The Australian Real Estate Review Winter 2011 by APRS Media

Liquidation and the franchisee Is success all about

mind over

matter? The value of

being realistic in real estate

Winter 2011

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The Australian Real Estate Review

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Winter 2011

contents

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2 Editorâ&#x20AC;&#x2122;s Letter 4 Foreword: Bailey Compton, Managing Director at Leverage Australia and the Australian College of Professionals. 6

Agent Profile: Phil Chapman, Principal of LJ Hooker Mount Barker (SA).

8 Industry Q&A: Lecturer in the School of the Built Environment at the University of Technology, Sydney, and Fellow of the Australian Property Institute and Royal Institution of Chartered Surveyors, Associate Professor Angelo Karantonis. Events Coverage: 33 AREC 2011 84 AREL

From the experts: 20 Taxation Issues: Accountant Nettina Barresi looks at the tax benefits around choosing to buy or lease capital assets. 60

Conveyancing Issues: P auline Barrow, National President of the Australian Institute of Conveyancers, discusses the many risks when buying and selling real estate.

64 Marketing Issues: Public relations specialist, Julia Nekich, explains why face-to-face marketing is still one of the most effective and enjoyable marketing tools. 71

Technology Issues: John Paior guides you through the 10 things you can do today to improve your agencyâ&#x20AC;&#x2122;s computing network.

77 Legal Issues: Sharon Lakic, solicitor at Leverage Australia, discusses the potential power New South Wales Fair Trading holds when an agent faces disciplinary action.

Special thanks to Jason Attard Photography for the photographic contributions throughout The Australian Real Estate Review.

The Australian Real Estate Review

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Special Features

The Australian Real Estate Review

Liquidation and the franchisee The recent demise of Angus and Robertson bookstores in Australia has dented the livelihoods of many hard working franchisees. But what implications would there be if a real estate franchise were to go into liquidation? Margaret Ambrose reports.

Don’t give your car the cold shoulder this winter Driving in winter’s wet and dark conditions is not an experience many of us enjoy, made worse by fogged-up windows, sluggish batteries and ineffective windscreen wipers. Luckily many of these dramas can be easily avoided by following some simple tips.

Home is where the wine is drunk…and stored Whether wine is purchased in bulk for the occaisional dinner party, or purchased as an investment, it pays to maintain a healthy storage area. graham wright reports.

Mind the gap: talking about my generation Three agents, from three diverse age-groups, stood at the front of the Brisbane Powerhouse and pondered what it takes to transact with three different generations. Emily Maher reports.

The value of being realistic in real estate It is very important for real estate agents to understand the importance of being open and honest with prospective and current vendors about the state of the market, writes Charles Tarbey, Chairman and owner of Century 21 Australia.

Maybe she won’t be right… While the life insurance industry is doing everything it can to raise awareness of the underinsurance issue, the real estate industry also has a vital role to play, writes holly Dorber.

Dos and don’ts of property management Much has been written about what Property Managers should and should not do in the daily management of their portfolio of properties, however, Christopher goodway looks at some dos and don’ts for Agency Principals in developing a successful rent roll.

Hiring an in-house recruiter versus recruitment firm The crux of the difference between the requirement of a recruitment agency or an inhouse recruitment coordinator is the size of the business in question and the inherent challenges the real estate agency is facing, writes John Caldwell.

Is success all about mind over matter? Stuck in a sales rut? We find out how to reset your mind to win in every selling situation. Charmaine yabsley reports.

Risk management starts during tenancy selection The need for Risk Management Systems within any industry has never been more evident than within the real estate property management sector, writes Philip Nounnis.

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Editor’s Letter

‘can-do attitude’ is the key to success in many facets of daily life – especially in the fiercely competitive world of real estate. Maintaining a can-do attitude will help with the perseverance needed to secure a winning deal, or it can even help you through the more tough times when things don’t go to plan. During the AREC 2011 conference in May, I had the pleasure of listening to US real estate veteran Bob Bohlen. Bob’s story is truly inspirational. After only 22 years in real estate – formerly a cattle farmer – he is on his way to notching up an amazing 10,000 sales (at the time of writing he was up to 9903!). Amongst the great advice Bob had for the conference delegates, there was one thing he said which really struck a chord with me: “This business, and life, is all mental. If you think you can, you can, and if you think you can’t, you’ve already lost.” given his success, Bob’s advice must ring true. To be successful you need a positive mind and a

Editor kathryn Edwards editor@aprs.com.au

Editorial Assistant Jarrod Fitch

Lead Designer Bianca Fidge

can-do attitude from the beginning. If you need to reset your mind in order to achieve this, Charmaine yabsley reports on page 58 about how to revamp your motivation by setting goals and working out how best to achieve them. To read more about this year’s AREC conference see page 33. Also inside this edition, Emily Maher from the Real Estate Institute of queensland reports on interacting with each of the three generations – Baby Boomer, X and y – in the real estate world. We catch up with Associate Professor Angelo karantonis, lecturer from the School of the Built Environment at the University of Technology, Sydney, and Fellow of Australian Property Institute and Royal Institution of Chartered Surveyors, to talk about the Australian property market, the economy and future challenges for real estate professionals. Accountant Nettina Barresi looks at the tax benefits around choosing to buy or lease capital assets. John Caldwell returns to discuss recruitment issues, and this time looks at the pros and cons

Co-ordinator Renee Lambert Phone: 08 8113 9223 rlambert@aprs.com.au

Feature Contributors Charmaine yabsley Emily Maher

Graphic Designers

Nettina Barresi

Michael griffiths kimberley Smith kasha Abbott Louie Smale

Holly Dorbor

Phone: 08 8113 9206 prepress@aprs.com.au

Marketing Johnathon Dunstan Danielle Tessari

The Australian Real Estate Review

Christopher goodway John Caldwell Margaret Ambrose Phillip Nounnis Jon Paior Charles Tarbey Julia Nekich

between hiring an in-house recruiter or using the services of a recruitment firm. Margaret Ambrose looks into the recent demise of Angus and Robertson bookstores in Australia and asks what implications there would be if a real estate franchise were to go into liquidation. And finally, Charles Tarbey, Chairman and owner of Century 21 Australia, looks at the value of being realistic in real estate. Also remember to look out for our agent profile, and regular columnists Bailey Compton, Julia Nekich, Shannon Lakic and Pauline Barrow. I would be very interested to hear your thoughts on our magazine or any of the issues addressed inside. Please drop me a line at editor@aprs.com.au or follow me on Twitter: @kathrynEdwards kathryn Edwards Editor The Australian Real Estate Review

Publisher garth Wright

CEO gary Peach

General Manager graham Miles

APRS Head Office gPo Box 1746 Adelaide SA 5001 Phone: 08 8113 9200 Fax: 08 8113 9201

Printer Newstyle Printing 41 Manchester Street Mile End SA 5031

Disclaimer APRS is not committed to nor takes responsibility for the views expressed in articles or advertisements herein. The publishers could not possibly ensure that each advertisement published in this magazine complies with the Trade Practices Act and responsibility must therefore rest with the person, company or agency submitting the advertisement for publication.

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Mother Government; Hurting those it intends to care for!

ell meaning government does not always achieve the desired outcome. Too often governments make decisions for the right purposes, but end up hurting or injuring those they meant to protect.

financial products and financial advice. If you go to a financial advisor, you will be confronted with a Financial Services guide (FSg), a Fact Finding form, and a Statement of Advice (SoA). All these contain prescribed principles and make all the documents incredibly cumbersome.

Consumerism was given its birth in 1974 when the late Sir Lionel Murphy introduced the Trade Practices Act 1974. This was set up on the simple principle that consumers should not be mislead or deceived when purchasing products, and they should be compensated if they are. This brilliant piece of legislation has become the centrepiece of consumer protection since its inception. Unfortunately, consumers have rarely been able to utilise the Trade Practices Act due to the expense of gaining access to justice. The primary beneficiaries of the misleading and deceptive principles have been very large corporations.

Consumers that we have dealt with have found most of the details far too difficult to understand, and the options granted under the SoA too confronting to consider. In fact, many people don’t use financial advisors because of the difficulties associated with understanding the information.

Somewhere in the mid ‘80s to the early ‘90s government gave birth to the ‘disclosure statement’. government believed that, if consumers were clearly told of the pitfalls in relation to using certain products and services, then consumers would be in a better position to make an informed choice. Well meaning, but not fulfilled in practice! Let’s start with the Trade Practice (Franchise Industry Code) Regulation of 1978. If you buy a franchise, you will receive a ream of documents that include the Franchise Code of Practice, a draft agreement and a disclosure document. We represent a number of people who enter into franchises but I am yet to meet one person who has been able to work through every page of the disclosure document and make an informed choice. Most solicitors are left with the obvious advice that the franchise agreement is set up for the franchisor and the franchisee takes a risk by entering into it. In 1999 the New South Wales government introduced disclosure documents to retirement villages under the Retirement villages Act 1999. Any elderly person who wishes to enter a retirement village gets a contract and a large disclosure document to assist them to know everything concerning what they’re about to do. obviously, there are many who have the capacity when entering a retirement village to scan through these documents. In the main part however, most consumers find it confronting and far too complicated to sift through the pages. In 2003, the Corporations Act 2001 introduced the concept of product disclosure statements for

The Australian Real Estate Review

What the financial industry has been left with is a whole pile of advisors who will produce a set of standard documents as a means of compliance. They will tell the consumer not to worry about it and to provide direction in the best way the financial advisor sees fit. In fact, they will be directed to products that gain financial advisors the most amount of commission. The law has made way for the ‘shonky’ and not for the prudent. Enter, the National Consumer Credit Protection Act 2010 (NCCPA); the bastion of protection for the consumer who is about to obtain credit from a bank; the desire to protect the poor, unintelligent, and useless consumer.

Consumers are being strangled and any dream of owning their own home is being crushed. We deal a lot with the young. They are now reaching the stage where they do not believe the Australian dream of owning a home is even remotely possible. Without the first home buyer there isn’t the second, third and fourth home buyer. We don’t get a progression through the property market and therefore the property market stagnates. This will ultimately cause a plummeting of prices in the most valuable asset that any consumer owns. I am acquainted with one of the leaders in Consumer Credit Policies of Australia. She told me many years ago that she got her first loan by getting it approved by one bank and running across the road and borrowing a deposit from the other bank. She would not be able to do that today. She lives in a very salubrious suburb of Sydney and has maybe forgotten the difficulties faced on ‘Struggle Street’. Theoretical law has its place, but it rarely operates effectively in practice. Creating barriers to credit only hurts the consumer and the market place.

Replicating the financial services reforms, it requires licensing of credit providers and provides for a range of disclosure documents. They have continued the practice of outlawing unjust contracts and not misleading or deceiving the consumer. The part that is intended to have the greatest consequence for consumers is that the financial institution must ensure that a borrower is capable of repaying a loan. Consequently the ability to obtain credit is more difficult than it has been for a number of years. Banks and third party lenders are absolutely paranoid that they are going to be prosecuted or sued under the NCCPA if they are not conservative when lending to consumers. The problem is that they will search deep into a person’s background to make certain that they pay all their bills. We have seen a loan knocked back for non-payment of an electricity bill of $125. The client did not even know that the $125 was owing and had a judgment debt laid on them after they had left the rented premises. Another person had bounced one cheque in two years of running their business and that gave rise to a person being refused finance. The banks are now looking for proof of deposits and the ability to pay the loan.

Bailey Compton Managing Director Leverage Australia and the Australian College of Professionals Bailey is a leading property solicitor and a licensed Real Estate Agent. Bailey has been described as one of the best legal minds in the real estate and property industry. The thousands of people who have heard Bailey speak have stated that his power is in the making of legal concepts simple for everyone to understand. The unique mix of legal and real estate talents allows Bailey to speak about property in a profitable and safe manner.

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The Australian Real Estate Review

SYDNEY • MELBOURNE • BRISBANE • GOLD COAST • CAIRNS • TWEED HEADS SYDNEY • MELBOURNE • BRISBANE • GOLD COAST • CAIRNS • TWEED HEADS

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profile IN THIS ISSUE WE SPEAk WITH PhIL ChAPMAN, PRINCIPAL oF LJ HookER MoUNT BARkER. What is your point of difference? What sets you apart from competing agents? We are a family-owned and operated business and we’ve run for over 100 years now. I’m part of the fourth generation of the business, which has been running since 1909. our reputation has been built upon local knowledge, trustworthiness, and just being honest. We also offer conveyancing and the state administration services, then on top of that you can add in the LJ Hooker finance arm, which really makes us a one-stop-shop.

How long have you been offering conveyancing and what prompted the decision to make it a part of your overall service? My father, who still works in the business, calls it the ‘grandfather clause’. He used to also offer taxation services because he was a licensed tax agent, a licensed valuer, a licensed real estate agent and a registered conveyncer. He held all four of those licenses and with that he operated all the businesses so it was like being a onestop-shop. years ago you didn’t have the other services around, so people were like, “Where do I go?” And we could offer those services across the board. Unfortunately now legislation means one person can’t run a conveyancing business and a real estate agency – the government said that’s a conflict of interest. So at the moment, there’s my father, my sister and myself in the business and my father and sister are registered conveyancers and I’ve got an agency licence. So the licences are held under different families but we’re still able to operate it which is quiete handy. No other agency in the area can offer to sell a person’s home and offer conveyancing under the one roof. For us it works out really good having the conveyancers in the same building because if there’s ever a hiccup there we can talk easily to the conveyancers. That’s a real advantage for vendors.

How do you handle the issue of other agents placing higher figures on properties to obtain listings? Every real estate agent probably does this a little bit differently, but in this situation I find a CMA (Comparative Market Analysis) comes in handy. We can produce that, show the client and do a comparison between the higher priced properties, the selling time and the actual price achieved. I usually like to go through that because it gives the client a sample. Unfortunately what they see is an advertised price for a property, look at it and say, “oh, mine’s worth more than that!” They see

The Australian Real Estate Review

eventually later on that the property sells but they remember that advertised price, and they get that price stuck in their minds, even though it could have been an agent over-pricing it. So it is really powerful when you can come in and say that although it went on the market for that price, it was on the market for however much longer, and eventually sold for this. Then I like to bring in and talk about the buyer activity, and there’s a graph you can use – the buyer activity wave. I explain to the vendor how buyers usually work on the market and how important the first 30 days on the market are. Then you get back what they would like to achieve and how long they want to be on the market for. you’ve got to show the vendors comparable homes to theirs and show them what they really end up selling for. It’s not going to work for all clients because you’ve got your different personalities out there. When you put the statistics down in front of them that’s going to appeal to a certain percentage, but for others it’s like, “Just tell me a figure.” So there will still be some that you will lose out to that higher price...buyers are pretty smart and they’ll know if it’s priced right or not. In today’s market if you’re overpriced by too much you won’t even get any offers.

Regarding your marketing, does everything have to be online these days, or does print advertising still hold a significant place in the industry? I think print advertising still holds a place. online definitely captures a fair amount of your buyers out there today, but print media has still got a place. Even now not everyone’s got a computer and not everyone’s got access to the internet, whether it is at home or at work. you can say probably 70 per cent of your enquiries are coming from the internet, but in saying that, do you want to miss out on those clients who don’t have access? There are definitely people out there who haven’t got the internet at home. I haven’t seen the latest statistics but I know a while ago...there are statistics you can get which say how many people have the internet at home and it’s not 100 per cent yet. And of course, how do you get your best price for property? you try and get as many people as possible through the property and get competition going. Because if you can get two people fighting for your property, that’s how you’re going to get your best dollar. Now if you’ve only got one person, it makes it that little bit harder to really talk up. Now the question is, if you miss out on that one person who looks through

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print media and not the internet, you could miss out on another $5000 or $10,000 for your property. you should have print media as part of your marketing campaign.

How do you pass on feedback to your vendors if it is unflattering? verbally is pretty good! Each situation is going to depend on what’s required. you can talk to the vendor verbally straight up, either over the phone or by meeting face-to-face. Another technique we’ve got, through part of our Customer Management Systems (CMS) is we can send them a report that has the customer feedback from the open inspections, so they can get it in print but then I’d suggest always ringing the vendor up and talking to them about the report. outside of that, if you really wanted to you could say, “I’m only passing on what the market is saying, and I’m here working for you.”

How do you ensure you get repeat business from your past clients? Firstly, you’ve got to do a good job first time! Because if you don’t do a good job the first time, you’re probably unlikely to get the business back a second time. Again it gets down to, do a good job the first time, being professional, honest, you’ve got to be able to give that feedback and if you do all that it goes a long way to securing repeat business. Secondly, after you’ve done the job you’ve got to try and keep in contact with them. There are plenty of different options of how you can keep in contact, you could go quarterly, half-yearly or yearly, it just depends on how often you want to keep that contact up. This is where your CMS system comes into play. you might send them real estate related material, or non-real estate related material, but you’ve got the option of keeping in contact at least once a year at the very worst, depending on the wants and needs of your clients. you might have some clients that like to be kept up-to-date with what’s going on in real estate so you can send them material more often, but I also have other clients who don’t want any real estate related material. At least if you keep up the contact you remind people that you’re still around, because it might be years down the track before people sell again.

What are the challenges for real estate agents in your area of Adelaide/SA? Definitely one of the challenges is the time properties can spend on the market, because in our area [Mount Barker, South Australia] the

average time on market has slipped out, we’re looking at around the four month mark. When I talk about the average, I had a week where I had one of the cheaper-end properties and I had only done three opens on it and got that sold within four weeks. But then I also had one that had been on the market for about seven or eight months, then sold that. So there was a mix.

Why are properties taking around four months to sell in your area? Well it’s all down to supply and demand. At the moment what’s happened is there are more properties that are on the market, compared to the numbers of buyers that are around. I’ve seen some statistics in The Advertiser of how many open inspections have been run and the number has increased. I can’t give you exact numbers but I have seen it and noticed that there’s more stock on the market than what there was 12 months ago. Although there’s more stock, there’s actually less buyers in the market, so then what happens is properties sit around longer. you can say for sure that the properties that are selling are the ones that are priced right, anything that’s overpriced isn’t selling. So we’ve got more properties than what there is buyers, and one of the other challenges out there is that first home buyers have disappeared – they’re just not around. Most of them who were seriously looking had to get into the market prior to December [2010] because the grants were dropping, so now that those grants have dropped back, there’s no urgency for the first home buyers. on top of that the banks have tightened up on their criteria over the last 18-24 months and because we’re on the outer fringe [of Adelaide] we’ve got areas where the banks will only lend 80 per cent, and that can make it difficult.

Why are first impressions so important? It goes without saying, if you make a bad first impression you may never get a chance to make a second impression.

What has been the biggest highlight so far in your real estate career? There was an older lady in town, her husband passed away, and she wanted to move interstate to be close to her family again. She didn’t really trust real estate agents and over time I think she had every agent in town come and appraise her property, but she never really employed anyone. It got to the stage where I’d been in there, talked to her, tried to put her at ease and let her know of the process and what we do. She eventually ended up putting her faith in us and listed the property and the price she wanted was in the top 10 per cent of my appraisal range. It was nice to be chosen because I knew that every other agent had been through. So we got the property listed, to the market, did the inspections how she requested which were private inspections and we managed to make the sale and got within the top-end of the price range which was what she was after. So finally once that settled she was able to move back closer to her family. It was nice to earn her trust when she didn’t trust real estate agents, and to go through that process and get a successful result. That’s one highlight that sticks in my memory.

What advice would you give to those just starting in real estate? Don’t think that because the other salesperson is sitting back and getting leads or referrals that they’ll come to you too. That salesperson has already done the hard yards – and that’s what you need to do now – prospect, prospect, prospect and keep in regular contact. That’s what people fall into the trap of, they sit there and say, “Why is the other salesperson getting leads and I’m not? I’m working hard but I’m not getting leads.” They have to do the hard yards first.

Phil Chapman is the Principal of LJ Hooker Mount Barker (SA). Phil is the fourth generation of the HB Chapman Family currently running the business established in 1908.

The Australian Real Estate Review

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Image courtesy of Jason Attard Photography.

The Australian Real Estate Review

The state of play

Industry feature name Q&A

in Australiaâ&#x20AC;&#x2122;s

market

The Australian Real Estate Review

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Lecturer in the School of the Built Environment at the University of Technology, Sydney, and Fellow of the Australian Property Institute and Royal Institution of Chartered Surveyors, Associate Professor Angelo Karantonis, spoke to The Australian Real Estate Review about the Australian property market, the economy and future challenges for real estate professionals. Can you speculate on Australian residential housing prices in the short to medium-term; and do you think residential housing market prices have bottomed out? Generally, as we speak, all the markets seem to have come back and the trend seems to be saying that now is not the best time to buy. Across the board, all capital cities have come back 0.3 per cent in the last quarter [June ending 2011], but overall in the last year: 1.5 per cent; and the top end of the market is the one most affected with about a 5.4 per cent decrease in the last year. But, one thing we have to be careful of: there are still patches where prices are holding their own, or moving upwards. In fact Sydney’s moved upwards in the last quarter: 1.2 per cent; however that should not be a sign of rising markets.

“Good salespeople have always said that they’re good in a falling market rather than a rising market because when prices are rising rapidly you don’t have to be a good salesperson – the houses sell themselves.”

more cautious look. That said, that’s a good sign, especially a lot of young people haven’t ever seen a downturn. Basically, we’ve had a continued run of good economy, good prices, from the early ’90s right up until the GFC – and even the GFC didn’t have a major impact on Australia immediately, or we thought we had overcame them, and to a certain extent we have – but there seems to be new signs that there could be some problems, especially in places like Europe that could have a major effect around the world.

What challenges could be expected to face real estate professionals in the short to medium-term?

As far as bottoming out goes… It’s moving towards a buyer’s market – it’s definitely not a seller’s market – but it’s starting to get to some stages where it’s becoming a buyer’s market. These are hard issues when we generalise about the Australian property market, but on the east coast, Sydney, Brisbane and Melbourne, my gut feeling is I don’t think they’re moving upwards at this stage – the chances of them moving upwards are very slim – whether they move upwards depends on the individual markets; and anyone that wants to sell is probably going to have to take a little less than what they anticipated. So basically, in my opinion, the last quarter [June ending 2011] saw our economy move into negative growth [-1.2 per cent] and also we saw some large falls in the stock market; so these are signs, more or less, that we’re not totally out of the woods from the impact of the global financial crisis (GFC).

I suppose the obvious thing will be that properties will be harder to sell – and in particular auctions, clearance rates are continually falling – but again, because we’ve had prices continuing to go up, everyone’s putting properties to auction. Really, auction selling is a specialist trade. In the old days it was the LJ Hookers and the Raine & Horne’s that were going to auction, and some of the other major firms, but now you’re getting every ‘Tom, Dick and Harry’ putting something to auction, and I think what’s ruining auctions is people trying to sell properties before the auction date. So these issues will be the biggest problems. But I also think it’s a good idea for professionals to fully understand what’s happening in the economy and how supply and demand is determined in the property sector. The property market is different to other markets; for example, if something is not selling it’s taken off the market, whereas, in first year Economics you learn that demand equals supply equals price, so that doesn’t really happen in the property market – people can withdraw a property from the market any time they like.

