Bernie’s Brief



What follows here is a series of blogs on the state of the market (and other topical issues) as seen by me. New posts will appear here from time to time. These also go out to my many clients through the post and via email. If you’d like to receive the latest blog via email then flick me an email :-) and I’ll put you on the list!

Happy Birthday – Bernie Kroczek Real Estate

Last modified on 2015-08-31 06:13:01 GMT. 0 comments. Top.

10 Years Old!

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Ten years ago this September, Bernie Kroczek Real Estate was born! So a Happy Birthday to us.

Bernie commenced his real estate career 28 years ago with Roy Weston in Duncraig where he stayed for a number of years. Those were the days when selling real estate meant hours of door knocking, dropping leaflets every week by hand, and there were only one or two methods of communication, face to face or the telephone!

How real estate has changed, now there are multiple platforms for getting your message out, from Websites such as this one, Facebook and Twitter to YouTube, Instagram, Blogs and everything in between.

Bernie however, still says there is nothing like getting in front of people on a face to face basis or over the phone. The rest are definitely useful tools for promotion of the business and in some degree promoting property for sale, but nothing beats a real live conversation.

From Roy Weston in Duncraig, Bernie worked for Roy Weston in West Perth for a many years honing his skills on the inner city market place before joining forces with Tommy Clarkin and forming Clarkin & Co operating out of West Perth in 1993 and later becoming Clarkin Properties. After 12 years with Tommy Clarkin, Bernie sold his share of the business and in September 2005, together with his wife Gai, opened Bernie Kroczek Real Estate.

Since then the business, which started at 376c Oxford St, Mount Hawthorn, has grown to include Total Care Property Management, a separate business looking after Property Management.

Bernie and Gai are both still very active in both sides of the business, and look forward to further servicing both our new and our faithful clients.

So Happy 10th Birthday to us!

West Australia Nurses Boom Time Hangover

Last modified on 2015-02-18 12:15:47 GMT. 0 comments. Top.

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So, screamed the headline in the Financial Review!

After the biggest resources boom in 150 years it seems, the party is over. Only a few short years ago experienced commentators and business leaders were proclaiming a resources boom lasting decades.

Alas, like so many crystal ball gazers, the predictions evaporated almost as soon as they were made. In the past eighteen months tens of thousands of jobs have been lost in the resources industry in Western Australia as commodity prices have collapsed and our number one trading partner, China, begins to run out of steam economically.

For every job lost at the coalface, there are many more lost in supporting industries. Even the professionals such as engineers, geologists, lawyers and specialist manufacturers are having to look overseas for work.

Naturally there is a trickle down effect when, in the major population centres, demand for business services and real estate hits the wall.

Rents in Perth for example have dropped by hundreds of dollars a week at the higher end of the market, but no area has escaped the falling rents.

In September 2012, there were only 2100 rental properties available in Perth at a very low vacancy rate of 1.8%. Today there are now 6291 rental properties available and the vacancy rate has shot up to over 4%.

As for property sales, only a few short years ago there were less than 10,000 homes for sale in Perth. Today, REIWA reports that there are now over 13,000 listings on the market. Sales are down by 19% compared to this time last year.

Whilst we are in a predictable cycle which is inherent in a predominantly mining/oil/gas economy, nevertheless it is probably only the start of a serious economic downturn in Western Australia.

As has often been said, downturns pass, as do booms and for those with access to money and who have a long term view of the world, these times often provide once in a lifetime opportunities to set themselves up for the next boom.

Interesting times indeed!

Source: Financial Review Jan 17, 2015

Price Growth Loses Momentum!!

Last modified on 2014-05-22 10:27:41 GMT. 0 comments. Top.

MomentumAustralia has a number of major property markets, mainly centred around the various capital cities. Then there are markets within each state. Even in the capital cities there are different markets.

So, I find it somewhat confusing to hear things like “…. Real estate in Australia is booming”, or “.. Price growth loses momentum”.

When economists and experts make these broad ranging statements they are invariably talking about the major markets in Sydney and Melbourne.

For them, anything outside Sydney and Melbourne may just as well be on the moon. It’s understandable in one sense, but it can also give a false impression as to what is actually happening in the real estate marketplace.

Nonetheless, it seems that the trend in values in the March quarter declined compared to the December quarter 2013. For example, growth in Perth values fell by 2.2% compared to the December quarter producing an overall net increase of 1.1%.

This seems to be a current trend nationwide. So where is the market heading post budget?

From what I am hearing around the traps, most people (business in particular), are expecting slower spending in the short term as consumers ie; you and me, get used to the spending cuts and tax increases in the Abbott budget.

Another significant factor for the future of the property market in the medium term is the reduction in the threshold for stamp duty exemption for first home buyers from $500,000 to $430,000.

For first home buyers this effectively means an increase in property prices on homes over $430,000. This will no doubt make it even harder for first home buyers to enter the market.

Having said all that, there is always somebody buying and selling in any market at the right price. More so now than ever it is very important to price your home to the market if selling and if buying, maybe lower your sights and buy within your means.

Interesting times ahead!

Too Many Units, Too Few Tenants!

Last modified on 2014-03-18 06:04:31 GMT. 0 comments. Top.

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This interesting article appeared in the Weekend Financial Review’s property section last weekend, (March 15/16). We thought you might be interested.

The article warns investors of the traps associated with buying an investment unit in a market where supply outstrips demand.

The cities mentioned with inner city vacancy rates in excess of 6% were Perth and Brisbane. Both cities in mining boom states, where the mining sector has slowed significantly.

In the articles, Louis Christopher, head of SQM Research says, “It is very alarming”, he says the building binge in Perth has continued after thousands of itinerant miners have packed their picks and shovels and gone home!

The article further states that “For investors it should be obvious that when supply massively outstrips demand, there’s going to be a big impact on apartment values and rent. The growth in value of apartments is a miserable 1.7%, 10 basis points below the inflation rates, which means the real value of property is falling by about 1% a year.”

Here at Bernie Kroczek Real Estate, we can concur. We have seen inner city units stay of the market for much longer than say, the last few years. Apartments becoming vacant at the moment, which were receiving very good rents, are struggling to find tenants to even view the properties. Rents, therefore, have had to fall back to compete for the reduced numbers of people looking to rent an apartment in the city.

Landlords, who have had a very good run with rents while at the same time enjoying record low interest rates, will now have to tighten the belt and ride out this latest dip in the property cycle before the next upward trend, which could be some time away.

To read the full article Click Here.

Five Tips for Buying in a Rising Market

Last modified on 2014-03-11 07:34:51 GMT. 0 comments. Top.

Nationally, property values are increasing and Perth is no exception.
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Often in a rising market where there is a shortage of stock, as we currently have in Perth, there can be a tendency to ‘rush in” due to fear of missing out.

It only seems like yesterday, during the boom of 2006 when Perth prices increased by 42%, that buyers were bidding tens of thousands over the asking price to secure the home of their dreams.

On more than one occasion buyers, especially first home buyers, burst into tears after being informed that the property they were enquiring about sold on the first day.

Of course nothing remains the same in life. Booms come and go, as do busts.

The bubble burst in 2007, then we had the Global Financial Crisis followed by a low point in buyer activity in 2010/11. Now in 2013/14, things have picked up considerably, especially since interest rates have fallen to their lowest level for at least 50 years.

Stock levels, at around 9,000 properties for sale in Perth, are well under the long term average of 12,000 to 13,000.

Certainly, the $400K to $700K price bracket is hot at the moment. The higher end though, is steady at best.

So, what is the best strategy for buying in a hot market?

• Get your finance, pre approved. Seems obvious, but it will certainly give you an edge and more confidence if you know your borrowing capacity.
• Do your homework, take your time. There is always a new opportunity just around the corner. Don’t allow yourself to be panicked into making a decision by a sweet talking salesperson.
• Put in a fair and reasonable offer for the property. Trying to ‘steal’ a realistically well priced property will do you no favours and you will only antagonise the seller.
• Be decisive. Having done your homework, once you find the property you want to buy, then just go for it. As we’ve heard many times, ‘He who hesitates is lost’.
• Don’t complicate things. Putting unrealistic demands on the seller doesn’t help. Be reasonable with the conditions you put on the offer. Everyone likes a simple, straight forward transaction. The more conditions you put on the contract, the less responsive the seller is likely to be.

These are just a few of the strategies you can use when buying in a hot market.

If you need any advice about buying or selling please feel free to email or call me direct.

Shelter or Investment?

Last modified on 2014-02-27 12:21:55 GMT. 0 comments. Top.

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As you have probably seen in the media, there is a bit of a debate raging between the various commentators and interested parties about whether tax concessions for investment property should be abolished.

This is an ongoing debate and comes up from time to time depending on the affordability of housing, particularly for first home buyers.

Just as a matter of interest, first home buyers represent only around 12% of the market at the moment, down from the usual 24%.

This in itself is a bit concerning because it is an indication that, in spite of record low interest rates and relative high rents, first home buyers are struggling to get into the market.

The consequence of this, is that existing home owners find it more difficult to sell their home due to the shortage of first home buyers who keep the flow going.

Which brings us to our original question, “is a home merely for the purpose of shelter from the elements or could it also be seen in the context of a long term investment?”

Of course, everyone in a modern society has the right to secure housing, whether it be through direct ownership or rental.

Currently, in Australia, around 67% of families live in homes which they either own debt free or are buying by way of a housing loan. Clearly, home ownership in Australia is the more popular way to go as opposed to renting.

Historically, the value of real estate appreciates at a greater rate than inflation over the longer term, say 10 to 20 years. The fact that a residential property can be leveraged means that the overall rate of return on the amount outlaid is very attractive for those uncomfortable with more risky investments.

For example, if one were to invest say $100,000 being the deposit (20%) on a property valued at $500,000 and the value of the property increased by just 20% over say 5 years, then the value of the original $100,000 deposit would have doubled to $200,000. Note that no account is taken of stamp duty, and ongoing costs for the purpose fo simplicity.

For an investment to double every 5 years it would require a compounded rate of return of around 15% pa on the original $100,000 invested. In the case of an owner occupied home, any capital gains are tax free when the property is sold.

So whilst a home provides basic shelter and security, long term ownership is also a means to financial security, and as such could be deemed a sound investment.

Confidentiality – How Important Is It?

Last modified on 2013-09-10 15:56:20 GMT. 0 comments. Top.

If you were selling a property, what value would you place on your selling agent not disclosing your personal circumstances to the general public?

Quite a bit, I’m guessing?

Would you want any potential buyers to know your particular reasons for selling your home, and even worse, what your minimum price might be?

According to what I hear from speaking to buyers, it is not unusual for an agent to disclose the sellers reasons for selling and even hinting what the seller may accept.

This is clearly a breach of client/agent confidentiality.

The seller of course is obliged to disclose to the buyer, through the agent, all relevant information in regard to the property itself, however their reasons for selling and the price they’ll accept is and should remain confidential.

Any breach of this confidentiality not only breaches the Code of Conduct for real estate agents, but it is also an immoral practice designed to achieve a quick and easy sale by creating an atmosphere of desperation on behalf of the seller.

The job of the real estate agent is to work in the sellers best interests at all times and to follow their instructions. Any breach of this confidence is a betrayal of trust especially when it leaves the seller at a disadvantage in the negotiation process.

Interestingly enough, an agent who discloses sensitive information to the buyer is not doing himself any favours in the long run. Quite a few sellers I have met over the years have not chosen to list their property with the agent who sold them the property in the first place. The reason – because they felt the agent was working for the buyer, and not the seller at the time.

Rubbing salt into the wound, the agent is actually being paid by the seller to supposedly work in his (the sellers) best interests. Thankfully, most real estate agents maintain confidentiality, especially the more experienced ones, who are not so desperate for a sale.

Something to be aware of when appointing an agent to sell your home.

Cheers

Bernie Kroczek

I would be really interested in your thoughts or queries. Please feel free to comment here.

What Stops You From Selling Your Home?

Last modified on 2013-09-10 15:22:43 GMT. 0 comments. Top.

Once you decide to sell your home, it can be helpful to start thinking of yourself as a businessperson and a vendor rather than the home’s owner. By looking at the transaction from a purely financial perspective, you’ll distance yourself from the emotional aspects of selling the property that you’ve undoubtedly created many memories in.

It’s completely normal for you to become attached to your home. Not only did it probably cost you vast amounts of money, but it’s where you keep all your belongings and where you’ll spend a vast amount of your leisure time.

Therefore, it’s not unusual that when people come to sell their home they might find it difficult to let go. Emotions and sentimental value can get in the way of good decisions and cause a transaction to fall through.

The truth is we are human and sometimes we have no clue what the next step for our lives is. We know we need to sell for a multitude of reasons – perhaps the children have left home (hallelujah!) and it’s time to downsize, free up capital and cut down on maintenance; or you might be needing something that has the potential to extend as your family grows.

Here are some things to consider to allow for more detachment when selling your home.

  • Are the memories holding you back? Many older homeowners are hesitant to sell their home because it’s where their children grew up and it’s filled with memories. This reasoning may be keeping people in homes that are too large and too expensive for them to maintain. If you know someone in this situation, it may be helpful to encourage them to do what they need to do.
  • Are you hesitant to sell because the housing market’s down? Thing is, most people buy and sell in the same market whether it’s up or down. So waiting for the next boom might not necessarily work in your favour.
  • Taking an offer too personally? Buyers will often state every single thing that they can find wrong with the property to justify a lower offer. Some sellers take this to heart, thinking that the buyer is doing this because the property isn’t worth as much as they believe. Take it as a good sign that they’re trying to haggle with you.
  • Have you priced the house based on emotional attachment? Some home owners will price their house based on their own sentimental attraction to it. Try some styling/remodelling because these changes in appearance will not only assist the sales price, they’ll also help you create that emotional distance because the home will look less familiar.
  • I’m not going to lie – selling a home is not always a bowl of cherries. The process can be stressful and frustrating even when the mechanics of the transaction are going smoothly.

