The magazine for real estate professionals who are the difference. The Journal of the Real Estate Institute of Victoria / APR. 2022 / Vol. 86 No. 1
New year brings fresh challenges and opportunities New REIV CEO Quentin Kilian shares his vision for the future
LATEST LEGISLATION An in-depth look at the changes to the Owners Corporations Act 2006
Property valuation in family disputes Jan Hancock shares insights, cautionary tales and suggestions
The Estate Agent is published by the Real Estate Institute of Victoria.
Publisher REIV 335 Camberwell Rd, Camberwell, Victoria 3124 Editor Sarika Bhalla – sbhalla@reiv.com.au
Established in 1936, the Real Estate Institute of Victoria (REIV) is the peak representative body for real estate professionals in Victoria. Our Mission is “To enhance the professional excellence of our members to the benefit of the communities they work within, and to advocate and represent their interests”. Connect with REIV on social media. Find us on: facebook.com/REIVictoria @REIVictoria REIV @REI_Victoria
Features 16-19 All that glitters is not gold Jan Hancock shares some insights, cautionary tales and suggestions about property valuation in family disputes
23 Fast-track your training No matter how busy you are, the REIV has you covered for your ongoing professional development
PRODUCTION Pagemasters
25 Attracting new talent to real estate The “Great Resignation” has impacted most sectors and our industry is no exception
29 Disclaimer Unless otherwise specifically expressed, the views or opinions appearing in The Estate Agent (EA) are those of the authors and do not represent the views of The Real Estate Institute of Victoria Ltd (REIV). The REIV gives no warranty about the accuracy, completeness, or reliability of the content of EA. The entire content is general information only. It is not advice or intended as advice and in no circumstances should be relied upon as such. Readers and third parties should verify the content and seek their own independent advice before making any decisions, financial or otherwise, based on what they have seen or read in EA. The REIV and EA do not endorse or take any responsibility for material on third party websites referred to in the EA.
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The Auctioneer A poem by Darrell Simpson
Contents
Contents President’s report
Pages 4-5
CEO’s report
Pages 6-7
Bulletin
Page 9
Legislation Changes to the Owners Corporations Act 2006
10-13
Pages 10-13
Best practice
Changes to the Owners Corporations Act 2006
Frequently asked questions Property valuation in family disputes
Pages 14-15 Pages 16-19
Data insights Pages 20-21
2021 – A record(s)-breaking year
Training Fast-track your training Attracting new talent to real estate
Page 23 Page 25
Events
30-31
2022 REIV Connect Series 2021 Auctioneering Competitions
Page 26 Page 27
Resources
The benefits of using VicForms
Property Data – best-in-class data and technology The benefits of using VicForms Ready to sell your real estate business? Are you considering selling your rent roll? Top 3 reasons to use a broker for business insurance
We speak to some Members who use digital forms and authorities on VicForms to understand their views
Page 28 Pages 30-31 Page 32 Page 33 Page 35
Members The Auctioneer – a poem by Darrell Simpson Member milestones New members
Page 29 Page 37 Page 38
33 Are you considering selling your rent roll? The agency rent roll is a major asset of any real estate business other than its staff
The Estate Agent – APRIL 2022 | 3
President’s report
Adam Docking REIV President
We also saw a distinct shift away from the primarily traditional Saturday auctions – how many times can the media use the cliché ‘Super Saturday’? With the adoption of hybrid, livestreamed auctions, we called more auctions mid-week and evenings than ever before. Maybe we may have to adopt a new catchphrase, ‘Wonder Week’? Like everybody across the industry, I’m gladly putting the past two years behind me and looking forward to a more ordinary 2022 where we can interact both professionally and personally face-to-face
In 2021, we broke pretty much every property record there was to break, including the highest volume of auctions on one weekend (1870 auctions were held in the second week of December), the highest number of transactions for a quarter (an estimated 52,400 sales for Q4) and, in some suburbs, the highest percentage gains in one quarter. and not via Zoom. As a residential sales consultant when we went into lockdown, we simply had to stop what we were doing and either find ways to transact virtually or wait until another lockdown ended. Property Managers were polar opposites. Your workload increased, stress increased and, on too many occasions, you became the whipping post at which some renters and owners vented their frustrations. As a result, we have seen a rationalisation in Property Management professionals at levels never seen before. Amid the bureaucracy and constantly changing
requirements, the new RTA was released. Talk about the perfect storm! For the new year we need to sweep clean, reset and be aware that our mental health is now more important than ever. If you need to reach out, never be afraid to ask for help or, if you think someone is struggling, don’t be afraid to simply ask ‘RUOK’? In mid-February, I had the great pleasure of welcoming our new CEO, Quentin Kilian, to Victoria and enjoyed the opportunity of picking him up at the
Former REIV president Leah Calnan with the President’s Award recipients Andy Reid (2020) and Bill Di Donna (2021). 4 | The Estate Agent – APRIL 2022
President’s Sectionreport head airport one balmy February Thursday evening. Mind you, while I greeted him in shorts and a summer-weight linen shirt, Quentin was wrapped in a leather jacket and heavy-weave jeans. I guess a 25° night is deemed ‘cold’ for someone coming from the Northern Territory. Quentin’s first day on the job was Friday, 18 February, however he had previously involved himself in many Zoom meetings, from his Darwin base, with his new executive team, so he’s hit the ground running. Quentin’s experience in the corporate world is extraordinary and includes Directorships in international trade at government level, Northern Territory Business Council, Australian Business Association in Singapore and even a position as the President of the Rotary Club of Darwin Sunrise! Simply put, the next chapter of the Real Estate Institute of Victoria, under the helm of Quentin Kilian, is certainly looking positive. Quentin would not have a solid foundation to work from if it wasn’t for the outstanding job Gil King did over the five years in his position as CEO. Gil’s work has seen the REIV become the benchmark for property institutes Australia wide. It cannot be underestimated just what a monumental job Gil and his mostly handpicked team had in front of them to right a listing ship that was the Institute he walked into. We are so very lucky that many of the executive team Gil appointed are still here and will have the opportunity to see into fruition the plans and objectives Gil implemented during his time at the helm. For me personally, I would not be in this
REIV President Adam Docking with his predecessor Leah Calnan.
role the Institute granted me if it wasn’t for the mentorship and, I must say, the friendship shown to me by Gil. It is often said, we won’t know where we need to go if we don’t know where we’ve come from, yet we can’t live in the past with the notion ‘that’s how we’ve always done it’. As a membership Institute we take inspiration and
confidence from our history and look towards the future with enthusiasm. The future of the Institute needs to include creativity, innovation and strategic thinking. With Quentin as our new CEO and with the experience he brings, the future of the Real Estate Institute of Victoria is bright! Adam Docking REIV President
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CEO’s report
Quentin Kilian
It is with great pleasure that I write my first editorial message as CEO of the REIV.
REIV CEO
A little about me for those who may be wondering. I have spent the past 12 years as CEO of the REINT based in Darwin, and before that have a career that spans international trade and relations, regulatory compliance for the satellite industry across the Asia Pacific, running a television station in Singapore and working for Hong Kong based satellite broadcaster Star TV across a daily footprint of 220 million households, plus several other roles including radio broadcasting. However, from all of this, I have a found a real passion for real estate. I am privileged that the REIV Board
6 | The Estate Agent – APRIL 2022
have allowed me the opportunity of heading up the REIV, which in my view is, by far, the most progressive organisation in the most exciting property market in Australia. On top of which, both my wife and I are looking forward to all the magnificent offerings that both Melbourne and Victoria have to give us. Gil King has done a sterling job with the REIV over his tenure, and this makes my transition so much easier. I am looking forward to working with the highly professional team at the REIV and with REIV President Adam Docking.
With a federal election and a Victorian State election both occurring this year, a lot of our time will be devoted to our legislative and advocacy agenda. We will continue to have robust discussions with Government on issues such as the RTA and its impact on the rental market, the post COVID commercial property market, taxes on property and housing affordability. At the time of writing this column, the REIV is working with Members to respond to the Property Market Review announced by the Victorian government.