The global factors are creating the cautious approach, and we’ve seen in the last six months or so in releases of things like credit: most people aren’t spending as much, even in retail sales – we’re seeing it everywhere – everyone’s taking a

But on a specific sector, development sites for example, in the current market would be hard to sell. The challenge for developers is that they’re very reluctant to take the risk in developing, especially whilst the selling prices, or gross

The Australian Real Estate Review

realisation, is so speculative. At the same token, because of the GFC, money is not easy for developers to get from the banks – the banks want pre-sales to lend money on them – so developers are going to tough it a bit too. All it means is that salespeople are going to have to do their jobs as salespeople, basically. Good salespeople, though, have always said that they’re good in a falling market rather than a rising market because when prices are rising rapidly you don’t have to be a good salesperson – the houses sell themselves.

It’s often argued that Australia has one of the most over-inflated housing markets in the developed world. How accurate is this assertion? As an economist, I always have a bit of a laugh whenever we compare markets on world terms, because one of the major problems is: how do you measure something? One measure often quoted is comparing the ‘income multiplier’, which is ‘how many years of income equals the purchase price?’ [Website] Demographia, for example, actually publish this every year*, and they’ve shown that Australia is the ‘second least affordable’ of ‘comparable’ nations. But the reason I make this point is that first of all, when you talk about income, in Demographia’s measurement, for example, from what I understand, it’s ‘household pre-tax income’, therefore you need to consider taxation; some people would argue that Australians are highly taxed, and that varies from country-tocountry too, but if you’re getting a lot of benefits from tax then you don’t need to spend your money on other things – like public healthcare benefits, for example. On the other hand, when you’re considering median house prices it doesn’t consider the current characteristics of the home – and they actually recognise that themselves and say that UK housing is relatively smaller, and it’s true – a house in the UK will be smaller than a house in Australia, and a house in Australia will be much bigger than a dwelling in Hong Kong. But

Industry feature name Q&A

having said all that, there is no doubt about it that there are other ways of showing that Australian prices are relatively higher, but there are reasons for that and that’s because of the continual demand for property in Australia with a growing population. Public housing is another factor – some countries have good public housing – if you’ve got good public housing then you don’t need to buy a property to live in, so therefore there is less demand for buying property. To touch on tax, in Australia we do have tax benefits for residential – there is negative gearing for investment properties, also capital gains exemption from own residents; a lot of people think the more you buy the bigger the capital gain, that’s tax free. So, there is a bias in buying for the purposes of winning on the tax side. The Henry Report touched on both those. I’m not trying to advocate that these should be gotten rid of, but the fact is that these tax benefits are in place, and when you talk about governments, all three tiers of government play a major role in the property market. For example, stamp duty: one of the problems, I think across the board in Australia, is that governments haven’t taken into consideration that stamp duty rates have stayed the same as they were 30 years ago, and prices have virtually doubled all over the place. on the other side, when you’re talking about government, on the supply side, with planning controls, restrictions, infrastructure charges, etc., it’s very expensive to open up new areas. In NSW, for example, with the boom from the early ‘90s to the early-mid-2000s, governments have amassed large amounts of money from stamp duty and land tax due to increasing values, but have spent hardly anything on infrastructure. There are also some inefficiencies in the market. I touch on this because I’ve got relations that are getting older and they’re living in big houses and they’re on the pension, but if they sold their big houses and downsized, besides the transfer costs being pretty high, they would then also lose the pension and all its benefits. Some people argue, ‘if they have a big house then they don’t need the pension’, but it’s not just the pension they lose, it’s the medical benefits too. More broadly, there is a case to get rid of negative gearing on the basis of equity, but successive governments have been reluctant to do so because in the short term all it would do is get investors out of the market and push rents even higher.

Much has been said about an ‘Australia’s rental crises’. Is this call correct, and if so, what are the underlying causes? There is a crisis – an overwhelming yES on that. The reason for that is the underlying demand for housing, not only just to buy but for renting as

well. Since people can’t afford to buy, and since supply hasn’t kept up with demand, you’re going to have rents going up. Here in Sydney, and I’m sure in most capital cities, inner-city apartments or small houses can go for $600-$700 a week, and there are queues to get in to look at the place. The Real Estate Institute (REI) every quarter brings out the vacancy rate and they keep telling us it’s still staying at this continuing low level. Another factor for property prices to continually fall is that if rental prices rise and if housing prices are stable or fall then the return to the investor is increasing as well, especially in the inner rings of our major capital cities. I use the term ‘inner ring’ for the simple reason that the outer rings, unfortunately, is where people are generally having problems with unemployment and everything else, which then becomes a major factor for them. So, unless there is a change in the tax system to abolish negative gearing, for argument’s sake, the problem for the government to do that in the short-term is that it would be a catastrophe for rentals, but it would give people the incentive to buy. I suppose that I’m a firm believer that it’s better to subsidise people to buy a property than to subsidise them to pay rent because if they own their property then people can get some equity in their home, they’ve got some integrity about themselves, they can also buy furniture etc., rather than having to pay 18 to 19 per cent on their credit card.

been big contributors to that as well. The thing about Asian investors is they’re always, for many years, buying off the plan, well before Australian investors started to do so, who were always more ‘conservative’ compared to speculative off-theplan investors. Regarding the duration of the Chinese boom, the urbanisation of its people, with large-scale developments of new cities with five to 10 million people might suggest that the boom will go on for quite a while. This development and the number of people in China and their turnover and their gross domestic product (gDP), means, as many have said, China will be the biggest economy in the next 20 years. geographically speaking, Australia is in the right place. I can see that happening for a while and doing good for us; but there are some people, right or wrong, who are complaining that Australia is selling too much to China, but their usually talking about selling manufacturing, etc. But the Australian dollar looks like being pretty strong for a while now, the days of the 50 to 60 cent Australia dollar is behind us for the time being. * 7th Annual Demographia International housing Affordability Survey: 2011 http://www.demographia. com/dhi.pdf

How strong of an influence do you think China’s economic growth plays into the Australian property market? The first thing, on the economic front, China’s growth has helped Australia’s economic growth and it’s also helped us even through the gFC – even though we recently had a negative quarter – but it’s also helped lift the Australian dollar because of all these exports. In property, because of China’s imports Australia is experiencing a mining boom and therefore there is a need for housing in these areas, and it also impacts the major cities near these regions. The two major mining cities, Perth and Brisbane, but particularly Perth has had a tremendous increase in its housing prices – a year ago Perth had a higher medium price than the medium price of Sydney. These sorts of increases can be dangerous because they’re hot markets and they’re relying on a continuing mining boom that can easily have a catastrophic impact once the boom finishes or anything happens with that boom. on the other hand because of the mining states’ big economies, Chinese foreign investment, for example, in Australia in the year 2009-10 was AU$2.4 billion in Australian property and development, according to the Foreign Investment Review Board (FIRB); in addition there was AU$2.3 billion invested in off-the-plan purchases. A lot of the Asian countries, now China in particular, have actually

Angelo Karantonis is an economist who has over 30 years of property industry experience, agency, valuation and property development. He is an Associate Professor having joined University of Technology, Sydney, as a part time lecturer at the beginning of the Property Economics course and has been full time since 1989.

The Australian Real Estate Review

feature name Franchise issues

and the

franchisee

The recent demise of Angus and Robertson bookstores in Australia has dented the livelihoods of many hard working franchisees. But what implications would there be if a real estate franchise were to go into liquidation? Margaret Ambrose reports.

magine it: you are sitting in a meeting packed with anxious franchisees, just like you, the atmosphere thick with tension. Those attending the meeting are all thinking the same thing – that the outcome of this meeting could make or break their businesses – businesses to which many of them have dedicated years of their lives, not to mention a big chunk of money. The meeting has come about as a result of the planned sale of a real estate franchise group due to liquidation – and you are a franchisee. In an ideal world, when their franchisor goes into liquidation, franchisees would have some input into deciding the future of their businesses. Unfortunately it isn’t always the way and all too often franchisees find their businesses viewed by the liquidator little more than just another asset to be put up for sale. And as for having a say in the future of their business, franchisees can find their voices drowned out by those of every other stakeholder in the franchise. The recent demise of Angus and Robertson booksellers and the subsequent legal action by liquidators and franchisees has highlighted the potential risk to franchisees across all industries, including real estate. According to the University of New South Wales, which recently released a study on the impact of liquidation on franchisees, there are a number of issues frequently cited by franchisees as problems in the process of liquidation. Franchisees told of difficulties continuing to trade in an environment where the media was focused on the company’s ability to trade; they claimed they had no voice

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Franchise feature issues name

in the franchisors’ creditors meeting because they were not technically creditors; and they complained that the needs of the creditors were given priority over the needs of the franchisees. The study found that even if they survived liquidation, 93 per cent of franchisees involved in a franchisor failure lost substantial amounts of money and were forced to terminate the employment of staff. A common issue expressed by franchisees was that there was no consideration to how well, or in what way, a purchaser might handle the relationships and commercial needs of franchisees. However, Adrian Jones, chairman of Noel Jones Real Estate, says that the fundamental differences between a product-driven business and a servicedriven business mean real estate franchisees are

When product-based franchisors go in to liquidation, there are commonly disputes about monies owed or the continued supply of product. In real estate, however, a franchisee is rarely in a position to be owed monies by their franchisor, and there is no product needing to be supplied.

“What happens during liquidation is entirely dependant on the strength and content of the franchise agreement,” says White. “Most agreements would have clauses relating to the process and rights of each party if either was to go into liquidation.”

“What you are buying in a real estate franchise are systems, training and processes.” None of which, says Jones, would necessarily change in the case of liquidation. “The brand can even continue in some cases,” he says.

Protecting yourself could be as simple as making sure those clauses accurately reflect what the franchisee would like to see what happens in case of liquidation. These could be as standard or could be more particular. For example, it would be ideal if a franchisee had some say to what business the company might be sold to in the case of liquidation.

In fact, according to White, a real estate franchise can go through liquidation without any real change to public perception – as long as the liquidation process is not acrimonious. “People buy into a franchise because of the brand and what it offers,” he explains. “And when

“…a real estate franchise can go through liquidation without any real change to public perception – as long as the liquidation process is not acrimonious.” in less ‘danger’ than other franchisees, such as book stores. “In real estate you are selling experience and expertise, not products,” he explains. “With, say a pizza franchise, the franchisee would be obligated to purchase their stock from a particular supplier, et cetera.” Much more of the franchisee’s business is tied to commercial arrangements of the franchisor, he says, which may be impacted upon by liquidation. “The prices for real estate services are not set by a franchisor,” adds Geoff White, Member Services Manager at the Real Estate Institute of Victoria. “The franchisee is the one who negotiates with the consumer as to the fees they charge, and in turn the franchisee then has the control over their overheads, expenses and the like. This means the franchisee is often more likely to see financial stress, than the franchisor.” The University of New South Wales study supports this, stating that of all the franchise businesses in liquidation that were examined, real estate franchisees fared well.

there is damage to a brand, whether it be due to liquidation of any party in a franchise system or even a story on A Current Affair involving a franchisee, there can be potential damage to not only the franchisor but also other franchisees in the group.” The key to controlling what you can in the case of liquidation is largely dependant on what happens before you sign on the dotted line. “It’s really important to make sure you do due diligence before signing your franchise document,” says White.

“There can be many variables associated with this,” says White. “It also depends on the franchisor – whilst some may be prepared to vary the agreement to cater for changes, most will not as the process is usually clearly defined anyway.” Adrian Jones agrees that most franchise agreements are non-negotiable, though – and that is nothing to be alarmed about. “What you are buying into is principally a system, and a system that has been working and will continue to work. Once you start changing elements of that system, the system is weakened.” The good news says White, is that Australia has really not seen a major real estate agency franchise go belly-up. “It should be remembered that liquidation of either a franchisee or franchisor is something that could happen. However history will show us that in real estate, there have been many more franchisees go into liquidation than franchisors.”

As Angus and Robertson franchisees are discovering, once a company has gone into liquidation, it’s often difficult for the franchisee to disengage with the franchisor. Currently, a group of Angus and Robertson franchisees is seeking to terminate their agreements with the franchisor. The liquidator is resisting this move because the franchisees are a valuable asset to the company. The dispute is set to be battled out in court, which will drag out the process and be a financial burden on all parties.

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Find out why… when times are tough MoRE PEoPLE ARE TURNINg To PRoFESSIoNALS To BELoNg To THE BEST vALUE BRAND

It is no secret, 2011 is proving for many in our industry to be one of the most challenging years experienced in their careers. The market is lower, competition higher and the activity all across Australia has slowed dramatically over the past twelve months. The bottom line for agencies has never been more important and this is where Professionals Real Estate group truly shines. over the past four years the big names in Australian real estate have been hit hard with many groups having numerous offices close each month from all over the country. The Professionals group however, with their focus on providing high quality member services, low fees and true value for money are growing in numbers with more and more people choosing to belong to this exciting group.

every cent of fees the group receives is reinvested back into the business by way of services, benefits and value for their members. A family affair When asking Professionals members about the ‘feeling’ of their group one word seems to come up time and time again… family. Professionals members are not competing against each other for listings or market share, so rather then being rivals like you would find in many other groups – they are colleagues, sharing knowledge and information, supporting each other and working towards common goals. There is a real camaraderie amongst Professionals members and you only have to step into a group event to ‘feel’ it. Conferences, workshops, training days and awards events provide an opportunity to not only catch up with friends but also to get together and share knowledge and information to improve their teams and their businesses!

The Professionals ‘difference’?

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Professionals is quite unique compared to some of the other Australian brands and a lot of that difference stems from how the organisation functions. Their business model is what is referred to as a membership group, which means that instead of money being paid out to shareholders,

Because Professionals was created by members, for members – they have pledged a commitment to provide all members with dollar for dollar value. This essentially means, for every dollar received in fees, they endeavor to give more than a dollar back in value. Returns are delivered in added value

A message from Professionals CEO Glyn Morgan

A great ‘family style’ group, real value for money and an exceptional brand – no wonder so many are choosing to join the Professionals group. With new offices opening constantly Professionals truly are the group of the future. We offer our members the opportunity to belong to the best value brand in the business. We provide a unique service, where our members can retain their independent agent status, gain international brand presence and access the best value services across the industry. Whether you are currently operating under an independent brand, are part of a franchise group or perhaps are working for someone else and are now ready to take the next step and open your own office, we would love to have a chat to you about what joining our family could mean for your business. We have business development professionals right across Australia, contact someone in your state today.

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to Professionals members through high quality services, not in profits to shareholders. This commitment to providing value as a group means their members pay lower fees than other organisations in the industry. Service Centres offer a comprehensive range of Marketing, Training, I.T., Recruitment and operational services and also ensure Professionals members have access to the best industry relevant information, deals and suppliers. The bottom line being Professionals members pay less in fees… but get more back which means more profit and more money to invest back into their own business in local area marketing and promotion. Professionals Real Estate Group To find out more information visit their corporate website at: http://www.professionals.com.au/

SOUTH AUSTRALIA Lynne Savage 0458 505 950 WESTERN AUSTRALIA/ NORTHERN TERRITORY David Hobbs 0417 707 768 NEW SOUTH WALES Stuart Watts 0438 332 028 QUEENSLAND Michelle Mulholland 0434 331 656 VICTORIA/TASMANIA John Abraham 0434 331 738 ASIA PACIFIC/NEW ZEALAND glyn Morgan 0430 288 170

Talk to one of the Professionals team today about how belonging to the best value brand could take your business to the next level!

WHY YOU SHOULD

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“I’ve been in the industry for a long time... and I can safely say there’s nothing like being a part of the Professionals group. They’re constantly giving us more and more. More services, more value, more learning and business development experiences, more campaigns and marketing opportunities... more everything! Since becoming a Professionals office our brand awareness in the community has sky-rocketed and we just keep growing and finding more success!” Conor Arnold, NSW

C O N TA C T SOUTH AUSTRALIA Lynne Savage 0458 505 950 WESTERN AUSTRALIA/ NORTHERN TERRITORY David Hobbs 0417 707 768 NEW SOUTH WALES Stuart Watts 0438 332 028 QUEENSLAND Michelle Mulholland 0434 331 656 VICTORIA/TASMANIA John Abraham 0434 331 738 ASIA PACIFIC / NEW ZEALAND Glyn Morgan 0430 288 170

TO THE

BEST

VALUE BRAND

Join Professionals Real Estate Group and experience a unique family, culture, true value for money and the opportunity to be part of one of Australasia’s most exciting brands!

Belong

Experience a true sense of belonging, with regular opportunities to work and network with your fellow members, opening up the doors to information sharing and referral opportunities.

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Professionals are dedicated to maintaining a strong, fresh, vibrant and relevant brand that is easily recognisable and is considered to be one of the industry leaders throughout Australasia.

Visit us online at www.professionals.com.au for more info.

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n An unrivalled Sales, Property Management and Office Management system which provides our franchisees access to the complete Fletchers Way “business in a box” policies, procedures and precedents via the Fletchers intranet for every aspect of running a best practice agency.

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Car maintenance feature name and wet weather

the cold

Donâ&#x20AC;&#x2122;t give your car

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Car maintenance and wet weather feature name

riving in winter’s wet and dark conditions is not an experience many of us enjoy, made worse by foggedup windows, sluggish batteries and ineffective windscreen wipers. Luckily many of these dramas can be easily avoided by following some simple tips.

Recharge your batteries Extreme temperatures have the potential to wreak havoc on car batteries with nearly 40 per cent of all winter breakdown calls received by the Australian motoring clubs resulting from battery and electrical related problems. The good news is that there are many simple precautions we can all take to prepare our car batteries for winter and reduce the risk of a battery failure. Electricity has a tendency to leak via paths created by dirt or moisture, so always keep the engine and electrical components clean and dry. Have a good look at your battery – are the terminals clean and tight? keep an eye out for white or green corrosion powder around the terminals and if it’s too thick to wipe off easily, make a cleaning paste by mixing some water with bi-carbonate soda. Brush the paste onto the terminals and allow it to soak for a few minutes, and then rinse it off with plenty of clean water. Remember, battery electrolyte is very corrosive, so always use eye and hand protection, and don’t let the electrolyte touch the car’s paintwork as it will cause damage. Also, take care to capture the run-off as this may be very acidic and could cause damage and staining to driveways, lawns and other surfaces. It’s important to regularly check the battery electrolyte levels through the vent caps in the top of the battery. Remember, only top up the levels with distilled or deionised water so that it just covers the visible top of the battery cell plates. In the case of non-accessible batteries, it might pay to have your battery checked by a professional.

Tread the right path No one enjoys driving in a heavy down pour, but having good tyres can go a long way in preventing any frightening incidents. The grooves in a tyre allow the rainwater to pass through it and stay in contact with the road,

instead of having water accumulate in front of the tyre. As the tyre wears, theses grooves become shallower allowing less water to pass through, which in extreme conditions or at high speed can result in the tyre losing contact with the road and “aquaplaning”. To avoid this situation, there is a maximum legal allowable amount of wear in a tyre’s tread of 1.5mm. An accurate way to gauge the tread on your tyre is to call into a motoring club approved repairer where you can pick up a free plasticised tread depth gauge for you to use and keep in the glove box.

Wipe the slate clean Windscreen wipers are vital because if perished or cracked they’ll be unable to wipe the glass effectively, causing streaks, smearing and reducing visibility. Lift the blade from the screen and look for cracks or general perishing. If you spot any of these signs or if the blades fail to wipe the windshield clean or ‘chatter’ across the glass, it’s best to replace them. While you’re there, check that the washers work and the reservoir is topped up.

Clear the air Many people also don’t realise the importance of running your car’s air conditioner during colder weather. Ideally, if you run the air conditioner for at least five minutes each week, it will allow refrigerant to run through the system and keep the compressor seals lubricated so they won’t dry out, minimising cracks and leaks. The air conditioner, when used in conjunction with the car’s heater, is also very effective for de-humidifying the interior of your car on a cold winter’s morning.

Winter tool box Be prepared and keep a small squeegee and chamois in the car. This will make it easier to keep the windows clean when they become clouded with a combination of built-up dirt and the low winter sun. A small can of water dispersant, which is a very thin lubricant, will also help with wet ignitions and any joints and hinges that get tight over winter.

The oil factor oil is reactive to temperature making it thicker when cold and thinner when hot – it also becomes thicker as it becomes dirtier. When checking your oil, if you detect it’s thick and dirty, consider booking the car in for an oil change at your local repairer. The last thing your engine needs is to work harder during a cold weather start-up, as the oil is usually thick and harder to pump around the engine.

A guiding light Winter often means poor visibility, so you need to make sure that your lights are in perfect working order, ensuring that you can both see and be seen by other motorists. A quick check from outside the car will reveal most faults and you can test the brake lights when you put the car away at night. Simply turn the headlights and parking lights off then press the brake pedal while in a garage or carport as the brake lights, if working, should easily illuminate the area. If you don’t have either of these, simply reverse up to a shop window when you are out and using it as a mirror will help.

Australian Automobile Association and its constituent members: NRMA, RACV, RACQ, RAASA, RACWA, RACT, AANT and RAC.

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feature name Taxation

To buy or Buying versus leasing

The Australian Real Estate Review

NETTINA BARRESI LookS AT THE TAX BENEFITS ARoUND CHooSINg To BUy oR LEASE CAPITAL ASSETS.

feature Taxation name

ne of the most common questions asked by clients is “Should my business lease or buy equipment?” There are many advantages and disadvantages in both, and it really does depend on the business. The most common factors that come into evaluating decisions are based on cash flow.

Buying ‘Can my business afford to pay for the capital equipment outright? What kind of impact will this have on my business, right here, right now?’ If the business is in a strong cash flow position, then by all means this is a preferred option. you, as the business owner, immediately have ownership of the assets. If the business assets have a long life, then this can be of great benefit also. There are tax advantages of buying the asset, as a business is able to claim depreciation deductions:

Tax Scenario – Case study At the start of a new financial year (1 July) a business is looking to purchase two computers at a combined cost of $6000 Option one – Buying the assets

Option two – Leasing the assets Cash at bank – not affected Tax deduction – leasing term three years at nine per cent (total cost $6620) Total tax benefit – $210 per month ($2520 per annum) It is important to remember that every business is unique, and every business will need to make their decision based on what is best for the business at the time.

What types of leasing are available for businesses?

• You don’t tie the business into long-term agreements which may be difficult to end.

There are two types of leasing:

Leasing Leasing business equipment allows the business to preserve capital, and provides flexibility – but is generally more expensive to the business in the long run. one advantage of leasing business equipment is that it allows the purchase of capital with a minimum cash outlay. general business assets are great tools for any business and are genuinely needed in the workplace. Provided that a business has a budgeted cash flow, and have calculated their commitments in leasing the equipment, this can be advantageous for any business, either in a start-up phase or a growth phase. The advantages of leasing are:

Every business has different needs: It is important to discuss with your accountant what option may be best suited to your business at the time.

Cash at bank – reduces by $6000 Tax deduction – computers x 2 ($6000 x 40 per cent = $2400)

• You own the asset and it cannot be repossessed – unless it has been used as security.