    Your home cradles many of your most sensitive emotions; you have countless memories and moments of wistful sentimentality while preparing the way for someone else to take this house of yours and make it their home.

    When you are still emotionally tied to your home, it is difficult to remember to not take things personally. Whether it’s less than friendly feedback or whether it is an offer that you find ridiculously low, it is important to remember that this is not a personal stab at you but a business transaction.

    The buyers and their agent are not emotionally tied to the home like you are – they didn’t grow up there. They didn’t watch their child take his first steps in the living room; their dad wasn’t constantly tinkering in the shed. They are looking at your home as a commodity.

    I hope this has been useful to you. Many thanks for your time.

    Cheers

    Bernie Kroczek

    I would be really interested in your thoughts or queries. Please feel free to comment here.

    Panic Buying Hits Home in Perth!!

    Last modified on 2013-04-18 15:50:24 GMT. 0 comments. Top.

    …So screamed the headline in last weekend’s Australian Financial Review.
    Unlike a lot of the stuff you read in the press about the property market, most of which is written to generate either fear or greed, this one is true.

    Two years ago there were over 18,000 properties on the market in Perth.

    As of last weekend there were 8,400 properties on the market according to the Real Estate Institute of WA.

    Last week alone 1029 properties sold, which is an increase of 40% on the same time last year.

    How come the sudden surge in buyer activity? Well, it’s not so sudden. I have been saying for over 12 months now that if the number of properties on the market continued to decline and interest rates continued to fall then inevitably something would have to give.

    That ‘something’ gave in January of this year as first home buyers piled into the market in droves closely followed by investors.

    Since the boom of 2006, which saw the median price increase by 42% in less than a year, Perth has experienced the slowest growth of all the capital cities.

    According to Landgate turnover between 2006 and 2011 fell by 40% as buyers, burnt by the boom quietly waited for the inevitable price drop before returning to the market.

    Property prices fell by up to 20% in some areas; it wasn’t pretty.

    A great many real estate agents left the industry between 2008 and 2011 in what has been described by some old timers as the worst market for over 30 years.

    Well, it seems we have gone full circle and the buyers are back in town.

    I’ve heard of people paying significantly over the asking price just to get into the market and agents presenting multiple offers to sellers who previously couldn’t attract a sniff of interest.

    Where is it all headed you may ask?

    According to respected valuer and real estate expert Gavin Hegney of Hegney Property Group, values in Perth could rise by between 8% and 15 % this year.

    I sincerely hope we don’t see anther boom of the likes of 2006 because it distorts the market which then takes time to recover.

    At the same time if I were a first home buyer I would be buying sooner rather than later.

    Be careful of borrowing too much as interest rates will start to rise again in 2014. That’s where some people get burnt and are forced to sell because they can’t afford the mortgage repayments.

    Buy the best you can afford, the dream home can come later.

    Happy Days!

    Bernie Kroczek

    I would be really interested in your thoughts or queries. Please feel free to comment here.

    So Predictable

    Last modified on 2013-04-18 15:51:50 GMT. 0 comments. Top.

    As we embark on another working year following the Christmas and New Year festivities and feast of public holidays, the predictable predictors are out in force trying to forecast which way property prices are headed over the next 12 months.

    So far we have heard that house prices will fall by 40% or increase by 10% and everything in between. So take your pick, you have just as much chance of picking the Melbourne Cup winner!

    Have we become a nation obsessed by house prices? If you already own a home do you really care whether it goes up in value? After all one would presume that you purchased it for the purpose of providing shelter, right?

    Everywhere I go, someone is asking me what the market is doing. I suppose everyone has an interest in real estate in that we all need to live somewhere. But we are constantly bombarded with economic information and commentary viz, the stock market rose by 5 points today because … or the stock market fell by 15 points today because….(same reason).?”>#@$%??

    In real estate one source will say prices increased by 1.2% last quarter and another will say prices fell by 0.3%. Who is right? Do we really care? If you need a house to live in and can afford it, just go out and buy one.

    It doesn’t matter if the market is going up or down, everything is relative and as long as you have a long term time frame (minimum of 10 years) there is virtually no risk.

    Enjoy you home, that’s what it’s for!

    Back to predictions. I may as well throw my hat in the ring, so here we go: I predict that in 2013, house prices will either increase, decrease or stay the same!

    Happy 2013!!

    I would be really interested in your thoughts or queries. Please feel free to comment here.

    Also feel free to check out our Facebook Page.

    Ho Ho Ho… It’s off to work we go!

    Last modified on 2013-04-18 15:52:01 GMT. 0 comments. Top.

    Well, Santa has done his work for another year and now it’s time for us to do the same!

    Christmas, for many, is a welcome respite from the stress and activity of the year. Personally, I love the Christmas/New Year period and make a point of catching up with friends and family who can sometimes get lost in the day to day activities of life, much of which involves work.

    This holiday period was particularly special for us as my 60th birthday was on January 4, and we had friends and family from Darwin to Sydney attending the celebrations.

    Turning 60 means I probably have to grow up but I’ll have to think about that! It certainly means that I am more relaxed about life and more willing to take time out on a regular basis to spend with various of my ten grandchildren, something I could not, or would not do with my own kids 30 years ago.

    How one’s perspective on life changes when the grandchildren come along. I wouldn’t have it any other way.

    Back to work though and as I approach my 27th year in the real estate business I am just as enthusiastic as I was when I first started. I love the business and the people you meet on a regular basis, many of whom have become personal friends.

    I am just so grateful that I found my niche in life and the more I seek knowledge and ways to improve, the more rewarding it becomes.

    Long may it continue, and all the best for 2013.

    To Buy or Not to Buy? That is the Question!

    Last modified on 2013-04-18 15:52:35 GMT. 0 comments. Top.

    To Buy or Not to Buy? That is the Question!

    Interest rates in Australia are currently at their lowest level since May 2009 when they fell to just 3%. If you recall this was in the middle of the Global Financial Crisis (GFC), otherwise known as “The Great Recession”.

    At the time the Reserve Bank of Australia, in conjunction with the Federal Government, took pre emptive action to prevent the Australian economy from sliding into the deep recession which was affecting the rest of the industrial world.

    Whether we are in the same economic climate as we experienced in the midst of the Global Financial Crisis, nonetheless, interest rates are low by historical standards.

    Real Estate prices in Perth in Western Australia have fallen over the past few years in spite of the biggest mining boom in the past 130 years. Rental values have increased markedly over the past 12 months or so, some by as much as 20%.
    Renters are asking the question, “Am I better off financially to buy, rather than continue to rent?”

    Fair question.

    Let’s now look at the numbers to see how taking on a mortgage compares to renting:

    Take the example of a typical 3 bedroom house renting for $400.00 per week and worth around $400,000 to buy.
    $400.00 per week rent equates to $20,800.00 per annum.

    Assuming you have a 10% deposit comprising $33,000 plus $7,000 from the First Home Buyers grant making a total of $40,000, with no stamp duty payable for first home buyers up to $500,000 purchase price,
    the amount you would need to borrow would be $360,000.

    At a home loan interest rate of 6% the amount of interest payable over 12 months is $21,600 per annum, a difference of just $800.00 per annum or just $15.00 a week, compared to renting.

    It is almost a no brainer isn’t it, assuming you have a 10% deposit and a steady income. Go for it!

    If you are an investor or on the other hand, thinking of buying a property similar to the one in our example, to rent out at a similar rent, then this means that you can almost have your mortgage paid for directly from the rent. The shortfall would be equal only to the costs incurred along the way for management, shire and water rates, and maintenance which approximate to anywhere from 15% to 20% of the rental income. Or based on a $400,000 property, $60.00 to $80.00 a week, which can be offset through negative gearing at tax time.

    Not a bad investment all things considered!

    If you’d like to find out more about buying property, you must read our 14 Common Mistakes Buyers Make – so you are well armed!

    I would be really interested in your thoughts or queries. Please feel free to comment here.

    Also feel free to check out our Facebook Page.

    We’d also like to wish you a Merry Christmas and have a special treat here for you:

    Why do I need a Property Manager?

    Last modified on 2013-04-18 15:58:31 GMT. 0 comments. Top.

    It’s not an uncommon question I hear from landlords. Let me ask you another question.

    Do you need a property manager at all?

    Not everyone needs a professional property manager. For example some people have sufficient spare time to deal with the physical aspects of managing their property.

    Such things as
    • meeting prospective tenants at the property
    • interviewing the prospective tenant
    • carrying out the reference checks
    • typing up the paperwork for lease and bond
    • carrying out a detailed property condition report
    • attending the final bond inspection and
    • dealing with regular maintenance issues.

    In addition some people are fully up to date with and understand the Residential Tenancies Act. There can be expensive monetary penalties imposed if the Act is breached.

    Some landlords are very comfortable and confident dealing with sometimes difficult situations involving tenants.

    In my 26 years experience in property management I have found a great many privately managed properties are under rented. That is, the landlords haven’t kept up with current market values and/or are not comfortable asking the tenant to pay more rent.

    If you are investing $400,000 or $500,000 in an investment property why would you not want to achieve the maximum return on your investment by not keeping up with current rents.

    If you are comfortable, confident and have the time to deal with these issues, then you probably don’t need a property manager.

    On the other hand you may need a professional property manager, in which case we may be able to help you.

    Bernie Kroczek Real Estate is pleased to announce that our property management department is now a company in its own right. Yes, as of November 14, 2012 we are delighted to announce the commencement of ‘Total Care Property Management’.

    You’ll still be serviced by the same amazing team giving you and your property Total Care, of Victoria, Vicki and Gai, but you will notice a new look on our stationery, logos, website and advertising.

    We are keen to increase our rent roll, so if you need a great team of professionals to look after your investment property, we’d love to have a chat with you and offer you Perth’s best in property management.

    Why your home is not worth as much as you think it is!

    Last modified on 2013-04-18 15:59:07 GMT. 0 comments. Top.

    Let’s face it everyone, including real estate agents, think their own home is worth more than it really is. Not only do we think our own home is worth more than it really is when we come to sell it, but also our car, our TV, our fridge and the list goes on.

    This is known as the theory of “optimism bias” and basically it says that our own chances of receiving positive things in life are greater than those of the average person. Conversely our chances of experiencing negative things are less that those of the average person.

    In addition this theory says that “people often demand more to give up a thing that they would be willing to pay to acquire the same thing”. If we apply this theory to the sale of real estate the implications are obvious.

    It is more common than not that as sellers we perceive our own property to be worth more than what is reasonable, well informed buyer is willing to pay.

    This is the single biggest impediment to the sale of a property and the main reason properties stay on the market for months on end before attracting an offer or being taken off the market due to lack of interest.

    This phenomenon, also known as the ‘endowment effect’ is responsible for sellers, in a normal market, over valuing their properties by around 12% or more, according to Richard L. Peters in 2008.

    Peters cites a study carried out at Stamford University in 2008 which connects the ‘endowment effect’ and the activation of the brain’s anterior insula. The interesting thing is that the anterior insula also activates when the subject experiences fear, pain or disgust.

    The upshot is that a person selling a home at below their own perceived value of it’s worth will experience psychological affects similar to fear, pain and disgust.

    Hence the reason what so many properties stay on the market for longer than is necessary, anything to avoid psychological pain. Eventually meeting the market becomes the least painful option as the stress and financial cost of having a property on the market for months on end becomes too much to bear.

    By knowing about the ‘endowment effect’ and how it influences our perceptions in terms of the value we place on our own property, we may be able to see things from a slightly different perspective and so avoid the unnecessary pain of a long and drawn out selling process, not to mention the financial cost.

    The information in this article was taken from a piece in Property Observer on October 18, 2012 written by Brian Caldwell-Eyles. If you’d like a copy of the original article please email me at bernie@berniekroczek.com.au.

    I would be really interested in your thoughts or queries. Please feel free to comment here.

    Also feel free to check out our Facebook Page.

    The Boom is Over – Long Live the Boom!

    Last modified on 2012-10-26 06:51:54 GMT. 0 comments. Top.


    There has been a great deal of commentary in the media about the so called end of the resources boom. Like many people living in the suburbs of Perth, you may be asking the question, “What boom?”

    It is true that anyone directly associated with the mining and oil and gas industries has done very well financially and WA has the lowest unemployment level in Australia. But, somehow the riches haven’t actually flooded the suburbs of Perth as expected and this has been reflected in the rather flat real estate market over the past several years.

    Small business, and especially retail has been doing it tough over the past few years in spite of the massive wealth being generated by the oil and mining industries. This has been reflected in the lack of consumer confidence in the property market where prices are still around 10% below their peak in 2007.

    The good news is that buyer activity has increased markedly since Christmas to a point where there are now fewer than 11,000 properties on the market in Perth, down from around 17,000 a year ago.

    Due to a slowing economy and potentially rising unemployment it seems the Reserve Bank will again reduce interest rates by the end of the year, which will make buying a home more attractive especially in the light of rising rents.

    Nonetheless, the future of the Australian economy is looking less rosy than it was a year ago. There are still plenty of resource projects in the pipeline, but as we have seen in the past couple of weeks with BHP, Woodside and now Fortescue Metals Group, things can quickly be put on hold, and people can find themselves out of a job at the stroke of a pen.

    As far as the real estate cycle goes the supply demand equation (12,000 properties on the market is the long term average), is suggesting that it is as good a time as any over the past several years to be buying or selling.

    I would be really interested in your thoughts or queries. Please feel free to comment here.

    Also feel free to check out our Facebook Page.

    How Time Flies When You’re Having Fun!

    Last modified on 2012-08-15 10:14:12 GMT. 0 comments. Top.

    Last Saturday August 11 2012 marked the 26th anniversary of my entry into the real estate industry.

    I commenced my real estate career with Roy Weston Real Estate in Duncraig WA under the excellent tutelage of John Arthur.

    Prior to that the first 16 years of my working life were spent in the mining towns of Kambalda and Newman in Western Australia as an electrician.

    At the time most people who knew me said I wouldn’t make it in real estate because I didn’t have the ‘gift of the gab’.

