes – Commencing October 2014

Classes each Wednesday 9am – 5pm at the Camberwell Campus

Classes each Tuesday 9am – 5pm at the Camberwell Campus

Cluster

Classes start

Date of Last Class

Cluster

Classes start

Date of Last Class

Agency and Risk

Wednesday, March 19

Wednesday, April 2

Agency and Risk

Tuesday, October 28

Tuesday, November 18

Property Management Wednesday, April 9

Wednesday, April 30

Property Management Tuesday, November 25

Tuesday, December 16

Property Sales

Wednesday, May 28

Property Sales

Tuesday, February 27, 2015

Appraisal and Auction Wednesday, June 18

Wednesday, July 9

Appraisal and Auction Tuesday, February 24, 2015 Tuesday, March 17, 2015

Agency Management

Wednesday, August 6

Agency Management

Wednesday, May 7

Wednesday, July 16

Tuesday, January 27, 2015

Tuesday, March, 24 2015

Tuesday, April 14, 2015

The Estate Agent ❘ December 2013

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12/10/13 5:24 PM


Tech Talk

iPad Air now part of Member Rewards Program

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ollowing the launch of the REIV Members’ App, we’ve partnered with Officeworks to develop an exclusive iPad offer for Members. With the REIV Member Rewards Program you have the opportunity to purchase an exclusive bundle including

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an iPad Air and a sleek Kensington compendium. The REIV branded compendium will convey professionalism with handy features such as a keyboard, business card holder and an iPad stand. Using the REIV Members’ App, you will be able to keep informed on the latest industry news, register for training and events, look up useful directories, perform a range of calculations and more.

Together with an iPad, you have the essential toolkit for estate agents; enabling you to show clients your latest properties, sign contracts, update contact details as well as access important information on-the-go such as VicForms, propertyDATA and realestateVIEW. To find out more about this offer go to reiv.com.au/iPad

The Estate Agent ❘ December 2013

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Oc, opo Life Class

A healthy day at the office I

t’s one thing to tell staff you value their health by handing out water bottles or monthly massages, but it’s another to affect them directly through a healthy work culture. “Think about it,” says Ken Buckley, founder and managing director of Healthworks, which delivers health products and services for more than 500 Australian companies. “You want to help your employees lower stress levels, so you provide engaging, valuable information on mental health, you organise seminars, you give them campaigns and activities to show in easy steps how to improve positive thinking. “But their manager sends them emails at all hours, they feel they have to work through their lunch break and their request for a day off is refused yet again. “Such actions are all part of your organisational culture. “An unhealthy culture can create real blocks for employees to become healthier and more productive.” So, implement health expectations alongside education, limit business activity to business hours and actually encourage productivity through scheduled breaks. Next, consider the “where, how and why” through which your business is conducted. “Ideally, you should have in place things that are proven to encourage healthy habits,” Buckley says. “Physical things, such as bike

racks and fridges in the kitchen; policy things, such as flexible work arrangements; or operational things, such as a wellness committee [to think up and monitor health initiatives].” But even in a supportive culture and accommodating environment, some employees will struggle to cut back on caffeine and the vending machine. “For optimal participation and engagement, participants have to want it,” Buckley says. “They have to really see a direct, personal reason for taking part.”

An unhealthy culture can create real blocks for employees to become healthier and more productive Often the reason won’t necessarily be a desire to feel better. It might be a financial incentive, a need to socialise, or to contribute towards a greater good. The National Australia Bank offers financial incentives “to encourage and educate employees to make healthy choices”, media officer Chris Venus says. “NAB provides an annual voluntary flu vaccination, and a range of healthinsurance providers offer discounts to staff, likewise with gym memberships.” Venus says many of the company’s major buildings house bicycle storage with shower and changeroom facilities

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Providing your employees with a more balanced work environment is not just good for them, it’s good for business, writes Ainsleigh Sheridan to encourage healthy behaviour. The company also has a wellbeing web portal where staff can read tips and fill out a health check. Boeing, the multinational aerospace group, started “Boeing on the move” in 2010 by tracking activity with pedometers after more than half its respondents to an internal health assessment said they weren’t getting enough physical activity. More than 40,000 employees took part in the global initiative that first year, with prizes awarded to the top five staff, communications director Allison Bone says. Participants found the program rewarding because it led to weight loss, increased energy levels and an improved sense of friendship among staff members. For Australian east coast recruitment firm Employment Office, a relay ride on a stationary exercise bike as a charity fundraiser has proved a sporting thing to do. “Two years ago, we started an event called Tour de Office,” publicist Brooke Chapman says. The “Tour” has raised more than $20,000 each time it has been held. The firm’s staff, clients, suppliers, family and friends each ride 30-minute legs in a continuous relay for a working week, with money raised through sponsorship. “This year there are 20 workplaces all over the country taking part.” The Estate Agent ❘ December 2013

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12/10/13 5:23 PM


Master Sales

Technology opens new doors to bring buyers to sellers Leading agents explain their techniques in making residential and commercial sales. By Anthony Black

T

echnology combined with innovation is rapidly changing the landscape for selling property. Embarking on a sales campaign today is far more sophisticated than in past years, although any real estate agent’s objective of satisfying vendors remains unchanged. Today, two prominent real estate agents share their techniques on selling a specific property and property in general.