• You will pay less overall than you would through a lease or hire-purchase agreement.

low as possible, particularly at the start-up growth stage of your business. Leasing options do help with accomplishing these goals.

operating leases: often allows the lessee to make smaller periodic payments than with a term loan. Capital leases: Amortises the lease over the span of the lease term. Lease payments on a capital lease are larger than payments on an operating lease. In fact, capitallease payments are comparable to loan payments.

Hire purchase or buy? Hire purchase means that the business owns the asset, once all the payments have been made. The advantage is that you can often update your equipment without the expense of buying newer models. Leasing means you may never own the asset outright, although some lease arrangements let you buy the asset at the end of the agreement. you can also claim capital allowances against tax from the beginning of the hire purchase contract.

• It is tax deductible.

Helpful Hint

• Flexible options of payment, and it is easier to upgrade equipment.

Many clients come to us to discuss the above options available.

• Particularly good where business assets have a short-term technology span.

What you must remember as a business owner: you may need to keep your cash expenditure as

Nettina Barresi Managing Director and Principal Accountant Nettina founded Advantage Accountants (SA) Pty Ltd and has been fundamental in growing the company and the services offered to its many loyal clients. Nettina has over 15 years of experience in the accounting field, and set up public practice in 2001. Her main focus is taxation and wealth creation strategies. The team behind Advantage Accountants (SA) Pty Ltd are extremely passionate about assisting their clients’ needs. They all work very closely with their clients to ensure that targeted goals for the client are maintained and achieved. The passion that lies within Nettina and Advantage Accountants (SA) Pty Ltd, is the great need to assist clients and small businesses with implementation strategies to help grow the business and ensure all operations of the business are run successfully. Nettina is a specialist in Business Accounting and Taxation and provides great leadership to the accountants and other staff members that make up the team. Tina is also very focused on helping clients with their business review and planning needs. Nettina is passionate about what she does and her competencies in the Business Accounting and Taxation sector have been established over many years. Nettina is also able to assist client with strategies on better managing their debt and implementing wealth creation solutions. Please feel free to visit: www.advantageaccountantsa.com.au

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What’s missing... FRoM yoUR PRoPERTy SALES PACk?

Glossy property flyer? Check. Professional photographs? Check. Architecturally drafted floor plan? Check. Check. Suburb Profile? Check. Tax depreciation estimate … huh? If ‘know your customer’ is one of the golden rules of successful selling, and investors currently account for approximately 31 per cent of all property sales in Australia, why do so few real estate agents include information about property tax depreciation in their info packs and online listings? What is property tax depreciation? Tax depreciation is one of the most important tax saving benefits available to property investors. It should also be an important sales tool for real estate agents. “Agents spend a lot of time putting together comprehensive sales packs with information about

local schools, shopping centers, restaurants and recent sales, et cetera yet the most vital piece of information for a property investor is nowhere to be seen,” says Tyron Hyde of Washington Brown quantity Surveyors. Tax depreciation can save investors thousands. Just like you can claim the wear and tear on a car purchased for income producing purposes, you can also claim the depreciation of investment property against your taxable income.

• Educate buyers about the tax benefits of a property. • Differentiate yourself with clients and potential buyers. Crunch the numbers. Washington Brown Quantity Surveyors has a free co-branded online tax depreciation calculator available to real estate agents – visit washingtonbrown. com.au/free-tax-depreciation-calculator or call us on 1300 99 06 12.

“Savvy agents are starting to realise information about tax depreciation can really drive sales and differentiate them in the market,” adds Hyde. Depreciation is about knowing your customer: • Get the right price for the vendor. The ability to highlight the tax savings to potential buyers upfront can help support your client’s price expectations.

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Rental Properties the TaxSmart® way what you need to know

Owning an investment property is the dream of many Australians. For many, the idea conjures up images of large annual tax refunds, great weekly rental returns, and then after a few years the big payoff – a tax effective capital gain upon sale which sets the owner/s up for a life of easy living.

For many Australians, these dreams have become a reality, with the Australia property market seeing various bursts of significant price increases in the last two decades. But for many investors, the large windfall has yet to be realised, and holding investment property has become more and more challenging.

• Interest on loans

As tax professionals, we seek to identify all available deductions for our investment property owners, so as to make life a little easier whilst they navigate their way through the ups and downs of the sometimes volatile property market. We recognise that property investors incur unique expenses, and seek to claim all allowable deductions wherever possible.

• Pest control

Some expenses you cannot claim as deduction, and must be included with the costs of acquiring or disposing of your rental property when calculating a gain or loss on sale. These types of expenses are capital in nature and go to the cost of the property and include: • Legal fees and stamp duty on the purchase, and, • Advertising the property for sale • Agent commission on sale, and, • Capital improvements. Negative Gearing = Big Tax Refund? Everyone loves a big tax refund, but what’s the best way to make sure yours is everything you’re entitled to? Australians have been fascinated with the idea of negative gearing for decades, but are the benefits really all they’re said to be? Scott Andrews is a CPA with a specialisation in taxation, and is the founder and managing director of national tax franchise TaxSmart Accountants and Advisors. ®

A rental property is negatively geared when expenses of the property exceed income from the property. Generally, the larger expenses are incurred via interest from funds borrowed to purchase the property, however non-cash expenses such as depreciation and capital write off can also significantly contribute to the loss is incurred. Losses incurred can then be offset against assessable income (e.g. salary and wages or business income) – the outcome being either a reduction in tax payable or a larger tax refund. Let’s take look at the most common deductions claimed on Australian investment properties: • Cleaning • Management fees • Body corporate fees

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• Council rates • Repairs and maintenance • Electricity and gas • Land tax • Insurance • Travel • Borrowing costs • Depreciation • Capital write-off Of all the expenses mentioned above, the two of most significance in my opinion are the non-cash expenses of depreciation and capital write-off. Unlike all other expenses listed above, these expenses have not actually been paid in cash by the investor. That’s right; we’re talking about claiming potentially tens of thousands of dollars per year without technically spending the money. Negative gearing deductions are more beneficial to people in higher income tax brackets, however significant benefit can still be obtained for an average income earned, if the right property is purchased and the investor obtains tax advice from a suitably qualified tax expert. Over a period of a few years, substantial additional cash flow benefit can be obtained by taking advantage of non-cash expenses, and seeking the advice of a Quantity Surveyor is one of the most important things we consider a property investor can do. For more information on non-cash expenses, speak to your accountant, who can put you in contact with their preferred Quantity Surveyors. PAYG Income Tax Withholding Variations If you have a negatively geared investment property, you may be entitled to receive your cash flow benefit in your pay packet each week instead of as a lump sum refund at the end of the financial year. This can be of tremendous assistance to an investor who finds themselves with higher repayments than they’d originally anticipated, and in essence allows for a weekly/fortnightly or monthly reduction in tax deduced from PAYG Withheld where a projection of an individuals’ tax payable predicts a tax refund. If you think you may be eligible for a PAYG Income Tax Withholding Variation, talk to your accountant.

One simple rule which we always recommend potential property investors follow – always buy property for reasons OTHER than tax. Buying property just for tax advantages is considered by most accountants the single dumbest thing that someone could do when it comes to property investment. When discussing a property that an individual is considering purchasing, we think you should be saying things like “I’ve done my research on the area and I’m fairly certain there is potential for strong capital growth in the medium to long term”, or “We really want to live in the area, we’ve done our sums and we’re confident we can afford it”. Tax Time! What you’ll need to maximise your refund: As you prepare the not so fun task of gathering information for this year’s Tax Return, it’s essential that you provide your Accountant with all information required to maximise your tax refund or minimise your tax liability. It is imperative that you supply your Accountant with detailed lists of all your income from the property and expenses, whether they be cash or non-cash expenses. Following is a list of the things you will need to collect and keep throughout the financial year to give to your Accountant at tax time. For each investment property you own you will need to keep a separate folder to collate all your records. • The address of the property • The date of purchase of the property • The purchase price of the property • Ownership details of each property • The total income of the property • Details of all expenses incurred • Quantity Surveyors Report (if applicable) • A copy of the depreciation schedule (if you have one) • Details of any travel expenses incurred • A list of any questions you may have Rental Properties – Examples of Allowable Deductions Advertising for Tenants This is a claimable expense if you advertise for tenants. The cost of advertising for the “sale of a

property” is a capital expense and therefore cannot be deducted. Body Corporate Fees Generally paid quarterly and covers the running costs of the building, e.g. maintenance of shared areas. Borrowing Expenses These costs (e.g. loan establishment fees) are not deductible upfront, however they are deductible over either the period of the loan or five years, whichever is shorter. Capital Works A non-cash expense, based on the actual cost of construction to the owner (subject to construction date for properties built more than 20 years ago).

the lounge room wall by a tenant moving around furniture is a clear example of a repair, which would be fully deductible in the year incurred. Travel Travel is deductible if used in conjunction with the income producing activities of the property, for example collecting rent. Travel expenses include motor vehicle travel and airline travel as well as accommodation, car hire and meals. If the rental property is in a different town to taxpayer’s residence travel must be pro-rated on the number of days spent on actual rental business. Travel expenses incurred in purchasing and selling a property are of a capital nature and therefore NOT deductible.

Cleaning Includes internal and external cleaning. Commissions and Management Fees Unless incurred as part of a property purchase or sale, these costs are generally deductible. Council Rates Including water and sewerage. Depreciation This is sometimes a non-cash expense for the cost of items such as furniture, fixtures and fittings and is based on the assets effective life. Gardening This includes dump fees, gardening and tree lopping. Insurance Insurance on building, contents, public liability and landlord insurance. Interest Interest on a loan to purchase, build, improve or repair is deductible. The purpose of the loan is very important; it should be used for income producing purposes. Land Tax Land tax is a deductible expense. Pest Control This is a deductible expense and includes payments to contractors and purchase of sprays etc. Repairs Repairing an item to the condition it was in before it deteriorated without changing its essential character. Adding a new deck is not a repair, it is a capital expense which is required to be depreciated. Fixing a hole accidently knocked into

The Australian Real Estate Review

feature name Wines

HOME is where

drunk…and stored

The Australian Real Estate Review

featureWines name

walked into a client’s home the other day to do a cellar valuation. The house was a new one. I was even asked to take my shoes off, “must keep the carpets clean dear” the matron of the house declared.

And nine times out of 10, you’ll blame the wine maker for it! But it’s not his/her fault. It’s yours because you’ve stored it in a hot tin shed. And by the way, just think, you may have just missed out on one the most spectacular wines ever made!

That was all good news, as it suggested to me that I wouldn’t be crawling around a dark, dank cellar full of rat droppings, puddles on the floor from leaking bottles, boxes of keepsakes that nobody has looked at in over 30 years and of course, plenty of dust.

From your humble $5 supermarket white blend, to a more expensive Macedon Ranges cabernet blend to a super-premium wine like Henschke’s legendary Hill of grace or Leeuwin Estate’s famed chardonnay, they all need stable and cool cellaring conditions.

Aaah, this will be a new cellar, a clean cellar, where the wine is young, in good condition and loaded up with Penfolds Bin 707 (a wine that is selling like hot cakes in the current auction market). And all the original packaging is intact.

So here’s a few storage tips from one who has seen a lot of poor and very sad cellars in his time.

I just hate that bit in my job where I have to explain to my client that their bottle of tawny port they have hung onto for over 40 years is worth diddly squat, or that their prized bottle of grange from the 1960s is worthless because the label has been chewed by silverfish and the capsule and cork have been gnawed at by the large colony of wine savvy mice. oh yes, those wine mice always choose grange over Jacob’s Creek! Australian’s drink a fair amount of wine, on average around 23 litres per capita per annum. The French drink about 45 litres while the vatican consumes approximately 70 litres! (The Wine Institute: Trade Data and Analysis 2009.) But importantly most of our wine is consumed at home. Correspondingly, there has also been an increasing amount of wine being stored at home as well. Where good bargains by the case, wines that are hard to come by, wines purchased for the occasional dinner party or solely for Aunt Mable’s monthly sav blanc binge or where that special wine purchased while touring the vineyards along with wines purchased for investment, are now being stored at home. Alas, I do suspect that it is also being stored poorly as well. Bottles stored in kitchen cupboards, boxes out in the laundry that cop the full blast of the summer sun, in the colourbond garage that has no insulation and if you’re lucky or you have an underground cellar that has the unique feature of light and air shaft that allows that allows the inside temperature to match the outside! These are all true storage stories. In a simple word: heat kills. And to be a little more exact: rapid temperature fluctuation kills. At best: the wine leaks and just tastes cooked, disjointed and just plain nasty. But at least you can see it has been heat affected. At worst, it tastes dull, not quite right. All those light delicate, complex making flavours are gone. your wine has just become very dull and boring.

First of all, always seek advice, ask an expert, ask the winery, ask the retailer, ask your best mate who is a wine collector: How should I store my wines? Then you can consider the following storage options. At the no cost or cheap end: just locate where the coolest part of the house is and store there or maybe consider using the bottom of the wardrobe, which funnily enough is a good spot because it has a very even temperature. And use those old post office polystyrene packs, they are excellent insulators.

dusty tannins and a very long after taste. Would certainly take a few years cellaring to bring out its best. Try Nick’s Wine Merchants Melbourne.

A wine for long term storage and investment… Penfolds Bin 389 Cabernet Shiraz 2002 $50-60 at auction yep, it’s an older release but from a strong year and still at a good price (the listed excludes buyer’s premium and other charges). Even Penfolds has declared that this wine will last to 2030! Try oddbins Wine Auctions. And the home I visited? The matron of the house took me into the lounge, all white shag pile carpet and a lounge suite that looked like it had never been sat upon. The gas heater was going full bore. It was warm and stuffy. So was the wine collection, carefully racked right next to the heater. Aaaaah!

Then if you want to step up to the next level, why not consider a wine storage fridge. From one dozen through to hundreds of bottles, these appliances are safe and can be very affordable. you can even get models such as the vintec that can store both reds and whites at different temperatures. And best of all, they can be easily incorporated into your existing as well as new homes. And finally, you can always convert or build a proper wine cellar. Temperature and humidity controlled with plenty of racking, a place to store your wine accoutrements (cork screws, books, decanters, funnels etc.) and a place you can disappear to when you need some quiet, vinous solitude. Needless to say, you’ll need a substantial bank account for this ideal option. So while you’re considering all this, here’s a couple of drinks to keep you going…

A wine to drink now… Yangarra McLaren Vale Roussanne 2010 RRP $20 A McLaren vale white? you’ve got to be joking! Nope, this is brilliant: full, richly flavoured and it’s also crisply clean and fresh tasting. Try East End Cellars.

A wine to pop away for a bit… 5 Maddens Lane Old Riddell Yarra Valley Cabernet Sauvignon 2006 RRP $35 Blackcurrants, cedar and mulberry flavours abound in this very well put together and very tasty cabernet. Amazing length, with fine

Graham Wright is a director of both oddbins Wine Auctions and The odd Whisky Coy. visit www.oddbins.com.au

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Mind the gap: talking about

THREE AgENTS, FRoM THREE DIvERSE AgE-gRoUPS, STooD AT THE FRoNT oF THE BRISBANE PoWERHoUSE AND PoNDERED WHAT IT TAkES To TRANSACT WITH THREE DIFFERENT gENERATIoNS. EMILy MAhER REPoRTS.

s Amy Jorgensen from Ray White New Farm, gerard Baden-Clay from Century 21 Westside and Lenore Sieber from RE/MAX United Vision Carina stood for the camera, Lenore joked, “Amy you should have your iPad in your hand and I should have my brick mobile phone and two-way radio for the shot.” “I always wondered what people did before mobile phones,” Amy responded. An ageing workforce means Australia is looming towards the biggest retirement phase in its history. According to the experts, tailoring your communication and selling strategies, keeping up-to-date with technology, and building rapport and trust among other generations different than your own, are the keys to succeeding in today’s changing market.

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Generation Y (1980 - 1994) Let’s take Generation Y for example. McCrindle Research (2010) claims this group to be the most entrepreneurial generation ever. They’re in their 20s, even more educated then previous generations, and looking for more opportunity. Within the decade, they will represent 35 per cent of the workforce across the country. These kids are the new first home buyers. Having grown up online, they are highlynetworked and technologically-savvy. They’re used to being readily available through mobile technology, namely SMS, since welcoming their teenage years, and now barely communicate via phone conversations – let alone face-to-face meetings. They simply can’t imagine a life without the iPhone, Facebook or internet – nor do they want to. According to McCrindle Research, Gen Y has short-term wants, little brand loyalty, credit dependency and their purchase influencers are generally their friends. Representing the Gen Y’s, 29-year-old apartment specialist in Brisbane’s inner-city suburb New Farm, Amy Jorgensen, says brand loyalty is difficult to quantify in real estate as buyers tend to follow properties rather than agents. “However, I have noticed Gen Y tend to have more urgency in jumping on the property ladder and New Farm lifestyle with a real fear of ‘missing out’,” Amy says. “However, like every generation, they do have the long-term benefits in mind. Gen Y property hunters tend to break the more stereotypical characteristics as they are looking beyond the immediate and into the long-term, which illustrates the difference in ‘property savvy’ Gen Y as opposed to the stereotypical Gen Y.” Mark McCrindle, social researcher and demographer for McCrindle Research said Gen Y’s property appeal is definitely the lifestyle and location. But, what will cramp their style is the money available to buy their first home.

“Gen Y has less equity and therefore fewer options when it comes to purchasing property. And there are questions over the value of their first place compared to what their parents or even grandparents paid when they attained their first property. But for many, it’s getting a foot-hold in the property market,” Mark says. “They have limited negotiation power and (because of the lack of savings) Gen Y is finding different ways of acquiring their first property.” Rather than the traditional home purchasing of previous generations (buying with a partner), Gen Y are acquiring their first piece of real estate by purchasing individually or by teaming up with their parents or in bigger groups. “They only own the property for a little while so they can step-up to get what they really want. They are investment-driven when it comes to decision making, even if for compliance reasons, they live in it for a while,” Mark said. Gen Y is not only different because of how and what they purchase, but also in how they search for properties and interact with agents. Baby Boomber Lenore Sieber, 57, of RE/MAX United Vision in the Brisbane suburb of Carina, said Gen Y want information and want it immediately. “By nature, they are impatient and demanding and as a salesperson you need to be ready to serve this immediacy. Gen Y shows no fear and is ready to take risks,” Lenore says. “Gen Y are very social media savvy and rely heavily on Facebook and Twitter to communicate with each other, and to select their relationships based on trust and personal experience from within their peer group.” Gerard Baden-Clay, a 40-year-old Gen Xer, owner of Century 21 Westside in Brisbane has a similar opinion. “Our objective is to attract as many interested buyers as possible so we can generate the best possible result for the seller. Whilst we rarely have issues with anyone based solely on their age, I think the biggest issues usually come down to communication. Not necessarily poor communication, just different communication,” Gerard says.

»»

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»»

Generation X (1965 - 1979)

“As their family is growing, both numerically and in size as their children move into the teen years, we are seeing them purchase property to suit their needs for the next five to six years. They are typically ‘up-graders’ looking for location and quality of living,” Mark said.

Gen X, in many ways, has continued the legacy of the Boomers – but with more education. Mark McCrindle said this generation got into university in record numbers, they have a solid work ethic and a determined focus on wealth accumulation.

“They can push harder when negotiating, but are definitely moving up in terms of value of stock. They’ve been shaped in a world where they have a bit more aspiration in property.”

Gen X has experienced and had to embrace the huge shift in the way family, friends, colleagues and even the media interact and communicate. Take the recent Queensland floods. McCrindle Research says, characteristically, Gen X brand switch, have medium-term goals and their purchase influencers are the experts. Gerard thinks that in many respects, this is true of Gen X, but there are always exceptions to the rule. “It’s important to listen to each individual and their needs, wants and desires in order to assist them best to achieve the outcome they are looking for,” he said. “We’re often feeling challenged by the rigours of raising a family, and can sometimes be a bit precious about feeling responsible for everyone and everything. A Gen X friend of mine said to me ‘we’ve helped pay for Gen Y’s education, and we’re funding Baby Boomers into retirement’ – so be prepared for some ego stroking too!” Gerard said with a cheeky laugh. As Gen X is in the family-life stage now, their decisions, when purchasing property, are driven by their family.

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Lenore’s experience with Gen X is that they want researched information to substantiate the facts they rely on to buy property. “They can then take the time to be certain about their decisions and possibly consult trusted family members for their opinion,” Lenore says.

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Baby Boomers (1946 - 1964) Not just the gen Xers, but also the Baby Boomers have had to adapt to ‘new-age’ technologies to suit the needs of their clientele. “The internet came and changed the way we advertised and email changed the way we interacted with our clients. And then came Facebook, Twitter and iPhones and this has made the pace of real estate far faster. We have needed to adapt to embrace this into our business plans and for our clients,” Lenore says. The Boomers are a high-network generation who own some 50 per cent of the nation’s private wealth. This is the generation who’ve experienced years of economic growth. They have succeeded through increasing the capital growth of property in their lifetime – but not without hard work. “They started their working lives at 16 or 17 years old – and have worked hard ever since,” Mark says. In 1992, Lenore began her real estate career joining her partner to form a husband and wife team. Now owner of RE/MAX United Vision Carina, Lenore says understanding what drives and motivates your target market is imperative to succeeding in real estate. “My own generation needs nearly the same amount of information [as other generations], but we process it differently. We take longer to make more considered decisions. We look more at the bigger objective unlike gen X or y who will look more to just the immediate future,” Lenore said.

“our generation is considering moving towards retirement and what impact that will have on our future buying and selling habits.” Lenore agrees Baby Boomers are generally brandloyal and have long-term goals, having felt firsthand the effects of the 17 per cent interest rates in the late 1980s. The Boomers have, and need, long-term goals. “We have lived longer and know from our experiences that times can and will change – for example, the gFC, extreme weather conditions, interest rate fluctuations,” Lenore said. “We are a generation that believes we have to ‘serve our time’ to reap benefits which sets us apart from gen X and y.” Through his research, Mark has found that Boomers have much power in their life. Powerful options. Powerful decisions. And negotiation power. “They are not in a mad rush to jump into a purchase as they already have a roof over their head. They are more likely to look for the deal that’s going to make sense to them,” he says. “It has come to the point in life where quality matters, as they are becoming empty nesters and wanting to downsize from the large four to five bedroom homes in the suburbs. “The Boomers are fairly articulate in what they want in a property and are quite demanding. They are looking for someone to interact with them, who can show them respect, and really engage with them in a professional and informative manner.” »»

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Real issues feature name

... And the next generation?

Where to from here?

Born after 1995 are the gen Zs. They portray many of the gen y characteristics but are even more educated, even more technologically savvy, competitive, and culturally connected. They will have a lot of life experiences cramped in a shorter amount of years. And as they will be more financially conservative, they will be able to save and achieve property ownership.

Mark McCrindle, also known as a futurist, predicts great opportunity for property in the years ahead. People will live longer, have a stronger love-affair for property in Australia and remain active in the market.

»»

“They will be disciplined, structured and quite diligent in that financial area,” Mark says.