CEO’s report Section head
Boosting employment in the real estate sector, particularly in Property Management, will be a key policy issue this year. Some reports state that there has been as much as a 40 per cent drop in employment in property management since the start of COVID. We will be looking at ways we can boost employment levels across the entire sector through, but not limited to, government led incentives, tweaking the training regime and campaigns to encourage people to take up a career in real estate. We will continue discussing ways that government can help the recovery of the commercial and retail sectors. Commercial property owners have done more than their fair share of the heavy lifting for the past two years. Given the importance to the Victorian economy of the commercial and retail sectors, we feel it is imperative that government engages with us in meaningful discussions on solutions to help rebuild these sectors. As the rental market begins to rebound across metropolitan Melbourne, we are facing a situation where many investors have reduced their holdings over the past two years, which in turn will mean
pressure on supply as that demand increases. With record low vacancies across regional Victoria, we will be discussing with the government, ways that we can incentivise investors back to the market to create supply. Given that this issue is not unique to Victoria (in fact even Darwin has seen vacancy rates fall to record lows of 1.3%) there are a number of examples of what other jurisdictions have done, or are considering, that the Victorian government can look at.
We are pushing ahead with the continual growth and change within the REIV, where we’ll be bringing new services, new offerings and a renewed vigour to our interactions with members. Quentin Kilian – REIV CEO
Of course, as rental markets tighten and rents begin to rise, the sensible alternative for many people will be to consider purchasing. This is particularly so for our young first home buyers. But, like many jurisdictions, there is still a lot of work to be done on reasonable First Home Buyer incentives and ineffective taxation. We will be continuing our discussions with government over how we can help to realise the dream of
many people to enter the housing market, because as you grow the number of homeowners, you also grow the stability and ownership of your suburbs and city.
So there is a lot to be done this year. On top of that we are pushing ahead with the continual growth and change within the REIV, where we’ll be bringing new services, new offerings and a renewed vigour to our interactions with Members. Plus, there are several social events where I am looking forward to meeting our Members and engaging with them. This is going to be a very exciting year for the REIV and myself. Working closely with my amazing team at the REIV, and with Adam Docking and the Board, I am looking forward to making this fantastic organisation even more attractive to our members. Quentin Kilian REIV CEO The Estate Agent – APRIL 2022 | 7
Bulletin
REIV AGM 2021
Membership renewal
Shop online
The four special resolutions for changes to the REIV Constitution were passed by Members who attended the REIV AGM on 30 November, 2021 either in person or by proxy. The updated Constitution has been available on the REIV website since 1 December. The main change was to enable General Meetings of Members to be held fully virtually in line with permanent changes to the Corporations Act which have now been made.
REIV Membership annual renewal will be due on 30 June, 2022. All Members have the option of using the monthly direct debit facility. You can choose the monthly direct debit at no additional cost, making the renewal process seamless. Direct debit can be attached to a bank account or a credit/debit card.
You can order a range of office supplies including printed REIV forms and authorities at the click of a button. The REIV sells a range of sector-specific resources such as auction bells, flags and more, that can be delivered straight to your door.
Realestateview AGM The Realestateview.com.au Ltd (REV) AGM was held on 3 February, 2022 when shareholders agreed to change the REV Constitution and increase IMP’s shareholding to 72.18 per cent. The REIV Board supported the resolutions as giving REV the best opportunity for success.
For any member queries or assistance, please contact the Membership team on membership@reiv.com.au
Renewals can be done online by logging in at members.reiv.com.au Agency invoices can be paid by the OIEC or a designated administrator. Please contact the membership team for any queries or assistance.
The REIV sells a range of sector-specific resources such as auction bells, flags and more, that can be delivered straight to your door.
Please login with your personal membership number and password. You can also manage your CPD, log requests for CPD points for external training and stay up to date with your REIV account with an online gateway to pay renewals and other invoices. For any queries or assistance, please contact the Membership team on membership@reiv.com.au
Nominate an REIV Account Administrator OIECs can delegate the everyday management of their Office Membership by nominating an Account Administrator for your REIV Office Membership Account. The Administrator will have the ability to take the following actions on behalf of the Office Membership: • Order printed forms, REIV diary, stationery or other supplies • Pay invoices billed to the office membership • Contact the REIV for any queries or assistance on behalf of the OIEC • Keep the office profile up to date on the REIV website The nominated administrator can be any employee of the business.
The Estate Agent – April 2022 | 9
Legislation
Changes to the Owners Corporations Act 2006 Amendments to the Owners Corporations Act 2006 commencing 1 December 2021 are comprehensive and significant. They aim to balance the interests and requirements of different size complexes as well as strengthen the regulatory responsibilities of developers, managers, decision-making processes, and dispute resolution. Control of the common property within a plan of subdivision will be fairer, more efficient and transparent. Snapshot • These amendments reflect a genuine effort for widespread consultation to produce a more liveable environment for communities affected by owners corporations. • The introduction of previously unavailable consumer legislation will curb the undesired elements of developers and managers and make their accountability more prominent. • Owners and occupiers may be able to enjoy a fairer, more efficient, secure, and transparent delivery of processes and services.
A major reform of owners corporations legislation in Victoria The revised Owners Corporations Act 2006 (“Act”) to commence on 1 December 2021 is a successful accumulation of diverse opinions from a wide field dedicated to the goal of creating an equitable and effective regulatory environment for communal living. This article presents the main features plus concomitant amendments to other Acts that affect an owners corporation (“OC”) including OCs in retirement villages, and the Subdivision Act methodology of setting lot entitlement and liability.
Functions and powers The concept of a prescribed OC¹ has been replaced with five tiers of OCs: tier 1 comprising more than 100 occupiable lots, tier 2 comprising 51 to 100 occupiable lots, tier 3 with 10 to 10 | The Estate Agent – APRIL 2022
50 occupiable lots, tier 4 with 3 to 9 occupiable lots, and tier 5 being a 2-lot OC or a “services only” OC². Whereas a special resolution was previously required for an OC to commence legal proceedings in the Magistrates’ Court of Victoria or the Victorian Civil and Administrative Tribunal (“VCAT”), an ordinary resolution is now sufficient. A special resolution is still required to commence legal proceedings in the County Court or higher. An OC is no longer required to have or use a common seal. An OC may dispose of goods abandoned on the common property under specified sections of the Australian Consumer Law and Fair Trading Act 2012.
Financial management If an OC incurs additional costs arising from the particular use of a lot by the lot owner, it may levy additional annual fees on that lot owner. For example, increased insurance premiums due to the risk associated with short-stay residential accommodation or a change of commercial tenancy.
a maintenance plan for its common property. Such plan may be amended by ordinary resolution and levies struck must be adequate to fund the plan. By special resolution, moneys may be drawn from the maintenance fund for other purposes.
Insurance A 2-lot plan of subdivision continues to be exempt from having public liability insurance on common property and now this will also apply to a ‘services only’ OC. This appears to be an important omission. All OCs (other than a tier 5) must obtain building valuations every 5 years or earlier. Public liability insurance for common property must not be less than $20 million. Large multi-level buildings with separate OCs on the same plan of subdivision, must now insure separately and be valued separately. An OC on a plan of subdivision for multiple single dwellings with common property may, by unanimous resolution, resolve that the lot owner of each single dwelling is responsible to insure their lot. In certain circumstances, an OC can pass on an insurance excess to an individual lot owner. Presently, annual administration fees comprise insurance and other recurrent expenses which must be levied based on lot liability. In OCs where lot liability and lot entitlement differ, the amended Act allows insurance to remain part of annual recurrent expenditure, levied on lot liability, but the OC may also elect to levy insurance separately based on lot entitlement. This will impose an equitable balance in situations where larger lots with greater entitlement often have similar lot liability compared with much smaller lots.
Tier 1 OCs must have their financial statements audited whereas a tier 2 OC’s accounts must be reviewed by an independent authorised accountant. Neither an audit or review is required for a tier 3, 4 or 5 OC, but it is optional.
Meetings and decisions
Only a tier 1 or tier 2 OC must prepare
The initial owner of land affected by
The applicant for registration of the plan of subdivision must disclose any relationship with the manager of the OC as well as any commission, payment, or benefit from that relationship.
Legislation an OC or an associate (as defined) of an initial owner must not: • Be appointed as manager of the OC; • Vote on any resolution of the OC that relates to a building defect; • Receive any payment from the OC manager in respect of the manager’s contract; • Designate as a private lot what normally would be common property; or • Propose an unreasonable or unsustainable annual budget. Unless an OC resolves otherwise, a manager may pass an interim resolution at a general meeting even if no lot owner is present provided additional expenditure is not greater than 10% of the current annual budget and does not affect the manager’s contract of appointment. This will ensure that the OC can continue to function. A lot owner in arrears must not vote as a proxy for another lot owner at a meeting or represent another lot owner for the purpose of election to a committee. A person must not vote as a proxy or attorney for more than one lot owner if there are 20 or less occupiable lots on the plan of subdivision and not more than 5% of lot owners if there are more that 20 occupiable lots. Family exceptions apply.