    They were right!

    I didn’t and still don’t have the ‘gift of the gab’ but I had and still do have two ears, and I know how to use them.

    And therein lies one of the keys not only to a long and successful career in real estate sales, but also to a happy and fulfilling life in general.

    When I had to hire people to come and work as salespeople in our real estate business, the first question I would ask at the interview was “Why do you want to work in real estate?”.

    More often than not the answer given was, “Because I’ve always loved houses” or some similar response.

    Wrong answer!

    The correct answer is….

    “Because I’ve always loved people”.

    Selling real estate has little to do with bricks and mortar and EVERYTHING to do with PEOPLE.

    It is a statistical fact that 80-90% of people who start in the industry as salespeople will drop out in the first 12 months.

    Many reasons are given for this huge attrition rate, but in my humble opinion is is largely because the people entering the business are simply not suited to it.

    You can have the best training and back up in the world but if a person thinks the “gift of the gab” is more important than listening to the client and then having a sincere desire to serve that person, then they are probably not right for this business.

    As for my self, I am a work in progress.

    Despite the various economic cycles and the peaks and troughs which go with it, I still love this wonderful business, and long may it continue.

    I would be really interested in your thoughts or queries. Please feel free to comment here.

    Also feel free to check out our Facebook Page.

    Is it a Good Time to Sell?

    Last modified on 2012-08-08 06:42:56 GMT. 0 comments. Top.

    This is a question I often get asked in my capacity as a real estate agent.

    The answer is, “It all depends.”

    There are a number of things to be considered before selling a property. The first question I ask of people thinking of selling is, “Why do you want to sell?” Sometimes selling a property, whether it be the family home or an investment property may not be the best option.
    There may be an alternative path other than selling.

    Assuming, having asked the question, that selling is the best option, then the question can be asked about whether it is a good time to sell. The implication about whether it is a good time to sell or not is that the property may not sell in the current market.

    Let me dispel the idea that a property may not sell in any given market. In 26 years and having been through several economic cycles, I can say with 100% confidence that any property can sell in any market. The real question a seller needs to ask themselves is, “Am I prepared to meet the market?”

    Buyers don’t care about what you want for the property, how much you paid for it, how much debt you have, how much you’ve spent on it over the years or whether you need to go on holiday or buy a new car from the proceeds.

    Buyers are only interested in what the property is worth in the current market, and let me say that there is a buyer for every property in any market – at the right price. Without exception!

    The other thing to consider is….

    that if you are buying and selling in the same market, everything is relative. Certainly you may receive less than what you expected when you sell, but you will make it up when you buy. Even in boom times some properties don’t sell, whilst others sell in a short time in a supposed depressed market.

    If you are going to sell, be prepared to meet the market, don’t get stuck on the idea that you’ll only sell if you can get $x.

    Someone once asked the question, “How do you know if the property is at the right price?” Someone will want to buy it!

    I would be really interested in your thoughts or queries. Please feel free to comment here.

    Also feel free to check out our Facebook Page.

    Is Vendor Paid Advertising in the Seller’s Best Interest?

    Last modified on 2012-07-07 05:18:43 GMT. 0 comments. Top.

    I read an article in a real estate business magazine the other day where the author suggested that sellers should be paying more money to agents to market their properties.

    Vendor Paid Advertising (VPA) has been around for a while but it is something I, as a practising real estate agent for the past 26 years have never embraced, and never will.

    Effectively what has happened is that the financial risk of marketing a property has shifted from the agent to the seller.

    The risk to the seller is that once the money has been paid up front to the agent for marketing, if the property dosen’t sell, the money is not reimbursed.

    Paying money up front to an agent gives the agent licence to waste the money on over the top, ineffective marketing which doesn’t make the slightest difference to the end result.

    If the agent is confident and competent in their ability to sell the property, there is no need to be charging the sellers up front for marketing.

    Once the sale is made we get paid well enough to be able to carry the cost of marketing. If we don’t believe we can sell the property without charging the sellers up front, then we shouldn’t take the listing.

    I also saw a video recently where a real estate agent was suggesting that agents who do NOT charge sellers for marketing their property, were not acting in the seller’s best interest.

    I found this to be an interesting and different perspective on this rather vexed question of Vendor Paid Advertising. It is probably fair to say that a majority of real estate agents now charge sellers either up front or at settlement to market their property.

    Various people have told me that they were charged anywhere from $500 up to $4300 by real estate agents for marketing. At the extreme I recently heard of a case where the seller had paid $9000 to the agent and the property still hasn’t sold.

    The problem with paying up front for marketing is that if the property does not sell, then you, the seller lose your money. The agent cannot refund your money because it has all been wasted, sorry, spent on advertising.

    Also, if you take the property off the market then you are presented with an account to cover the cost of marketing, assuming you haven’t already paid up front.

    So why do agents still insist you pay up front?

    If there is now no financial risk to the agent because the seller is paying for marketing (more often than not the marketing is all about the agent and not much to do with the property), then the agent is free to waste your money advertising in places which no longer work as far as selling the property is
    concerned, such as newspapers.

    I can’t remember the last time I sold a property where the buyer came from a newspaper advert. The main reason is because most buyers (approximately 90%) enquire having seen the property on the internet and another 6% to 7% enquire off a For Sale sign seen while driving around the area where they are looking to buy.

    The internet is a very inexpensive and much more effective way to market most products these days but especially real estate. Therefore, I cannot see how NOT charging for marketing is not working in the sellers best interest.

    Maybe I’m missing something?

    I would be really interested in your thoughts or queries. Please feel free to comment here.

    Also feel free to check out our Facebook Page.

    Vendor Paid Advertising:

    Charging for marketing upfront is quite unbelievable and is one of the reasons why Bernie and his team will always take care of our properties whether it be sale, manage or purchase.

    Bridget Stonier-Gibson.

    Venor Paid Advertising:

    Very thought provoking article. Thank you and I think you are correct that the agent should still pay to keep them sharp as to what is still working. Thanks for a very good read.

    Benji Leggate

    Should Real Estate Agents Guarantee their Service?

    Last modified on 2012-06-25 03:20:32 GMT. 0 comments. Top.

    I recently went on a bit of a buying spree and purchased 5 electrical items valued from $79 for a heater to $485 for a juicer.

    As you’d expect all of the appliances came with a written guarantee. Would you buy an electrical appliance or a car or most other things without some form of guarantee?

    I can hear you saying, “no way!”

    Which leads us to the question which forms the title of this article, “Should Real Estate Agents guarantee their service?”

    You pay a decent amount of money when you sell a property through a real estate agent, so I would think it is not unreasonable for the agent to offer some sort of meaningful guarantee, wouldn’t you agree?

    Yet how many real estate agents offer any sort of meaningful, written guarantee where the agent’s own money is on the line if they don’t perform?

    I’m happy to say we do offer one such guarantee. We guarantee that:

    • If we don’t achieve the minimum price we’ve quoted, then you, the seller, are released from any obligation to pay our fee.
    • If, once we have negotiated a successful sale, you, the seller, are not satisfied that we have acted in your best interests or you feel you have not received value for money, you are free to re-negotiate the fee.

    You can download a copy of our guarantee and ask your agent to use it next time you sell a property.

    Just go to berniekroczek.com.au

    Rational Behaviour Not “Normal”!

    Last modified on 2012-06-13 08:19:47 GMT. 0 comments. Top.

    This week we have invited respected investment advisor Philip Carman to share his thoughts on how professional fund managers earn their daily crust.

    It is an interesting perspective but nonetheless something to take into consideration if you are looking to have your superannuation managed by the big fund managers.

    Philip Carman:

    Not that share markets have ever been particularly rational but they are now less rational than usual. Maybe it’s because they’re falling sharply that they appear irrational to those who predicted shares would provide increased wealth and “better returns than other markets”? The reality is and always has been that investing in someone else’s business (buying shares) has always been fraught with risk.

    But especially when outcomes are determined by a mix of “investors” who are either playing with “Other People’s Money” and/or betting on short-term trading patterns. Only a tiny fraction of the money sloshing around the share market is controlled by its ultimate owners. The vast majority is pushed about by young professionals, paid to look like they know what they’re doing and to be “focussed”, “motivated” and “dynamic”. rather than, circumspect and deliberate as you and I would be when managing our own affairs.

    Worse, most are rewarded for volumes, and profits generated for their trading houses. So, not only are the owners not in control, but many of those who are pulling the strings are motivated by factors other than maintaining solid, consistent returns.

    The great myth of economics –

    that people behave rationally and always act in their own interests – is as silly as the principle that the people in charge must surely know what they’re doing. (“How else could they have reached such lofty positions??” is the common exclamation.) And both of these commonly held notions have been disproved so often that it beggars belief anyone still pays them any attention…yet they persist in the public realm because they are pushed at us every day across a range of broadsheets, tabloids, TV and computer screens. We can’t escape the media’s inane financial sideshow even in a hospital waiting room or at the pub!

    And you can’t blame the feckless reporters for swallowing the market’s bunkum and then regurgitating it almost verbatim. They usually have earned their BA with a major in some subject other than that about which they are writing and have too little life experience to discern truth from lies; spin from back-story, or bulldust from history. And their sub-editors (where they still exist) are either a few years older (and no wiser) or on the lookout for a better-paid position with a corporation or political party and unwilling to tread on any toes for fear of biting the hand that might one day feed them.

    The workings of most markets are revealed to the public by commentators who have little or no idea of what they’re seeing, while those close to the action and who are interviewed for “insider” stories have hardly any more idea of what they’re doing! All this collected and analysed wisdom is then passed on to investors leaving them to decide what to do next, OR they can choose to let some of those youngsters mentioned earlier, manage their money for them at further cost. With the conventional wisdom that it’s better to be in the market than out, it is no wonder great swathes of wealth are being forfeited, daily?

    PHILIP & ALISON CARMAN
    Directors; Principal Adviser and Partner
    BRIAN BAYNAM Associate
    ELIZABETH McDONAGH Accounts Manager
    Personal Asset Services Pty. Ltd.
    E-mail admin@paservices.com.au

    Thanks Philip for your insights..

    I would be really interested in your thoughts or queries. Please feel free to comment here.

    Also feel free to check out our Facebook Page.

    China Crashes, Australia in Depression!!

    Last modified on 2012-06-01 04:16:09 GMT. 0 comments. Top.

    I recently attended a seminar where celebrity economic futurist, Harry S Dent, was speaking live via video link from Florida in the US. Harry was confidently predicting the second phase of the GFC, which he said would be worse than phase one.

    We’ve all heard about the tragedy which is Greece, where no one pays any tax and they all retire at age 50 and wonder why their economy is a basket case.

    Mr Dent thinks that whilst Greece is bad enough, it will be Spain, a much larger economy, which will be the straw that breaks the camel’s back. Unemployment in Spain is currently at 20% and if they default on their debt, then Europe will be in very, very serious trouble.

    Okay, so what?

    Europe is China’s biggest export market and if that market crashes it will create a major slowdown in a Chinese economy which is already slowing. There has been a massive building boom in China over the past decade to the point where there are whole cities with no one living in them.

    Property prices in China are grossly over valued and according to Harry Dent, its property crash is just around the corner. Harry also believes Australia’s house prices are amongst the most expensive in the world and that if GFC Mark 2 happens over the next couple of years, there is the potential for our property prices to fall by 50%.

    Well, he probably has a point about our property prices being over valued compared to the rest of the world and also in relation to wages.

    But a 50% decline? Sounds a bit rich, doesn’t it.

    So, according to Harry, what’s the good news???

    Well, the good news, according to Harry, is that once we’ve been through the impending recession, Australia will be at the forefront of the next economic boom, later in the decade and beyond.

    Harry’s advice, sell your shares, sell any investment property and reduce debt.

    By the way, one of the major factors determining economics over the next decade is the imminent retirement of the baby boomer generation and all that it implies… but that is another story.

    I would be really interested in your thoughts or queries. Please feel free to comment here.

    Also feel free to check out our Facebook Page.

    Is the Great Australian Dream Dead?

    Last modified on 2012-06-01 04:13:15 GMT. 0 comments. Top.

    In the good old days of the 1980’s and 90’s it took around 3 times the average wage to buy the average, median priced home. In the 2000’s it now takes 5 to 7 times average wages to buy the same home.

    It doesn’t take a genius to see that buying that elusive first home is now a lot harder than it was a generation ago. In fact in my 26 years in the real estate industry. I’ve never seen so many parents chipping in to help their children to enter the property market.

    In the past few years the percentage of first home buyers has dropped from 29% to around 12% as property has become more expensive relative to wages.

    For those of us old enough to remember the 18% interest rates of the late 1980’s early 90’s, we wonder what all the fuss is about when people complain about interest rates at 8%.

    The reason is that with much higher average mortgages (around $300K) it doesn’t take much of a rate increase to blow the budget.

    Don’t forget also all the other things competing for our dollars such as mobile phone, Pay TV, internet access and of course the ever increasing cost of living and its easy to see why it is so much harder to save for a deposit, never mind servicing the mortgage once we have the deposit.

    In light of that, people often ask why they should even consider buying their first home rather than having the flexibility and freedom which comes from renting.

    So what should you consider when asking the question, ‘To buy or not to buy?”

    One of the hardest things I’ve ever had to do was tell an 86 year old tenant dying of cancer that the property they were renting had been sold and the new owner wanted to take vacant possession.

    Sad to say, unlike in Europe, there is not a great deal of protection for tenants in Australia in terms of security of tenure. It’s not so bad when we are young and mobile but one day we are not going to be so young and mobile.

    Secondly, when we opt to buy rather than rent, every time we make a payment to the bank part of that payment goes towards paying off the debt. In other words we are increasing our equity in the property. It is also known as ‘forced savings’.

    To buy or not to buy? That is the question!

    I would be really interested in your thoughts or queries. Please feel free to comment here.

    Also feel free to check out our Facebook Page.

    Negative Gearing – Australia’s Sacred Cow!

    Last modified on 2012-05-02 13:44:19 GMT. 0 comments. Top.