“We will see a lot more churn in property and we’re going to see people upgrade and upgrade to suit their current life stage,” he says. “With the ageing population, we will see the biggest transfer of generational wealth yet. “People will be moving more frequently than ever. They will be more aspired to get what they want rather than just making do. “Regardless of any economic ups and downs, the demographic realities are quite clear. And that is – our population continues to grow strongly and in turn demand is outstripping supply. “There will be some good opportunities for all generations in the years ahead.”

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This story by Emily Maher first appeared in the Real Estate Institute of Queensland (REIQ) Journal. The REIq is the peak professional association for the real estate industry in queensland. With more than 90 years’ experience, few associations hold the reputation or brand recognition of the REIq. Holding an exceptional reputation as the State’s leading authority on real estate and property related issues, the REIq is widely recognised as a true and reliable source of comprehensive, up-to-date market data and information.

Image courtesy of Top Snap.

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Jones and Giuliani

AREC 2011 The Australian Real Estate Review

feature nameCoverage Conference

Image courtesy of Top Snap.

arly on an autumn Sunday morning in May, 2500 real estate industry professionals from across Australia and New Zealand descended on the Sydney Exhibition and Convention Centre in Darling Harbour to attend the Australasian Real Estate Conference – AREC 2011 – the 14th held by TRET. Under the banner ‘Shift Happens’, the proceedings were opened by real estate guru John McGrath who recalled the event’s history and how it came to be such a success Down Under. He also touted the list of speakers that was in-store for the delegates. “If there is a conference anywhere in the planet, of any description, that has three better speakers to open the event than the three that we have I’ll be absolutely shocked,” he told the audience. Total Real Estate Training (TRET) general manager, Stephanie Mason, agreed with McGrath, saying this year’s event focused on providing delegates with the right mix of international and national speakers, both from within and outside the real estate industry. “AREC is like no other real estate conference in our part of the world. It gives you the opportunity to learn from the best, to hear what others do that really works, to take home some valuable insight into even the smallest change that you could make in your business that will take you to the next level.

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“Our aim was to provide a broad range of topics, tips and insights that gave attendees the wealth of knowledge they needed to return back to the office inspired, energised and ready to boost their business, and this year we were able to provide that right mix,” she said.

Along with Bohlen other conference speakers included real estate coach and trainer Tom Ferry, local agent Bill Malouf, US agent Lillian Montalto and the UK’s Peter Rollings, along with the conference heavyweights 2GB’s Alan Jones and former mayor of New York, Rudy Giuliani.

“The exhibition was the largest AREC has had yet, and again this enhances the take away value for delegates as they are able to learn the latest about the resources and tools that are available to them, whilst talking to the exhibitors themselves to see how they can best utilise these.”

“The international speakers we brought delegates were carefully selected for the insight they could offer, and our non-industry speakers often leave delegates blown away with their message, Alan Jones this year was proof of how valuable that message can be,” Mason added.

The first conference speaker was US real estate veteran Bob Bohlen. A former cattle farmer, Bob is on his way to notching up 10,000 sales after only 22 years in real estate. Along with sharing his stories on the state of the US housing market and tips to clinching that lucrative deal and dealing with sellers and buyers, he also encouraged agents to become great by acting upon the new ideas that they learnt during AREC and to have a written personal and business plan, containing things such as their motivations and budget. “Welcome change, don’t fight it. We’re in the greatest period of change I’ve ever seen in this industry... Embrace it because it provides opportunities. And if you choose not to embrace it you’ll be out of the business,” he said.

Jones spoke about travelling the road to success and dealing with adversity along the way. “The greatest illustration of the road to success...” he told delegates, “...derives from the experiences of those who have been there.” On the topic of leadership, Giuliani wowed the audience with tales about his time in New York during the terrorist attacks on September 11, 2001. “When September 11 happened I all of a sudden realised that the arrogance of thinking I had been through everything was just plain wrong. There was something bigger and worse than anything I had ever been through, anything I had ever anticipated, anything we had ever practiced for,” he told delegates. “And it challenged every bit of common sense, ingenuity and discipline that I had...”

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Image courtesy of Top Snap.

Giuliani cited the six most important principles of leadership, saying that leadership is a question of how much discipline you have about yourself, and then once you develop that how you convey that to other people.

The six most important principles of leadership according to Rudy Giuliani

Mason says leaving the delegates energised, motivated and excited to get back to business is TRET’s sole objective in planning the conference, so anyone can be assured to walk away with valuable content.

“You have to know what you believe, you have to know what you want to accomplish, you have to know where you’re going. How can you ask anybody to follow you if you don’t know where you’re going?”

“In 2012 we will be keeping the momentum of AREC going and taking delegates to a new and exciting location, the Gold Coast! Often a simple change can make a huge impact, we understand this in business, and so we strive to keep lifting the bar higher each year and bring you the best ever speakers from around the world and locally, along with new and exciting ideas from the industries key suppliers,” she said.

2. Optimism: To be a leader you have to be an optimist

“We look forward to seeing you on the gold coast in 2012!”

3. Courage

Report by Kathryn Edwards.

1. You have to have strong beliefs

“People follow hopes, they follow answers to problems, they follow the person who is offering a way to solve the problem. You have to learn how to solve problems if you want to be a leader. Embracing those problems and being able to suggest a way to turn them around.”

“Courage is not failure to have fear, courage is how do we use that fear? How do we get on top of it? How do we make it useful and productive?” 4. Relentless preparation “They take the fear and they put it into preparation. Instead of having the fear immobilise them, they use the fear to practice... Prepare everything, go over

everything, practice everything – take the unknown out, take the unanticipated out, and then you’ll be successful... If you prepare for everything you think of, you’ll also be prepared for the unanticipated because it will just be a variation of it.” 5. Team work “What are my weaknesses? What don’t I do well? Where can I find somebody who does well at what I don’t do well at? “Growing is being able to recognise those weaknesses and either overcome them or compensate for them. When you get to the stage of running an organisation, you’re going to have to get help to do that.” 6. Communications “Ultimately a leader is a teacher and a motivator. You help to teach people how to do it better and you’ve helped to motivate them to do it better. Teaching is not enough, motivating is not enough, you need to do both. And that last part is critical because all the rest doesn’t mean anything unless you can get into the hearts and minds of other people and it’s going to activate them. “There are many ways to communicate, you have to figure out what the best way to communicate is – for you.”

The Australian Real Estate Review

Marketing by auction Before the campaign begins… 1. Be clear on why auction as the choice marketing method. 2. Overcome any objections and questions. Both you and the vendor need to feel comfortable and confident using the auction marketing system. 3. Together with the vendor identify who the property will best suit – the likely. 4. Determine where you will most likely find these buyers, i.e. internet, local area. 5. Decide on what advertising you will prepare and where you will place this. Give vendors a choice and clearly outline the costs. 6. Provide your vendor with a set timetable and plan of events so they know what is happening every step of the way. This leaves no guesswork. Activities should be pre-scheduled and confirmed. Always carry a calender! 7. Follow an Auction Checklist – every agency should have a set procedure for Auction so that you don’t miss anything out! This allows you to monitor and review your marketing campaign, make adjustments, have clear instructions and keep the vendor fully informed as ALL the work is carried out prior to the auction date to make it happen on the day. Download checklist at myauctioneeer.com.au. 8. Monitor and review your campaign – each week written reports and letters to your vendor will confirm, adjust and educate them to where their property fits into the market and what they should expect on auction day. Weekly written reports are EXTEMELY powerful and ENORMOUSLY assist in the education of the vendor. 9. Pre-schedule feedback – At the beginning of the campaign clearly schedule how and when feedback will be delivered. Phone vendors after all opens and follow up all buyers consistently, weekly vendor meetings, weekly written reports. Keep your vendor close and fully informed.

11. Invitations - Personally invite neighbours, send out written invitations for your open for inspections and to the auction. This will ensure your open for inspections are a hive of activity and the energy is humming on auction day. This strategy allows you to build your client database and referrals. Be assured your next vendor will there! 12. Open for Inspections – Limit your open for inspection times to half an hour so people are brushing shoulder’s. Create the crowded restaurant scene to increase buyers appetite and desire for the property. If someone wants it others want it too! Remember you are on show and open for inspections always attract your next vendors and people in the area. Present yourself and your properties so your next vendors will want you to present their home. 12. Be prepared for the day – On auction day you are on show! Here is the chance to showcase your brand, raise your profile and gain more business. Ensure your team is professional, well informed and all delivering the same message – a united front. On the day and after the auction visit the neighbours and follow up with ‘just sold’ brochures to the surrounding area. Follow up the under bidders and onlookers, they are some of the strongest buyers in the market. Why auction? Auction is a well established proven marketing strategy for selling property. Firstly, you as the agent need to be clear on ‘why auction’ and confident in this method of marketing and carrying out the campaign to completion of sale. Benefits to marketing by auction ...for your vendor • Creates competition amongst buyers. • Buyers are ready and prepared.

• Condensed marketing period gives high impact and exposure to the market. • Increased enthusiasm and motivation wrapped around the property from agents and buyers. • No price is disclosed and therefore property is not tainted in the marketplace. • Not saying no to obtaining a higher sale price. • A clearly detailed well planned timetable so owners are well informed of activities and events every step of the way. • Media Interest in auction properties. • Vendors dictate the terms. • The best result is achieved on the day. • The auction is transparent. Everyone has equal opportunity to bid and buy. • Vendors can sell prior, on day or afterwards. • A concentrated attention and effort from agents. • Scheduled feedback so owners are fully informed and know precisely when agent will be phoning, giving written report and meeting with them. They can know the level of interest and educated to make a clear decision well before the auction proceeds. ...for agent and agency Have you ever considered why the leading real estate agents around Sydney, New South Wales, Australia and the world use Auction as their preferred method of sale? • Increases your efficiency, time and number of sales. • Adopting Auction creates high profile for agent and agency. • Highly organised. • Structured plan and timeframe to work to. • High energy in office.

• Unconditional Sale with contracts exchanged on day and 10 per cent deposit paid at the fall of the hammer.

• Agents maintain motivation around the property.

10. Create urgency in your advertisements – Auction Marketing works by creating a deadline for both buyers and vendors to prepare. They get their finance and any reports they need done prior to the auction date. The auction date increases peoples desire and value of the property.

• A set timeframe to work to. Sellers can begin packing and organising their move.

• Your name and brand receives premium exposure.

11. Don’t quote a specific price – give the buyers ‘recent’ property sales for them easily gain understanding and clearly make up their own minds.

• A well organised and strategic marketing plan that is monitored and reviewed each week of the campaign.

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• A set auction date creates a deadline for buyers. • Creates urgency amongst buyers, this in turn adds value to the property when buyers believe they can no longer have the property after auction day.

• Identify genuine buyers. • Creates more contacts, referrals, clients and business. • You can plan and schedule your work load. • Unconditional exchange on day – increases your results + increases your income. Local Inner West agent Kyp Kosmatos from Colonial State Realty says, “Working to a particularly timeframe and having a date set is particularly important, so our vendors can meet their deadline

and coordinate their move. vendors can organise their lives around the set dates and times.” Why NOT auction? There was a myth that suggested only certain types of property were suitable to be auctioned like unique or unusual properties. Not true. It is the opposite.

Sounds simple huh? By adopting auction as a preferred method it quickly sorts out if your vendors are committed to selling and are serious about getting the job done. Those that are not committed are listed with the other agent with a price.

All properties can be marketed by auction. It is even better when they are similar to others that have sold or are for sale, so buyers have properties to compare with and make up their own mind on what they will pay based on what they have seen.

After 30 days on Market by Auction currently around 60 per cent properties sold.

The only reason a property should not be put to auction is the same reasons why a property shouldn’t be listed for sale with a price.

Common objections and questions

If the vendor is not motivated and does not really want to sell? Auctioneer Will Hampson outlines the the critical points needed for a property to sell:

After 30 day on Market with a Price currently less than 15 per cent properties sold.

These need to be covered within your listing appointment. If left unanswered to sway in the wind they may rare their ugly head and bite you on the backside. Tips for marketing by auction

• Create urgency in your advertising. Gain vendors permission around motivation and wording to excite buyers to call. • Never put “unless sold prior”. If you were a buyer that was considering a property with this in an ad and it gets closer to auction day wouldn’t you consider if it hadn’t sold prior that there was no one interested in it. Therefore it decreases the desire to own something that no one wants. • Don’t quote a specific price for your auction property, quote comparables. • Set an auction date to create the deadline for everyone to be ready for. • Keep owners fully informed throughout the process so they are educated on the day. • Discover buyers’ familiarity of the auction process and prepareness for bidding. Assist them with sourcing any additional requirements for them to bid on the day.

1. Right Price

• Make campaign three or four weeks – no longer or buyers will diminish and lose interest.

2. Right Commission

• Create urgency amongst all parties.

Will Hampson and Kate Lumby are directors at myauctioneer.com.au

3. Motivated vendor

• Stay in touch with buyers every week and give them hope.

To book training or your next auction call My Auctioneer on (02) 9949 6000.

4. $ Up front

Auctioneers Real Estate Training

Book your next auction with us. We look forward to servicing you and invite you to ‘Experience the difference today’ Phone

9949 6000

feature Real Estate name Matters

The value of being

in real estate

The Australian Real Estate Review

Real Estate feature Matters name Image courtesy of Jason Attard Photography.

IT IS vERy IMPoRTANT FoR REAL ESTATE AgENTS To UNDERSTAND THE IMPoRTANCE oF BEINg oPEN AND HoNEST WITH PRoSPECTIvE AND CURRENT vENDoRS ABoUT THE STATE oF THE MARkET, WRITES ChARLES TARBEy, CHAIRMAN AND oWNER oF CENTURy 21 AUSTRALIA.

s real estate agents, I think it is fair to say that we know exactly what our vendors want to hear when they are preparing to sell a property. “yes, your home will definitely sell for that price,” “Don’t worry about what you read in the newspaper – now is a great time to sell,” or my personal favourite, “yes, you will likely need a new lawn due to the sheer number of interested bidders who will turn up at your auction.” When conditions in the residential property market resemble a boom in that buyers are rising to meet a seller’s high price, it can be very easy to purport these favourable views to clients with confidence, securing their business and delivering a successful sale result. We must not forget however that at other times there are periods where in order to sell vendors must alter their value expectations so as to satisfy a purchaser’s offer which they may consider to be low. This second period is what we are in 90 per cent of the time, including now – and it’s called real estate. It is very important for real estate agents to understand the importance of being open and honest with prospective and current vendors about the state of the market. The truth is that it’s not hard to sell a property when buyers are banging down your door – competition is rife and sellers are pleased with the exciting sales results you are delivering to them. But the true skills of real estate come into play when market conditions are less than favourable, such as when properties remain on the market for longer periods or price discounting is required to achieve a sale. In such conditions, where the present and near term market outlook is not particularly rosy, it is your professional responsibility to be frank and honest with your client throughout the various stages of the sales process. Agents must not only convince prospective clients to grant them their business in the first place, they must also manage the expectations of the vendor when the sales process doesn’t go as smoothly as was anticipated – that is, the property doesn’t sell straight away, or the vendor’s desired price is not obtained. Real estate agents will face an assortment of situations during the sales process where they will be called upon to give their professional opinion to a vendor. These may not often be easy views to voice, nor will they always be

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feature Real Estate name Matters

»» taken on happily by your client.

However as the experienced professional you must be prepared to give them.

Pitching to a prospective client It is all well and good for a real estate agent to take the easy route when meeting with potential vendors, and there are certainly many agents who make the mistake of consistently maintaining the strength of the residential property market – no matter what the current conditions actually are. To such agents, ‘now’ is always a great time to sell or buy a property. There are two reasons why such an approach can be the undoing of an agent. Firstly, while such tactics may afford success in securing a client’s business in the short term, if the property does not sell as was expected your once happy clients will be demanding answers from you. Secondly, an overtly optimistic outlook may cause suspicion from many potential clients who could pick up that the agent is saying whatever it takes to secure their business. In conditions such like we are seeing in the current market, vendors are confused and look to their real estate agent for truthful advice. And given the recent media speculation we have seen about the state of residential property in Australia, your clients can be forgiven for being perplexed. It can certainly seem as though one minute the market is experiencing supply and affordability concerns, while the next auction clearance rates are dropping and value growth is flat. As a hired industry professional you will thus be required to give your opinion on a number of factors, most importantly whether or not you feel that the client’s desired selling price is a realistic value to expect. It has always been my stance that giving an honest view is the best policy. In most cases, your client will be thankful for your truthfulness, and it will immediately act to set you apart from those competitors who may not have been as open. Additionally, working with a real estate agent who has integrity and has been straightforward from the outset about selling in less than favourable conditions can help to make the process much less daunting and stressful for vendors, as they have been well prepared regarding what they should expect. Having said this, the decision to sell a property is a big one and people will understandably want reassurance that they are putting their property on the market at an opportune time, even if this is not the case. other less scrupulous real estate competitors may have already even told them what it is they wish to hear in order to secure the listing.

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These situations can be challenging, but I would advise you to resist the temptation to exaggerate the positive state of the market to gain the business – your client should appreciate your truthful market assessment. This honest approach will also protect you further down the line when you cannot deliver the sales result and time frame that you initially indicated to be achievable.

“…the true skills of real estate come into play when market conditions are less than favourable, such as when properties remain on the market for longer periods or price discounting is required to achieve a sale.” Delivering unpleasant news

with respect. Acting in this fashion and displaying an understanding of the vendor’s situation will help to build on your strong relationship and client loyalty. It is unfortunate that as a result of the sometimes insincere behaviour of some of our colleagues in the real estate industry, many people can be wary when it comes to their dealings with real estate agents. In my opinion, one of the most important lessons for real estate agents and agencies to learn is the value of their own professional opinion – and that of sharing it with clients truthfully and respectfully. Working to build your career on a reputation of honesty and trustworthiness should ensure your achievement of both sales successes for your clients (as is reasonable in the market conditions in which the sale is taking place), as well as long term client relationships and loyalty. your reputation will also class you apart from and above your competitors, ensuring your professional success as an agent in both booming markets as well as downturns. In short, real estate agents and agencies should try never to underestimate the value of maintaining a pragmatic and honest approach, especially when it comes to providing advice for clients who are on the cusp of selling in less than favourable conditions. A realistic approach will help to build your personal brand and longevity of success in an ever changing market.

There are only two reasons why a property does not sell – the seller’s price is too high or the agent’s marketing is poor. As agents we all know that a property will usually attract the most interest when it is first placed on the market. Serious buyers will be constantly checking for new properties that fit with their criteria and will investigate a property fairly shortly after it is listed. It logically follows then, that the longer a property has been on the market at an unchanged price, the less attractive it is to prospective buyers. The continued presence of a “For Sale” sign at the front of a property will reflect badly not only on the property in question, but also on your abilities as an agent. It is at this point that it becomes the professional responsibility of agents to engage in the price reduction process, which is discounting a property until it reignites buyer interest and becomes immediately sellable. This is never an easy conversation to have with your vendor – their pricing expectations have been cut (in some cases quite substantially) and this can be a hard pill to swallow. It may even restrict their ability to buy their next property. If you build a relationship with your client from the outset you can deliver bad news

Charles Tarbey is the Chairman and owner of Century 21 Australia, one of Australia’s largest and most recognised real estate franchise networks. Charles has over 35 years of experience and is the author of two industry-recognised real estate text books, Listing Rich and Profit Driven Real Estate.

Absolute Office Interiors CoMMERCIAL FIT oUT SPECIALISTS

Absolute Office Interiors’ Showroom, Office and Warehouse are located in East Victoria Park, Perth, at 12-16 Milford Street, Milford Park complex, our showroom faces Swansea Street, next to Swansea Street Markets.

Absolute Oﬃce Interiors was founded on the basis of passion for innovation in workplace design and service. To enable the business to expand we have learned and continued to benefit from our varied and diverse knowledge and customer base over the years to be able to offer workable solutions to fitting-out most types of workplaces. Since 1996, our team of contractors has been servicing the needs of our customers in Perth for more than 13 years. These include all office partitioned walls and ceilings, all electrics and data cabling, any plumbing requirements, commercial carpet and vinyls direct from the manufacturers, Daiken air conditioning systems, signage and frosting. This strong and enduring working relationship has ensured that projects are completed smoothly with minimum disruption to your operations. We start with consultation to listen and discuss your ideas and the needs of your staff to operate effectively long into the future and the parameters with which you are working with. We then suggest practical solutions that help you

achieve a result that is as close as possible to your ideas within those previously identified needs, boundaries and budget. We work with you from start to finish ensuring that any issues along the way are diminished and/or diverted. our unique range of office furniture is often based on work-flow, functionality, practicality and aesthetics blended carefully for maximum comfort and efficiency. This ensures safety, comfort and productivity in a workplace. our principals are firmly based on workable solutions without compromising cost, efficiency or safety as style, practicality and space restrictions can often conflict in designing a work area or furniture. Absolute Office Interiors aims to move into the East Coast capital cities within the next 12 months, setting up like minded professional companies in each capital city to provide clients with our exclusive and unique range of office furniture. Look for updates on: www.absoluteofficeinteriors.com.au

The Australian Real Estate Review

feature Life Insurance name

The Australian Real Estate Review

Life feature Insurance name

she won’t be While the life insurance industry is doing everything it can to raise awareness of the underinsurance issue, the real estate industry also has a vital role to play, writes Holly Dorber.

he latest statistics show that 95 per cent of Australian families do not have adequate levels of life insurance. This figure is particularly alarming given that one in five families will be impacted by the death of a parent or a serious accident or illness that renders a parent unable to work. It is estimated that Australia’s chronic level of underinsurance will cost the Government up to $1.3 billion in the next 10 years. While the life insurance industry is doing everything it can to raise awareness of the issue, the real estate industry also has a vital role to play. Working face-to-face with consumers everyday puts real estate agents in a position to encourage people to think about protecting their incomes and lifestyles. After all, buying a

property is one of the biggest purchases most Australian families are likely to make and it is vital that they are protected from unexpected financial hardship that could mean Australian home owners are forced to sell if they lost their income due to illness or injury. Life insurance provides the financial means to preserve a person’s way of life, or that of their family, in the event of an accident, serious illness or even death. There are different types of life insurance products available, such as income protection, trauma or critical illness insurance and total and permanent disability insurance, and the relevance of each will depend on an individual’s age, financial position and whether they have any dependants. While for some, starting a conversation about life insurance at the exciting time of purchasing a »»

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feature Life Insurance name

»» property may seem a little gloomy, the impacts

“Working face-toface with consumers everyday puts real estate agents in a position to encourage people to think about protecting their incomes and lifestyles.”

of underinsurance cannot be underestimated. The average Australian family could not meet their financial obligations after just three months if they lost the family’s main breadwinner or if the main breadwinner were unable to work for an extended period. The sad truth is underinsurance can have a huge impact on lifestyle if the family’s ability to make mortgage repayments or pay the rent, cover schools fees and meet bills and other expenses, is taken away. The realities of the issue were exposed in the 2009 Victorian bushfires. Statistics relating to these tragic events showed that as a result of inadequate levels of cover, the average life insurance payment received by the families of bushfire victims was only $119,000. The ‘insurance gap’ is highlighted by the Victorian Bushfire Royal Commission Report which valued the total loss of life at $640 million dollars. Only $10 million in actual claims were processed. The reasons for underinsurance have been explored time and time again. A false sense of security, contentment that superannuation policies offer adequate levels of cover, product complexity and confusion surrounding costs are all contributing factors. But in many cases, a lack of awareness and a cultural “she’ll be right” attitude to life are also responsible for underinsurance. Research conducted earlier this year by the life insurance industry’s consumer awareness campaign, Lifewise, demonstrated that there was a real disconnect between what Australian parents valued about their lifestyles and the measures they actually had in place to protect and maintain them. For example, while 73 per cent of parents said that if the main breadwinner of the family was unable to work the family lifestyle would be greatly impacted for the worst, only 28 per cent said they had a life insurance policy outside of any cover offered by superannuation. When it came to mitigating the risks they took on a daily basis, 69 per cent of parents said they took less risks since becoming a parent and yet 58 per cent of parents admitted to having used their mobile phone while driving. There is a clear divide between how parents are thinking about risk taking and what they

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are actually doing to build safety nets around the family lifestyle.