Committees An OC comprising 10 or more lots (previously 13 or more lots) must elect a committee at each AGM. A member of a committee may provide a proxy for a committee meeting only to another committee member. A committee must have at least 3 members and no more than 7 unless the OC resolves to increase that by ordinary resolution to not more than 12 members.
Managers A tier 1 OC must, whereas other tiers may, appoint a manager. A manager cannot be appointed for a period that exceeds 3 years. It is the OC that determines any offer of renewal thereafter. A manager’s contract of appointment
must not include terms – • Making an OC convene a general meeting or pass a special resolution revoking the appointment of the manager; • Allowing the manager to renew the contract of appointment at the manager’s option; • Requiring a tier 1 or tier 2 OC to give 3-months or more notice of its intention to revoke the manager’s appointment, or one month for other tiers; • Providing for the automatic renewal of the contract of appointment if the owners corporation fails to give notice, in accordance with the terms of the contract, of its intention not to renew the manager’s contract, in which case the contract continues monthly or a shorter period equal to the contractual notice; and • That restrict the ability of the OC to refuse consent to an assignment of the manager’s contract of appointment other than a requirement that such consent must not be unreasonably withheld by the OC. An OC manager must: • Take reasonable steps to ensure that any goods or services procured by the manager on behalf of the OC are procured on competitive prices and on competitive terms; • Not exert pressure on any member in to influence the outcome of any decision of the OC; • Before entering a contract for the supply of goods and services, provide written notice to the chairperson of the OC disclosing any commission, payment, or other benefit which the manager is entitled to receive, other than from the OC, and those details must be included in the manager’s report at the annual general meeting of the OC; and • Immediately on becoming aware that a proposed contract is with a supplier with whom the manager has a beneficial relationship, and before the contract is entered into by the OC, provide written disclosure to the chairperson of the OC of any beneficial relationship, commission, payment, or other benefits with or from that supplier.
The terms ‘associate’ of the manager, ‘control’ and ‘executive officer’ are defined in the Act. A manager must hold all money on behalf of separate OCs in separate bank accounts but may hold moneys in the same bank account if – (a) Each OC is on the same plan of subdivision, and each has consented; (b) The bank account is a statutory trust account held by a licensed estate agent, legal practitioner, or licensed conveyancer. Money held by a manager on behalf of an OC on trust for the OC, includes any interest earned.
Registration of managers A person guilty of specified criminal offences is not eligible to register as an OC manager if it is found contrary to the public interest. There are no educational requirements to be licensed as an OC manager, and there is no requirement to engage in continual professional development.
Rules An OC may make rules in respect of proposed works to renovate or alter the external appearance of a lot, to protect the quiet enjoyment of all other lots and the common property during those works, to protect the structural integrity of any building on the plan of subdivision and to ensure that the market value of any other lot does not decrease because of those works. An OC must not make rules, solely on aesthetic grounds, that unreasonably prohibit the installation of sustainability items on the exterior of a lot (such as solar panels). An occupier of a lot (including an owner or tenant) must ensure that any invitee complies with the rules of the OC. If the invitee breaches the rules, both the occupier and invitee are jointly and severally liable for any compensation or penalty. A lot owner is not liable for an invitee’s breach if the lot owner provides the invitee with a copy of the rules of the OC. CONTINUED ON PAGE 13
The Estate Agent – APRIL 2022 | 11
Legislation CONTINUED FROM PAGE 11
Rules may be made: • Requiring advice to be given to occupiers about fire safety procedures and the operation of fire alarm systems; • Regarding payment of fees by instalments by lot owners in financial difficulty; or • Regulating and prohibiting the drifting of tobacco smoke from a lot in a multi-level development. Rules are of no effect if they are oppressive to, unfairly prejudicial to or unfairly discriminating against a lot owner, or an occupier of a lot.
Records At the request of a person entitled to inspect the OC register and on payment of a reasonable fee, An OC must provide a copy of the register or any part of the register. Under the amended Act, a lot owner must not authorise a representative who is not a lot owner to request a copy of the register or any part of the register for a commercial purpose without the prior consent of the OC.
Complaints Complaints can no longer be made to the OC in relation to the recovery of any fees, charges, contributions, or amount owing to the OC.
Application to Vcat VCAT may hear and determine a dispute or matter relating to: (a) A term of a contract of appointment of the manager of an OC and whether the term is fair. [In so doing, VCAT must consider Part 2-3 of the Australian Consumer Law (Victoria) as if a reference in those Parts to a consumer contract were a reference to the contract of appointment of the manager]. (b) The disposal by an OC of goods abandoned on common property. It may make an order requiring a lot owner to pay to the OC reasonable costs incurred by the OC in recovering an unpaid amount from the lot owner. Presently, a successful applicant in a debt recovery matter at VCAT is likely to be awarded legal costs of $600 that includes the application fee and any corporate
search fee. Unless ‘reasonable costs’ are significant, the lure of greater costs orders in the Magistrates’ Court may see a decline in the OC list at VCAT.
defined in s 3(1) of the Water Act 1989) is taken to be part of the common property. This grants the OC permission to take and/or use the water referenced.
New provisions clarify how a lot owner may apply to VCAT for an order that authorises the lot owner to commence, prosecute, defend, or discontinue a specified proceeding on behalf of the OC³.
Conclusion
VCAT may make an order requiring an occupier of a lot to grant entry to a lot or a building on a lot to a person authorised by an OC to carry out repairs, maintenance, or other works on behalf of the OC on common property.
The key unfair contract terms provisions in the Australian Consumer Law and Fair Trading Act 2012 that were unavailable to OCs have been specifically incorporated into the Act. This could negate past abuse by unscrupulous managers and developers. Other conduct involving long term contracts, the misuse of proxies, and inequitable units of entitlement and liability have also been addressed. There is real hope that the volume of disputes will diminish, and that quality of processes will improve.
Currently, if a person fails to comply with a rule of an OC that imposes an obligation that is binding on that person, VCAT may make an order imposing a civil penalty not exceeding $250 payable to the Victorian Property Fund. That amount has increased under the amended Act to $1,100 and will be payable to the OC.
Subdivisions Act 1988 Under Part 5 of the Subdivisions Act, an initial owner must engage a licensed surveyor to set out the initial allocation of lot liability and lot entitlement in the plan. A new section 27F (4) lists the criteria for the creation or alteration of lot entitlement or lot liability. Previously, this section only considered alteration of lot entitlement or lot liability. The new criteria should curb developers from implementing unfair schedules.
Retirement Villages Act 1986 The Act has been amended to clarify that residents in retirement villages may elect a residents committee to represent the interests of the residents.
General New provisions specify the way documents may be provided to or served on an OC, including electronic transmission, and permits service on the committee and its officers. Any rainwater or other water that falls, occurs, or flows on the common property (otherwise than in a waterway or bore as
These reforms will deliver transparency and confidence to lot owners subjected to an otherwise heavily litigated environment.
Norman Mermelstein is the principal of Law Ink Pty Ltd, a member of the Property and Environmental Law Section Leases Committee and Property Law Committee, Succession Law Committee member, and an accredited mediator. Neville Sanders is a valuer, National Manager of Strata Services, Whittles Body Corporate Management, and past president of both the Real Estate Institute of Victoria and the Real Estate Institute of Australia. Both are REIV accredited Owners Corporations Specialists, Owners Corporation Committee members, licensed estate agents and for the past 13 years, co-authors of the Owners Corporations Chapter of the Fitzroy Legal Service’s Law Handbook. This article was first published in the Law Institute Journal (December 2021).
Footnotes: 1. A prescribed owners corporation was defined in the version 1 of the OC Regulations 2018 as an OC that levies annual fees more than $200,000 in a financial year or an OC that consists of more than 100 lots. 2. A ‘services only’ OC has no occupiable lots but contains services on common property such as shared water, gas and sewerage pipes, pumps, drains, electrical and telephony infrastructure, and common property assets such as fences, pools, and water tanks. 3. See new Division 1B of Part 11. The Estate Agent – APRIL 2022 | 13
Best practice
What are we talking about?
Jim Lourandos & David Dundas REIV Information Officers
REIV Information Officers David Dundas and Jim Lourandos, address some of the current common questions from Members.