    The term ‘negative gearing’ is almost synonymous with property ownershop in Australia.

    Australia is one of the few places in the world where people deliberately buy property with the intention of losing money.

    Lose money on property???? …. Never!!!

    Yes, to negatively gear a property is to lose money on the difference between the rental income and all the outgoings in the form of interest on the loan, shire and water rates, maintenance etc.

    That’s loss is then claimed against the owner’s income as a tax deduction which reduces the overall loss. Still a loss is still a loss. So why would anyone buy a property to deliberately lose money every week?

    We all know the answer: in order to reap a substantial capital gain at some undetermined time in the future. So far, so good, as long as the property appreciates in value to a point which offsets the previous years losses plus adjustment for inflation and capital gains tax.

    If the investor is prepared to hold the property for sufficient time, everyone is happy.

    The real question, in my mind and increasingly in the mind of some serious economic commentators is, ‘Should the general taxpayer subsidise the losses incurred by investors due to negative gearing?’

    Or in other words…

    Should a renter struggling to pay rent or save a deposit to buy a first home subsidise through the tax system, investors who are sufficiently wealthy to be able to afford a second and subsequent properties, AND who can afford to lose money on them on a daily basis?

    The practice of negative gearing adds no additional housing stock to the market as most all investors purchase already established homes, rather than new homes.

    Tax concessions for the construction of new homes would at least be an incentive to investors to build new homes as well as providing employment to the building and associated industries.

    However, if I were a taxpayer struggling to pay rent whilst saving for a deposit to buy my first home, I think I would object to subsidising those who already have at least one property by way of the tax system.

    What do you think?

    I would be really interested in your thoughts or queries. Please feel free to comment here.

    Also feel free to check out our Facebook Page and become a Facebook Friend and enter our competition to win accommodation in Margaret River for your next holiday!

    Property Values to Fall By 40% !!

    Last modified on 2012-04-08 11:52:13 GMT. 0 comments. Top.

    There are a number of gloom and doom merchants out there, some from the other side of the world, peddling the line that Australian house prices are overvalued by 40% to 60%.

    It is true that property prices in WA were over valued following the boom of 2006, when the median price increased by 42% in one year.

    Since 2007 prices have been naturally deflating, assisted by higher interest rates, low affordability particularly among first home buyers, and of course the Global Financial Crisis.

    Add to that Federal Government interference in the form of economic stimulus to the housing market at the end of 2008 and the subsequent drought of first home buyers in 2010/11 means that the median price of a house in Perth has fallen by 10%, from $505,000 in 2006 to $450,000 to the end of 2011. (according to RP Data Rismark index).

    Since Christmas buyer activity has increased and the number of weekly sales is now over 800 compared to 600 at this time last year.

    The GFC was largely a North Atlantic phenomenon and Australia was to a degree insulated from it due to our very solid banking system, Chinese demand for our minerals and a strong economic balance sheet bequeathed by the former coalition government.

    So what can we look forward to in 2012 and beyond? …

    The WA economy has the lowest unemployment rate in the country at 4.2% and the hundreds of billions of dollars worth of resource projects soon to start flowing into the local economy.

    In addition you would have heard that rents are going through the roof. The vacancy rate in Perth is a very low 1.6%. At that rate investors will be attracted back into the market and first home buyers will find it more financially viable to buy rather than rent, provided that the deposit barrier is overcome.

    I don’t see prices rising for the remainder of this year as there are still currently over 14,000 properties on the market in Perth. However, once that number drops to 11,000 to 12,000 there will be pressure on values as the supply/demand equations kicks in.

    In summary if you are waiting for prices to fall by 40% before you buy, you are taking a big risk. It ain’t gonna happen.

    I would be really interested in your thoughts or queries. Please feel free to comment here.

    Also feel free to check out our Facebook Page and become a Facebook Friend!

    Is There Any Value In Going Local?

    Last modified on 2012-02-21 03:52:22 GMT. 0 comments. Top.

    Often the question in any seller’s mind is whether to use the local agent or to use someone they know and trust and who has the experience but is not local.

    There are aguments for and against.

    From a personal point of view as a practicing real estate agent with over 25 years experience and over 1000 sales under my belt, I find it doesn’t make much difference if the agent is local or not.

    I have sold properties from Yanchep to Mandurah, although I would usually refer the business to a local agent, these days, where the property is more than 30 minutes from our office in Mount Hawthorn.

    In cases where the property is more than 30 minutes away it becomes more a question of efficiency and economics rather than local knowledge as this can be picked up very quickly in these days of instant information.

    Going for a local agent for its own sake doesn’t necessarily bring with it experience or competancy. If the local agent is only selling one property a month it doesn’t exactly inspire confidence, does it?

    Also because of the internet, today buyers prefer to deal with the agent who has the listing, all things being equal, as opposed to simply contacting a local agent to view a property just because they happen to be in the area.

    As for a local agent having better knowledge of values in a particular area, in this age where information is instantly accessible an agent can, with a bit of on-line research, establish a property’s value even if they are an “out of area” agent. Licensed valuers do it all the time.

    So what are the main qualities to look for when choosing an agent, whether they be local or out of your area?

  • Do you like them and can you work with them?
  • Do you trust them?
  • Do they have good communication skills?
  • How long have they been in the business and how many properties do they sell every year?
  • Can they produce testimonials from happy customers?
  • What sort of internet presence do they have? (e.g. website, Facebook etc)
  • Are they in regular contact with their database by way of newsletters, blogs, Facebook?
  • Do they offer an unconditional written guarantee for their services?
  • Are they confident enough in their own marketing skills to pay for the marketing?
  • If you can satisfy yourself on most of these questions, it doesn’t really matter whether the agent is local or not, to a large degree.

    I would be really interested in your thoughts on this. Please feel free to comment here.

    Also feel free to check out our Facebook Page and become a Facebook Friend!

    Perth Real Estate Rocks!

    Last modified on 2016-02-19 01:08:27 GMT. 0 comments. Top.

    The question many people are asking me as we return from holidays and the Christmas break is “What will real estate do in 2012?” It’s a fair enough question following the depressed market of the past two years.

    In fact the Perth property market has been trending down since the peak of the boom in early 2007 when the median house price reached $505,000 making Perth the second most expensive city after Sydney.

    Towards the end of 2007 prices had started to fall and we were starting to see evidence that something was seriously wrong with the banking system in the US following the sub prime mortgage collapse.

    In October 2008, in response to the collapse of Lehman Bros Bank in the US and the seizing up of the wheels of finance which led to what became known as the Global Financial Crisis, the Labor Government under Prime Minister Kevin Rudd injected billions of dollars into the Australian economy in the form of cash handouts and government funded projects, to ensure that Australia did not fall into recession, like the rest of the major OECD economies.

    The Government also increased the First Home Buyers Grant from $7,000 to $14,000, the idea being that it would stimulate the building industry and therefore saving possible job loses.

    What happened then was that, rather than stimulate new home construction, first home buyers opted to buy established homes, which did not create any new jobs, except in the real estate industry, but instead resulted in the mini-boom of 2009. This pushed up the price of established homes as First Home Buyers competed with each other for an established home in order to receive the extra $7,000 gift from the government.

    This is an example of the ‘Law of Unintended Consequences’ and what happened next?…

    Subsequently in 2010 and 2011 we had a major housing slump in Perth and values continued their decline to a point where the median house price in Perth today is $450,000.

    So what about 2012?

    I am happy to report that since Christmas buyer activity has increased markedly and, better still properties are actually starting to sell.

    We have had our best start to a new year for many years and now find we are short of stock to offer for sale to the increasing number of buyers in the market place.

    It seems a 4 year downturn in the property market is long enough for most people and, especially in Perth where there has been an increase in wages and where unemployment is very low. People now seem more confident to be entering the market.

    In addition we’ve all had enough of the gloomy news about the economic situation in Europe and it has become clear that the Europeans will continue to muddle along and procrastinate and life will go on. Nothing new there.

    There are hundreds of billions of dollars worth of resources projects in the pipeline for Western Australia and the likelihood of a major economic downturn is quite remote.

    Personally, I feel consumer sentiment has turned in relation to the Perth real estate market and whilst property may not increase in value in the short to medium term, it looks like the market has probably bottomed.

    If interest rates continue to fall and rents keep increasing as they have been, it will become more economically viable to buy rather than rent and more first home buyers will enter the market.

    If you are buying a home to live in for the next ten or fifteen years, you are fairly safe. If you are buying to invest, do your homework and don’t borrow too much.

    Welcome to 2012.

    Thanks for tuning in, and let me know what’s on your mind …. ->

    ***

    Easter Special!

    As an extra special thank you between now and Easter, if you are thinking of selling and you list your property for sale with Bernie Kroczek Real Estate, we’ll give you 10 cents a litre off your petrol for a year*.

    Or if you are looking for a good Property Manager to look after your investment and appoint Bernie Kroczek Real Estate to manage your property between now and Easter, the same deal applies. We’ll give you 10 cents a litre off your petrol for a year*.

    All you need to do is choose us as your agent when you come to sell your home, or rent out your investment, between now and Easter, and we’ll reimburse you 10 cents per litre of your fuel consumption for a year*. All we need are your petrol receipts bought into the office on a monthly basis, to receive your refund.

    So if you are thinking of selling or renting and need a good agent, be sure to call Bernie in for a chat, between now and Easter.

    * Maximum of 50 litres per week.

    Goodbye 2011, Hello 2012!!!

    Last modified on 2011-12-17 06:01:04 GMT. 0 comments. Top.

    As 2011 draws to a close we can reflect on what has arguably been the worst year for Perth property prices and the number of transactions for over 25 years. The Real Estate Institute of Australia in it’s latest “Market Facts” reports that house prices in Perth declined by 6.3% over the September quarter, to be down by 8.2% for the whole 12 month period.

    In dollar terms the median house price fell by $40,000 in the 12 months from September 2010 to $450,000. In the boom of 2006 the median price reached $515,000 at one point, so its been downhill ever since.

    Landgate, which records all property transactions in WA, stated that residential property transactions had fallen by 40% since 2006.

    Renters are also doing it tough at the moment with rents increasing by 2.6% over the September quarter to be 5.3% higher at $400 per week over the year.

    The GOOD NEWS is that interest rates have started to decline and wages are up. Western Australia has the lowest unemployment rate in the country and according to recent reports the ‘Real’ Mining Boom hasn’t even started yet.

    So in spite of worsening economic conditions in Europe, which will inevitably effect the rest of the world, Western Australia is probably the best place to be for the next few years at least.

    Personally, I am looking forward to a productive year in 2012 and we are working on some great marketing ideas which will see us increase sales and grow our property management business.

    Thank you for reading my blogs over the past year or so. I hope you have found them to be of some interest and even useful.

    Remember our Compeititon which will end at midday on Monday December 19. Simply become a Facebook Friend of Bernie Kroczek Real Estate Fan Page by clicking on the ‘Like’ button on the Fan Page. Then enter the competition for an iPod Touch, worth $199.00 and you could be a WINNER!

    Even if you already own an iPod you can always give it away for Christmas and make someone else happy too.

    Best wishes and Merry Christmas!

    Thanks for tuning in, and let me know what’s on your mind …. ->

    Be Careful! Tsunami Approaching!

    Last modified on 2011-12-05 14:23:05 GMT. 0 comments. Top.

    I was reading the Australian Financial Review the other day (29/11/11) and came across a story by economics correspondent Michael Dwyer. He begins with this, ‘Resilient as Australia is, there might be no escaping at least some of the backwash of the economic tsunami now threatening the entire euro zone”.

    Whilst the euro plays a relatively small role in terms of Australia’s exports, nonetheless we shall feel the effect via a slowdown in the Asian economies, especially China which takes 30% of our exports, mainly coal and iron ore.

    In turn Europe is a major export market for Chinese goods. If Europe slows, which is currently happening, this effects the Chinese economy, which is also slowing, and Australia, being a major resources exporter is also effected.

    Fortunately, Australia is the best place to be in a world economy which is hurtling toward a second recession in 3 years. According to recent statements by our big four banks, lending will slow and finance for homebuyers will be harder to obtain in 2012.

    The implicatons for house prices over the next 12 months are obvious.

    The message? – If you are thinking of buying get your finances sorted out sooner rather than later and BUY. If you are thinking of selling, do it sooner rather than later and most importantly GET REAL on your price.

    To stay in touch with all that is happening in real estate, you may wish to become a Facebook Friend of Bernie Kroczek Real Estate Fan Page by simply going to our page and clicking on the ‘Like’ button. If you do be sure to enter the competition for an iPod Touch, worth $199.00 by heading to the Competitions Tab or the Offers Tab on the left side bar and enter by completing the form there. The competition closes on December 19, and the winner will be notified via email on December 20.

    We are going to be holding a number of competitions throughout 2012 with lots of great prizes, including holidays, restaurant vouchers, iPods, iPads and Myer Gift Vouchers.

    To be eligible all you need to do is go to Bernie Kroczek Real Estate on Facebook and click the “Like” button, then complete the form. You will also need to be able to pick up your prize from our office here at 376c Oxford Street, Mount Hawthorn before midday on December 23, 2011.

    Alternatively, you can go to our Competitions Page click on the “Like” Button there and complete the entry form.

    Good Luck to you all!

    E=mc2

    Last modified on 2011-11-23 13:56:54 GMT. 0 comments. Top.

    I’m sure everyone recognises this famous equation Einstein used to represent the Theory of Relativity. The question is how many people actually understand it and can explain it? Well, I for one certainly can’t but what I’ve done is come up with my own theory of relativity aptly named “Bernie’s Theory of Relativity”.

    Here’s how it goes:

    “When you are buying and selling a property in the same market, everything is relative.”

    How’s that for genius?

    I came up with this flash of brilliance because so many people ask me if it is a good time to sell or a good time to buy. My reply is “It makes little difference if you are buying and selling in the same market”.

    For example, let’s say you want to sell a property valued at $500,000 and buy a property valued at $700,000. The changeover price is $200,000, right?