So how can the real estate industry play a role in solving the underinsurance issue? The first step is to encourage consumers to actually have the conversation about putting measures in place to protect and maintain their lifestyles. Using affirmative language that makes consumers think about the lifestyle they value and how best to protect it can be a good place to begin to get people talking. While no one likes to think about ‘worst case scenarios’, having a contingency plan in place can provide peace of mind so that financial hardship will not be an issue. Simple facts that highlight that unexpected events do happen and do affect Australians everyday can demonstrate the very real need for life insurance. For example, over three quarters of Australians will be diagnosed with a serious illness in their working life, while one third of women and a quarter of all men will suffer cancer at some stage in their lifetime. While confronting, these facts remind us that the unexpected may happen to us. The use of positive case studies can also help illustrate how people can benefit from life insurance. One of the challenges the life insurance industry is facing in raising awareness of the underinsurance problem is that many people do not want to talk about the possibility of an unexpected death or illness in the family. Focusing on the benefits of life insurance rather than the tragedy of loss can be an easier way to broach the issue. Once consumers have started the conversation, a good place for them to find out more information is their superannuation fund which will offer an automatic level of life insurance cover. However, it has been estimated that the default level of cover offered by superannuation policies only delivers, on average, 20 per cent of the cover that Australians actually need. As a real estate agent, it may be worth suggesting that your clients check the adequacy of the cover offered by their superannuation fund – it may simply be a case of increasing the cover they already have within superannuation. For more complex needs, professional advice from a financial

Life feature Insurance name

adviser is often the best option as they can ensure the level of cover is adequate. The broader offering of life insurance is quite often misunderstood. Research shows that more than 50 per cent of Australian parents do not understand what the term ‘life insurance’ means and only 42 per cent understand the term ‘trauma insurance’. Discussing the various types of life insurance products available and their relevance for each different life stage can be hugely beneficial in ensuring Australians are adequately and appropriately covered. The following are the main types of life insurance products available: • Term life insurance pays money to the policy owner’s nominated beneficiaries in the event of the policy owner’s death. This could help pay off the mortgage and other debts, provide for the children’s education and secure the family’s lifestyle; • Trauma insurance pays a lump sum to the policy owner if they are diagnosed with a life threatening illness or injury. Also referred to as critical illness insurance, there are no restrictions around how the payment can be used – it could go towards medical treatment, rehabilitation, reducing working hours and spending time with the family;

accident that may render them unable to work. For example, take a young couple purchasing their first property – their ability to repay the mortgage will be greatly impacted if one of them was unable to work for an extended period of time. For those that have actually had the conversation and put a life insurance policy in place, the issue of renewal is also important. quite often, when unexpected cuts need to be made to the household budget (say when a family upgrades to a new home) life insurance can be the first expenditure cut. However it is vital that people understand the risks associated with viewing life insurance as a luxury rather than a ‘must have’. It is also important to keep in mind that once a policy lapses or is cancelled, it may be harder to obtain a new policy at the same premium. Like medical professionals, employers and bank staff, those working in the real estate industry have the ability to encourage Australians to take positive steps towards ensuring their lifestyle is adequately protected against unexpected financial hardship. It is time to start the conversation.

• Income protection pays a monthly income stream to the policy owner if they are unable to work due to an injury caused by an accident or are suffering from an illness and are unable to work for a period of time; and • Total and permanent disability insurance (TPD) pays a lump sum if the policy owner becomes disabled and is unable to ever work again. This could go towards paying off debts, covering medical costs and investing to create an income stream. Specific policy types may be worth considering depending on the life stage of the policy owner. For example, for those happy-go-lucky types with no children, it is likely that very little time will be spent wondering what would happen if something went wrong. However, life insurance policies such as income protection can provide a financial safety net in the event that this type of person suffers an illness or

Holly Dorber is the Coordinator of the life insurance industry’s consumer awareness campaign, Lifewise. The campaign encourages Australians to take appropriate steps to protect themselves from financial hardship that can result from accident, sickness or death. The campaign features a straight-talking website (www.lifewise.org.au) and a ‘how much is enough’ insurance needs calculator so that Australians can educate themselves about the risks they face in life and how they can be managed.

The Australian Real Estate Review

property management

feature Rent Rolls name

The Australian Real Estate Review

Much has been written about what Property Managers should and should not do in the daily management of their portfolio of properties, however, Christopher Goodway looks at some dos and donâ&#x20AC;&#x2122;ts for Agency Principals in developing a successful rent roll.

any principals are not sure whether they want to include property management in their business plan, but do so by default as prospective clients ask for management services. Therefore they go into property management half heartedly and without a business plan or goals for what they want to achieve from this part of their business. Firstly, take a moment and work through these points; 1. If you were starting your business from scratch today, where would you locate your office and what type agency practice would you develop? 2. If you were to make a list of things you would do differently, what would you include on that list and can you action them as part of your next business review? 3. Take the chance to dare to dream and work towards continual improvement within your business. The day you stagnate and stop growing is the day you start to go backwards. Itâ&#x20AC;&#x2122;s time to step out from the crowd and brand yourself as a leader in property management across your region. The steps are simple but they require your commitment and discipline in order to action them.

feature Rentname Rolls

The dos 1. Position yourself well in the market place What type of agency do you see yourself as owning? How do you want to be portrayed within your market place? Even if you are operating in traditional “bread and butter” suburbs, you can still set standards and goals to be the best in your area. I grew up in a working class area and like most principals, it was natural to start in the area I knew. Over time I developed a successful company working in some of the most difficult suburbs in Australia for property management. Now confident of the skills and standards that I had set within my agency, I believed I could do even better in the more sought-after suburbs. I opened a second office on the fringe of the Adelaide CBD and developed a quality boutique agency specialising in personalised property management. In the last few years, I have witnessed an increasing number of agents who have also been relocating their businesses into so-called “stronger areas”.

. . . s s e c c u s

that will give you enough cash flow to employ a good property manager. In many cases you can pick up the existing property manager with the rent roll being sold. With this in mind, your due diligence review should include the staff as much as it does the rent roll. Strong agencies with good rent roll portfolios typically employ good staff who are highly systemised, which leads us to the next point. 3. Give the team time and support Property management is one of the best cash flow businesses available, when structured and managed correctly. It is therefore fundamental that principals get involved. Remember that the portfolio is your key asset and in tough times; cash-flow is king! In larger agencies, a partner or general manager who is responsible for the property management department can be your support in this role.

“The reality is that the higher the rents you are collecting, the fewer properties you need to manage for the same return, which will powerfully impact your profitability.”

The old days, when an agency principal could employ an inexperienced person, give them a phone and desk and expect them to run the property management department are gone. Your team needs your time, support, encouragement, along with the provision of good systems and procedures on how the business will operate. These essentials need to be in place within the agency at the beginning for best results and smooth growth. 4. Build market perception that you are the specialist in your area Once you have these points in place then it should be easy to offer your landlords a high level of customer service because you now have: • an agency with a good strong image; • a well presented office presence;

If you have the luxury of selecting your position within the market place, I encourage you to aim as high as you can. The reality is that the higher the rents you are collecting, the fewer properties you need to manage for the same return, which will powerfully impact your profitability. Should you choose to develop a boutique agency, you must also be prepared to invest time and money on developing the right image. You need to stand out from the crowd, as your agency’s presence within the market place will very much depend on the simple things like name and image. 2. Select the best staff Sadly there is still the perception that the property management division of an agency is a mere “add on” service that needs to be provided. It is not the time to be tight-fisted when paying for good property management staff, as it’s universally true that, ‘you get what you pay for’. So if you are serious about developing a property management division and you only have a small number of properties, plan to purchase a rent roll

• professional, well trained staff; • good systems and procedures in place; and, • good market presence. Build the perception that the level of service in your agency is high, and it starts to become a selffulfilling prophecy. This encompasses the end to end process, from the listing presentation, the local paper advertising, your web site, local sponsorship promotions and the front window of your office; in other words – everywhere! As the agency principal you have the unique opportunity to position yourself as the “guru” in property management. As you get to know the business, its strengths and weaknesses, you can promote it through magazine and paper editorials and at your local community events. Consider offering to be a public speaker for service groups, and become proactively involved in your community letting those around you know that you are the expert in your field. And you will be!

»» The Australian Real Estate Review

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link. This person doesn’t know or perhaps even really care what is happening in the property management department.

wrong way

If your engagement in business constricts your time, one of the best things you can do is to invest in a top senior manager or general manager to do all the day to day running of the department. This role commonly includes that of “business development,” with specific goals and targets in place to grow the rent roll organically. 3. Don’t ignore technology

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The don’ts 1. Don’t over extend yourself when purchasing new rent rolls No matter how good you think your agency operation is, do not over extend yourself on purchasing additional portfolios. Take into account all costs and take the time to complete a three to five year projection on your property management financial profit and loss. A good reference point is to subscribe to an industry benchmarking group so you can see how your agency is performing against other “like-for-like” agencies. In my experience, smart operators nationwide: •w ork hard to reduce debt within two to three years; • r evalue and work within a predetermined ratio of lending; and, • l ook to purchase their next portfolio and repeat the cycle. Whilst it’s true that you will be paying principal down in after tax dollars, I believe it is better to lose a little in tax to ensure you have funds to reinvest in building your asset base for the future. The opportunity cost is too great to be caught up in the minutiae of taxation. It is however important that you do not only rely merely on purchasing to grow your portfolio. This strategy must be supported with an effective marketing plan so that the portfolio continues to grow organically and at the same time. 2. Don’t be a cheap skate! As we considered earlier with regard to staffing, the same rings true for your broader business. Remember the old adage; ‘if you pay in peanuts, you get monkeys’. The rent roll is only as good as the staff who run it, sadly this often means the ‘absentee principal’ is actually the weakest

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Embrace technology! It is worrying how many principals over 50 don’t know or worse, don’t want to know how to use a computer effectively. Technology is difficult to avoid and is developing every moment, we must embrace and use it to its maximum to improve efficiency and profitability. Whilst there is a cost associated with technology, it is getting cheaper all the time and is in most cases, carefully selected, the best investment you will ever make. It can make your agency more efficient in its operation and boost the client’s perception of your position in the marketplace. 4. Don’t spread your portfolio across town It’s often said, because it’s true, that ‘not all business is good business’. You may very well have a terrific relationship with a client, but if their investment property is not in an area you service, you should refer it on to another agent. I have met metropolitan property managers who have been required to look after properties 50 kilometres or more from their office. Understandably country and regional agents will have properties that are spread, but if you have properties outside of what would be classed a reasonable distance from your office, take time to work out the management cost to you to service those clients. You may very well have a property manager out of the office for more than half the day to inspect one property, leaving other jobs piling up and your staff member frustrated. The closer the portfolio of properties is to your office the less time and money will be lost when your manager has to travel out to check on maintenance, show the property for letting or to carry out routine inspections. Not only is drive time ‘dead time’ that you are paying for, it is also lost desk time, meaning office work is being either rushed, deferred or put onto other staff placing more pressure on them, impacting office morale negatively along the way. So if you have a few properties way out on their own, consider approaching a local agent to see if they have some properties in your area they would like to swap management agreements with. Groups of 40 to 50 can be sold off quite easily and we often deal with principals selling distance portfolio in an agency rationalisation.

feature Rentname Rolls

However, if you are considering selling just to cash up then start again, remember, a prudent buyer will ask for a restriction on trade before parting with his or her hard earned money.

“…the image and perception of being successful is everything in the market, and it will win you business because the public likes to deal with successful businesses that look the part.”

5. Don’t discount fees to build your business It has been asked whether ‘prostitution is alive and well in property management’. It may be deemed a bit extreme, yet discounting fees is often referred to as a prostitution of the industry. This guttural analogy has been around for many years and really refers to the idea that charging rock bottom fees to develop business quickly, is a cheap method that disadvantages the principal. For those starting out, discounting seems like a good idea, yet when it comes time to develop the business, purchase a rent roll or sell it later on, there is very little chance of upgrading fees, resulting in an extremely poor asset value to either financiers or prospective purchasers. There is certainly a place for healthy competition in a free market place where an agent may offer to negotiate their fees. That is part and parcel of our work place environment. It is not however a development and marketing strategy and whilst it’s a free country and you may charge what you want, do so after considering this scenario:

If Agent John should purchase Agent Smith’s portfolio, the combined average management fee would drop to six and a half per cent and the average income per property to $1,183. Agent John would have lost a massive one and a half per cent on the average management fee being charged and yet have to do the same work for both portfolios with the same staff and costs which means profitability would also be reduced. Agent John would be smart to reject Agent Smith’s rent roll and seek a business at least to his level or higher. Agent John would in fact be better off to focus on growing the business organically. Industry figures would suggest a portfolio of this size as having a nominal profit margin of around 10 to 12 per cent. yet the difference in income between the two portfolios shows that Agent Smith’s portfolio is down on management fee turnover by 37.5 per cent. In real money, Agent Smith is losing in excess of 20 per cent per annum. So the obvious encouragement to the agency principal would be to take time out IN your business to work oN your business. Set specific goals with defined time frames of achievement, then monitor them on a weekly and monthly basis. Focus on positioning your business within the marketplace to maximise return. Employ the best staff you can find, don’t just take the best of the bunch on the day, but seek out those with high work ethic and industry knowledge. Then provide a great environment for them to work, support them in training and supply them with the latest technology and reward them accordingly. Make sure your office looks the part; the image and perception of being successful is everything in the market, and it will win you business because the public likes to deal with successful businesses that look the part.

Agent John average management fee is eight per cent and on this portfolio is an income of $145,600 or $1,456 per property per year.

Last but not least, remember that when taking on business, not all business is good business. yes, it is hard to say no when there is money or client relationships involved, but if it is out of your area, not up to a satisfactory standard, or the indications are that it could be a difficult landlord with overly high expectations then you should not make it attractive for that potential client to give you their business. Make sure your property management staff understand these rules and empower them to make the decisions that need to be made in these situations.

Agent Smith has an average management fee of five per cent and on this portfolio is an income of $ 91,000 or $910 per property per year.

And having now built a solid rent roll, when the time comes to sell up and go fishing, give me a call!

Agent John wants to buy a rent roll and considers one for sale by Agent Smith. Both agents have: • 100 properties; • an average rent of $350 per week; and, • an average of $1.8 million rent collection per year.

Christopher Goodway commenced his real estate career in 1973 and then his own real estate practice in 1978, spending 15 years as the Principal and Director of PRN Property Rental Network, an exclusive property management company. For the 16 years prior to this, he owned a prominent real estate agency in Adelaide’s northern suburbs, which is still trading successfully today. In 1982 Chris was an inaugural member of the First National real estate group in South Australia and remained an actively involved member on the state committee up to the sale of his business in 1994. During his career he has been involved in every facet of the industry as well as having considerable experience in buying and selling rent rolls and his own agency practice. He also holds a National Certificate Iv in workplace training and assessment.

The Australian Real Estate Review

feature name Recruitment

Hiring an versus

recruitment firm The crux of the difference between the requirement of a recruitment agency or an in-house recruitment coordinator is the size of the business in question and the inherent challenges the real estate agency is facing, writes John Caldwell.

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feature Recruitment name

magine; you, your business, its exponential growth barking at the door. A pretty image? Damn right.

However, you’re faced with one hurdle that’s going to unlock your success; human resources. These resources unlock your means to an end and unlock the world of reputable business that awaits an agency that doesn’t quite fit the bill of yours at present. What to do? I hear you shriek. The answer is but a simple one: in-house or agency recruitment? The question is that simple, however, the application is where many agencies and more widely speaking come apart. This is a question asked by many a real estate agency. However, as we delve into and weigh-up the pros and cons of each possibility, we come to realise that the choice is not so much between which avenue to go down, rather, what service the in-house or agency recruiter will be serving and what your business needs are. From here, we can tailor our decision. If I, as a property owner and potential developer, were to say to a real estate agent, ‘why should I use your services? I can do it myself’ jaws would drop and knuckles would crack, I’m sure. Why? Because I’m hiring and paying for the people that know the way; those who’ve spent years either studying or working in the field to gain the best knowledge there is; the walking, talking fountains of information on the real estate industry. That’s why. That and I’d never dare be brave enough to market my own house. Therein lies the reason supporting the existence and ultimate use of an agency. This question, however, is often asked by many real estate agencies when faced with the prospect of utilising the services of a recruitment agency to undertake their recruitment. When agencies contemplate working with a recruitment agency, they need to really think about what challenges they’re faced with when it comes to business expansion. For example, some agencies struggle to attract top talent to their agency for a number of reasons, such as career progression. Conversely, some agencies may be able to attract possible candidates by the bucketload, but are lacking in the time, resources and funding to trawl through the application emails.

So, instead ask not why you should use the services of a recruitment agency, rather ask what you’re missing. You’ll likely find ‘someone to do the job for me at an affordable, yet effective rate’ may be the resounding contention of that good old little voice in your head. There is no arguing that the overall goal of recruitment is to gain talent, and great employees. How exactly we do that, admittedly does not matter. However, if we take the longevity, success and reputation of our business seriously, then it becomes of the utmost importance. You’ve got to bear in mind that the people in the agency’s employ are representatives of you, your company and your property, all of which affect your income. You do not want to jeopardise any of the aforementioned with unskilled agents, or those that may place you in disrepute. This is where the benefit of an agency and its wealth of knowledge come into play. The entire recruitment process is critical to ensure that you get the right person the first time. Once applicants are received and sold on you and your brand, it’s imperative to ensure that the candidate is everything they said they are in black and white; the all-important résumé. Do bear in mind, often a candidate who does not live up to the claims of their CV won’t make it to the estate agency. The key to agencies is to filter through the applicants to find and source the top potentials. The crux of the difference between the requirement of a recruitment agency or an inhouse recruitment coordinator is the size of the business in question and the inherent challenges the estate agency is facing. For example, Hocking Stuart uses in-house recruitment coordinators for all of their recruitment needs. While the likes of smaller real estate agencies, such as privately-owned suburban businesses rely on the use of recruitment agencies. This allows the big companies to control and directly influence who and what comes through their doors – which can have its own positives and negatives – and smaller agencies to outsource their requirements to the professionals in order to ultimately save money from what can conclude as a costly endeavour in hiring an in-house representative. From my experience and as it presently stands, smaller agencies such as this and even to a degree franchises of larger networks, would never

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feature name Recruitment

»» consider having a full time in house recruiter. This resource to them would appear as an extra cost given the small number of people they would hire annually. So it would seem given the choice, an external recruitment agency is the most befitting and cost-effective. In addition to the lack of need for someone inhouse, agencies do often carry other reasons they require assistance with recruitment; attractiveness and the almighty incentive. Who doesn’t love a sweetener, an incentive, a bonus? No one. So, why not lather your agency with the beauties until people can’t say ‘no’ to your offer for a position in the ranks? Incentives can be something small to large, but are for the most part something that attracts applicants and keeps workers working and enthusiastic. Company cars, higher-than-average commissions, flexible working conditions, and to go so far as to suggest small percentage shares in the business have been offered before. Sky’s the limit. The issue within the incentive, however, is tying that in with your brand name. On job boards and online listings, many applicants scan for brands rather than divulge incentives and their perfect job, which is the number one driver behind applicants clicking the ‘apply’ button. For small agencies, this can be the key to success for them, and the key to work for recruitment agencies. If a small, albeit unknown agency has incredible incentives, with no brand reputation, it will be overlooked. Sorry. However, if a recruitment agency with great reputation advertises the estate agency and its accompanying positions – you’ve got a match made in heaven. Watch the applications come flooding. This is the crux of where recruitment agencies shine for business; they latch onto the good, utilise their leverage and pump through the top-quality talent to fulfil the needs of clients. Of course, in addition to this, there are hundreds and thousands of dollars to be saved in terms of job position advertisements, as well. Agencies have their ways of weaving advertisement magic that allows top talent to come through at minimal cost. On the other side of the fence, businesses advertising their own positions and gaining public traction of them, can be a costly and sometimes unrelentingly arduous process. It’s best to leave it to the professionals in most cases. There are an impressive number of areas of the recruitment game that agencies are able to provide assistance with: communication and process management, maintaining its drive, interparty negotiations and fine-talent filtering. Then of course, there’s the painful process of legal negotiations and the proverbial minefield that estate agents must negotiate when it comes

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to recruitment. Of course, though, agencies are fully equipped, trained and prepared for the embroiling endeavour this can occasionally prove to be. However, what’s interesting to note is that while some agencies may go about their own recruitment with an in-house recruiter or a recruitment agency, there are the few here and there do neither. Shock, horror. I recently spoke to Christopher Dane a principal from Woodards TBM and was interested to learn that they have not used a recruitment agency nor an in-house recruiter before. The main reason being that they get a large number of unsolicited applications each month, which is overall unsurprising given their status. Chris suggested that because there are so many applicants many of them never even get a meeting. So, in order to narrow down the applicants, they only interview those who have extensive real estate experience. Woodards, however of late deviated from the recruitment norm. By hiring applicants whose determination to be noticed, over their experience, Woodards has set a new path, but illustrated another benefit in the use of a recruitment agency: solicited, knowledgeable and controllable applications. While I have touted the positives of recruitment agentry, it is admittedly only one side of the fence. In-house recruiters have their own merits also. Where, however, in-house recruiters come apart is similar to in any area of your business in that there needs to be a return on investment. How do we best establish this and justify forking out the high-tens of thousands a year in recruiter employment wages? The simple answer would be to calculate what your annual spend would be on an agency and ensure that this would be more than an in-house person. However, take into consideration the additional costs of an in-house recruiter that may likely involve an increase in worker’s compensation, superannuation, car expenses and desk and placement costs. Simple enough. Despite the apparent savings that may be proven by a budget reconciliation with the inclusion of an in-house representative, not only small, but large real estate agencies should take into account the business needs and the positive/negative aspects of their next steps – where they can afford to go. What history has often displayed is that the larger agencies with higher turnover, high staff numbers and large reach and appeal often struggle in their attractiveness to potential employees for

whatever reason; lack of incentives, negative reputation, poor performance. The list can be possibly endless. What you, as a larger agency, may find unfortunately is that while you may be armed with the most efficient and productive in-house recruiter, they’re still using your agency’s – for all intents and purposes – unattractive brand to leverage applications, which mightn’t yield in the outcome. Many recruitment agencies see in-house recruiters hired to cut the agency recruitment budget but after a period of minimal success agencies are again retained and the in-house person takes a shuffle to the side to become the manager of the recruitment-real estate agency relationship. As mentioned earlier, however, our research has suggested that only significantly large employers benefit from an in-house recruiter and in almost every case this has – not removed – rather reduced the need for agency-hosted recruitment. So. As mentioned, know your business, know your challenges and know what you need. These are the key gems of knowledge that will unlock the determining factors within your company that identify the need for an in-house representative or the third party inclusion of an agency. So to answer the question; Hire an in-house recruiter or recruitment firm? There is no quick-solve answer. It is a corporate decision to be made after the decision-making and determining processes that establish the needs and wants of the business and how best to get them.

feature Recruitment name

Top Tips

kNoW yoUR RECRUITMENT BRAND AND ITS STRENgTHS AND WEAkNESSES – IT’S oFTEN vERy DIFFERENT To yoUR CoNSUMER BRAND.