Arrears – possession before five strikes When the major changes to the Residential Tenancies Act were introduced many property managers there distressed by the “five strikes rule”, thinking there must be five notices to vacate in a 12-month period on the grounds of arrears before a possession order can be obtained. This is not always the case! Once the notice to vacate is deemed to have been given i.e., the allowance for postage time has expired, an application for a possession order may be made. Where the unpaid rent is not all paid before the termination date in the notice to vacate, VCAT may grant a possession order, although it is not compelled to do so. If the rent is paid before the termination date and it is not the fifth notice in a twelve-month period, the application should be withdrawn as VCAT would be compelled to dismiss it.
So why have the five strikes rule? On the fifth occasion of a notice to vacate in a 12-month period an application for a possession order may proceed even if the renter pays the unpaid rent before the termination date in the notice. Again, the granting of a possession order is not guaranteed but VCAT does have to decide the application. For more information on this subject see the information sheet “Non-payment of rent and Notices to Vacate” on reiv.com.au
Intention to sell – renter’s right to vacate Selling agents need to tread carefully when advising the vendors or potential vendors of tenanted residential properties. Some agents have stumbled when it comes to the need for a notice of intention to sell and the consequences
of such a notice. As soon as the agent is appointed, they should on behalf of the vendor/rental provider give the renter a “Notice of Intention to Sell”. There is no right of entry to show the property to prospective buyers until 14 days after the notice is given. After receiving the notice of intention to sell the renter may give as little as a 14-day notice of their intention to vacate, irrespective of the end date or the fixed term if there is one. However, they cannot do so if they were informed before entering into the rental agreement of the intention to sell. For more information see the information sheet “Selling a rented residential property” on reiv.com.au
Price quoting in a changing residential market In determining the amount buyers are likely prepared to pay for a residential property an agent must wherever possible base the estimate on the sale of three comparable properties. The timeframe in which the sales must have taken place and the distance they can be from the subject property vary according to whether the property is a metropolitan or non-metropolitan area. The estimate must also be reasonable, so if the market is rapidly changing either up or down the price achieved for the comparable properties may not align with what the subject property would be likely to sell for in the current market. Although, to the knowledge of the Institute, it has not been tested in court it would seem reasonable to adjust the estimate in line with the rapidly moving
14 | The Estate Agent – APRIL 2022
Best practice trend in the market. In a rapidly rising market, a reasonable estimate might need to be above the amounts comparable properties sold for, and in a rapidly declining market the reasonable estimate might be less than the prices achieved for comparable properties. Particularly in the case of the estimate being lower than the amounts comparable properties sold for, the agent should ensure the file contains evidence of the declining market which justifies the lower estimate. The lack of such evidence could be problematic in the case of an audit by CAV. For more information see the information sheet “Price quoting when selling residential real estate” on reiv.com.au
Disclosure before entering a residential rental renewal The information which a rental provider must provide before entering into a rental agreement is contained in section 30D and regulation 16. Some members have asked whether a fresh disclosure is required in the case of
the offer of a further fixed term to an existing renter. Given that the Act requires disclosure “before entering into a residential rental agreement”, and the renter agreeing to take up a new fixed term is a new agreement, a disclosure statement should be given to enable the renter to make an informed decision.
The Act does not make specific reference to a disclosure statement in the case of a tenancy becoming periodic following the expiration of a fixed term. Given that the roll over to a periodic arrangement does not involve a decision to enter into a new rental agreement it is assumed that a fresh disclosure statement is not required.
Please note: This is general information and should not be treated as a substitute for reading legislation, regulations and official guidelines, or for seeking legal advice where necessary.
The Estate Agent – APRIL 2022 | 15
Best practice
All that glitters is not gold Property valuation in family disputes Most agents will become involved in a family dispute at some point and it could be at any stage of the dispute settlement process. We have to be neutral, not pass judgment and remain professional. Jan Hancock FAPI, CPV, CEA (REIV) is a 40-year REIV Member, a Certified Practising Valuer, an Expert Witness and a member of the Valuers Chapter Committee. Jan shares some insights, cautionary tales and suggestions. Every day agents provide potential clients with property appraisals and do so in good faith, using available property data and their knowledge of local market conditions. Vendors may volunteer that the reason for the potential sale is a family dispute – divorce, separation of long-time partners, or deceased estates. Sometimes agents are completely unaware of the existence of such circumstances. The disposal of property arising from a family dispute always requires sensitive handling, even when relations appear amicable. When relations are not amicable, extra care and caution is required. Information provided to the agent may not be complete, an appraisal
inspection may not reveal serious defects, information provided to a vendor may be used for other purposes and the dispute settlement process may take months, if not years. Where a dispute has progressed to the point where there are Orders, a Deed of Settlement or other formal agreement, we must be advised of the property related clauses so that we can and do act in accordance with them. However, the existence of such agreements doesn’t necessarily mean that it will be plain sailing. The parties’ legal representatives should be called upon by their clients to help resolve issues in accordance with the agreement. Where they aren’t represented, it is really important to take
care not to get drawn into trying to assist with matters outside our scope. It is not unusual for the parties to seek agent appraisals to influence the settlement outcome and this may be before a valuer is engaged, or to obtain appraisals to “check” a valuation and potentially to use them as evidence to challenge it. Agents need to be aware that their appraisals may be passed on to a valuer for follow-up. It is essential that appraisals include the market evidence and other details on which the agent relied. Valuers are regularly appointed as expert witnesses to give professional advice in the settlement process. They might be instructed directly by the parties or by one or both legal representatives. Valuation reports must contain clearly explained rationale with sufficiently detailed supporting evidence and those for Family Law matters must be prepared in accordance with the Family Court or Federal Court rules. Valuers must be impartial and adhere to practice standards and Codes of Ethics. Valuers undertake detailed inspections, secure relevant documentary evidence and speak to other relevant people including agents. All documents, including agent appraisals are reviewed and considered carefully. As in much of life, the devil is in the detail.
Agents need to be aware that their appraisals may be passed on to a valuer for follow-up. It is essential that appraisals include the market evidence and other details on which the agent relied.
16 | The Estate Agent – APRIL 2022
Best practice Cautionary tale #1 A circa 1950s weatherboard dwelling, brick veneered before undergoing major owner-builder extensions to the ground and first floors and addition of a garage. A solid fence with horizontal slatted gates across the frontage. The valuer’s inspection was on a very wet day. There were no plans. The property was measured, there were roof and wall leaks to the garage/living space, plus some first floor movement and an associated water leak. Insurers had declined to pay out for previous roof repairs. The external timber deck around the pool was built – without permission – over the drainage and sewerage easement containing active assets. On top of the deck above that easement was an operative ablutions pod. Given the issues, the valuation was qualified accordingly and the rationale
clearly set out and backed up with detailed evidence, including information provided by local agents. Three months after report submission, one of the solicitors provided an agent’s very brief market appraisal for comment. The agent’s curb side inspection had been on a sunny day, the price range applied was several hundred thousand more than the valuation. No sales in the
surrounding area were cited in the appraisal. The valuation was defended and deficiencies in the agent’s appraisal were highlighted. Rises in the market in the period since the valuation inspection were acknowledged and the valuer was happy to take instructions to update the valuation on being provided with a structural report on the improvements. CONTINUED ON PAGE 19
The Estate Agent – APRIL 2022 | 17
Best practice CONTINUED FROM PAGE 17
Cautionary tale #2 In late 2021, a valuer was instructed by a solicitor to provide a “shadow” valuation of a property in a tourist location and was provided with four market appraisals prepared by two agents. Part of the property was subject to a telco lease and the infrastructure had been erected. Agent No.1’s first appraisal was prior to the late 2020
market surge, the second was eight months later. Both included the owner’s address and some recent sales. The agent verbally advised that there had been limited, if any, price movement rise over the second half of 2021 and mentioned the telco tower effect. Agent No.2’s first appraisal had been delivered at the same time as Agent No 1’s second appraisal, gave a lower value and briefly referred to the telco tower. Their second
appraisal four months later increased value by 30 per cent based on a strong market. Neither appraisal included the owner’s address (postal or email) nor any supporting sales evidence. Agents should ensure that evidence supporting their appraisal is provided and where there are specific issues impacting the appraisal, these should be clearly identified.