Residential

Steven Abbott, managing director of real estate firm Jellis Craig in Hawthorn, shares his insights into selling a residential property in Camberwell while Joseph Walton, of commercial real estate firm Allard Shelton in Melbourne, recalls the journey in selling two commercial properties in Brighton. Abbott achieved $171,000 above the reserve price when he recently sold a four-bedroom, two-bathroom brick property for $1.721 million at an auction that attracted five bidders. He chose to auction the property because he believed the wellconstructed and meticulously presented property in a sought-after suburb offered broad appeal. Abbott’s database told him two people were keen to buy, 44

while a carefully orchestrated sales campaign would flush out more bidders. Multiple bidders competing for the property drove up the price. “The auction was a classic case of bidders forgetting about what they were potentially spending and just trying to win in a rising market,” Abbott says.

We can’t rely on one form of media to market a property. In real estate, never make assumptions “The energy towards the end of the auction drove up the price an extra 7 per cent to 10 per cent. It’s what I call the ‘wow factor’ when several bidders are eagerly competing. What I like about an auction is the transparent process. Auctions remove a veil of secrecy and enable bidders to lock horns in a battle to win the property.” Before the auction, Abbott advertised the property in print and online to generate interest. A sale board in front of the house and social media also contributed to generating appeal. “We took a multi-pronged marketing approach because it enabled us to reach as many potential buyers as possible,”

he says. “Our websites and email correspondence enable readers to share property information with their family and friends. The consumer drives social media and any shared information can rapidly go viral. It’s a cheap form of advertising and marketing. “But we can’t rely on any one form of media to market a property. In real estate, never make assumptions. Don’t assume all buyers just look for property on the internet. A buyer may be a driver who spots a board. Or, a buyer could be flicking through a magazine and say, ‘Gee, I love that house’, two days before an auction.” Abbott assesses each potential property sale on its merits. If a vendor has unrealistic expectations about price, Abbott may quietly test the market about what a buyer is prepared to pay. He will take interested buyers through a vendor’s property to gauge their views. The vendor is well informed about what potential buyers think before making a decision on whether to commit to a full-on marketing campaign. Continued on page 46

Joseph Walton (right): For some vendors, it’s the best deal that does the trick, not necessarily the best price.

The Estate Agent ❘ December 2013

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Oc, opo Great sales

The Estate Agent â?˜ December 2013

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Master Sales Steven Abbott: Assesses each potential property sale on its merits.

Continued from page 44

“It’s always best to be straight with vendors and buyers because then everyone knows where they stand,” he says. “If a vendor has unrealistic expectations, it’s best to say so based on your knowledge and experience of similar sales in the same area. It avoids vendor disappointment. “An agent who provides clarity to a vendor is usually rewarded with the listing nine times out of 10.” Abbott studies body language when pitching for a listing. He calls it profiling a client. He will put 10 comparable sales to a vendor’s property on a table and then watch how the vendor reacts to the prices. “Watching where a vendor’s eyes go tells me how to communicate,” he says. “If the vendor is a facts and figures orientated person, I don’t sit there talking about how beautiful the house is, or how great it’s going to be, or how nice the world is. I show the vendor comparable sales results and inform what price I realistically expect to fetch from selling the property. “I am not a yes man. I am true to myself and give professional advice based on my knowledge and experience.”

Commercial

Joseph Walton, of Allard Shelton, called for expressions of interest before selling two commercial properties in Brighton for a combined $9.5 million. Initially, Walton devised several sales strategies to test the market. A single investor or developer could buy both commercial properties, or they could be sold separately to two interested parties. Walton believed splitting the 46

properties into two sale opportunities was the most effective strategy. It would be easier to sell the properties to two developers at different price points than trying to find one prepared to pay $9.5 million for the lot. One developer paid $5 million, the other $4.5 million. He marketed the properties as Opportunity 1 and Opportunity 2. Opportunity 1 comprised single-level retail frontages, consulting rooms, undercover parking and land measuring about 1500 sq m. Opportunity 2 comprised single and dual-level brick buildings used as office and retail suites. The land also measured about 1500 sq m.

The internet is powerful, print is still relevant and the old silent salesman – the sign board – still works well “We wanted to broaden our market as much as possible,” Walton says. “Dividing the properties into opportunities was far more palatable from a price perspective.” Both commercial properties, owned by one investor, were marketed as providing rare and outstanding development potential. After calling for expressions of interest, Walton shortlisted potential buyers and invited them to tender for the properties. “What you want from an expression of interest perspective are offers on the table,” Walton says. Apart from sale boards at the properties, Walton used print, online display ads and video to generate interest.