UNDERSTAND THE REAL CHALLENgES To RECRUITINg, E.g. ATTRACTINg TALENT oR MANAgINg THE PRoCESS.

WoRk oUT THE TRUE CoST oF SELF-RECRUITINg INCLUDINg BAD HIRES, RE-TRAININg AND LoST SALES.

CoNSIDER HoW MANy gooD APPLICANTS yoU MIgHT BE MISSINg THRoUgH NoT CASTINg THE NET WIDE ENoUgH.

FULLy INvESTIgATE THE “TRUE” CoSTS oF IN-HoUSE RECRUITERS INCLUDINg oFFICE CoSTS, oN CoSTS AND EXPENSES.

WoRk oUT HoW MUCH TIME yoU PERSoNALLy WASTE oN SELF-RECRUITMENT – yoU CAN’T EvEN PUT A $ vALUE oN THIS.

7 8

FAMILIARISE yoURSELF WITH yoUR LEgAL oBLIgATIoN oF SELF-RECRUITINg – IT’S A MINEFIELD. REMEMBER IF yoU kEEP DoINg THINgS THE SAME WAy yoU CAN’T EXPECT A DIFFERENT oUTCoME.

John Caldwell is CEo for Retailworld Australia and company director for the Retailworld group of companies globally. John started his career in fast food making pizza and being a delivery driver. He progressed through the business holding most available roles on his way up the ladder - Store Manager, Area Manager, National Training Manager and State operations Manager. At the age of 21 John franchised two fast food stores in Sydney. In 1998 one of John’s stores was awarded the Australian franchise store of the year and John was recognised at the world conference as one of the best franchisees out of the 7,000 stores worldwide. In addition, this business acknowledged John with dozens of national and international awards. John sold his stores to move back into a corporate role. He was appointed National Training Manager for an Australian retail fashion success story with over 100 outlets before stepping up to take on Human Resource & operations Management for the company nationally. John then took on a Melbourne based high end fashion retail chain as general Manager, in this role he lead the company through massive sales increases and established the manufacturing and wholesale side of the business. In 2003 John decided to follow his passion for HR and retail and developed the Retailworld brand in Australia as a subsidiary of the New Zealand based company. In more recent years John and Trish McLean acquired all shares in the global company to form a formidable partnership globally. John has very detailed and large scale growth plans for Retailworld both in Australia and throughout the world.

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Recruitment Specialists FoR THE REAL ESTATE INDUSTRy

Having built up an incredibly successful and nationally recognised recruitment company in Christchurch, New Zealand, some may have thought that Richard and Nikki Taylor had found there niche. But far from being content they recognised the potential to further specialise in the recruitment industry, and to utilise their hands-on experience in the Real Estate industry at the same time. Having both worked in the property market, Richard as a business owner, manager and salesperson, and Nikki as a property manager and administrator, they realised they possessed a unique, inside knowledge of the intricacies of the industries’ recruitment needs, and Real Estate Job Search was ICG2694 born! Aust RE Rev Hpg 03-PRINT.pdf

Now operating out of sunny queensland and currently servicing all of Australasia, REJS focuses on finding the very best recruits for each and every job which is listed on their site, whilst ensuring that candidates are matched with companies which fit their personalities and their aspirations. “The Real Estate industry requires staff with unique skillsets, whether they are operating as salespeople, property managers, franchise owners or administrators,” says Nikki. “There really is no ideal, generic solution. It requires an approach which looks at each case on an individual basis to determine which candidates have the skills to succeed in which environment, and which job situation will present the candidate with the best opportunity for personal and professional growth.” Richard and Nikki have simply taken the tried and true principles 10:24 they developed in their general 1 27/05/11 AM

recruitment days, and adapted them to the Real Estate industry, creating a highly-efficient and hugely effective system for recruiting the very best property personnel. “People looking to enter the industry nowadays are faced with a myriad of opportunities,” Nikki says. “Because we have worked in all areas of the profession we are able to give them genuine advice. We can see each individual situation from both sides of the equation – we know what it is like to embark on a career in Real Estate, and we know what it is like to run a Real Estate business, and how difficult it can be to find the right staff to help catapult your business to that next level.” With their unique expertise and unparalleled experience, REJS is quickly becoming the first choice in Real Estate recruitment.

» P rofessional Photography & Twilight Photography Jason Attard Photography is the leading Real Estate Photography specialist, and has been for the past 7 years. If you are after Professional Photography, Floor Plan or maybe a High Resolution 360 Degree Virtual Tour for your property, we can adapt to all requirements. We pride ourselves on quality and friendly service with fast turn around, we understand that everyone is busy and requires urgent attention. We can customise for your business with company colours and logo’s to add that extra personalised service. For further information or to organise your photography requirements, please contact Jason.

w www.jasonattardphotography.com.au e jasonattardphotography@msn.com p 0411 406 608

» Interactive Floor Plans » Photography Courses » H igh Resolution 360 Degree Virtual Tours

feature name Forward Thinking

Is success all about

over matter

STUCk IN A SALES RUT? WE FIND oUT HoW To RESET yoUR MIND To WIN IN EvERy SELLINg SITUATIoN. ChARMAINE yABSLEy REPoRTS.

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Forward feature Thinking name

hether you’re known as the cool cucumber of the office, or the sales Superman, there’s no denying that even the most talented, motivated and inspired sales person will need to recharge their mojo at some stage. According to those in the know, success and level-headedness is all about mind control. The good news? Continual success and motivation is achievable by everybody. You just need to follow some simple steps and rules. Copious research has shown us that our mind is a powerful tool when it comes to achieving what we want. Research by the University of California and the California Institute of Technology has found that thought alone can change what you experience and achieve. And in numerous studies, sick patients given a placebo pill pronounced an improvement in their symptoms; those wanting to lose weight were more likely to succeed if their mind-set was programmed correctly. And the amount of best-selling books on the topic, show us time and time again that your state of mind really is a reflection of your success potential. As the American writer, Charles Swindoll said, “The secret of living a life of excellence is merely a matter of thinking thoughts of excellence… It’s a matter of programming our minds with the kind of information that will set us free.”

“...our mind is a powerful tool when it comes to achieving what we want.” On your marks So how do you get started? Firstly, set out what you want to achieve. “Without goals, it’s too easy to just give up,” says Andrew Darbyshire, a Melbourne-born international businessman, author, father, pilot and philanthropist, and author of Think Big Live Large ($29.95, www.andrewdarbyshire.com). “The most important thing you need for success, is purpose, and, to be, purpose driven,” he says. “So throw away your rule books which outline your company’s vision, mission and values. To achieve your dreams, you must be clear on your purpose.” Firstly, advises Darbyshire, write out your passions and strengths, as a business and/or as a person. Look at what you’re good at and what your strengths are. According to neurolinguistic programmer and master trainer, Tony Wrighton (author of Confidence in a Minute, Virgin Books, www.tonywrighton.com), writing out your desires,

“literally spelling them out on paper, means you’ll have a 33 per cent increase in your chances of achieving your dreams.” Once you’ve got your goals down on paper, work out, step by step how to get to the top, right down to the finite detail. “Seeing it in black and white will help give you a clearer picture of what steps you need to take, mentally, physically and emotionally, for success.”

Get set Then decide what you want to do with these attributes. “For instance, Apple’s purpose is to ‘make insanely great computers’,” he says. “At Disney, it’s to ‘make people happy’. So if you’re not making people happy then you’re not fulfilling the company’s purpose. Your own purpose needs to be what you are truly, and really desiring.” Now that you’ve written down your purpose, it’s time for action. Work backwards from where you are. For instance if you want to achieve a monetary sales goal each month, then decide, how many hours you need to work, how many viewings you need to conduct, how many phone calls you need to make each day. “These are individual tasks which will help you to achieve those goals,” says Darbyshire. “It’s all very well deciding you want to sell 20 houses, but you need to ask yourself why. If the reason is purely monetary outcome, then you’ll have little satisfactory outcome. Just look at the lotto winners, who, after 12 months of winning millions are no happier than they were before the win,” he says. Your purpose needs to be greater than money: it may be security for your family; to upgrade your lifestyle; to achieve more than you had as a child. “Be honest with yourself and your reasons. When you’re on your true purpose, failure is not an option,” says Darbyshire. “Remember, if you base your purpose on money, then when you have a bad day, you’ll lower your standards and your goals and become disenchanted with your purpose.”

Think like your hero “Many successful people emulate others working and lifestyle habits,” says Darbyshire. Choose somebody you admire: they can be living or dead, famous, or live around the corner. “Study and copy their habits and behaviours,” he says. “Once you’ve got a mindset of success, then you are free to tap into your customers’ needs and wants.” Emulating inspiring people is what gets Amelia Burton, celebrity personal trainer and life coach, up early every morning to train and work out. “Whenever I’m feeling a little unmotivated, I ask myself, ‘what would my hero, the person who inspires me, do?’ Without a doubt, it makes me get moving. Nobody became a hero because they sat around waiting for life to happen to them, they got out and got motivated.”

For Olympic volleyball champion and author of The Business of Being an Athlete, Keri Pottharst, success is all in the mind, whether you’re competing athletically or in the workplace. “I focus 100 per cent on what I want and, mentally, envisage each small step that’ll take me to that winning place. Whether it’s to make a sale, or reach a personal milestone, having the right mindset is a must.”

Make your customers successful too “Buying a house is an emotional process and decision,” says Darbyshire. “To help others achieve their purpose, they need to be clear in their criteria, so that you can be clear in delivering what they want. Write down everything your customers wants in a home: you’ll stop wasting their and your time.” After all, time is money. Author Tim Ferris, best-selling businessman behind The Four Hour Week (Random House), says that in order to be a success, we must outsource our work, rather than feeling that you need to do everything yourself on your to-do list. “It’s important to have the emotional strength to delegate and to stop micromanaging,” agrees Darbyshire. “It’s why many small businesses stay that way, because they’re so busy with the administrative side, they’re not concentrating on the purpose of the company, which is to provide a service to their customers.”

Put yourself into your customer’s shoes “Having a successful mindset isn’t just about your state of mind, it’s about listening to what others want,” says Darbyshire. “When selling houses, you need to remember the five emotions people tap into when making a purchase and tap into these: grief, anger, envy, fear, and love. It’s your job, as a confident salesperson to alleviate the negative emotions and create a sense of safety for the positive.” The two most important questions you should ask when finalising your customer’s purpose are: • What does the customer want and what do they want to achieve? • What are the benefits to the customer? “Rather than ignoring the customers’ needs, many salespeople tell the customers what they think they want to hear,” says Darbyshire. “But many people seeking to buy have their own purpose. By finding out that purpose and fulfil that purpose, then you have a deal.”

The Australian Real Estate Review

feature name Matters Conveyancing

The Australian Real Estate Review

Conveyancing Matters

Get your advice

before you sign on the dotted line THERE ARE MANy RISkS WHEN BUyINg AND SELLINg REAL ESTATE, WRITES PAuLINE BARRow.

uying a property is one of the biggest investments a person will make during their lifetime and therefore it is a decision not to be taken lightly. The process of buying property varies in each Australian jurisdiction as do the contract terms, and processes. In most jurisdictions conveyancers and legal practitioners are responsible for conveying property however a real estate agent is usually responsible for filling up the contract of sale and arranging for the vendor and purchaser to sign the contract and any pre-disclosure statement directly with the parties. As the real estate agent is engaged by a seller, usually referred to as ‘the vendor’ then, it is most important that the purchaser seeks his or her own representation BEFoRE signing any documents. There is a plethora of contracts, some legislated, and others prescribed. generally there is no requirement to use these legislated or prescribed contracts. From my experience, contracts are varied to suit the needs of the vendor. Whilst I have seen in my days as a conveyancer contracts varied to the extreme so as to be so unbalanced in the guise of protecting vendors, it may be that such harsh terms have merely served to turn off prospective buyers when viewed by purchasers or their conveyancers. Whilst I will always advocate for a purchaser to seek advice on the contract before signing it, there is some respite for purchasers under Australian Consumer Law when harsh terms have been added to a standard form contract, making them void, or in effect, stricken from the contract. The Australian Institute of Conveyancers advocates that there should be compulsory disclosure in respect of consistent prescribed matters affecting the sale of real property by a vendor to a purchaser prior to the parties entering into a contract. New South Wales, victoria and South Australia are currently the only states that have compulsory disclosure of property information for domestic freehold property prior to entering a contract. »»

The Australian Real Estate Review

Conveyancing Matters

»» So what is the point in engaging a conveyancer before you sign the contract? Let me look at a few issues:

1. Identity fraud in conveyancing With the increase of frauds occurring, it is now more necessary for both vendors and purchasers to be identified to ensure that they are the persons who they claim to be. In order to sell real estate, the vendor must prove that they are the person or entity registered on a government register as the registered proprietor of the land, or if they are not registered, that they have the right to deal with the property. A conveyancer will ask the seller to provide a number of documents to prove his or her entitlement to sell. Australian Registrars of Title will now have more say in what they consider to be the verification required, partly due to the shift to use of electronic instruments in conveyancing and secondly, due to increasing mortgage and title fraud.

2. Stamp duty When a purchaser acquires an interest in real estate, state governments require payment of duty on the transaction. The amount of stamp duty payable and the timing of when a dutiable transaction occurs varies in each jurisdiction. Without obtaining the correct advice from your conveyancer before you sign the contract, you may unwittingly be subject to double duty which could have been avoided had you sought the proper advice before signing a contract. Stamp duty in some jurisdictions is paid on the contract prior to settlement, whereas in victoria, stamp duty in primarily assessed on the Transfer of Land after settlement. So if you have purchased property in victoria there are some matters which will need to be answered before a decision is made as to the amount of duty payable. For example, was there a right to purchase land or a right to a transfer of the land, an option to purchase the land or an option for the transfer of the land; a right of first refusal in respect of the sale or transfer of the land; any lease, licence, contract, scheme or arrangement by which the transferee or assignee, or an associated person of the transferee or assignee obtained any right or interest in the land that is the subject of the lease other than the leasehold estate; or any other transaction that resulted in a change in beneficial ownership of dutiable property.

3. Buying a property as a trust In most Australian jurisdictions, Registrars of Titles will not record in the Register notice of any trust but the trust may be noted by a document. Usually that document is the Contract of Sale. There are various difference trusts and how those trusts are treated, will vary. For example, a trust which is a Self Managed Super Fund (SMSF) purchasing real estate – will that SMSF be able to borrow funds? When borrowing is resorted to for a SMSF, an asset must be held on trust for the SMSF so that the SMSF acquires the beneficial interest in the asset. That

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is, the SMSF will not be permitted to directly hold the legal ownership of the asset until it has paid off the loan. Therefore, a trust relationship must be established to satisfy the borrowing rules which is achieved by the SMSF. In consultation with your conveyancer and accountant, these matters would need to be dealt with before you sign a contract so that the legal ownership of your property is documented appropriately and secondly, no additional duties are imposed because of a right to purchase which was not documented correctly.

4. Agreeing to a condition in a contract before seeking legal conveyancing advice I am constantly hearing horror stories about property conveyancing matters that have gone horribly wrong. The “Licence Arrangement” is one recent issue that was raised on a current affairs program which for the poor unfortunate vendors, saw them held ransom to unscrupulous buyers. one could ask, how could this happen. I am still asking myself that question. I have a saying, which does not provide any solutions in this instance, but if I was acting for a vendor, the answer would always be “do not let them in”. If I am acting for a purchaser – “if you can get in, get in”. In stating all of that one will always have to take into account the circumstances of the transaction at the time and the parties involved and what may prove to be a simple issue may turn out to be diabolical. What must be remembered is a due diligence test is essential, which appeared to me in this case, did not occur. That said, I am not familiar with the issues in this matter, only what was reported. What is important however, is the importance of documenting matters correctly before the problem arises.

registered or entitled to be registered for gST) nor does the vendor obtain an input tax credit for any gST paid on the inputs used to make the supply. However for a newly constructed residential property, gST is applicable. The vendor has to therefore remit gST to the Australian Tax office on the supply of new residential premises. If you are a private person who is not registered for gST, then acquiring a new residential property will not concern you for the purposes of the application of gST. However if you are purchasing a new residential property for the purposes of an investment for which you or the entity is or required to be registered for the purposes of gST, then the application of gST is important. you will need to speak to your accountant and conveyancer to ensure the purchase price is correctly set out in the contract and the intentions of the parties are known. If the vendor has adopted the margin scheme, you may wish to reconsider the pricing to your circumstances so that you can claim any credits for gST to be included in the price. I have not been exhaustive in defining some of the risks in conveyancing, however my best advice for a smooth and hassle free conveyancing experience, is to seek the appropriate advice with your conveyancer before committing to sell or purchase your important investment.

5. Insurance What happens with insurance risk when a contract of sale is signed? Ideally the risk for insurance should remain with the vendor until settlement or occupation, whichever occurs first. Depending on where the property is located, dictates as to when the insurable risk passes. In New South Wales, Northern Territory, victoria and Western Australia the risk passes on settlement or the earlier occupation. In queensland, 5pm on the next business day after signing the contract, the purchaser would be responsible for the insurable risk. In Tasmania, either the vendor or Purchaser may be at risk depending on the contract terms. A special condition in a contract could change the status of play and when it comes to insurable risks, you need to obtain advice. Common law rights may contradict contractual rights and if you are relying on a vendor’s insurance policy, think again.

6. GST gST is payable over real property being an interest in or right over land. However existing residential premises, that is, not new residential premises are input taxed. That means that the vendor does not have to charge gST on the supply (if the vendor is

Pauline Barrow is National President of the Australian Institute of Conveyancers. After completing a Business Course in the 1970s, Pauline began her professional career in legal services, firstly working in legal firms and later specialising in conveyancing which resulted in the opening of her own conveyancing firm, Professional Conveyancing Services, in glen Waverley victoria in 1986. Pauline is also a fellow of the Australian Institute of Conveyancrs and the Institute of Legal Executives (vic).

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Why face-to-face marketing is still one of the most effective and enjoyable

– and why it’s here to stay

hink marketing and the first things that may come to mind are direct mail, online advertising, PR and sponsorship. But when your business relies on relationships to secure customers, don’t look past old-fashioned face-to-face marketing – things like networking, speaking engagements and events. In fact, many of the most wellconnected people in the business world understand the value of getting out of their office and into functions, events and industry parties. And that’s because they understand the benefits:

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• Connecting with potential customers: There are a few reasons why people may buy from a business – its track record, experience, knowledge, results and team. Another major reason, however, is that they can connect with the person fronting the business. often this can be the single factor that gets a sale over the line. Meeting and greeting at events is often the first step in the process. • Connecting with likeminded people: Meeting new people can also bring you into contact with complementary businesses that can refer business to you over the long term, or provide you with resources, knowledge and contacts that can boost your business further. • Creating profile: Developing a strategy where you speak at three to four events a year, each with a good number of attendees who are your target market, is a very effective way of raising your profile. • Building your reputation: The more potential customers or industry figures you get to know, the more you are enhancing your reputation – whether it’s of your character, your knowledge, or a particular image you are cultivating.

Networking Networking at industry lunches, networking functions and client events can be a powerful business-building tool when it’s aligned with your business vision and has a strategy behind it. As a PR agent, I’ve seen many of my clients network to great success. Networking is also part of my own long-term marketing plan, and has paid off enormously. It may be easy to show up at an event, but there are ways to make networking work better for you. • Know your business vision and, as with every marketing activity, ensure your networking helps get you there. Have an agenda every time you attend a networking event, and don’t leave without meeting it. • Know who can refer you. Before you begin networking, write down six types of businesses that could refer business to your agency if you had a relationship with them. They could include mortgage brokers, buyers’ agents, valuers, property accountants, conveyancers, and other non-competing real estate agencies (many of my referrals come from PR agencies who are too busy to take on new clients, or who don’t work in my area of specialty). These are people you need to seek out when networking. • Go to the right events. Once you know the types of contacts you need to make, you’ll know which events to attend to meet them. get your PA to put together a calendar of events – one every fortnight or month – that you can attend.

• Arrive early. Whether it’s a lunch, speaking event, speed networking event, or awards night, it’s easier to begin building relationships when there are a handful of people in the room. Walking into a crowded room can be daunting, and arriving 10 minutes before a speech gives you little or no networking time at all. • Listen, listen, listen. When you meet someone, be generous. It’s tempting to talk about your business, your wins, or how frustrating the market is right now. But you’ll get a lot more out of the exchange if you take the time to find out about their business and how you can help them. Listening also helps build trust. If your contact sees you’re genuinely interested in their business, they will naturally want to help you. • Work the room. Don’t stay in your seat the entire night. give yourself a goal to speak to 10 people or collect at least five good business cards. • Stay back later. Often this gives you the chance to speak to the speaker, the organisers, or sponsors – who are often very well connected. • Get good database software. Without good software to store and organise your contacts, the business cards you collect can often end up at the back of the drawer, never to be used. Buy database software that tracks appointments, provides reminders, allows you to log your contact history, and can send and track email blasts. • Follow up your contacts. Get in touch with your contacts the next day. I use social media sites, such as LinkedIn, to follow up any new business contacts. (Any new-business leads will definitely receive a phone call.) The advantages of using social media is that it allows to you to send one (personalised) message to multiple contacts, stores their contact details permanently on your page, and keeps everyone updated on your business activities without you having to contact them individually.

by industry associations, business networking groups, large events companies, trade expos and some large organisations who run events for their own clients. Compile a list with the correct contact details. • Ensure the events you pitch yourself to attract the same audience that you are targeting in your own business. Don’t waste your time at an event with an audience that is not relevant to you. • Create a speaker profile for yourself and pitch to these organisations: it will need to include a bio, topics you can speak about, testimonials from any past speaking engagements you may have had and, if possible, video footage of you speaking. This enables the event organiser to assess your presentation skills in a couple of minutes. • Don’t expect payment (unless you are a bit of a celebrity!). But you can negotiate some sort of contra deal by asking the event organiser if you can distribute your marketing collateral to the audience, or access the audience contact list after the event so that you can market to them. • Build your reputation as a speaker by filming each speaking engagement and uploading them onto your youTube channel, which you can stream into various online channels, including your own website and eNewsletters. Whether it’s networking, speaking or holding a small event, ensure you align the activity with your business vision. And it’s important to realise it’s a long-term strategy. Face-to-face marketing is about building relationships, which requires trust and therefore takes time. If you expect a sales lead at every event, it can lead to frustration. But spending some time building trust can often lead to something better: partnerships, affiliations and continuous referrals over the long term.