    Let’s say you delay by a year to see what the market is doing and the market falls by 5% over the year. Your $500,000 property is now worth $475,000. However, and this is the good news, the $700,000 property you want to buy is now worth $665,000. The changeover price is now $190,000.

    So…

    in fact, you are actually better off in real terms by selling in a falling market and buying a more expensive property. Of course, the reverse is true if the market is moving up. Therefore, it is a very good time to sell and buy a more expensive property in the current market, because prices have been falling over the past couple of years.

    The fact is, and I’ve proven this over 25 years in the business, there is ALWAYS a buyer for EVERY property in ANY market.

    It’s hardly as if things have completely dried up. In fact last week there were 1,132 sales in Perth, so people are buying. Forget about all the negative stuff coming out of Europe. We in Perth are in the best place in the world economically. You wouldn’t want to be living or trying to earn a living in Greece, Spain or Italy right now, would you?

    By the way, check out my new website at www.berniekroczekrealestate.com.au and request a FREE information pack. Even if you are not thinking of selling right now, you may know of someone who is and who would benefit from the information.

    And it’s FREE!!!

    Thanks for tuning in, and let me know what’s on your mind …. ->

    Who’s Pulling the Strings?

    Last modified on 2011-11-07 10:32:56 GMT. 0 comments. Top.

    Today I’m referring you to a recent report by consumer group ‘Choice’ about how much influence the real estate industry has over newspaper editorial content. You will find a link to the report at the end of this blog if you would like to read it.


    Essentially Choice is saying that the real estate industry, because it spends so much money advertising in newspapers, is able to influence editorial content in a way which favours the industry and at the same time often distorts the facts.

    Who would have thought?

    As a result the real estate industry is up in arms and is now attacking Choice, suggesting it should stick to testing washing machines and fridges.

    I’m not so sure..

    Recently the Sunday Times in Perth published a feature on the pros and cons of selling you home privately, including some tips on how to do it. In fact, the article was quite favourable towards the idea of selling privately and presented some comments from people who had successfully done so.

    About a week after the story was published we, as real estate agents received a rather cap in hand apologetic email from the Sunday Times suggesting that in the interests of fairness and balance, a feature would soon be published from the real estate industry perspective.

    Sounds to me like someone (guess who?) may have leaned on the Sunday Times editorial staff to redress the outrageous possibility that selling a home privately could, in fact be the best option for some people.

    Talk about arrogance!

    The Newspaper industry once described real estate advertising as “Rivers of Gold”!

    I wonder why?

    The sad thing for the general public is that an increasing amount of newspaper advertising is being funded by the sellers themselves in a medium which is becoming increasingly redundant and obsolete.

    Why do you think News Limited has purchased the online vehicle for property advertising realestate.com.au and Fairfax Media Ltd owns Domain?

    They’re not silly are they?

    What do you think??

    PS Here is the link to the Choice Report – “Real Estate’s Influence on Newspapers”.

    I’d be interested to know your thoughts …. ->

    To Pay, or Not to Pay…?

    Last modified on 2011-10-24 10:21:04 GMT. 0 comments. Top.



    I saw a video recently where a real estate agent was suggesting that agents who do NOT charge sellers for marketing their property, were not acting in the seller’s best interest.

    I found this to be an interesting and different perspective on this rather vexed question of Vendor Paid Advertising or VPA.

    It is probably fair to say that a majority of real estate agent’s now charge sellers either up front or at settlement to market their property. Various people have told me that they were charged anywhere from $500 up to $4300 by real estate agents for marketing.

    At the extreme I recently heard of a case where the seller had paid $9000 to the agent and the property still hasn’t sold.

    The problem with paying up front for marketing is that if the property does not sell, then you, the seller lose your money. The agent cannot refund your money because it has all been wasted, sorry, spent on advertising.

    Also, if you take the property off the market then you are presented with an account to cover the cost of marketing, assuming you haven’t already paid up front.

    In the past 10 to 15 years the financial risk in marketing a property has shifted from the real estate agent to the seller.

    So why do agents insist you pay up front?

    If there is now no financial risk to the agent because the seller is paying for marketing (more often than not the marketing is all about the agent and not much to do with the property), then the agent is free to waste your money advertising in places which no longer work as far as selling the property is concerned, such as newspapers.

    I can’t remember the last time I sold a property where the buyer came from a newspaper advert. The main reason is because most buyers (approximately 90%) enquire having seen the property on the internet and another 6% to 7% enquire off a For Sale sign seen while driving around the area where they are looking to buy.

    The internet is a very inexpensive and much more effective way to market most products these days but especially real estate. Therefore, I cannot see how NOT charging for marketing is not working in the sellers best interest. Maybe I’m missing something?

    I’d be interested to know your thoughts …. ->

    It’s all an Illusion!

    Last modified on 2011-10-14 14:55:22 GMT. 0 comments. Top.


    I saw an article on a News Ltd website recently about what was referred to as “real estate agents latest tricks”. Some real estate agents in Sydney are using computer software to enhance photographs of properties, which are being marketed for sale on the internet.

    You know how it works, making a less than appealing property look fantastic.

    The idea is that when buyers see the enhanced photos on the internet they will be more inclined to visit the property in person and therefore more chance of the seller receiving an offer.

    Does it make sense then in the context of attracting more people to the property?

    My question for you is, once you inspect the property and see that it looks nothing like it did in the photos, what will be your response? Will you feel the real estate agent has deceived you? Will you feel you have wasted your time? Will you by angry at being tricked into viewing the property?

    OR

    Will you think ‘WOW!! Those photos on the net gave me some great ideas on how I can make this ‘sows ear look like a silk purse’’.

    Is it any different to renting fancy furniture to enhance a vacant property (except that it is much cheaper)?

    Photo enhancing goes on all the time in marketing, so what is the difference with this? Is this the way of the future??

    I would really be interested in your views on this, as it may soon be coming to a home near you!

    Oh and my view..

    In case you are wondering, my personal view is that I would be disappointed and annoyed as a buyer, seeing that the actual property is not at the same standard as shown on the internet. Particularly if the price reflects the ‘enhanced’ condition and not the actual condition!

    Maybe I am just old fashioned but I like to present things as they actually are. Of course, if you are the seller you may take a different view. You may think it is a great idea! Remember though that today’s seller is tomorrow’s buyer.

    You can’t have it both ways.

    Let me know what you think!

    No Price, No Sale!

    Last modified on 2011-10-23 11:17:21 GMT. 0 comments. Top.


    You quite often see properties advertised for sale with no price. For example, headlines starting with the property suburb and then “OFFERS!”

    If you were in the market to buy something in this particular suburb what would your initial reaction be on seeing a property advertised without a price? Mine would be that the property is grossly overpriced and the agent/owner is too embarrassed to list the actual asking price.

    Are they likely to get any response to an ad without a price? Hardly, especially in the current market where there are a large number of properties to choose from with a price tag.

    On the subject of advertised prices, how about properties which are advertised in a range. For example $395,000 to $445,000. This is quite common, especially here in Perth.

    So what does this say to you Mr/Mrs Buyer? What it says to me is that the seller has high expectations and the agent has low expectations. Either way, it is misleading advertising because it suggests that the seller will accept a lower price than they actually will!

    If you were the buyer what would you be offering for a property advertised with a price range??

    It certainly wouldn’t be any more than the lower price, in this example $395,000. Why would you?

    My research shows…

    that properties advertised in a price range usually sell at or below the lower price. Hardly a satisfactory outcome for a seller who has been expecting a much higher price, is it?

    And what about this one? From….. eg; Tuart Hill… from $395,000.

    What is this saying Mr/Ms Buyer? Well, essentially it is saying the sellers lowest price is $395,000. So why would a buyer offer more than that? Would you? I don’t think so.

    Frankly I know of no other industry in the world which offers its product with a ‘price range’ or ‘from $..’. Certainly if you are offering a range of products which are similar or have added extras, then offering the product with ‘from $…’ is valid. But in the case of real estate it is certainly NOT valid and is misleading and deceptive.

    So, why does the real estate industry continue to market properties in this way?? Ask me another question ’cause I have no idea! If you know, I would be happy to hear from you.

    By the way, when I offer a property to the market, there is only ONE PRICE, the HIGHEST price we expect to get. You can always negotiate from there!

    Let me know your thoughts….

    Do We Do Property Management? Yes, We Do!

    Last modified on 2012-03-03 14:25:58 GMT. 0 comments. Top.


    In fact we even GUARANTEE our service.

    WE GUARANTEE

    TO RESPOND to any communication from you within 2 hours during normal business hours.
    YOU WILL NEVER LOSE RENT with any tenant selected by us, provided you have adequate landlord’s insurance.
    If we don’t achieve the rent we quoted, we will MAKE UP THE DIFFERENCE for the term of the lease.
    If you appoint us as you managing agent for a minimum of 12 months, and if you are not satisfied with our service after the first 3 months, we will release you from the agreement and REFUND your first 3 months management fees. No questions asked.

    As we are keen to grow and improve our business, if you recommend us to someone between now and Easter – and they enter into a minimum 12 month management agreement with us, we will present you with a GIFT VOUCHER to the value of $120.00 for ‘Kailis Bros Fish Market and Cafe’ or ‘Giardini’s Cafe’ in Leederville.

    And, finally, if you like our style it would be fantastic if you would make us a friend on your Facebook page and ‘Like’ us by clicking here:

    Estate Agents Must Get Real!

    Last modified on 2011-09-26 15:34:53 GMT. 0 comments. Top.


    I read an interesting article in last weekend’s Australian Financial Review written by Alan Stokes. The article as somewhat entertaining being written tongue in cheek, one would think, or maybe not.

    The essence of it was that due to the caution and lack of confidence prevailing in the property market nationally, but no more so than in Perth and Brisbane, real estate salespeople are leaving the industry in droves.

    It was being suggested that , due to the proliferation of websites offering services to private home sellers, the demise of the ubiquitous real estate agent was assured. Mr Stokes, however, did qualify the suggestion by saying that, like cockroaches, real estate agents can survive almost anything.

    He’s probably right!

    Nonetheless, it is true that it has never been easier for private sellers to sell their home, thanks to modern technology and those entrepreneurial types who can see an opportunity to exploit a growing market. Whilst selling a property privately has its pros and cons, it has been shown that private sellers generally achieve the same price as a typical real estate agent, even if the sale takes longer.

    So what should the endangered species do to survive this onslaught from the private seller?

    Here are some suggestions …

  • Return Calls
  • Respond to emails
  • Speak to people with respect
  • Treat everyone with equanimity, a beggar is as good as a king.
  • Do what you say you are going to do
  • Tell the truth. It’s not true that the truth hurts, it actually frees you up.
  • Have a genuine interest in the other person
  • Turn up on time, or at least let the other person know if you are running late.
  • Don’t answer your mobile phone when you are in conversation with another person. It is the height of bad manners.
  • Always act in the interests of the other person.
  • Well that’s a start.

    Can you think of anymore?? I would be really interested in your views.

    I’m interested in your thoughts so have your say….

    Do we do Property Management?

    Yes we do!

    And what’s more we even GUARANTEE our service!

    WE GUARANTEE

    NEVER to charge you for postage and petties.
    NEVER to charge you for Internet marketing.
    TO RESPOND to any communication from you within 2 hours during normal business hours.
    YOU WILL NEVER LOSE RENT with any tenant selected by us.
    If we don’t achieve the rent we quoted, we will MAKE UP THE DIFFERENCE for the term of the lease.

    In addition, as we are keen to grow and improve our business, if you recommend us to anyone and they enter into a minimum 12 month management agreement with us, we will manage your property FREE of management fees for the next month.

    If you are looking for a genuine, honest and hardworking property manager then you cannot afford not to give Victoria a call today on 08 9444 4099.

    We’re A Nation Obsessed!

    Last modified on 2011-09-26 15:35:30 GMT. 0 comments. Top.


    I went in to my local newsagent this morning and was browsing through the popular magazines on display. My attention was attracted to the number of magazines on wealth creation and in particular wealth creation through real estate.

    Magazines with headlines such as “Cool Market..Hot Profits”, “How I spent $30,000 and made over $120,000 in just One Month!”. You know the ones, you can hardly miss them when you visit any typical suburban newsagent these days.

    Whether such headlines reveal the truth or are just typical hype, who knows? The fact is there is obviously a demand for these magazines, the implication being that anyone can get rich in a matter of months without doing any work or using any of their own money or savings simply by investing in real estate.

    While it may be possible for certain people under certain circumstances to strike it lucky once in a while, it is certainly not the norm. In my 25 plus years working in the real estate industry I have seen more people lose money in real estate than make the proverbial ‘$120,000 in one month’ or such similar pie in the sky numbers.

    This brings us to the point of the headline, ‘We’re a Nation Obsessed’.

    Obsessed by what? You may well ask …

    In a nutshell – HOUSE PRICES

    If we are to believe the typical hype in the newspapers and electronic media, the price of houses is the most important thing in the world for most people.

    What happened to the idea that houses provide one of the essentials of life, namely shelter, regardless of the value of the house. If we were a truely egalitarian society wouldn’t we want houses to be more affordable, both in terms of renting and purchasing so more people could participate in home ownership?

    A generation ago it took 3.5 to 4 times the average single wage to buy the average house. Today using the same criteria, and based on the average single wage of around $50,000, it now takes 9 times the average wage to buy the median priced home in Perth.

    Now, I’m not an economist, but those numbers say to me that the median priced home is unaffordable to a person on the average wage. So much so that it now takes two wages to buy the average home. Apart from the financial aspects, there are also social consequences which haven’t fully played out yet, but will no doubt do so over the next generation or so.

    We are fast becoming a nation of those who currently own property and those who can never affort to.

    As a final thougt, how come we complain when the price of bananas goes through the roof, yet rejoice when house prices do the same? (no pun intented). Or, the day before we buy a house we pray the prices will collapse, but the day after we’ve bought, we can’t wait for prices to go up! Go figure.