“Video works well online,” he says. “I link the video to my email signature, so people I’m communicating with get to click on the hyperlink, enabling them to see the property vision on their computer screens. The strategy is to get potential buyers to engage with me in a more meaningful way before they ring. When it comes to marketing, the digital landscape is forever evolving and becoming the dominant platform. The key to successful marketing is multiple sources of recognition and repetition. “The internet is powerful, print is still relevant and the old silent salesman – the sign board – still works well.” Walton says when selling any commercial property, vendors are sometimes prepared to accept the best deal rather than the best price. “We can get highly conditional offers and contracts in the commercial market, which vendors won’t tolerate,” he says. “With development sites, you may get offers subject to planning approvals, or an extensive due diligence period, which may be non-binding on the purchaser. Due diligence and planning approvals can drag on for up to a year. Sometimes we have transacted on that basis because it’s the best commercial position we have in front of us. “But there are a lot of key factors that determine a good offer, and while price is a critical one, it doesn’t start and stop with price. We and our vendors want certainty. A vendor may sacrifice some price in exchange for a clean, unconditional contract offer. At least a deal can be done.” Walton says an expression of interest campaign is often preferred to an auction when selling commercial property because it provides the vendor with much more versatility. An auction is akin to a blunt instrument where the highest bidder wins the property if it’s above the reserve price. An expression of interest campaign leaves more room for negotiation. Walton says his vast database of 8000 contacts is vital to selling commercial property. At any one time, he can offer commercial property for sale to investors on his books. Keep building that contact book.

The Estate Agent ❘ December 2013

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12/11/13 12:30 PM


RECORD SIGNATURES ELECTRONICALLY

VICFORMS IS NOW OPTIMISED TO COMPLETE FORMS ON IPADS VICFORMS.REIV.COM.AU ea_2013-11-01_47.indd 47

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Interaction

Oh what a night of nights as industry celebrates its stars The cream of Victoria’s real estate agents wined, dined and danced in style at the Crown Palladium for the REIV Awards More than 1200 movers and shakers (literally) of the real estate industry enjoyed a night of glamour and entertainment at the REIV Awards. The Crown Palladium ballroom was the venue for a Logies-style evening full of bonhomie. The sold-out event was compered by television personality James Mathison. Some of the big winners on the night included Janet Spencer, Buyers Agent of the Year, and Residential

Property Manager (non-principal) Sali Young of PhillipWebb. However, the most sensational moment of the awards segment of the night came when Gary Peer, of Gary Peer and Associates, took out the award for Large Residential Agency of the Year and was joined by about 40 of his nearest and dearest associates from the agency. Peer and his crew, who won another three awards, then made quite an impression on the dance floor.

Residential Property Manager of the Year Non Principal, Sali Young from PhillipWebb

Buyers Agents of the Year, Janet Spencer from Buyer Solutions

Gary Peer and his team picked up four awards, including Large Residental Agency of the Year

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Life member Valda Walsh, Wendy Lovell, Minister for Housing, and Robyn Waters – World President Elect, FIABCI

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Oc, opo Interaction

Novice Auctioneers’ Competition 2013 The 2013 Novice Auctioneers’ Competition was a fantastic event which gave auctioneers-in-the-making a chance to test out their skills on a live audience while also competing for the coveted title.

Alex Raimundo of Nelson Alexander

Robert Pierantozzi of Nelson Alexander

Travis Keenan of hockingstuart Richmond

Marcus Tanti of hockingstuart Commercial

Nick Smith of Jellis Craig

David Melatti, Charlotte Bourne, Danielle Verity and John Alfredo Melatti from Astute Buyers Advocates

Christopher Curtain from Lemon Baxter, Phil de Fegely from MGI Melbourne Corp and Joseph Walton from Allard Shelton

Release property management receives prestigious award Release Property Management received the prestigious award for best Small Business or Division/Department of a business at the 2013 Geelong Business Excellence Awards. Presented at a Gala dinner ceremony at The Pier on Geelong’s waterfront precinct, the Geelong Business Excellence Awards recognise and celebrate business excellence in the region.

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Directory

REIV Mission Statement: To lead and represent the real estate industry and to advance the professionalism of its members.

What We Do

Contact

The Real Estate Institute of Victoria has been the peak professional association for the Victorian real estate industry since 1936.

Internet reiv.com.au

More than 2000 real estate agencies in Victoria are Members of the REIV. Members specialise in all facets of real estate, including residential sales, commercial and industrial sales, auctions, business broking, buyers agency, property management, owners’ corporations management and valuations. REIV Members are located in city, rural and regional areas.

Twitter twitter.com/REIVictoria LinkedIn Search ‘REIV Networking Group’ Facebook facebook.com/REIVictoria Access REIV members rewards reiv.com.au/members/member-rewards Book an event reiv.com.au/event Register for a training course reiv.com.au/training Access REIV sales data https://members.propertydata.com.au Purchase REIV forms http://vicforms.reiv.com.au Access REIV insurance services reiv.com.au/members/insurance

Find out more about the REIV Telephone 03 9205 6666 ❘ Facimile 03 9205 6699 ❘ Email reiv@reiv.com.au Victorian country members only 1800 061 218

commercialview.com.au

propertydata.com.au

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soldtoday.com.au

realestateview.com.au

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REAL PEOPLE. REAL DISCUSSIONS. REAL ANSWERS. JOIN ‘REIV NETWORKING GROUP’

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The Estate Agent, December 2013