• Reward referrals. If you want continuous referrals, make sure you reward each referral with a gift – or a referral of your own.

Speaking engagements In my own PR consultancy, we secure speaking engagements for clients such as economists, property investors, real estate agents and entrepreneurs who want to lift their profiles and generate leads from a very specific audience. Speaking, in my opinion, is the highest form of networking. When you attend a networking event, you may meet 10 people but when you are the speaker at that event, everyone has met you! Here’s how to secure an opportunity. • There are numerous speaking opportunities both in cities and regional areas. They are run

Julia Nekich is principal of PR consultancy The Ideas Suite, which has a specialty in property media coverage. visit www.theideassuite.com.au

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Top Snap’s professional property photography IS NoW AvAILABLE AUSTRALIA-WIDE

In response to growing demand for its services, professional property photography company Top Snap now has photographers located across six mainland states and capitals, with further expansion planned over the coming months.

In addition to property photography, Top Snap offers property marketing tools including copywriting, virtual tours, virtual furniture, and floor plans. Top Snap’s general Manager, Helen Clarke, puts the demand for its services down to the real estate industry’s increased recognition of the benefits of professional photography.

“Agents who invest in professional photography can be confident of reaping the benefits, with a recent US study revealing that professionally photographed homes are viewed an average of 60 per cent more times online, and sell for anything up to $100,000 more than listings using amateur photos. “Ultimately, the more people interested in a property, the greater the chances of receiving an attractive offer. “And with professional photography being used for all aspects of a marketing campaign, including signage, listing websites and printed materials, its importance these days just can’t be overstated,” she said. Michael kirwan, Principal of Ray White Maitland in New South Wales, uses professional photography for all his campaigns and couldn’t agree more:

“We’re in the business of presenting every property at its best to help secure maximum profit for our vendors, so we always insist on professional photography as it helps drive buyer interest and competition, and can ultimately lead to a higher sales price. “What’s more, we use the photographs for all our marketing so it’s a good return on investment, and means our ads look fantastic which gives us an advantage over competitors,” he said. “As an agent my skills lie in sales, marketing and negotiation, so I leave photography to the experts! In my experience there’s simply no substitution for professional property photography, so make sure you are giving your vendors the best shot at a sale by using it for all your listings,” concluded Michael.

Experience the power of professional photography ! Did you know: • Homes that are professionally photographed can sell for up to $100,000 more than those with amateur photos? • And are viewed online 60% more than homes shot with point-and-shoot cameras?*

Experience the power of professional photography with Top Snap • Affordable, high quality daytime, dusk, elevated, aerial & commercial photography • FREE online property tour with every shoot • All images are digitally enhanced & delivered to your inbox the next day • Complement your campaigns with copywriting, virtual furniture, floor plans & 360-degree virtual tours “If you want quality photography, supported by quality service at a competitive price, you can't go past Top Snap. Everything they do is professional, starting with the booking and finishing with electronic delivery of outstanding photography.” Jason Maxwell - Managing Director, Raine & Horne Newcastle (Top Snap client for 2 years) *Research by Redfin, 2010, US

To book your next shoot contact Top Snap on 1300 TOP SNAP (867 762) or sales@topsnap.com See the difference professional photography can make www.topsnap.com The Australian Real Estate Review

We can make anything work ANCIENT WISDoM ENgAgED IN gENERATINg SUCCESSFUL SALES

Applying the Feng Shui principles to pre-sale styling and/or renovating is a powerful sales tool. It enables to attract the right clients, who are keen on making a purchase and thus, attracting the prosperity to the property owner. At ZARA Interiors we work with this concept. We understand that every buying decision is based on how the property ‘feels’. Seconds after a potential buyer walks through the door, he or she already knows whether this is the ‘right’ place to buy. Any logical reasoning comes after that. our holistic approach to creating an interior is quite unique. Apart from addressing the aesthetic side of it, we also enhance the positive energetic influences of the space and counteract the influences of the challenging ones. This enables the potential clients to experience, and to feel how they can benefit from the quality of the qi (life force energy) that a particular property has to offer. We also address the issues associated with the Sick Building Syndrome and geopathic stress. The latter is often a hidden cause of why a beautifully presented, appropriately priced property in a good location, would take a long time to sell.

Beach, NSW The Australian Real Estate Review

Being a professional Feng Shui consultant (member of AFSC and IFSA) and an interior designer (member of DIA), the founder and director of ZARA Interiors, Anna Zarasyan is passionate about helping people to make the transition between the properties. She assists the real estate agents in facilitating this transition, helping to achieve the best possible price for the property owners. Our philosophy: We like being practical. We avoid complex and costly solutions. This is why we specialise in mini-styling services, which are cost effective. For us, appealing pre-sale design is about how the objects contribute into the space, and what atmosphere they create. The ambience could successfully be used for targeting a particular type of clientele. After all, the whole thing is about finding that right buyer who is determined to buy the property. ‘Supportive, easy-going, inspiring, highly professional and pleasure to deal with…great service, Anna.’ Michel Laveau, Waverton Contact details: phone 1300 361 196 e-mail: info@zarainteriors.com.au website: www.zarainteriors.com.au Photography by A. Shrits

Director of ZARA Interiors, Anna Zarasyan.

A REAL delight Imagine yourself lost in a misty valley, surrounded by vineyards and orchards and discovering the mysterious world of the ‘black diamond’. The Wine & Truffle Company is one of the few truffières in the world where you can not only enjoy the unique experience of a hunt with the truffle dogs through the oak and hazelnut groves, but also indulge in a truffle-inspired menu matched with award-winning wines. In WA’s South-West, the Manjimup/Pemberton region grows some of Australia’s finest cool climate grapes, in particular merlot, sauvignon blanc, chardonnay and shiraz. The richness of the soil and the cool climate are also ideally suited to growing the black truffle, a delicacy traditionally harvested in the forests of France.

Say thank you to your valued clients with our superb gourmet gifts What better way to acknowledge the support of your clients than with our award-winning wines or unique gourmet truffle products from our farm in beautiful Manjimup, Western Australia. View and purchase the full range of wines and gourmet gifts on our website.

Special offer

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Established in 1997, The Wine & Truffle Co. is the largest producer of fresh truffles in the southern hemisphere. The property has over 13,000 hazel and oak trees and 30 acres of wine grapes. What better way to discover how these fertile soils have become home to one of the most sought-after, edible European delicacies, than to walk through the Truffière on a guided tour. Watch the dogs weave their way through the Oak and Hazelnut trees searching for that elusive black treasure, and then smell the truffle’s pungent aroma. Each winter, chefs from around the world wait in anticipation and are prepared to pay up to $3,000/kg for this much sought after “black gold”. Before bringing this unique experience to a close, linger a little longer. Sip on one of our premium fine wines overlooking the picturesque scenery, or let our master Chef tantalise you with a mouth-watering selection from the seasonal menu where almost everything offers some interpretation of the truffle. The fresh truffle season runs from late May through September. The Cellar Door offers wine tasting, and has a full range of the Wine & Truffle Company products for you to purchase and share your experience, such as truffle oil, roasted hazelnuts, honey, mustard, and other products including merchandise. If you cannot make the journey to Manjimup, the Wine and Truffle Co. offers a selection of gourmet truffle products which are available all year round and can be ordered direct from the company. Naturally, the Wine & Truffle Company’s gourmet selections are made with hazelnuts and truffles harvested from their own farm together with other ingredients such as the oil, honey and salt which are made from local produce. The fine quality of the Wine & Truffle Company’s truffles and truffle products is demonstrated by their distribution around the globe to noted international chefs and food lovers everywhere. As you might expect, the Wine & Truffle Company produces a wide range of wines, from every day easy drinking wines through to richly flavoured and elegant fine wines and Sparkling Pinot Noir NV Brut, The Truffle Hill Chardonnay 2009, recently awarded a gold medal at the 2011 Timber Towns Wine Show, is the perfect complement to the product gift line. What better way to reward your colleagues or clients than to present them with a gift of gourmet food or wine from the Wine & Truffle Company?

www.wineandtruffle.com.au

To purchase, visit the website at www.wineandtruffle.com.au to register. Please quote REAL11 to receive your bonus discount, or phone 08 9387 2276 for further details.

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you can do today to improve

your agency’s computing network

hen I am meeting prospective real estate agency clients for the first time, I am almost always told that they want a computing system that will last them for five years. That is fantastic and I encourage users to think ahead about the challenges that will face them in that time period. It also means that the business is more willing to consider better and more reliable technologies, i.e. more expensive, where spending the money will actually gain value. However it is almost always the same businesses that currently have the most appalling networks. It is one thing to try and think about where your business (and your network) will be in five years. It is another whole ball park to actually get the most out of the computers and equipment you have right now. This list is just some of the quicker and less painful things that you can do to improve the health and speed of your computing network. But remember, there is no replacement for professional and certified assistance for your small business’s IT needs.

Backups This is the big one. Almost every business I go to thinks that their backups are just fine. “yes we change the tapes daily,” some say, or, “our IT guy said it would happen automatically,” or even, “We have never had a problem with the backups.” The reality is that almost every single agency that has engaged my firm this year has a manifestly inadequate or non functioning backup. out of sight, out of mind. you as the business owner or manager need to personally take responsibility for this. Learn about your backups, appoint someone, either internal or external to review your backup logs every single day. Make them report to you every day, by email is fine, that your backup was completed successfully or alternatively if it has failed. In fact, go and check the logs now! If your backup system does not produce logs then buy one that does. you must never take shortcuts with your backup. If you can’t be bothered with a backup you might as well just delete your data now and save yourself the pain when your equipment fails or is stolen.

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Antivirus and malware Find out what antivirus product is installed on your network, hopefully it is an enterprise grade product and the management and configuration tools are installed on your server. Updates will be distributed to the clients from there. Go to the vendor’s website and check what update pattern they have on their site as the latest, they all publish this on their home page. Compare that with what is running on your computer, for most antivirus programs simply hover your mouse over the product’s icon in your task bar. Find out what product version you are running and compare that with what is available. Every year the threat increases significantly and is vastly different, in recent times the threat has increasingly come from “spyware”, so much so, now vendors talk in terms of “malware” not just viruses or spyware. This means that you need to upgrade (not just update) your product each year, to take advantage of the new methods for fighting this war.

Get rid of unneeded applications All computers carry some dead weight, old programs that were installed at some point for some long forgotten reason. Many of these programs are “memory resident” which means that they actually load when your computer switches on but remain hidden until you need them. This increases the length of time that you have to make your morning coffee as you wait for your computer to boot, and takes up valuable RAM (short term memory) in your system, potentially slowing down your system further. So ask yourself, do you really need the 2005 Jenna Jameson screen saver, webshots, three different web search toolbars, or even the last six versions of Adobe Acrobat PDF Reader?

Power cycle all of your network switches Your network switch is a small box that all of your network cables get plugged into. Modern switches have a memory and try to keep track of the devices (computers, printers etc.) on your network so that it can direct traffic down the right cable rather than bothering everyone by simply repeating everything it receives. However this memory can get jumbled up from time to time. A simple flick of the switch off then on can reset this memory and keep your network running smoothly (make sure all your desktops

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and laptops are logged out first!). While you are at it, reset the power to your modems and internet equipment, to give those devices a fresh start too.

Run updates and reboot your server Fortunately Microsoft release monthly patches as updates to your server’s operating system (Windows) to fix all sorts of issues that are found over time. Unfortunately many of them require a system reboot. For obvious reasons it is not best to have this take place automatically. If you have a server, and you probably should, a manual reboot of your server clears out all the junk that might have been loaded over time into RAM (your computer’s short term memory) and gives your server a fresh start. A monthly reboot is advised for most server types.

Conduct a software audit Nearly every small business is a perpetrator of software piracy to some degree or other, mostly it is simply a matter of having some trial software that has expired and was never removed. However in some cases it could be that you have academic versions of software, when for your business type, you are not entitled to. Or even that someone installed a burned or “cracked” version as “a favour”. The problem with using pirated software is that: a) It is against the law and does not rightfully compensate the copyright owners for their investment in developing the product; b) You will not be entitled to updates and upgrades that not only fix bugs and issues with the software, but also close security flaws as they are fixed or “patched”; and, c) When things go wrong and you are at risk of losing data, you have nowhere to go for help. Your mate with the burned disk might think they are doing you a favour, but really what they are doing is opening you up to a world of potential problems. In most cases if you come forward and try to fix the situation, software vendors can be most accommodating. Microsoft, for example, from time to time has an amnesty licensing program that will allow you to “get genuine” for a reasonable fee, no questions asked.

Clean the inside of your computers Dust traps condensation (water) and heat, which are the two biggest enemies of your computer’s

internal components. In addition dust can get in the bearings of any exhaust or cooling fans your computer may have, making the fan noisy or worse, fail. Most office supplies retailers sell compressed air in a can. Simply take your computer outside, take the lid off your computer (carefully, you may need a screw driver) and spray the dust off of the internal components. Be careful though, if you get too close or use too much pressure you may damage some of the componentry by blowing it clean off! Also make sure you hold any fans steady when you clean around them.

Review your internet plan and equipment Find out who your ISP (Internet Service Provider) is. Give their sales number a call and find out if you are on the best plan for your agency. It took mobile phone companies years to get proactive with customers and start to make outbound calls about your phone plans. In general, ISPs have not yet gotten to that point yet. Ask them what your average monthly download usage is and if a higher speed internet connection is available. In Australia the current standard for ADSL is 24MB download and 1MB upload. If they can’t offer at least that then they themselves use antiquated and out-dated technology and you should change providers as quickly as you can. If you already have a 24MB connection then you just need to make sure you have enough (but not too much) download allowance. For most small businesses I recommend a minimum of 60 gigabytes per month. This should cover basic business use. Just be careful to ask whether or not you have a static IP (Internet Protocol) address, and make sure that this will not change when you alter plans.

Change your administrator password Employees come and go, and your IT support company may have had staff leave as well. It is critical that you get in the habit of changing your administrator password at least quarterly, or anytime a staff member leaves, even if you don’t think they know it. At the very least make sure you know how to change this password yourself. Your administrator password is like the keys to your car, business and house, ATM card and the all the associated PINs and security codes all rolled into one. Don’t let this into the wrong hands. After you change your server password, make sure your backups still work. Some backup

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programs may need to know your server password in order to work.

Contract a Microsoft Certified Professional (MCP) to assist you There are many things that are simply too hard or too risky for an end user (you) to do. An appropriately certified engineer will know how to safely: • Check that your server is not an open SPAM relay (a form of email hacking); • Check that your IP Address is not blacklisted for email; • De-fragment your databases (including your email and file systems); • Optimise your page file;

What is managed services and why is it good for my

real estate

• Disable unneeded start-up items; • Test the status and health of your UPS (battery backup); • Install (or update) a standards-based browser for safer internet use; and, • Much, much more. Don’t trust someone who doesn’t have this very basic certification, Microsoft Certified Professional “MCP” to touch your network. The company you engage should also belong to the Small Business IT Professionals Association of Australia (SMBITPro).

In summary As much as it is a tendency for people to blame others for their misfortune, the health of your small business computing network ultimately lies with you, the owner of the business. Whether it is choosing the right professional and certified support for your business in the first place, or maintaining vigilance with your backups and server health, the right decisions can make the difference between a happy productive computing network and a costly pain in the backside. Give your computer network the attention it deserves and it will reward you with a trouble free computing experience.

magine a business where you knew what your costs were going to be for the coming financial year, a full three months before the year even starts? Well you can’t predict all of your costs but now with the many companies that are providing managed services it is becoming a reality for your small business computing. Managed services is when your IT provider offers a fixed price per computer for some or all of your computer service requirements. This arrangement if done properly can be greatly beneficial for both the customer and the provider. Financially it allows both parties to budget for the revenue or expense of the offering while averaging out the actual cost of service.

greatly. (A gateway product is a device that intercepts all network traffic before it enters your network and confirms that is free of nasties, before allowing it into your network.) Managed service providers also now have a wide range of software packages to assist in monitoring and remote support, all of which drives the labour cost of the service down. In this scenario, it is now in the IT company’s best interest to run all the preventative maintenance it can to stop the big events from ever occurring. As the customer you win as your down time is reduced and therefore your productivity can be maximised.

For years IT companies just weren’t prepared to take the risk, it was too much of a gamble to provide a fix price service. If something went wrong, it could cost months’ worth of service fees to resolve, leading to the inevitable arguments over what is included in the fixed price and what isn’t. However with the advent of good relatively cheap and reliable high speed Internet available to small business, coupled with a security and reliability focus from Microsoft and other vendors in recent years, the risk has been greatly reduced. Technologies that have changed the way IT providers maintain and secure networks, such as gateway and border control products, allow the IT company to reduce the risk factors

Benefits to your business: Financial risk management As a small business owner you would be aware that cash flow is the number one issue in the survival (and prosperity) of your business. The peaks and troughs of the traditional computing model are unpredictable and risky. Month to month you never know what your bill is going to be, and what is worse, unlike most other expenses in your business, there is no correlation between your revenues and your IT expense. It would appear to be completely random. With managed services you have the ability to average out that expense over the course of the year and much better predict and budget.

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feature name Technology

hardware, you can have the confidence that the hardware issue will be resolved in the shortest time possible. other equipment such as fully subscribed, corporate level, malware (antivirus) applications and security measures such as firewalls and email scanners might also be insisted on. It might cost you more in the short term, but when you consider the lost productivity and frustration of computing system downtime, it is more than likely money well spent. Proactive maintenance

Less downtime By moving the risk and cost of fixing broken systems to your IT provider, you are in essence, purchasing a type of insurance. When something goes wrong, you know that it is not going to cost your business, but your IT partner’s. Therefore it is absolutely in the IT company’s best interest to prevent any kind of downtime from occurring. This can only be good for your small business as the experts are in a much better place to minimise this risk. New technologies Most Managed service providers insist on your business having certain prerequisites it terms of equipment and software. This is to ensure the best chance of the risk minimisation strategies actually working. For example you may only be allowed to have genuine IBM computers and servers with an IBM onsite warranty. This ensures that when something goes wrong with the computing

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The old saying, ‘a stitch in time saves nine’, rings true in IT. With a managed services contact in place your IT provider has a vested interest in performing all the preventative maintenance they can. Software updates, hardware and software monitoring, trend logging all contribute to you rarely having to make that dreaded phone call saying, “My system is down, again”. Better availability of support By choosing the right managed services provider you have the confidence that you can gain access to the support you need when you need it. A managed service provider is able to budget further into the future knowing exactly what revenue they can expect. This means they can hire the right level of staff to cover the work. In addition the provider can better employ labour saving technologies such as computer monitoring agents, update checkers, and remote administration tools, all of which reduce the overheads associated with providing a top level service. Managed services is not for all small businesses, however in the right business, the financial certainty of a fixed price offering and the close relationship with your IT provider might be just what you need to move your business into the new computing era.

Jon Paior has worked in Small Business IT for more than 15 years. He is a Microsoft Certified Systems Engineer (MCSE), and has a skill set that has enabled support for some major computing, networking and telephony projects. Jon has worked in many different diverse industries with a focus on the Information Technology needs for service professionals such as: Accountants, Doctors, Lawyers, Real Estate Agents and the like. Following the Microsoft Small Business Server product line from 4.0 (1997) through to the current version of SBS 2011, Jon is widely recognised as an expert in the field. Prior to that, Jon a geek since before the term was coined, was a co-founder of Adelaide’s premier geek hangout, valhalla LAN parties. In the last 18 months, Jon has transformed his business, geek, into a major managed services player in Adelaide, more than doubling in size, and is expanding nationally with high profile clients such as the Australian Industry group, Mirvac Hotels and of course including many real estate agencies. voice over IP Technology, information security and consulting are just some of the skills and concepts he brings to this market, enabling better use of available human and technology resources in your business. But mostly he’s just a geek who loves technology! For more information or even just a chat he can be reached via www.geek.on.net or jon@paior.com

When experience counts: CoNSIDER REALoZ yoUR PERFECT PARTNER FoR oFFICE SySTEMS

Realoz Developments has been servicing real estate trust accounting and general ledger accounting in Australasia for over 20 years. During this time we have seen technologies and technology fads come and go in the real estate technology business, some good, some not so good. Along with keeping abreast with latest technologies, at Realoz we know our underlying real estate specific accounting system has been built with years of experience with involvement from real estate professionals. Real estate offices, large and small through to franchise groups have trusted the Realoz financials modules over the years, and we constantly update to ensure we meet our clients ever changing requirements.

If you’re not using a one stop solution like Realoz that can manage your contacts, listings, web and window displays, sale calculations, payouts, full office accounting system including payroll, general ledger through to following up your vendors and purchasers well after the fact, you will be using systems from several suppliers that simply don’t talk to each other.

We have been doing this for years and our experience and support are unbeatable.

Realoz also has residential and commercial property management modules that can share your sales trust if required. We cover every scenario when it comes to meeting trust requirements across all Australian states. We have also just released our web based contact management system Realoz Live. This is the prefect tool for sales agents to manage contacts, buyer match from your offices database and automated email marketing tasks. If you’re looking for the one stop shop in real estate practise management software, consider Realoz.

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Legal Issues

the lines S

omething happened last year that affects the rights of every single agent licensed or certificated under the Property, Stock and Business Agents Act 2002 who faces disciplinary action from New South Wales Fair Trading – rightly or wrongly. The Administrative Decisions Tribunal of New South Wales (ADT ) handed down a decision which, on a practical level, has essentially given a delegate of the Director-general of NSW Fair Trading an unfettered and damaging power to suspend a licence or a certificate of registration for 60 days without natural justice and without the right to a review by the ADT. As we all know, two weeks, let alone 60 days, without trade can be enough to destroy a business. In the case of watson v Director-general, Department of Services, Technology and Administration [2010] NSW ADT 44 the Respondent challenged the jurisdiction of the ADT to review a decision by a delegate of the Director-general to suspend an agent’s licence or certificate of registration under section 196(1) of the Act. Section 196(1) gives power to a delegate of the Director-general to suspend a person’s licence or certificate of registration for 60 days when a show cause notice is served. To utilise the power, the delegate simply needs to be satisfied that the grounds for disciplinary action specified in the show cause notice would, if established, justify the suspension.

Facts By consent to consolidate, there were four Applicants in the proceedings: Christine Watson, Simon Turner, Michael Marquette, and »»

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Legal Issues

»» Marquette Turner Corporation Pty Ltd. Some of you may have read about Simon and Michael in the media recently. That, however, is a different story. The important story for all agents is this one – and I do not just say that because Leverage Australia was involved in this case. The ADT decision was delivered on 12 February 2010 by Deputy President Chesterman following a request by the Respondent to relist the matter. They wished to argue the ADT’s jurisdiction in previously granting a stay of the suspension of these persons’ licenses under section 196. That argument occurred on 8 February 2010. our Mr Compton appeared as solicitor for the Applicants and Ms Henderson appeared as counsel for the Respondent.