    I’d really be interested in your thoughts.

    I’m interested in your thoughts so have your say….

    Why We Don’t Trust Real Estate Agents!

    Last modified on 2011-09-26 15:36:39 GMT. 0 comments. Top.


    Every year the Roy Morgan organisation conducts a poll on which are the most trusted professions.

    Typically the most trusted are nurses, pharmacists, doctors and school teachers.

    At the bottom of the pile are car salesmen, real estate agents, newspaper journalists and politicians. Nothing new there!

    Being a real estate agent, I have often wondered why the general public has such a low opinion of the industry. After all most real estate people I have met over the past 25 years have seemed like fairly decent people, just like you and me.

    However, I rarely experience a real estate agent from the ‘other side of the fence’, that is, as a consumer.

    Anyway I was reading my local real estate paper the other day

    and came across an article by the CEO of one of the nation’s major franchise groups. The article was entitled “Western Australia Embraces Auction”.

    The article claimed that this particular real estate group had experienced a 50% increase in the number of properties sold by auction over the past year. This doesn’t really tell the whole story. If for example the group sold 10 properties by auction the previous year, then a 50% increase this year would mean 15 properties sold at auction. Hardly anything to get excited about.

    Simply quoting a percentage figure for auctions means nothing in the context of the total number of property sales in the given period.

    For example in the week of 21st to 28th August, 2011 there were 25 auctions held in WA of which a mere 4 sold. That is a miserable clearance rate of just 16%. In the same week a total of 900 properties were sold, by private treaty, according to REIWA.

    Therefore, the claim that Western Australia is embracing auctions is misleading and a deliberate attempt to imply that auctions are the preferred and best method of selling real estate.

    The general public have rejected auction as a method of selling real estate in WA. The claim by some of the major franchise groups to suggest otherwise is unsubstantiated hype and one of the reasons the real estate industry, as a whole, is not trusted.

    For a truthful and realistic expose of the auction system please visit the website of consumer advocate Neil Jenman.

    To receive a FREE Copy of Neil’s book ‘Real Estate Mistakes’ complete this request form and we’ll send a copy out to you immediately.

    Free Book Request

    To recieve your FREE Book "How To Sell Your Home For More", complete the form below and we will post your book to you immediately.

    First
    Last

    Anyone for Snakes & Ladders?

    Last modified on 2011-09-26 15:39:55 GMT. 0 comments. Top.


    We’ve been off the air for a few weeks meeting the challenges of the day, otherwise know as ‘life stuff’, with Gai in England for two weeks and a new grandson just recently arrived.

    In the meantime, you would have had to have been on a different planet not to know about the wild gyrations on world share markets over the last few weeks.

    What has happened in markets over the past three years and in particular the past couple of weeks has convinced me that investing in the sharemarket is not much better than playing the pokies.

    You speak to ten different economists and get ten different stories as to why sharemarkets are behaving in the way they are.

    The truth is NO ONE is able to accurately predict which way the market is going to go over the next week, never mind next year, five years or ten years.

    It’s all become a bit of a game of chance, in which the average ‘Joe Blow’ like you and I are mere pawns. I say pawns because for those of us who have no choice at all as to whether we pay into superannuation, our retirement funds are mere play things of the big players, who get paid zillions of dollars to have fun at someone else’s expense.

    All through no fault of our own.

    My own view is

    that economies and sharemarkets are in for a sustained period of low or negative growth, until such time as governments around the world grasp the nettle and show some courage and leadership and do what they should have done years ago.

    That is stop trying to buy votes through populist policies and instead do what is best for the nation regardless of whether it makes them popular. Can’t see it happening soon, but you never know.

    I was recently quoted on a similar subject on this blog Messages from the Front Line, if you are interested, by Leith van Onselen, the Unconventional Economist. Macrobusiness.com.au is an excellent site if you like an often contrarian view of the world of economics and politics.

    I’m interested in your thoughts so have your say….

    Danger, Danger, Danger ! ! !

    Last modified on 2011-09-26 15:40:27 GMT. 0 comments. Top.


    I read a rather disturbing article in the real estate section of last Saturday’s West Australian (July 16) with the headline Aussies Home in on US Market for Bargains.

    The article read more like an advertorial promoting the benefits and rewards of purchasing cheap property in the United States and achieving something like a 20% pa return on the investment.

    There is a company in town promoting the idea to unsuspecting Aussie investors. The company, ‘Foreclosed American Homes’ is quoted in the article as only dealing in areas offering capital growth, strong rental yields (around 20%) and lower risk.

    This is where the alarm bells should be ringing. The first rule of investing is ‘if it sounds too good to be true, it usually is”, and the second is “High reward equals high risk.”

    To achieve a high yield on any investment, never mind property which offers typically low yields, there must be a higher than usual degree of risk. Someone offering yields of 20% with low risk should make any reasonable investor doubly cautious.

    What do the experts say? …

    Property prices in the US have fallen by over 30% since 2008 and Professor Robert Shiller one of the founders of the Case Shiller Index which tracks house prices, is suggesting the property market could decline by a further 10-15% as the US teeters on the edge of a double dip recession.

    Many unsuspecting people have lost money on these types of schemes and I would advise you to be very careful if it is something you are considering. At this point I would like to direct you to a piece written by consumer advocate Neil Jenman about the traps and dangers of investing in US property headed American Warning – A Deadly Trap for Aussie Investors

    In case you missed the article in the West Australian here it is: Aussies Home in on US Market for Bargains

    I’m interested in your thoughts so have your say….

    Carbon Tax … It’s all about the Timing!

    Last modified on 2016-02-19 01:02:02 GMT. 0 comments. Top.


    I don’t know about you but I spent most of ‘Carbon Sunday’ glued to the TV, channel surfing between ABC News 24 and Sky News. It was riveting TV for a political junkie like me.

    So what do you make of all this carbon tax stuff?

    I have formed some views during the past few months culminating in the announcement by Prime Minister Julia Gillard last Sunday week.

    First of all regardless of whether we believe the planet is warming due to human activity, in the long term it is of great benefit all round to consume less and pollute less. This part is a no-brainer.

    Second, it seems inevitable that the world as a whole will eventually implement policies which result in lower CO2 emissions. The only question is ‘When?’.

    Third, the Carbon Tax policy announced by Julia Gillard on July 10, has more to do with politics and staying in Government in than with reducing CO2 emissions. This is evident by the fact that Ms Gillard was one of the four kitchen cabinet members under former PM Kevin Rudd who pushed for a shelving of the previous emissions trading scheme until some time in the future. Prime Minister Gillard then stated a few days before the 2010 election that there would be no carbon tax.

    Fast forward to February 2011 and the Prime Minister announces that there will now be a carbon tax. This is the price of forming a minority government with the Greens. My question is would a carbon tax have been announced if Labor had won government in it’s own right??

    Fourth …

    The major CO2 emitters of USA, China and India have not committed to any serious CO2 reduction scheme. In fact the US has completely abandoned its proposed cap and trade scheme.

    Fifth, Imposing a carbon tax in Australia will not make the slightest difference to global CO2 emissions in the absence of the major world economies joining in.

    Sixth, How is over compensating consumers going to change behaviours? It actually amounts to bribing people to consume more.

    Seventh, To impose a carbon tax of $23/tonne on the Australian economy at a time of low consumer confidence and a seriously slowing economy apart from mining, not to mention the serious state of the US, UK, EU and Japanese economies, is sheer madness.

    Finally, to further prove the point that this is more about politics than saving the planet, if you did happen to witness the proceedings on Carbon Sunday, you would have seen Greens Leader Bob Brown and his deputy Christine Milne grinning like a pair of Cheshire cats who had just swallowed a flock of canaries and who had all their birthdays and Christmases come at once. They were the happiest people in town and that in itself is a cause to be concerned.

    That’s not to say Tony Abbott’s proposed direct action scheme is any better, in fact it is more expensive and still may not have the desired effect.

    The main issue is the timing and mechanics of the government’s carbon tax relative to the rest of the world. We are very small players in the world economy (remember Copenhagen?) and our CO2 emissions are less than 2% of global emissions.

    However, the proposed tax at this time, I feel, risks causing serious damage to a seriously slowing economy, albeit one which survived the GFC, and that’s the real worry. There is a time and place for everything. It may be a good idea in principle but this is not the time for a carbon tax in Australia.

    I’m interested in your thoughts so have your say….

    Moooo… ! Don’t Worry, Be Happy!

    Last modified on 2011-09-26 15:43:00 GMT. 0 comments. Top.


    I was hoping to write about real estate today, but there is not really that much to say that you don’t already know. In short, the market is pretty flat nationally with Western Australia and Queensland faring worst.

    However, there is a glimmer that things may be turning around: my phone actually rang once last week and it has rung three times so far this week and it is still only Thursday.

    Much more interesting is the government’s amazing solution to our live cow exports… our cows can now relax in the knowledge that they will be asleep when their throats are cut.

    According to world standards, stunning is not mandatory, even in Australia, and despite everything else, not much is going to change in Indonesia.

    All our cattle exported to Indonesia will now have to be tracked electronically from the paddock to the plate, as it were, and Australian producers will be responsible for the cost of such tracking and auditing.

    The government has generously offered around $30 million to the cattle industry as assistance (read compensation) but in the context of a $300 million industry it should keep them in bread and milk for a week or so.

    Kevin, (…. I’m from Queensland…) obviously took my advice and flew up to Jakarta and sweet talked the Indonesians, but the damage done diplomatically and economically is a very sad reflection of the incompetence of some or our government ministers.

    Regardless of what one may think of live exports there are intelligent and appropriate ways of doing things and in my humble view the government failed miserably on both counts.

    Now do we just wait for the next fiasco? ….

    Rest assured we won’t have long to wait! Carbon Tax comes to mind…. stay tuned for my thoughts on that hot issue!

    I’m interested in your thoughts so have your say….

    To Open or Not to Open – That is the Question!

    Last modified on 2011-09-26 15:43:36 GMT. 0 comments. Top.


    “Home Opens” have been part of the real estate modus operandi for at least the past three decades. It is one of the prime methods of finding sellers (yes, sellers not buyers) taught by the various organizations who run the Real Estate Salesperson’s course.

    Every weekend come wind, rain or shine hundreds of real estate salespeople methodically hit the road, literally, putting out their “Home Open” signs as they engage in the weekly ritual of pretending to sell the property, whilst all the time really looking for new sellers who may be out and about checking out values in the area.

    How effective are “Home Opens” in selling the home? Not very is the truth. In fact it is a myth perpetrated by the real estate industry that most homes sell on the weekend. In fact most properties actually sell during the week from a private viewing, not from a “Home Open”.

    Why is this? Good question.

    For a start we now live in a 24/7 world where people have much more flexible work arrangements. In other words they are not chained to an office desk from 9 ‘til 5 which means they are freer to look at properties at various times on different days of the week. They are not just restricted to the weekends.

    The weekends seem to be more popular with buyers who are just starting to look and who may not have decided where to live or what type of property they would like. “Home Opens” are a good way of checking out the market for ideas.

    Potential sellers like to visit “Home Opens” in their area to get a feel for values. This makes them potentially more informed than some agents, particularly those who normally work out of the area. Genuine buyers, that is those who know where they want to live and are ready to buy today, actually prefer to view the home by appointment with the agent at their leisure and at a time that suits them.

    They feel less pressured and can spend more time at the property without the distraction of other “buyers” and an agent who is dashing to get to the next “Home Open”. A common response from an agent to a phone enquiry is “it’s open on the weekend, come through then”. Not exactly what you would call great service is it?

    Another thing, why be restricted to viewing the property during a half hour time frame on a Saturday or Sunday which suits the agent but not you?

    The facts are “Home Opens” suit the agent more than the general public. They are a great way of picking up leads and then following up, if you are lucky. (See Glenn Twiddle – Secret Agent Shop). Most sellers, and I have to admit this surprised me, actually don’t want their home open on the weekend. They find it stressful cleaning and getting the house ready only for no one to turn up or, if they do for no real interest to be shown.

    It is not about the number of people who come through the “Home Open”, but rather the right people viewing the property. When people view by ‘appointment only’ you can be sure you are dealing with a serious buyer. If someone is not prepared to make an appointment to view the home it is a fair bet they are not yet ready to buy, if in fact they are a real buyer at all.

    Finally, the Real Estate Institute of WA put a notice to its members several years ago warning of the dangers of “Home Opens” in terms of potential burglaries. It’s a pity they didn’t put out the same warning to the general public. You may not be insured either as, according to the insurance company, you have invited the burglar into the home.

    Who is going to reimburse you if anything goes missing? Not the agent, that’s for sure.

    Want to know more about selling properties without the usual hype, call me at your leisure.

    Thanks for reading.

    I’m interested in your thoughts so have your say….

    Kill The Fatted Calf

    Last modified on 2011-09-26 15:44:10 GMT. 0 comments. Top.


    While I was away in Germany I belatedly read a report that the Federal Government had banned live cattle exports to Indonesia. This is a typical policy on the run, poll driven, populist response to a TV program, in this case 4 Corners on the ABC.

    As a result, thousands of people are at risk of being thrown out of work, many more Indonesians are being deprived of staple food, and once again our Federal Government is looking like a bunch of incompetent amateurs.

    This is not to condone cruelty to any living creature, no intelligent, compassionate person would, but things need to put into perspective.
    For a start I find it hard to believe the powers that be did not know cruel practices were being carried out in some Indonesian abattoirs.


    Why did it take a TV program to alert them to something everyone in the meat industry already knew about?

    So, let’s give them the benefit of the doubt and say they were ignorant of the situation in Indonesia. And anyway, what happened to diplomacy!?

    Surely someone in high authority (What about “…Kevin, I’m from Queensland and I’m here to help”) could have allowed the Indonesians to at least save some face and embarrassment by holding talks in private to discuss the situation to the mutual benefit of all parties. This government is like (pardon the pun) a bull in a China shop when it comes to diplomacy.