Cautionary tale #3 A valuer became a shadow expert for the wife for one of two properties on which the valuer had some time previously been jointly appointed as a single expert witness. The dwelling looked impressive. The valuation inspection was long owing to building defects. It was a downward sloping block and the dwelling has been owner built with corners having been cut in its construction. The structural report required the loose fill in the rear courtyard, on which the swimming pool and surrounding terrace were built, to be removed and replaced with engineered fill before the pool and terrace could be replaced. The sub-floor walls supporting this fill were single skin brick veneer. The only pedestrian access to the rear was via the two rear garage doors and a 70-lot subdivision was about to begin on the rear land. Some time later, one agent contacted during the valuation advised that his office had been approached to sell the property, but had declined to take on the listing because of its building history. A wise move where adequate information is not provided by the vendor.
Valuation vs appraisal Valuations and appraisals are different beasts and each has its place. Valuers may be regarded as “conservative”, but what we really are and have to be is thorough - in our detailed inspections, the questions we ask, the people we speak to, the information we require, how we evaluate it all and our resultant reports. Family disputes can be lengthy and an appraisal, just like a valuation, has a shelf-life.
Valuations are always qualified. The usual duration is three months from the date of inspection, but during the pandemic, valuations included significant valuation uncertainty statements. The parties relying on a valuation are always encouraged to review the valuation periodically. Agents are encouraged to add disclaimers to their appraisals too. Agents should exercise professional caution when
involved in family disputes. Including disclaimers and sales evidence with your appraisals, noting unusual property features that may affect value, speaking to valuers, ensuring familiarity with your professional indemnity insurance and, when in real doubt, encouraging vendors to secure formal valuations, will all help you, your clients and valuers. We are all in this together and REIV Valuers are here to help. The Estate Agent – APRIL 2022 | 19
Data insights
2021 – A record(s)-breaking year Despite lockdowns, Victoria’s property market surged through a stellar 12 months. The past two years in the pandemic had very different results for the auction market. While 2020 saw a huge dip in terms of auction volume, one of the lowest in the decade, 2021 more than made up for that. 2021 turned out to be the biggest year for auctions in Victoria as most people embraced the different but effective digital tools for their house hunt.
CHART 1 Auction clearance rate and sales volume in Victoria 40,000
100%
35,000 80%
30,000 25,000
60%
20,000 40%
15,000 10,000
20% 5,000 0 2010
Despite the four lockdowns last year, more than 35,000 listings were sold under the hammer and recorded 83.3 per cent clearance rate – highest in at least the past decade. This is the highest ever number for homes sold via auction over a calendar year, in Victoria. In terms of listing numbers, 2021 (42,939) is still behind 2015 (43,707) and 2017 (44,709). Multiple records have been broken in 2021. Let’s start with the monthly achievements for Victoria. REIV recorded new records for auction sales in eight out of 12 months last year and most of them occurred in between the lockdowns. 2021 also saw new seasonal records for autumn and spring. With 11,110 homes sold during the autumn months, it is currently the highest figure for auction sales ever recorded in any season. Spring 2021 followed close behind with 10,591 sales. When we look at the stats on quarterly basis, December quarter 2021 has witnessed the highest number of auction sales for any quarter with 12,915 homes – almost 30 per cent more than its previous record quarter 4 years prior, December quarter 2017 (9,956). March and June quarter 2021 also broke the records on number of homes sold under the hammer for their respective quarter. 20 | The Estate Agent – APRIL 2022
2011
2012
2013
2014
2015
2016
2017
2018
2019
Auction sales
2020
2021
0%
Clearance Rate
CHART 2 Top five auction volume of all time in Victoria
44,709
2017
2015
43,707
2021
42,939
2014
40,290
2016
39,051
Total auctions
CHART 3 Auction sales in 2021 (light blue, record for the month)
March Q
June Q
September Q
DECEMBER Q
7,035
9,943
5,885
12,915
January
541
February
2,667 March
3,827
2,743
April
2,843
July
October
May
August
November
June
September
December
4,540
2,660
1,738
1,304
4,814
4,473
3,628
Data insights Section head
Chart 4 AUCTION BREAKDOWN BY REGION AND TOP 10 SUBURBS
Metro
5.9%
94.1%
Metro (94.1%) Regional (5.9%)
REGIONAL
Suburb
#of sales
Suburb
#of sales
RESERVOIR
614
HIGHTON
167
GLEN WAVERLEY
505
BELMONT
149
MOUNT WAVERLEY
477
WARRNAMBOOL
124
CRAIGIEBURN
449
MILDURA
108
RICHMOND
401
GEELONG WEST
89
BENTLEIGH EAST
391
HAMLYN HEIGHTS
74
PRESTON
373
NEWTOWN
72
BRUNSWICK
344
LARA
66
NORTHCOTE
339
GEELONG
57
CHELTENHAM
336
TORQUAY
55
Table 1
Auction sales that broke their respective suburb record of all time
Address
Suburb
Month
Price
525 The Boulevard
IVANHOE EAST
October 2021
$6,000,000
49 Alfred Cr
FITZROY NORTH
May 2021
$5,410,000
12 Lialeeta Rd
FAIRHAVEN
December 2021
$5,035,000
209 Sheedy Rd
GISBORNE
November 2021
$4,905,000
64 Bowen Cr
PRINCES HILL
December 2021
$4,735,000
1 Mullum Dr
DONVALE
September 2021
$4,500,000
9 Mccracken Av
NORTHCOTE
August 2021
$4,500,000
679-681 Aviation Rd
WERRIBEE SOUTH
December 2021
$4,200,000
19 James St
GLEN HUNTLY
May 2021
$4,150,000
25 Pride St
Torquay
March 2021
$4,140,000
15 Forest Red Gum Dr
Mickleham
November 2021
$4,000,000
4 Ti Tree Av
Bonbeach
July 2021
$3,970,000
39 Airlie Rd
Montmorency
October 2021
$3,207,000
19 Panorama Way
Point Cook
June 2021
$3,200,000
108 Carlsruhe Station Rd
CARLSRUHE
April 2021
$3,030,000
The auction market share is still dominated by metro suburbs with 94.1 per cent while the other 5.9 per cent occurred in regional Victoria. Reservoir remained at the top with 614 sold homes, making it the hottest suburb in Victoria for auctions, followed by Glen Waverley and Mount Waverley. Regional Victoria also saw interesting movements outside City of Greater Geelong, which is typically
the hotspot for auctions. Warrnambool and Mildura surpassed 100 auction sales for the first time ever in 2021 with an impressive 95 per cent clearance rate on average. On a suburb level, 139 suburbs broke their annual number of auction sales in 2021 (at least 10 reported sales over the year) – 22 of them are from regional
Victoria. In terms of sold price, more than 90 suburbs also broke their records for most expensive sale in their area (all methods of sale). We thank all agencies and agents that report their sales and rental data to REIV (or to PropertyData) promptly. Data analysis and reporting is only possible with access to the latest and accurate information. The Estate Agent – APRIL 2022 | 21
Training
Fast-track your training Individuals who hold the superseded 3-unit Agent’s Representative qualification can now update their training with the REIV Fast Track Certificate IV in Real Estate Practice CPP41419. The fast-track delivery allows students to complete the Certificate IV in Real Estate Practice CPP41419 in 6 months with all 18 modules delivered on the REIV interactive online learning platform.
The fast-track program can be accessed by people who have been registered with the BLA within the past 5 years and have minimum 12 months’ work experience. Individuals who hold the superseded 3-unit Agent’s Representative qualification and would like to upskill to become a licensed estate agent must complete both the Certificate IV in Real Estate Practice CPP41419
and the Diploma of Property (Agency Management) CPP51119. Please note, REIV accredited training is approved for government funding. To understand your eligibility for government funding support please contact the REIV training team. Government funding support can significantly reduce the out-of-pocket costs of training.