Submissions Without going into too much detail, the Respondent submitted that the ADT had no jurisdiction to review a decision by a delegate of the Director-general to suspend a licence under section 196(1) of the Act because such a decision did not involve the ‘taking of disciplinary action’. They relied on what was termed a ‘textual’ analysis of the legislation. As section 196(1) uses the words “pending a determination by the Director-general of whether to take disciplinary action,” it was argued that a suspension under section 196(1) was an interim suspension and did not involve ‘taking disciplinary action’ pursuant to section 200. The Applicants challenged the submissions of the Respondent in that the correct way to interpret section 196(1) was as a ‘subset’ of the particular example of ‘disciplinary action,’ as set out in section 192(1)(f ) - being a suspension of a person’s “licence or certificate of registration for a period that does not exceed the unexpired term of the licence or certificate of registration”. The heading under which section 196 appears is “Complaints and Disciplinary Action”. The Applicants submitted that an absurdity would be created by an interpretation of section 200 that all disciplinary decisions could be reviewed by the ADT but for decisions to suspend under section 196(1). Such an interpretation would

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result in an application for prerogative writ in the Supreme Court being the only avenue of review for an aggrieved agent, which flies in the face of the ADT providing cheap, efficient and relatively quick review mechanisms under the Act.

Judgment Deputy President Chesterman concluded that the Respondent’s objection to jurisdiction be upheld, due to “textual reasons…overriding any contrary considerations of policy.” The Deputy President accepted the Respondent’s submission that the consistency in and manner of use of the phrase ‘take disciplinary action’ or other variants is important, not the manner of the use of the term ‘disciplinary action.’ As such, the Deputy President noted at paragraph 48 of his judgment that suspending a licence under section 196(1) is to be “regarded as a measure distinct from, and antecedent to, that of ‘taking disciplinary action’, not as an instance of taking such action.”

that an application to the Supreme Court can extend far beyond 60 days. There is also the cost to consider. Under a suspension the agent cannot trade. With no trade there is no money coming in to fund a Supreme Court application anyway. Meanwhile, all property management and property sales pending listing or settlement are affected. Landlords and vendors, with no choice but to go elsewhere to protect their own interests, begin to move their business. Now, for want of a better word, there is no ‘stock’ in the business. All this can happen in the space of two weeks, let alone 60 days. Therefore, most agents will have no choice but to wear a section 196(1) suspension even if clearly unjustified. Consequently, a delegate’s use of this power will mostly likely go unchecked, blurring the lines between the legislative, judicial and executive arms of government. only one word comes to mind: reform.

The Deputy President further stated at paragraph 58 that “suspension of a licence under section 196(1) is authorised as a temporary protective measure when there exist only ‘reasonable grounds’ for believing that ‘disciplinary action’ may be warranted.” This description is not disputed, but that is the problem: what results is a lesser standard of proof for a power that is very severe.

What does this mean for agents? In short, what this case means for all agents in NSW is that, on a practical level, a delegate of the Director-general for NSW Fair Trading has been given an unfettered power to suspend a licence or certificate of registration under section 196(1). That is not to say that section 196(1) should be abolished. on the contrary, NSW Fair Trading should have the power to remove rogue traders from the industry. However, such a power should still be subject to proper checks and balances. Ironically, it is the 60-day time limit set out in section 196(3) which aggravates the problem. yes, the suspension is temporary, however the ADT’s decision has resulted in the Supreme Court being the only recourse for an aggrieved agent. We all know

Shannon Lakic is a solicitor with Leverage Australia Pty Ltd. Admitted in the Supreme Court of New South Wales in 2008 and holding a Certificate Iv in Training and Assessment, Shannon practices and teaches others in the areas of business law, real estate, franchising and strata management. Email Shannon at shannonl@leverageaustralia.com

ICG2694 Aust RE Rev Qpg 02-PRINT.pdf

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ÂŠ Ciao Magazine 2009

feature name Property Management

management

starts during tenancy selection The need for Risk Management Systems within any industry has never been more evident than within the real estate property management sector, writes Philip Nounnis.

Image courtesy of Jason Attard Photography.

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Property feature Management name

true National Default Tenancy Control System has never been more important. TICA is a service provider to the property management industry providing it with access to valuable tenancy information sourced from our members in every state and territory throughout Australia.

ver the years state tenancy legislation has been making life easier for tenants to abuse the generosity afforded to them by their landlord. TICA has always maintained that rental accommodation is a privilege not a right.

Unlike a number of other industry service providers, TICA was designed from the ground up by real estate agents for real estate agents. The TICA National Tenant Database has grown over the years to be the largest Tenant Database in Australia with over 7,000,000 records gathered from over 6,000 members.

Over the past few years TICA has conducted general surveys for continuous improvement. One of the most interesting outcomes was that as of the beginning of 2011 there was an estimated $143,000,000 owing in rent and damages. From the real estate industry’s point of view this represents a significant dollar value in lost commissions.

TICA revolutionised the way in which a pretenancy selection process occurred with the introduction of its Default Tenancy Control System. This system empowered our members with the advantage of always being one step ahead of tenants by supplying property managers with beneficial information that is needed in an ever-changing and challenging marketplace.

With rent prices on the increase and property prices reaching record heights, a landlord’s exposure to rent and or damage losses by a tenant is incredible. All managing agents have a duty of care to their landlords in all aspect of the property management starting from the tenant selection process.

TICA is and always has been more than just a Tenant Database. Our systems offer our members the ability to make informed decisions when considering a tenancy applicant.

Defaulting tenants who chose a career of making a property managers life a nightmare do not deserve a second chance whilst they continue to create havoc and owe money to previous agents and their clients. TICA and its associated companies are dedicated to the industry and will always fight for the scales of justice to be evenly balanced.

The industry solution TICA’s Director had a career in real estate spanning over 20 years; and identified the need to establish a National Tenant Database and a Default Tenancy Control System that united property managers from around the country. With the world and indeed Australia becoming smaller every day, more and more people are seeking a change of address for one reason or another. It is a well known fact that tenants can be a transient group who not only move within the local suburbs but also interstate. The need for a

TICA constantly investigates ways in which to add further beneficial protective measures by enhancing our services for members. The easy to use system along with real-time results keeps you that one step ahead without the need to provide any of your client’s confidential details. The war cry “breach of duty of care” is greatly diminished when you can advise your clients that you have access to Australia’s Largest Tenancy Database and have taken every step possible to reduce their chances of inheriting a problem tenant. Most importantly, you can rest easy knowing you are dealing with a company that provides a system which has been tested and is privacy compliant. As a member of TICA, you will be dealing with a company that has “sat where you are” and is there willing to defend its member’s rights and the rights of their clients. The management team of TICA always has the best interests of the membership close to its thoughts. We are constantly arguing and pressing the rights of property managers and the clients they represent with both State and Federal legislators. »»

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Property Management

»» TICA facts: • Australia’s largest National Tenancy Database. • Unites property managers from around Australia and New Zealand. • Designed by people from the industry. • Attracts media attention on a national level. • Always listening to the needs and wants of the membership. • Keenly priced so that it is affordable to even the smallest rental portfolio. • Profitable for principals where they can charge back inquiries to their clients. • Continually investing in systems and procedures that offer more protection in tenant selection for our member’s rental portfolios and the clients they represent. • Always considering methods in giving back to the membership with value added services and promotions. • The largest membership covering every state and territory. • The largest number of tenant records. • Provides the most competitive Landlord Insurance policy in the industry.

Make money with TICA The TICA service is a billable service to your landlords. As such the annual membership fees can be recouped and revenue generated over the year. The TICA system has a built in statistics dashboard, which allows its members to analyse the number of enquiries processed, revenue calculations and a billing report system.

New release: TICA Virtual Manager The TICA Virtual Manager is TICA’s latest product released to the market. TICA Virtual Manager is your own internal database, which means it is not subject to any state legislation that governs Tenancy Databases or its users. This innovation is another step TICA has taken to continue to empower the industry. TICA’s Virtual Manager (VM) product will now place members in a situation where they can have a Risk Management Tool working for them 24 hours a day, seven days a week. A feature of the product is the ability to monitor tenancy applications made by flagged individuals. If you believe a tenant is a risk to your portfolio because of rent arrears, eviction notice proceedings, terminations notices, etc. you can record them into VM and flag them for monitoring. VM will report on if these individuals have had applications processed by other members.

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TICA Virtual Manager is available free of charge to all TICA members with full membership that fall into the categories of Real Estate Agent, Residential Unit Managers or Caravan Parks, allowing you more control over the properties you manage and the clients you represent.

POEP Insurance offers your landlord an affordablypriced policy, wide coverage and low to nil excesses on all claims.

Benefits of using TICA Virtual Manager:

Also available is Building Insurance, Holiday Unit and Holiday Home insurance.

• Record all your tenant’s details within the system; which then allows you to flag tenants you wish to be monitored within the TICA system when they apply elsewhere.

TICA also offers its real estate members the ability to earn a referral fee on every new and renewed policy.

For further information on TICA’s products and services, please visit our website at www.tica.com.au.

• Receive automatic email reports on monitored tenants when they have applied for rentals with other TICA members. • Put a stop to your tenants having the ability to do the “midnight run”. • Auto lodgement facility to list your default tenants on the TICA Tenancy History Database with the click of a button. • The most innovative protection tool released to the Industry in years.

Landlord insurance Selecting the right Landlord Insurance policy is just as important as selecting the right tenant. Landlord insurance should not be the only form of risk management but a part of easing the possible financial burden placed on landlords not only by a defaulting tenant but other unforeseen events that may occur. Three main things that most people look for before taking out our insurance policy cover are: 1. Cost Cheapest is not always the worst and dearest is not always the best. TICA recommends reading the product disclosure statement to make an informed decision when comparing policies. 2. Cover offered Have a full understanding of what the policy covers and under what circumstances you can claim. 3. Excesses payable Do you or your landlords know the excesses payable on various claims under their policy? The excess payable quite often determines whether a landlord is willing to claim on their insurance policy. High excesses may diminish the value of having an insurance policy and don’t sufficiently diminish the burden left to be carried by the landlord after the insurance has paid out. TICA’s Landlord Insurance policy, titled “Property Owners Extra Protection Insurance” (POEP) is the most competitively-priced policy offering what we believe is the best coverage and excesses.

Philip Nounnis is the Managing Director of TICA and the original founder of the TICA system. He commenced his career in Real Estate and Property Management in the late 1970s until the early 1990s when TICA was born. Philip is well known and respected by Property Managers throughout the country. He has been heard on radio, seen on television and quoted in the press as a firm advocate of a fair balance between the rights and responsibilities of Owners, Tenants and Agents.

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Processes on average 121,046 enquiries per month Is used by over 6,000 offices throughout Australia Has three databases to search (History, Enquiries and Public Records) Has over 7,000,000 records that can be used for application assessment Is the most economical risk management system in the marketplace Was designed and developed from 30 years of industry knowledge Has one yearly membership fee with NO further ongoing charges*

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Selecting the right Landlord Insurance policy is just as important as selecting the right tenant. TICA believes it offers one of the best Landlord Insurance policies to the industry underwritten by one of Australia’s largest Insurance companies Allianz Australia Insurance Ltd. Annual Premium Pricing ACT NSW NT QLD SA TAS VIC WA

$190 $265 $250 $225 $190 $180 $225 $190

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Policy Excesses

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Default of Rent - Up to 15 Weeks Legal Liability - Up to $20 Million Fire & Explosion - Up to $50,000 Loss of Rent - Up to 52 weeks Landlords Content - Up to $30,000 Theft by tenants - Up to $50,000 Deliberate, Malicious or Intentional damage by tenants - Up to $50,000

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featureReview Event name

a smarter game Real estate intelligence for serious sales growth

ovER 300 DELEgATES FRoM ARoUND AUSTRALIA RECENTLy gATHERED AT FLEMINgToN RACECoURSE IN MELBoURNE FoR THE INAUgURAL ADvANCE REAL ESTATE LEARNINg (AREL) CoNFERENCE AND TRADE EXHIBITIoN. LEANNE howARD REPoRTS.

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Event featureReview name

new independent educational event management company, AREL was conceived in late 2010 to fill a gap in the market for advanced learning with a focus on the how and why – the business mechanics and science behind what drives serious sales growth and income. Targeted at smart, inspired, switched-on real estate professionals eager for resources to help them move towards elite sales status, the inaugural event put together in record time certainly hit the mark. According to Myles Pearce of Peter F Burns in Brighton, South Australia, “I’ve been in real estate 42 years and attended hundred of workshops and conferences – this was by far the best! The speakers were all dynamic, true blue, appropriate and concise. The material was pertinent, relevant and authentic. The value was outstanding.” The shared intelligence of international real estate experts – Bob Wolff, Richard Flint and Richard Robbins – combined with the extraordinary generosity and sharing of local industry practitioners doing exciting things and achieving great results delivered the audience with tangible take home value and clear, actionable steps to improve their sales results.

During the event the Twitter and Facebook feeds were buzzing and in the exhibition hall everyone wanted a chance to win one of several iPads on offer from exhibitors. Integral to the success of these events is the support of suppliers to the industry and the inaugural exhibition was a sell out. The event was generously sponsored by Excel Australasia with fellow exhibitors including RP Data, Connectnow, Rockend, Splash Displays, visual Domain, Direct Connect, open2view, rent. com.au, Street News, Winning Edge, Stockdale & Leggo, Auswide, kaplan, Harcourts, BPg Training, Marsh, Next Byte, Mortgage Express, BMT Tax Depreciation and JUA Underwriting. The experienced team behind the event delivered on their promise to cut through the hype and put together a program that provided some of the best growth maximising business intelligence available today from people in our industry actually doing it. “What a fantastic conference,” said Janice Dunn of eview in Melbourne, one of the agencies that sent a large group to the event. “The speakers all had something to offer everyone, regardless of the stage they are at in their journey.”

Delegate Ian Brook from eview in Melbourne commented, “The quality of the speakers was great and they most certainly delivered the promised ‘nuts and bolts’ of real estate. I will be taking a lot of the things I learned and putting them into action.” Most impressive was the working agents who embraced the challenge of presenting to their peers and took the time to share their ‘secrets to success’. Speakers included Andrew Chamberlain (Peter Blackshaw Manuka ACT), Paul Curtain (Place Estate Agents qLD and NSW), Mark Earle (Buxton Sandringham vIC), James Crowder (Community Real Estate vIC), Rik Rushton (Ranges First National vIC), David oster (Jellis Craig Ivanhoe vIC), Chris gilmour (All Properties group qLD), valerie Timms (Ray White Christies Beach SA), karen vogl (Hocking Stuart Ringwood vIC), Sadhana Smiles (Mcgrath Estate Agents Lower North Shore NSW) and Paul Tonich (Altitude Real Estate WA). Session topics ranged from creating customers for life, to how to create and work with a team, to strategies for success in a challenging or changing market. Speakers looked at the power of strategic influence and using competitive advantage. All the core real estate topics of prospecting, listing, nurturing, lead generation, scripts and dialogues, systems, and personal branding and marketing were explored, but with a fresh take on these industry ‘nuts and bolts’ including the role of social media.

If you are interested in receiving information on the 2012 AREL Conference, please email your details to laura.watts@ arelevents.com.au or call 1800 106 949. For further information please contact: Leanne Howard Head of Events Advanced Real Estate Learning leanne.howard@arelevents.com

The Australian Real Estate Review

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the basics Winning ideas to take you from an average to elite performer

WHILST MoST REAL ESTATE PRoFESSIoNALS kNoW HoW To SELL USINg TyPICAL SELLINg TooLS, AND PERFoRM WELL, THEy ALWAyS HAvE CoMPETITIoN SNAPPINg AT THEIR HEELS. So WHAT MAkES SoME AgENTS STAND oUT AS EXCEPTIoNAL oR ELITE PERFoRMERS? WHAT ARE THEy DoINg THAT IS DIFFERENT To ENSURE THEy STAy AT THE ToP oF THEIR gAME? LEANNE howARD REPoRTS.

The Australian Real Estate Review

Event featureReview name

eet four very different agents working in very different markets who have created winning ideas by taking everyday tools but executing them fresh, innovative ways.

Using marketing to take the work out of lead generation Chris Gilmour of All Properties Group in Brisbane’s southern suburbs lists or sells a property every 26 hours (excluding Sundays). What is impressive is he is just 30 years old and has only been in real estate three years, plus maintains a second career as a professional Formula 3 racing car driver. He is the No. 1 agent in his area with 82 per cent market share and manages on average 40+ listings with an average sale price of $546,000. Last financial year he listed 102 and sold 87 properties with an average of 18 days on market. In his first year in sales his gross commission was $130,000. A year later it was $880,000 and this year will be well over $1 million. So how does he do it? “The key to my success isn’t rocket science,” says Chris. “I’ve simply looked at what agents selling high end property are doing and replicating that in the suburbs.” “Professional marketing is mandatory to be my client – home styling, photography, interactive floor plans and video tours. While other agents in the area aren’t moving stock, mine is flying out the door often at above asking price so the vendor is happy. Our quality marketing attracts the majority of buyers looking at the area, which usually delivers me two to three new sellers. So it’s a win-win situation.”

Delegating prospecting to focus on volume Karen Vogl of Hocking Stuart Ringwood, a middleincome area of young families in Melbourne, started out in real estate in 2002. Her gross commission of $200,000 eventually came to a plateau at $500,000 and then took a massive jump to $1.5 million when she made some smart changes. Today with a team of four she averages 25-30 appraisals a week and 40+ vendors at any one time. Last year she listed and sold 150 homes with an average sale price is $600,000+, mostly by private sale, and finished with a gross commission of $1.9 million. “To boost my profitability I quickly realised that I needed to boost my volume,” Karen recalls. “But like most agents I don’t really enjoy prospecting and business development as much as I like appraising, listing and closing a sale.” So, Karen decided to delegate the task and almost overnight boosted her income by simply using her time more effectively and productively. In 2007 she bought the business and created a Prospecting Division that services all the sales agents and is also responsible for managing the client experience post-sale to

settlement to ensure positive referral business whilst the agents quickly move on to the ‘next big thing’.

Creating a unique point of difference to increase market share James Crowder runs a unique agency on Victoria’s Mornington Peninsula that is causing quite a stir in the industry. His unusual business model has earned him the 2010 REIV Award for Excellence for Community Service and a nomination for the REIA National Award. Most of his 30 year career in real estate has been spent in the family business created by his grandfather in 1952. But, in 2007 he opened Community Real Estate, realising his passion to create a business with a distinct point of difference that would build his personal profile while also benefiting the community. His new and exciting concept sees his business donate a percentage of its agreed fees to each vendor’s nominated charity or registered group. To date over $100,000 has been donated with 2010 donations reflecting around 14 per cent of total sales. “The most fantastic things about this concept is that it generates leads and word of mouth referrals from the most unlikely places and this is driving the business forward at an exciting pace,” says James. “Our business relies on local groups to support us as their local community agency and in turn we donate back to support the community – it’s a win-win for everyone.”

Having an answer for every objection, always David Oster of Jellis Craig Ivanhoe, a relatively affluent eastern suburb of Melbourne, is the elite agent in his area achieving sales records in excess of $5 million. However, he didn’t start out that way sixteen years ago and describes himself as a ‘below average’ agent who taught himself to become a consistent $1 million+ performer. David says, “There’s no secret to my success other than a dramatic change of mind set. If you want something badly enough like I did, you don’t say you are going to do something, you just go and do it over and over and over again until you’ve mastered it. Once I actually started counting my calls per week and knowing my prospecting stats my income doubled and kept doubling the more disciplined I became. “My success has been sustained by mastering scripts and dialogues around objections and always having an answer for everything. Most of us don’t start out knowing naturally how to do this, but we all have the same opportunity to meet great mentors through seminars and conferences and to seek out and talk to the best in the business to gain those skills.”

These impressive agents were joined by international real estate legends Bob Wolff, Richard Flint and Richard Robbins, plus other great local talents including Andrew Chamberlain (Peter Blackshaw Manuka), Paul Curtain (Place Estate Agents), Valerie Timms (Ray White Christies Beach), Mark Earle (Buxton Sandringham) and Sadhana Smiles (McGrath Lower North Shore) at the recent inaugural Advanced Real Estate Learning (AREL) Conference ‘PLAY A SMARTER GAME – real estate intelligence for serious sales growth’ held in Melbourne, 15-16 May. www.arelevents.com

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6/3/2011 11:04:28 AM

Real Estate Australia Locum WITH EXPERIENCE yoU CAN TRUST, PERHAPS A LoCUM IS JUST WHAT THE DoCToR oRDERED

“WHY should doctors get all the breaks?” muses leading Australian real estate identity Hank Petrusma. The founder of recently established realty service Real Estate Austarlia Locum, Petrusma says that finding time for a real holiday is an on-going problem for hard working real estate principals, who often go years without a decent break.

rarely are in a position to hand their responsibilities to some-one else while they take extended time off. “But the danger of not getting a real break is burn-out. And that can be disastrous in a business requiring ceaseless attention to detail and demanding service to a highly expectant public.” Petrusma says that locums are a well established phenomenon within medical circles and other topend professional fields and “I see no reason why our industry shouldn’t have a similar facility”.

Real estate is a highly competitive industry and mostly falls within the small business category, where owner/managers are hard put to take quality time out, he says.

“of course, trust and integrity are paramount, with any small business owner reluctant to hand over the reins for even a short period of time unless there is total confidence in the person standing in,” he says.

“As a rule, these principals are flat chat surviving in what is a very much a hands-on business. They

“I believe that my recently established Real Estate Austarlia Locum can provide that service in the

Do you as a busy real estate principal only dream about this? Well, dream no more!

you will have been in this hectic industry for many years. you have worked long hours and rarely taken a decent break. And probably because you did not have an experienced person to look after your business. Well, the time has come to finally enjoy a holiday. you deserve it. How? By employing a real estate LoCUM. Someone who can look after your business from two to four weeks while you enjoy your time away from the desk.

most professional way and in a manner that will be acceptable to any Australian real estate company. The fact that I am not connected in any way with their local competitors, also is an obvious peace of mind for them. “My independent service also will include the coaching of sales staff, providing further professional development to the benefit of the employer.” Real Estate Austarlia Locum will offer its service for periods of two to four weeks in all Australian states and the ACT.

Hank Petrusma is one of Australia’s most highly respected real estate agents. He has an amazing track record in sales as both a consultant and principal agent and also is a sought after trainer with a down to earth style based on solid coal face experience that has been an inspiration to many across the nation. He has worked for both franchise and co-operative groups as well as successfully developing his own realty business. Hank will run your business during your absence and as a bonus will spend time coaching your sales staff, further developing their skills to the advantage of your company. Whether you are based in queenland, New South Wales, victoria, Western Australia or the ACT or New Zealand, Hank has worked with sales people in both countries... Distance is no barrier. If this sounds of interest to you, call Hank on 0418 477 416 or email hankpetrusma@bigpond.com for further details on how a locum can best work for you. PS: As a company director, it took me 16 years to find a way to have my first four week break. This is an opportunity too good to miss!

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