    Our, at the time, Prime Minister Kevin Rudd set the scene when he referred to the Chinese as “rat f….rs” at the climate change conference in Copenhagen last year.
    No wonder Asian countries have seen the West as barbarians for so long.

    By the way, when are we going to shut down the live sheep trade, after all we have to be consistent, even incompetently consistent. And, last but not least, has anyone visited a chicken factory (sorry, farm) lately? You’ll never eat KFC again if you do.

    I hope all those people complaining and demonstrating about cruelty to animals are actually walking the talk and are or becoming vegetarians.

    If there were no meat eaters there would be no market for meat, live or otherwise. And yes, just in case you are wondering, I am a vegetarian.

    I’m interested in your thoughts so have your say….

    No, Prime Minister

    Last modified on 2011-09-26 15:44:39 GMT. 0 comments. Top.

    I’m back, and how good does it feel to be home again! While recovering from jet lag after a 36 hour journey home due to the Chilean Ash Cloud, I saw Prime Minister Julia Gillard being interviewed on TV and, for the first time I thought she looked stressed and under pressure. I could also hear some nervousness in her voice.

    The following evening I saw an interview on ABC 7.30 Report with the New Zealand Prime Minister John Key.

    What a contrast!

    Mr Key looked and sounded calm, relaxed, confident and, unusual for a politician, somewhat humble.

    New Zealand is hardly a major player on the world economic stage, but they have actually implemented an emissions trading scheme, which seems to be working for them.

    Whether you agree with climate change and its causes, the Kiwis have actually done it while our politicians play politics trying to score cheap political points against each other.

    And, what’s more, New Zealand has operated with a minority government for at least the past ten years.

    I’ve been a keen observer of politics for the past 40 years and I have never seen such a rabble on both sides of politics that we now have in Australia.

    Talk about “dumbing down”.

    Where are the great leaders, statesmen with conviction and vision!? They are nowhere to be seen.

    Australia stands at the precipice of the greatest mining boom in its history and it seems our political “leaders” have no idea on how to come up with and communicate policies which will set the nation as a whole up for decades to come.

    What an opportunity going to waste …

    That having been said there are foreboding omens on the economic horizon due to the deteriorating financial situations in the U.S., Europe, Japan and the U.K. And don’t forget China!

    Some economists are forecasting a slowdown in China over the next few years due to rising inflation and debt levels caused by a property boom (sound familiar?). Unless we position ourselves to absorb any financial shocks from overseas, I fear Australia may finally experience an economic downturn, notwithstanding the mining boom.

    Sad to say I don’t have a great deal of faith in our political leaders until they stop playing to the media and actual grow up and start governing.

    What do you think?

    I’m interested in your thoughts so have your say….

    Real Estate Agents Falling Like Flies!

    Last modified on 2011-09-26 15:45:07 GMT. 0 comments. Top.

    As my stay in Germany comes to a close my thoughts turn again to real estate and what is happening back home. As I was surfing the net I came across a story by the Real Estate Institute of Australia president David Airey, which stated that 10,000 out of 60,000 sales representatives have left the industry in the past 12 months.

    With sales volumes down between 30 and 40% since 2009 real estate agents and salespeople are experiencing lean times. Depending on whose figures you accept between 80 and 90% of salespeople drop out of the industry within 2 years of starting. You’d think with those statistics people would be deterred from entering an industry which initially promises 7 days a week work for no great reward.

    The Paretto Principle comes into play again which says that 20% of salespeople are doing 80% of the business. So as the cake continues to shrink it is little wonder that so many are leaving the industry. After all we all need to eat.

    But a downturn in the housing market doesn’t only hurt real estate agents. There many people who rely on property transactions to earn an income, such as settlement agents, mortgage brokers, solicitors and removalists to name but a few.

    This could involve many thousands of people directly and indirectly. This is one reason why governments try to prop up the housing market with various grants and tax concessions. No government wants to preside over higher unemployment due to a collapse in the housing market. However, all they are doing is delaying the inevitable, the market will have its way one way or the other.

    There is also such a thing as the wealth effect …

    I am sure you, like most people, feel wealthier when house prices are going up. That being the case we are more confident to spend, spend, spend even if we are using our house as an ATM.

    In the United States, and I would suggest the same applies in Australia, consumer spending accounts for 70% of economic production. It is easy to see how a downturn in consumer confidence and hence spending leads to a slowing economy and higher unemployment.

    Having said that, economic upturns and downturns are part of the cyclical nature of things. Downturns provide opportunities to buy, whereas booms provide opportunities to cash in, if only we were so disciplined.

    It just depends on how we see things. Glass half full or half empty. As Shakespeare said “for there is nothing either good or 
bad, but thinking makes it so.”

    I’m interested in your thoughts so have your say….

    Aufwiedersehen!

    Last modified on 2011-09-26 15:47:48 GMT. 0 comments. Top.

    I write this from Changi airport in Singapore where I am waiting to board a flight to Amsterdam enroute to Berlin. The easy part of the journey is done, now for the marathon flight to Europe.

    I’m off to visit my aunty and uncle who are celebrating their 65th wedding anniversary. They escaped from communist Poland in 1965 and settled in West Berlin, as it was then, and have been there ever since.

    I thought 65 years married was quite an achievement, which it is, and then I read a story in the West Australian last week about a couple from Midland who were celebrating their 80th wedding anniversary. He is 103 and the wife is 96.

    I wondered what sort of qualities it would take for a couple to stay together for so long. Well, one criteria, of course, is that they would have to have lived to a ripe old age. But also 50, 65, 80 years ago it was a vastly different world to the one we live in today.

    People didn’t have partners in those days, except in business, they had a wife or husband. When they entered into a relationship it was forever, “until death us do part”, and this was declared in public. There were no such things as pre nuptual contracts; why would you need one if the intention was to stay together forever?

    Of course things don’t always work out to our expectations even with the best of intentions, for any number of reasons, which today can be rather complicated at best. But way back then people seemed more committed and resilient. They also seemed to have the capacity to stick with something to the end, even in spite of difficulties.

    I suppose it could be said that having lived through 2 world wars and a REAL depression where unemployment was in the order of 30%, it gave one a greater appreciation of life and the resilience and patience to know that all things resolve given time and effort.

    Now, the same could be said about the capacity to deal with economic booms and busts …

    In Australia we have had close to 20 years of economic sunshine and only now is there talk of a possible weakening of the economy, not withstanding the imminent mining boom. However, our economy went backwards the March quarter by 1.2%. There is talk of a slowing Chinese economy which will have serious repercussions for Australia. Our second biggest trading partner, Japan has just gone into recession, again.

    Europe is facing another economic crisis as Greece and its fellow PIIGS battle w

    Oh Ellie! How Could They Do This To You?

    Last modified on 2011-09-26 15:47:03 GMT. 0 comments. Top.

    The mornings are getting cooler as the seasons move through autumn towards winter. We may be putting extra clothing on first thing in the morning, only to take it off again by lunchtime.

    Such was the case with my little granddaughter, Ellie, who turned four only last week. She goes to kindy a couple of time a week and on this particular occasion it was a coolish morning so her mum had dressed Ellie in a singlet under her usual top. Come lunchtime, the temperature had warmed up and Ellie was starting to feel hot. She asked her kindy teacher, a young woman, if she, Ellie, could take off her singlet.

    “That’s okay”, said the teacher. Ellie then proceeded to take off her top and then tried to take off her singlet. As you know if you’ve ever worn a singlet, you sometimes need to be a bit of a contortionist to get them off. How much harder then for a little four year old?

    The teacher didn’t offer any assistance but stood by as Ellie struggled with her singlet, ending up sobbing and distressed by the whole ordeal though finally successful. (I wonder what would have happened had she not been successful?).

    The teacher’s explanation to Ellie’s mum at hometime was that teachers are not allowed, in these situations, to touch the child, according to the rules, but rather have to stand by and simply encourage the child. Even though the simple, compassionate and intelligent thing would be to lend a helping hand, but, it is against the rules!

    Has the world gone mad or is it just the education system with its Orwellian rules and ideology? Maybe it is just me! What do you think?

    I’m interested in your thoughts so have your say….

    Slay the Sacred Cow!!

    Last modified on 2011-09-26 15:47:35 GMT. 0 comments. Top.

    Okay, we’re going to step on a few toes today, so if you’ve got sensitive toes you may wish to stop reading at this point.

    Would you buy a business which was guaranteed to lose money for the next 10 or 15 years? Would you, as a taxpayer, be willing to reimburse the said business owner for his deliberate losses, year after year??

    If you answered ‘no’ to either of these two questions, then let us ask it another way, what if we substitute the word “house” for “business”?

    Negative gearing of rental properties by investors is nothing more than speculating (read gambling) that property prices will increase over a number of years and eventually return a tidy profit to the owner when sold.

    The profit is then taxed at a heavily discounted rate, thanks to John Howard, who halved the Capital Gains tax rate in 1999, which made speculative investments very attractive.

    There is nothing wrong with owning residential property as a means of wealth creation, but it seems unfair for taxpayers, who cannot afford to buy a home just to live in, to subsidise investors through the tax system.

    I don’t necessarily support the view that investors compete with first home buyers for properties, thereby forcing prices up and making housing unaffordable.

    There are a number of factors which effect the direction of property prices, not least of which is the availability of easy credit from the banks. When interest rates are low and banks relax their lending criteria, then it becomes easy and attractive to borrow a higher than normal amount of money to buy a property. This was the case when the Reserve Bank reduced the official cash rate to 3%, and the Federal government introduced the First Home Buyers Boost in October 2008, to stimulate the economy in response to the Global Financial Crisis (GFC).

    Predictably first home buyers piled into the market in droves, artificially forcing prices up, thanks to increased affordability. Once the stimulus was removed and interest rates returned to ‘normal’, those first home buyers who had been lured into the market by easy credit were left with high levels of debt in a market where house prices have been steadily falling for the past 18 months.

    Back to the question of negative gearing…

    In 2008-9 taxpayers subsidised negatively gearing investors to the tune of around $4.3 billion. $4.3 billion would go a long way to building some much needed infrastructure which the nation as a whole would benefit from.

    There is an excellent article on this subject at www.macrobusiness.com.au. It presents a very comprehensive argument against negative gearing and its inequitable effects on taxpayers as a whole.

    However, don’t expect any government, Labor or Liberal, to restore equity to the tax system, it would be political suicide and governments are not usually noted for acting on principle.

    Although to his credit John Howard fought and won an election in 1998 with the introduction of a GST as his policy centre piece, and Hawke and Keating introduced a capital gains tax in 1985 and went on to govern for another 11 years.

    So major changes are possible it just needs some real political leadership to bring it about, and I don’t see it happening any time soon.

    What do you think??

    I’m interested in your thoughts so have your say….

    The Middle East of America

    Last modified on 2011-09-26 15:48:07 GMT. 0 comments. Top.

    So they finally got their man. The death of Osama bin Laden swept the Royal Wedding out of the newspapers without a trace. It’s as if the Royal wedding never happened or at best it now seems like a distant memory.

    It was an interesting contrast: the wedding of the 21st century representing something new and fresh, a beautiful young couple brought together by love and the promise of new life in the form of children; on the other hand the ugly and brutal death of America’s ‘public enemy No.1’

    And all this over the course of a few days.

    On the death of bin Laden, aside from the questions of legality and whether ‘justice was done’, both of which will be debated for the next decade, there was one aspect of the whole thing which I personally felt uneasy about: the euphoria and sense of moral rectitude with which the Americans celebrated the news.

    Was this more about vengeance than justice?

    The images of people gathering outside the White House in the middle of the night to celebrate a death is hardly the act of a society which prides itself on its Christian moral foundation.

    I am certainly no Christian scholar but I seem to recall the principle of an ‘eye for an eye and a tooth for a tooth’ as belonging to the Old Testament. If fact Jesus denounced the whole idea of an eye for an eye, and instead asked that ‘we love our enemies and do good to those that hate us.’

    Now, that may be stretching the friendship a bit in the case of Osama, but at the same time I don’t think Jesus would have approved of the blood lust displayed by the Americans. The images on the TV reminded me of the riots and uprisings we’ve seen in the middle east lately; driven by hysteria and hatred.

    Osama bin Laden deserved his fate, no doubt, but for President Barack Obama to declare that the world is now a safer place as a result, is somewhat premature, me thinks. Wasn’t it George W Bush who said, “God is on our side” after 9/11? Isn’t that what Muslims say as well, only they call him Allah?

    We are not really so different after all, given the same set of circumstances, are we?

    I’m interested in your thoughts so have your say….

    Ok! Tell me something I don’t know!

    Last modified on 2011-09-26 15:48:39 GMT. 0 comments. Top.

    About 20 months ago I attended an information (self promotion) seminar hosted by a well known and respected property analysis company. The person conducting the seminar was a well known, respected and often quoted in the media, economist.

    It was around the time when the United State Federal Reserve (the equivalent of our Reserve Bank) was creating money out of thin air at the push of a button and calling it quantitive easing or QE. This is an intelligent sounding title which means nothing to the average punter but is actually about debasing the currency.

    It is a practice which has been used for hundreds, if not thousands of years to devalue the local currency, in this case the US dollar. This causes inflation, which means that while commodity and asset prices increase, the real value of debt decreases.

    The United States has a level of debt which is virtually unrepayable. The amount varies depending of which source you refer to, however, it is in the trillions, and increasing. In other words America is hocked to the eyeballs and there is no relief in sight.

    This is why the US Federal Reserve is creating and exporting inflation to the rest of the world along with its destructive consequences. More on this later.

    Back to the information (self promotion) seminar…

    I asked the celebrity economist about the inflationary effects of the Federal Reserve’s quantitive easing and the possibility of rising interest rates to combat it and the effect it would have on the property market. From memory interest rates were around 1.75% lower than they are today.

    He replied that QE would have no effect on inflation and that deflation was the real problem and Australian house prices would continue to increase! This was in 2009 when the market was surging along thanks to Kevin Rudd’s stimulus package in the form of the First Home Buyers’ boost.