Short courses for real estate professionals on the go No matter your location or how busy your schedule is, the REIV has you covered for your ongoing professional development. PropEL is the REIV’s e-learning platform providing specialised real estate professional development resources. The suite of offerings is growing monthly, with a combination of Online Short Courses, On Demand Webinars and the Masterclass Series with AFL Coaches. The platform provides a simple, selfpaced method, allowing members to stay
up to date with best practice standards. Participants can access their enrolled module at any time and complete it at a pace that suits their busy schedule. There are 18 different offerings currently available with more than 20 modules in progress for roll out over the course of 2022. Topics will cover everything from specific real estate functions through
to business and risk management. All modules attract CPD points, and the platform also houses the compulsory Ethics modules for all Licensed and Agents Representative members to complete. For ease of access, your member ID and Password is all you need to login. Visit reiv.com.au/propel The Estate Agent – APRIL 2022 | 23
Training
Attracting new talent to real estate The widely discussed “Great Resignation” has impacted most sectors and real estate is no exception. The sector has had the additional challenge of recent changes to the Estate Agents (Education) Regulations 2020 that have limited the inflow of new talent into the real estate sector. Entry level training to work in real estate is now a Certificate IV (CPP41419 Certificate IV in Real Estate Practice – 18 Units), a significant change from the 3 Units that were required earlier to work as an Agent’s Representative.
the full Certificate IV qualification. In most cases a trainee needs to undertake approximately 10 months training and tuition to complete all 18 units and meet the competencies as required. Although this means a better trained “new starter”, it does require significant more time commitment before someone can start working in a real estate office. This has caused challenges for employers who are looking for junior staff, smaller populations in regional areas further compound the issue.
The 18 units include: • 5 core subjects • 13 elective subjects
The REIV has been considering strategies to ease the staffing pressures on businesses. The strategies include working with Consumer Affairs Victoria to consider pathways that allow trainees to undertake a wider range of duties under the supervision of a licensed estate agent.
Trainees undertaking the course can only perform clerical or administrative duties within the office until they have received
The REIV has proposed alternatives where a trainee who has completed the 5 core units of the CPP41419 Certificate
The REIV has been considering strategies to ease the staffing pressures on businesses. The strategies include working with Consumer Affairs Victoria to consider pathways that allow trainees to undertake a wider range of duties under the supervision of a licensed estate agent.
IV in Real Estate Practice, could shadow a licensed estate agent or experienced estate agent in the workplace to gain additional on the job training. The trainee would be required to complete the remainder of the elective units within a prescribed timeframe. Please note, this is one of the strategies being discussed. At this time, trainees are only permitted to perform administrative duties. In addition, we will be undertaking a promotional campaign to attract more people to the real estate sector. The Estate Agent – APRIL 2022 | 25
Events
2022 REIV Connect Series This annual event series gives all our members an opportunity to engage with the REIV closer to where you live and work. This year we welcome new REIV CEO Quentin Kilian who is hosting the events with REIV President Adam Docking. This will be a fantastic opportunity to engage with the REIV leadership team and hear directly about the year ahead in Real Estate and for the REIV. The 2022 series features an information
Location
Date
Mornington
Tuesday, 15 March
Bendigo Geelong
Tuesday, 22 March Tuesday, 29 March
Traralgon
Tuesday, 3 May
Wangaratta
Tuesday, 10 May
Ballarat
Tuesday, 17 May
session on Professional and Cyber Risk in Real Estate. This session is designed to help you understand how to identify, manage, and mitigate some of the specific risks faced by real estate professionals.
REIV Partner businesses will also be represented to present Member only deals and offers. For more information or to book your place, please visit reiv.com.au
2021 REIV Senior Auctioneer of the Year Paul Tzamalis.
26 | The Estate Agent – April 2022
Events From left, 2021 Novice Auctioneering Competition Winner Lachlan Walker (Jellis Craig Whitehorse) and runner-up Daniel Secatore (Woodards).
2021 Auctioneering Competitions The postponed 2021 competitions were held in February 2022. We thank the competitors for their patience and commitment through many changes in the schedule due to COVID restrictions. The 2021 Novice Auctioneering Competition Winner was Lachlan Walker (Jellis Craig Whitehorse) and Daniel Secatore (Woodards) was announced runner-up. 2021 Senior Auctioneer of the Year was
Entries Open
Competition Heats
Competition Finals
2022 Senior Auctioneering Competition
23 May, 2022 to 1 July, 2022
26 July, 2022
27 July, 2022
2022 Novice Auctioneering Competition
20 June, 2022 to 29 July, 2022
23 August, 2022
30 August, 2022
Paul Tzamalis (The Auction Company). Andy Reid (Sold By Auctions) was the runner-up. Thank you to our judges, bidders, competitors, the REIV Auction Chapter Committee and REIV Master
Auctioneers for their work on the Auction Competitions. The competitions play a critical role in developing some of the best auctioneers in Australia, your input and participation makes this possible. The Estate Agent – April 2022 | 27
Resources
Property Data – best-in-class data and technology Last year, REIV signed an agreement with property technology leader Hutly to revolutionise Property Data, the highly-respected real estate data platform. The new partnership follows a successful REIV/Hutly partnership initiated in 2020 to relaunch digital compliance platform VicForms (vicforms.com.au). Under the agreement, Hutly took ownership of Property Data while continuing to partner with REIV to deliver best-in-class, member-first technology solutions aimed at exceeding market expectations. After extensive feedback from subscribers and an in-depth analysis of usage, the Property Data team is well on track to deliver a significantly refreshed platform in the coming months. The focus is on building a smart and 28 | The Estate Agent – APRIL 2022
intuitive user experience that delivers greater efficiency for your business. Enriched property sale and rental data continues to underpin the platform as the most trusted source of data for Victorian agents. There have already been considerable enhancements to the API & XML technology which means that it is quicker and more efficient to report data resulting in greater availability and coverage. Look out for the Digital Comparative Market Analysis (CMA) Proposals coming soon to Property Data. Subscribers will have access to fully customisable digital proposals, leveraging Property Data’s credible
After extensive feedback from subscribers and an in-depth analysis of usage, the Property Data team is well on track to deliver a significantly refreshed platform in the coming months.
data and insights to help agents win more listings and boost their profile. The process will be fully automated allowing agents to track engagement and improve conversion. Please note: For more information, please visit propertydata.com.au
Members
The Auctioneer
– Darrell Simpson
My name’s Peter announced the auctioneer, It’s great to see so many bidders gathered here To compete for such a fine property this sunny day, I’ll summarise its salient points before we get underway. An architect-designed renovation for its four-bedroom interior, All class in its gold fittings, nothing’s inferior, Presented to you in dearly loved perfect condition And capturing the light from its corner position. I’ll read you the Government regulations before we begin Only I can vendor bid, for anyone else it’s a sin, And no late bidding after the hammer falls So bid strongly and harken to my calls. Now who’ll be brave and make the first bid? If someone else does you’ll be sorry they did. Call me a million cried the auctioneer It’d be a steal at that, not at all dear. Give me your bid, just one million please Was that a bid, or just a branch waving in the trees? Nothing doing? Then I’ll make a vendor bid To get us underway while you keep your hands hid. I have it now, it’s one point one We’ve got momentum, we’re past the ton, I’ll go again vendor bid one point two Come with me sir, it’s now up to you.
Against you now madam, here on my left Try another bid lest you remain bereft Remember the golden rule; position, position, position You’ll never buy a better house in this condition. Keep bidding, I’m calling fast and excited Raise your hand up higher, don’t be unsighted.
More bids coming, so thick and so fast Not a thousand, sir, keep it for last Keep bidding sir, keep your chances alive Finally we have reached one point five.
Please give me one more bid, that might be his last He’s slowed down, he’s not bidding so fast. Are you out sir? You’re shaking you head the wrong way, Another thousand may be all you need pay.
I’ll give it three calls before it’s knocked down To the luckiest couple here in this town. Nothing more? I’ll refer the bid to the vendor I know he was hoping for something more.
No?, well thanks for your bidding, he’ll get the keys What a lovely auction here under the trees. Don’t be sorry tomorrow, are you all done? I’m knocking it down now – going, going, gone!
Well the vendor says meet the market and sell Any more bids after you’ve had that short spell? What’s that, fresh blood far on my right You’ve left it late sir, but you’re still in the fight.
Congratulations to the young couple, give them a cheer, And thanks for your bidding, those gathered here, Another record price, the market is strong, In buying real estate, you can’t go wrong.
The Estate Agent – April 2022 | 29
Resources
The digital business The pandemic has seen most industries doing business digitally, and real estate has been no different. The change was not just with Zoom meetings and online auctions, but also executing contracts and signing authorities digitally. Following some initial hesitation, agencies started to see the efficiency gains that come with transacting digitally. Saving time and money on administrative tasks meant more time for building and growing the business. All businesses have their challenges and concerns when making a change to their tried and tested business processes. We spoke to some Members who use digital forms and authorities on VicForms to understand their views.
