THE PROPERTY OBSERVER INSIGHT
Crazy attitudes underpin our relationship with real estate: Catherine Cashmore
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You have to question the pure insanity that surrounds Australian real estate – you have to live here and experience it to truly believe it, because I’d challenge you to find another country where the subject receives the same intense level of pre-occupation.
Firstly, the obsessive and hugely popular renovation shows that populate our screens almost every evening – at peak viewing times – where contestants plot against each other to try and produce a product that will attract a storm of buyers when time comes to ‘flip.’ In this case, I’m talking The Block.
Whole episodes are often devoted to mindless discussions as to whether spending an extra few hundred on a 3D television would really reap a benefit. And whilst it may be the deal breaker enabling contestants to win a room ‘reveal’ prize, it certainly won’t make much difference to the end sale price.
Marketing a furnished property intended for owner occupation, or rent has its difficulties - albeit, this is ‘entertainment’ real estate style and judging by the ratings, viewers love it. The first apartment to go online (now followed by others) has been marketed at $1.2 - $1.4 million with a depreciation schedule of around $1,000,000 over 10 years.
Perhaps my only caution at this stage to potential buyers of The Block would be to pull their eyes away from the interior styling and check instead for nearby completed planning approvals - which hold potential to change the landscape, natural light, or views... Always concentrate on what you can’t change, before you pay attention to the fixtures and fittings you can change. In previous series’, buyers have been tripped up by this very issue.
Then the other week The Living Room on Channel Ten chipped in with some handy ‘auction advice’ for a couple of first-home buyers.
After encouraging them to spend money on a valuation which would not have taken into account any discussion with the agent of the level of buyer interest or vendor expectation – two vital bits of information required when negotiating a property purchase - and clearly without the budget to beat the evident competition surrounding the home, they were given the helpful advice to bid strong from the onset with an “odd” final number.
They lost of course – but never mind eh? As the program told us – apparently, you have to ‘typically’ fail at seven auctions (upping your budget along the way) before you graduate to be the lucky purchaser. Information I wasn’t aware of.
And meanwhile, we’re fed ‘daily’ with house price statistics from RP Data – which could be somewhat relevant if we were monitoring petrol prices – but in the daily index, real estate can ‘boom and bust’ all within a couple of months.
RP Data “ring up agents” to get collect their information, which would be a mammoth task considering most agents are highly unlikely to prioritise the reporting of private treaty sales information as soon as a contract is signed – if at all.
And yet this is what the accuracy of daily index relies upon – prompt agent reporting. Without it, the results lag until the official ‘settled’ sales data filters through from the government (some three months ‘plus’ later) - hence why there is a large ‘pinch of salt’ feeling surrounding their media releases.
Realestate.com.au is another carnivorous operator trying to secure a great proportion of the obsessive property industry pie. As the national number one property website (albeit not in all states) regular rises in advertising costs are all but guaranteed.
Compared to the other portals, REA’s fees are extreme, with a model that now requires agencies to pay a subscription fee plus an additional cost for each and every new listing uploaded – this obviously impacts the smaller and regional agencies fighting to get market share.
Of course, the dollar’s rise further for various feature highlights – which essentially equate to a few frills such as a fancy border surrounding the advertisement which will supposedly stay at the top of the list when searching on a ‘default’ setting – or special ‘emailed’ brochures.
All of the above is typically funded by ‘vendor paid advertising’ and passed on as such by the larger proportion of metropolitan real estate agencies, who recognise the need to run an effective ‘online’ campaign in order to maximise potential demand.