What are the top 3 things to consider when selecting a forms and authorities provider for a real estate agency? Dion Besser: The top 3 things that are important when selecting a forms and authorities provider are: • Legislative Compliance: Make sure the forms are up to date with the current legislation. The real estate industry is governed by strict rules and our forms must reflect the current legislation • Security: The forms provider must be able to ensure that only the authorised persons are signing the documents. • Functionality and user experience: The forms must be easy to use for all persons regardless of their IT skills. Lauren Blair: It’s quite clear in our minds: compliance, security and a user-friendly system.
How important is online execution of contracts in your business and what are the benefits/challenges? Dion Besser: At Besser+Co. we are 100% paperless. There is now no need for us to print a single document. The benefit is that we are now able to execute leases, 30 | The Estate Agent – APRIL 2022
At Besser+Co. we are 100% paperless. There is now no need for us to print a single document. Dion Besser – Besser+Co.
authorities and all tasks that require documents to be signed within a very short period of time. Digital forms and authorities in partnership with our digital folders makes it easy to ensure all
documents are completed correctly before closing off a task and file. Lauren Blair: Very important! Not only has COVID played a big part in needing
Resources
We continually need to adapt and streamline for both our team and our client’s needs for instant results and convenience. Lauren Blair – Keith Williams Real Estate
this service now more than ever, but our industry is also progressing. We continually need to adapt and streamline for both our team and our client’s needs for instant results and convenience. There were some challenges when the digital platform was first rolled out with there being no option to attach additional documents. This is now available, making the entire platform easy and convenient.
How do you ensure security of the online forms and contracts? Dion Besser: With two-factor authentication, the REIV forms and authorities ensure that that only the authorised persons are seeing and signing these documents. Lauren Blair: We regularly update our passwords to access this platform and with the system itself being more advanced with the two-factor authentication with email and text messages being sent to all parties.
VicForms was re-launched with Hutly about 12 months ago. What are the product improvements that are most valuable to your business? Dion Besser: With all new legislation, it is great for us to be able to send out new authorities, along with attachments like the REIV minimum standards form and disclosure form that the clients can fill out online and return through OneTouch™. As a further enhancement, I would like
to see the option of multiple logins. It is important that we know exactly who is sending out the documents so that we can keep them accountable.
electronically signed before preparing the contract of sale. It is all in the same platform and no additional programs and subscriptions being required.
Lauren Blair: Electronic signing, the autosave feature and, most importantly, being able to attach additional documents to the authority or contract of sale. Another feature I love is the option of OneTouch™ and being able to send separate documentation electronically, this is very helpful for having a vendor statement
Almost a year since the launch of a completely revamped VicForms platform, new features and improvements continue based on feedback from Members. Thank you to all the subscribers who regularly provide input to help build a service that is always compliant, easy to use and responsive to Member needs. The Estate Agent – APRIL 2022 | 31
Resources
MVA Bennett
Ready to sell your real estate business?
YOUR FUTURE, OUR BUSINESS MVA BENNETT is a Chartered Accounting firm in Melbourne and an REIV strategic partner. Our belief is that YOUR FUTURE is OUR BUSINESS, arising from rich history that dates back to our founding in 1941. Our capabilities are delivered by a team of seven partners and 50 staff governed by the profession’s quality controls.
Selling property is the cream on top of a solid rent roll for a real estate business – but what do you need to consider when you are the vendor selling your real estate business? When
How
A business owner may have it clearly in their mind when they wish to retire. There may be clear succession to the next generation of the family or to a senior manager. Unfortunately, ill-health and even a pandemic can force changes to the best laid plans. Three considerations to answer the question of ‘when’: Personal wealth and assets: Do the business owner and their family have enough personal assets to fund their lifestyle without future business income? Business saleable: Is the business achieving healthy financial results for the desired asking price? Personally ready: Does the business owner have personal interests for a happy and active retirement, particularly on Saturdays when for many years these may have been spent attending open homes, auctions and checking results in suburbs of interest? A yes to all the above suggests someone is ideally positioned to sell. There is no harm in being ready to sell at any time. To cover all possible eventualities, you may consider even answering the three questions above even if a sale is still some time away. Getting ready to sell
Years 1 & 2
As a guide, the sales process could run over five years (as illustrated below) and involve professional advisers, plus family and friends. Accountant: To review current financial statements and set up the next two years to maximise business performance, in years one to five ensure the maximum Small Business Capital Gains Tax Concessions can be accessed where relevant and in year five ensure a smooth handover. Lawyer: To prepare robust legal documents, which may include continued involvement in the business after settlement, potentially staggered payments and personal warranties from the business owner.
32 | The Estate Agent – APRIL 2022
For further information, please contact Nicholas Rodier Partner, MVA BENNETT Chartered Accountants nicholas@mvabennett.com.au 03 9642 8000. Level 5, North Tower, 485 La Trobe Street, Melbourne mvabennett.com.au
Broker: Facilitation of vendor and purchaser introductions and acting as a continued facilitator between parties as the sales process develops. Financial planner: To assist the business owner in reviewing personal assets and ensuring that in five years’ time they will be well placed financially for their future. Family and friends: Can provide a very different perspective from professionals, particularly on whether the business owner is personally ready to sell.
Sales process begins Handover
Years 3 & 4
Why engage MVA BENNETT? We strive to differentiate ourselves from other accounting firms by seeking to: • Develop agreed wealth goals, by identifying and aligning mutual values and obligations that will underwrite our relationship • Continually meet expectations, with strong communications throughout our engagement • Use cutting-edge skills and tools to achieve our deliverables, and • Practise what we preach
Year 5
Do what’s next
➤
Good luck with your continuing business success, but do not neglect considering the longer-term timing and preparations for the sale of your business.
– MVA Bennett
Please note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their circumstances.
Resources
Are you considering selling your rent roll? Traditionally, the agency rent roll is the major asset of any real estate business other than its staff. The value of the rent roll is dependent on several variables that need careful consideration both by the seller and by the buyer. Conventionally, the value of a rent roll is assessed as a multiple of annual property management commissions and is influenced by a number of factors including: • Ratio of landlords to properties under management • Commission fees charged for management • Letting & reletting fees • Geographical spread of properties under management • Retention period of existing clients • Desirability of the properties under management • Ratio of residential properties and commercial properties • The seller’s software used to manage the properties (age, reliability, reporting capabilities) whether it is capable of being merged with the buyer’s software or the ease of data transfer from one to the other • Vacancy rates (past & present) • Rental arrears (past & present)
The buyer must consider: • Funding the purchase of the rent roll • Transition period to the new entity and assignment of the authorities • The lease for the existing premises and whether to take it over, run the business from their current premises or lease new premises • Retention clauses (period of noncompete restraint of trade), adjustments in price and time frame for existing landlords to transition to the new managing agency
• Forensic analysis of profit & loss statements, balance sheets, business activity statements and other key financials • The option and implications of taking on existing staff who are willing to transition The sale of an existing rent roll is usually GST free on the basis the sale is of a ‘going concern’ and must be running at the point of sale and continue trading after settlement.
Legal issues and consequences: The contract of sale of business or heads of agreement must be prepared by a competent Business Law Specialist. Take into account the following: • Confidentiality agreements and nondisclosure statements must be signed and exchanged before any information is discussed or passed on to the buyer or third party interests • Assignment of lease or variation of terms of the existing lease • Licensing obligations, trademark, copyrights, business name, franchise agreements, tangible & intangible assets • Drafting special conditions intended for the contract of sale of business or heads of agreement • Employment agreements • Regulatory obligations pursuant to
the Estate Agents Act/Regulations and Corporations Act REIV leasing and/or managing authorities include an embedded assignment clause. The assignment clause streamlines the sale and relieves the buyer and seller from the laborious task of contacting existing landlords and re-assigning new authorities. If REIV leasing/management authorities are not being used, they may not include an assignment clause. For more peace of mind, you can also check if the seller/buyer is a current financial member of the Institute. This can be done by checking the REIV website or writing the REIV Membership membership@reiv.com.au Common mistakes made by buyers and sellers is ignoring or failing to secure professional advice from: • Business Law Specialists • Accountants • Business Brokers The buyer will pay a premium to the seller for the right to earn current and future income from the existing rent roll without deduction or shrinking of the database over a period of time. The Estate Agent – April 2022 | 33
Resources Section head
Top 3 reasons to use a broker for your business insurance There’s a lot to love about running your own business, but it’s unlikely buying insurance is one of the reasons. As a small business owner, time is money, and the last thing you want to spend your valuable time doing is researching different policy types, insurers and coverages. Enter the insurance broker… A good broker can help you find a policy that is customised for the common risks of your industry. Here are some of the top reasons to use a broker for your business insurance and how to select the best broker for your business.
Identify the right cover The best broker is the one who takes the time to understand your industry in as much detail as possible, and thoroughly assesses all the potential risks. A broker should carry out a needs analysis to identify gaps or changes in your requirements (both when taking out insurance, and at each renewal). Your broker may also be able to introduce you to additional services such as workers compensation specialists’ and asset valuation services.
Negotiate better deals Brokers often have access to a panel of insurers, who have been screened to ensure they offer the best coverage and value for your respective sector. The coverage and deal you get is often also impacted by your broker’s relationship with these insurers. A good broker should be comfortable to negotiate with insurers on your behalf to ensure you’re getting the best outcome. A broker can help you manage your claim with the insurer. This not only means managing or helping you with all the paperwork
Brokers often have access to a panel of insurers, who have been screened to ensure they offer the best coverage and value for your respective sector.
About Aon Aon is proud to be the new Platinum Partner of the Real Estate Institute of Victoria. Access a range of competitively priced insurance options arranged by Aon today. We’ll work through your industry’s risk and insurance needs – complex or simple, and scan the market to offer you a solution aimed at offering a superior combination of cover, price and service. Get a quote online or speak to an experienced insurance adviser today. Learn more at aon.com.au/reiv © 2022 Aon Risk Services Australia Limited ABN 17 000 434 720 AFSL no. 241141 (Aon)
Please note: The information contained in this article is general in nature and should not be relied on as advice (personal or otherwise) because your personal needs, objectives and financial situation have not been considered. Before deciding whether a particular product is right for you, please consider your personal circumstances, as well as the relevant Product Disclosure Statement (if applicable) and full policy terms and conditions available from Aon on request. All representations on this website in relation to the insurance products we arrange are subject to the full terms and conditions of the relevant policy. Aon has taken care in the production of this document and the information contained in it has been obtained from sources that Aon believes to be reliable. Aon does not make any representation as to the accuracy of the information received from third parties and is unable to accept liability for any loss incurred by anyone who relies on it. The recipient of this document is responsible for their use of it.
to submit your claim, but may also include lobbying and challenging insurers if the broker believes that a denied claim should in fact be covered.
Managing claims Insurance goes well beyond simply paying a premium – you often see the true value of it only when something happens. For this reason, if you do have an incident which you need to claim for, you’ll want to make sure you’re accurately portraying the incident and managing all the paperwork without any gaps so you’re getting the most out of your cover. A broker can help you manage your claim with the insurer.
This not only means managing or helping you with all the paperwork to submit your claim, but may also include lobbying and challenging insurers if the broker believes that a denied claim should in fact be covered. For this to be possible, your broker not only has to have a detailed understanding of insurance coverage and the exclusions that apply, but also a healthy relationship with insurers. – Aon Aon is a proud to partner with the REIV to bring members market leading and competitively priced insurance solution. Is your professional indemnity or business insurance due for renewal? Visit aon.com.au/reiv The Estate Agent – April 2022 | 35
This display poster can be used by Members for their offices. Download a digital copy from reiv.com.au/COVID-19 display at your next open or at your office
Membership
Bills call it a day after long careers William (Bill) J White AREI CEA (REIV)
Philip (Bill) Stokes FREI, CEA (REIV)
Bill White retired after 55 years in real estate. Bill is a fourth-generation Estate Agent from the White family which has had a long and close association with the REIV. Bill’s great-grandfather William White commenced his real estate career in 1888.
REIV Past President and a highly respected Valuer, Bill Stokes (pictured) retired in late 2021 after almost 60 years of REIV membership. Throughout his long career in real estate, Bill has been a strong supporter and advocate for the industry.
Milestones We congratulate the Members who completed important milestone Membership Anniversaries during January-April, 2022.
30 years John Henderson Graham Kendall Alan McQueen David O’Callaghan Gary Peer Ian Stewart Nicholas Velissaris
50 years George Kiper John Orr
40 years Geoffrey Buck Geoffrey Cayzer Alan Dickson John Dunlop Robert Eggers Jan Hancock Bryan Hayden Richard Jellis Neil McPherson Kenneth Moroney Richard Nicholas Martin Skahill Peter Smith Bernard Stocco Bradley Teal Graeme Wilson Gary Wood David Wynack
20 years Jim Byrne Nicholas Corby Julia Day Donato Gallicchio Simon Hunt John Kaufman Michael Phillips Fabian Rosin Raoul Salter Rohan Smith William White
10 years Aggeliki Athanasiadis Thomas Breen Michael Cantwell Kymberley Colliver Kanchana De Silva Wayne Dent Marcel Di-Scipio Catherine Dodds Kathryn Donaldson Paul Dunlop Danny Edebohls Vicky Emmanuel David Fried John Fumberger Roger Han Samuel Hartrick Joanne Hirst Inessa Kabaker
Joseph Kairouz Constantine Kokoras Andrew MacGillivray Andrew McCann Anthony Meik Michael Noble Carol Riley Da Rong Shi Harpinder Singh Emilia Stockdale Domenic Suleman Joseph Tadros Samuel Tamblyn Rachael Trimble Cameron Vurovecz Elizabeth Wall Lynne Wilton Stephanie Zaffiro
The Estate Agent – APRIL 2022 | 37
Membership
New members From October 1, 2021 to January 31, 2022 we welcomed 247 members to the REIV community. Building new relationships through networking is an important aspect of REIV membership. Please find the time to reach out to the new members.
Jem Ali-Nolan Stella Anastasia Adrian Antalfy Anu Basra Mohit Batra Scott Beames Vikas Bedi Burak Binatli Alison Blackley Glenn Bolam Jason Bond Johannes Botha Gurpreet Brar Jade Carberry Joshua Carter Wendy Chamberlain Xiao Hong Chen Bora Chhem Chetan Chohan Amanda Claridge Annabel Cobain Jordan Cochrane Christopher Dane Veronica Davies Julia De Amicis Scott Devereux Irene Dharmawan Amanda Lei Di Graeme Dimsey Darren Dowel Janice Dunn Mohammad Emaminezhad David Ferguson Byron Filippi Matthew Florance Theresa Godsmark Nilesh Gonsalves Glenn Grech Leigh Grixti David Hammond Jade Harrison Tashkin Hassan Christopher Hill Sean Hines Jitender Hooda 38 | The Estate Agent – APRIL 2022
Nigel Horne Kevin Huang Wei Huang Alex Huynh Mergim Ibrahimi Cameron Jay Xiaowei Jiang Iman Kelada Sartaj Khan Amir Khawaja Robert Krnjeta Laura La Bruna Damian Larkin Chao Li Cherry Li Kai Li Xiaorui Li Chin Huat Lim Ling Lin Andrew Lochhead Amy Lunardi Ning Ma Duncan Maclean Jim Malamatinas Samuel Maley Visot Mao Christopher Maziotis Robert McKenzie Yi Meng Santino Mercuri Scott Michaelson Adele Mirabella Carlos Misho Matthew Mitchell Kellie Morgan William Murnane Milan Neotone Jason Nevins Huy Nguyen Marsetyo Njoo Adriarna Nunn Shannon O’Connor Mike Ofli Panagiotis Panagiotidis Alleah Pearson Kathryn Portbury
Andrew Power Cindy Prince Anthony Rabl Zaim Ramani Parminder Randhawa Brenton Reginato Geoffrey Reid Anthony Reis Pramuditha Rodrigo Jayson Ryder Kirsteen Ryder Thomas Sanderson David Sanguinedo Surinder Sarain Leisa Saywell Rebecca Scanlon Genevieve Schagen Harrison Schier Robby Sciliri Gurpal Sharma Bhushan Shrestha Shaun Sleiman Caine Simpson Triantafilos Skapetis Matthew Skehan Nada Sleiman Matthew Smith Sarah Smith Tony Smith I Seong Som Michael Spektor Anitaraj Srinivasa Prabhakar Srinivasa Matthew Stedman Michael Stewart Jin Su Mary Swane Davy Sy Hidayathulla Syed Samuel Taylor Wayne Taynton Ross Telfer Sabin Thapa Michael Thompson Cheryl Townsend Huu Tran
Prabal Tripathi Erhan Tuncer Paul Tung Alicia Vavassori Quentin Walker Lu Wang Yahong Wang Renee Ward Jinhui Wei Sarah Wood Beiwen Xu Chengyue Yang Tao Yu Yang Yu Zhen Zhang Weiyang Zhu