    The expert economist dismissed me when I pressed him on rising inflation and higher interest rates. After all what would I know about economics? I’m not a celebrity, just another ignorant real estate agent.

    Anyway, twenty months and seven interest rates rises later, it seems inflation is now a global phenomenon and no more so than in Australia. The Reserve Bank (RBA) left rates on hold in May for the sixth month in a row. However, RBA Governor, Glenn Stevens, has hinted strongly that if inflation continues to rise (as it did in the March quarter) especially with the impending impact of the mining boom and wages claims by trade unions, there is a strong likelihood that interest rates will have to rise before too long.

    This is a real concern for homeowners who have purchased over the past 2 or 3 years at relatively low interest rates, and borrowed 95% of the value of the property, at close to their maximum borrowing capacity. Not only have property prices fallen (and are still falling), but repayments have increased significantly thanks to 7 interest rate rises since October 2009.

    Brisbane and Perth have the weakest property markets in the country at the moment. How this can be in the midst of the biggest mining boom in 100 years is a mystery to me, but then again I am no economist.
    However, the good news is, if you have owned your property for 5 years or more and are selling and buying in the same market, it is a great time to upgrade, because everything is relative. The more expensive property you are intending to buy is relatively cheaper now.

    If you have borrowed up to your maximum to buy in the past 3 years, things are not so good. Taking into account fees, interest, stamp duty, etc, you may be facing a net loss if you sell today. Better not to sell if you can avoid it. Property after all, has always been a good investment over the long term, and should continue to be, so you need to be patient.

    Still if you do really NEED to sell for financial reasons, better to take the pain now and at least be free from the stress of excessive debt, and the effect it can have on your health and happiness.

    Next time – Negative Gearing, “the Sacred Cow”.

    I’m interested in your thoughts so have your say….

    “… bye, Sweetie”

    Last modified on 2011-09-26 15:49:18 GMT. 0 comments. Top.

    So said my 4 year old granddaughter’s kindy teacher as my granddaughter left the classroom with her mother at the end of term.

    Then it dawned on the shocked teacher what she had said, and, in a state of panic, quickly retracted her ‘… bye Sweetie’ and instead said ‘.. bye Ellie’. The teacher then went on to explain to Ellie’s mother that they are supposed to use only the child’s proper name rather than terms of endearment such as ‘sweetie’ etc.

    What has the world come to, and in particular what has our education system come to?

    I listened to an interview on ABC 720 last week where morning presenter Geoff Hutchison was interviewing a high ranking official from the education department. They were discussing the issue of teachers having physical contact with children. Apparently teachers are not supposed to have any physical contact with their students at all.

    Geoff asked the question about what happens if a 5 year old falls over in the playground and becomes distraught or for some other reason becomes emotionally upset and just needs a consoling arm around the shoulder. The official replied that teachers were trained to respond to these students in a way which did not involve them having physical contact with the child.

    Excuse me, did I hear correctly?

    It is little wonder that teachers have lost control of the classroom and are becoming increasingly frustrated by a system which continues to set new standards in political correctness.

    George Orwell would be chuckling in his grave.

    Interested to hear what you think! Back to economic matters tomorrow.

    I’m interested in your thoughts so have your say….

    Agents Overprice Properties!

    Last modified on 2011-04-19 13:14:27 GMT. 0 comments. Top.


    This may come as a surprise to you, but this is what my friend Geoff Baldwin, WA managing director of Remax was reported as saying in The Weekend West on Saturday April 16, 2011.

    Geoff said, “… many agents were proposing drastically inflated sale prices in free evaluations in a bid to win clients.” This practice is known in the industry as ‘buying the listing’, and what Geoff is saying is absolutely true.

    Delibrately inflating the price of a property for the purpose of securing the business is not only dishonest and unethical, it means that the property usually sells for a lower price than it otherwise would have, and also causes unnecessary stress to the sellers, both emotionally and financially.

    When it comes to estimating the likely selling price of a property it is possible to make a mistake; even qualified valuers make mistakes from time to time. After all there are many factors which contribute to the value of a particular property including the overall rate of inflation, level of unemployment and consumer confidence, just to name a few.

    However, all things being equal, comparing recent sales in the area is usually the most accurate method. Often there can be a big difference between what a property is listed for and the price at which it actually sells, so it is important to compare on the basis of final selling price rather than listing price.

    Nonetheless, taking all that into account the final arbiter is the market itself. That is, a buyer and a seller who are fully informed and of reasonable mind, with realistic expectations, operating in a free and open market.

    Of course from time to time we do have freak markets such as the one in 2006, when property prices increased by 42% in a 12 month period. It was not unusual for buyers to be offering tens of thousands over the asking price in fear of missing out. In that sort of market it is virtually impossible for an agent (or valuer) to accurately appraise a property. Thankfully, we only see those out of control markets every 18 years or so.

    So back to the question of agents over pricing properties – how to counter it?…….

    One way is to make the agent guarantee in writing that if he or she does not achieve the price quoted, then the seller is relieved of the obligation to pay the selling fee. Unfortunately, you won’t find many, if any, agents who will give such a guarantee. But not to worry, I have one such guarantee on this website which anyone, including agents, are free to download right here.

    If you or anyone you know is thinking of selling in the near future, you can do yourself or your friend a great service by using our “Home Sellers Protection Guarantee”. It is more important now in the current flat market than ever before to get the price right. It doesn’t matter how much marketing you do or how many home opens you have, if the price is too high the property will not sell.

    As Geoff Baldwin says “Get real on home prices.”

    We are feeling pretty generous this Easter, so I am giving away 10 FREE copies of Neil Jenman’s book “Don’t Sign Anything”, valued at $29.97.

    Neil is the Real Estate Consumer Advocate real estate agents love to hate.

    To receive your FREE copy (remember we are only giving away 10), please send us an email with your name and address or call us on 9444 4099 before 5pm on Thursday April 21, and we’ll have it delivered direct to you.

    Have a great Easter Break!

    Men are from Venus, Women are from Mars

    Last modified on 2011-04-18 16:18:34 GMT. 0 comments. Top.


    I know once upon a time it used to be the other way around but in this politically correct (PC) world we live in everyone is the same, according to Big Brother. If you want to know more about Big Brother, you must read George Orwell’s classic, “1984”. While you’re at it read “Animal Farm” as well.

    George Orwell was one of the greatest writers of the 20th Century and while “1984” and “Animal Farm” are two of his most famous works, he was a prolific writer and produced many classics.

    So where are we going with this???

    For a start the idea of women fighting alongside men in the front line of battle. Women have been involved in the armed forces for a very long time, at least as far back as World War I, and even before then. I have no doubt that women can kill an enemy as well as any man, given both are trained to do so and are up to the task in the first place.

    The political problem as I see it is…….

    bringing young men and young women together in close proximity for an extended period of time, in potentially life threatening circumstances. Young men and young women are naturally attracted to each other for obvious reasons other then their mutual admiration for each other’s intellectual capacity. There is the obvious physical and sexual attractions; and this in itself is problematic.

    Just witnessing the current sex scandal at the Australian Defence Forces Acadamy (ADFA) should be proof enough of what can happen. And apparently this is no isolated incident. It wasn’t so long ago that HMAS Success was in the news for issues around sexual harassment and intimidation of female recruits.

    As much as the academics and theorists would like us to believe otherwise, sexual attraction between men and women does exist, for good reason, and no amount of wishing it otherwise will ever change that fact. It’s what makes the world go round!

    Life is not so much about idealism and lofty theories about equality, there is also a more important practical, every day side of things which Big Brother would prefer to ignore. It may be okay to have men and women together in the front line when we are not at war, but in a real life battle against a determined enemy, where there is no room for personal feelings or sentimentality, there are huge potential risks involved.

    I wonder what our front line soldiers think? What do you think?

    Petrol to Hit $2 a Litre!!!

    Last modified on 2011-04-11 10:32:26 GMT. 0 comments. Top.


    Some economists are predicting record petrol prices of $2 a litre over the next 12 months. Sounds a bit far fetched doesn’t it??

    It doesn’t seem that long ago, eleven years to be exact, that petrol was selling for 60 cents a litre and predictions were for $1 a litre. No one believed it at the time and we were up in arms when it did eventually happen. Oh for $1 a litre today!

    At $2 a litre it would cost $120 to fill the average medium sized sedan. Now that is a huge chunk out of the family budget. Throw in a carbon tax, flood levy, higher electricity prices and maybe an interest rate increase or two and
    you can understand why some trade unions are starting to push for higher wages.

    From the Reserve Bank’s perspective, higher wages leads to higher inflation which in turn means higher interest rates.

    I saw an otherwise unbelievable headline in the Australian Newspaper on April 7, 2011, “From Boom to Gloom in the West”. Apparently according to figures released by the Chamber of Commerce and Industry (CCI) the WA economy
    contracted in the last two quarters of 2010; 0.11% in the September quarter and 0.44% in the December quarter.

    So under the currently accepted definition this means that Western Australia is in a technical recession.

    With the lowest unemployment in Australia at around 4.2% and the biggest mining boom in over a centruy it is hard to believe we could be in a recession. Premier Colin Barnett certainly doesn’t believe it. However, all you have to do is wander around a few shopping centres and talk to the business owners. They don’t need official statistics to tell them business is flat.

    By the way housing finance applications fell by 5.6% in February, however as far as the residential real estate market goes, experience tells me there is a buyer for every property, without exception, in any market. So if you really want to sell or need to sell, you can. Don’t be deterred by a ‘slow market’.

    Even in a ‘slow market’ properties still sell, it just means things could take a little longer. (-:

    To Save or Not to Save….?

    Last modified on 2011-04-05 00:36:46 GMT. 0 comments. Top.


    If you are a baby boomer, like me, you may remember your parents saying to you that the secret to a happy and prosperous life was to work hard, save hard and above all else do not go into debt.

    If you are a Gen Y you can be forgiven for thinking this philosophy was something out of the Dark Ages. However, I can assure you it is not.

    You’ve probably heard on the news or read in the newspapers that despite the biggest mining boom in over 100 years, some (probably most) sectors of the economy are doing it tough. For example, retail sales have collapsed, building approvals are down, established home sales are the lowest for 20 plus years and credit growth has been slowing for quite some time.

    One of the reasons we are given for this depressing state of affairs is that we, the consuming public, are saving too much of our income rather than borrowing and spending.

    So what does this mean….

    Apparently we are saving 10% of our gross income, post GFC, as opposed to around 2% pre GFC. You may recall when the Global Financial Crisis hit in 2008, Kevin Rudd (remember him?), gave everyone a nice gift in the form of $900 handouts which we were instructed to spend. Some did, some didn’t, some paid down debt, some saved for a rainy day.

    Every dollar we save or use to pay down debt, is a dollar we don’t spend in the shops. Hence the reason retailers are struggling to make profits. Of course, this also applies to other discretionary spending.

    Now that the handouts, including the First Home Buyers Boost have run out the economy as a whole is slowing significantly, apart from mining. In my travels around Leederville and Mount Hawthorn, I speak to a lot of people, including many small business owners and they all tell me things are slow.

    However, in my experience there is always business to be had if you are creative and resourceful, (and work hard).

    The point of all this is that our modern economy is built on a foundation of debt and spending to acquire more, more, more (things we don’t need). This all seems a bit back to front to me. What happened to the old virtues of hard work, thrift and saving?

    Maybe they do belong in the Dark Ages?

    Anyone got a crystal ball???

    Last modified on 2011-05-27 04:36:53 GMT. 0 comments. Top.

    I just read an article in the real estate section of the Sunday Times (27/3/2011) by a well known and respected CEO in the Perth Real Estate industry.

    The articles was entitled “US Housing Bounces Back”. I have known the author Geoff Baldwin for over 20 years from our time together at Roy Weston Real Estate (remember them?). Geoff is a mover and shaker in the industry and I respect his knowledge of real estate matters. However, on this occasion, I must disagree with some of his assertions.

    Geoff has just returned from a real estate convention in the USA attended by some 5000 salespeople from 80 countries. Geoff reported that “properties in the US were now selling readily and investor activity is very strong, demonstrating a new confidence in the market and underlying the belief that prices have bottomed out.”


    At this point I refer to a report from USA Today The report is headed “Home sales Fall 9.6% in Feb; median price lowest in 9 years.” Reading this report it is clear that the US housing market is still a long way from recovering and in fact values are still falling. A very large number of housing loans in the US are due to be reset in the next six months at higher interest rates and it is feared that this will trigger a new round of defaults.

    Add to this the disaster in Japan, the world’s third largest economy, the current political unrest in the middle east and the escalating cost of fuel as well as depressed economies in Europe and it is clear the US economy is a long way from any meaningful recovery, despite vested interests trying to talk it up.


    Back to our quote from Geoff Baldwin:

    “This is important news for the Australian economy as we have historically reflected and followed US economic sentiment for the past 100 plus years.” Well that used to be the case but if we look back to the GFC and the Great Recession which followed in the United States along with unemployment at 10% plus, and house prices falling by 30% and more in some cases, the old adage that when America sneezes, Australia catches pneumonia simply does not follow in this case.

    In fact on the contrary Australia’s unemployment rate only went as high as 6.5% and is now at 5% and falling, Australia is the only developed economy in the OECD which did not experience a recession, and house prices have stagnated or fallen slightly but not the 30-40% they have in Europe and America.

    Geoff says in his penultimate paragraph “As the US market continues to improve(?), so too will our local market, reflected in a steady strengthening throughout 2011 and then significant upward movement in 2012.”

    Well, it is clear that the US market is not improving and the market in most states in Australia is stagnant or falling. In fact it has been reported by many long serving real estate agents that 2010 was the worst market in 20 years as far as number of sales is concerned.

    The fact is there has been a major shift in consumer sentiment over the past 2 years and many people are very cautious about debt. There are currently over 17,000 properties for sale in Perth against a long term average of 12,500. It is still very much a buyer’s market, but what I am hearing from a number of buyers is that they expect prices to be lower by the end of the year.

    Personally I would prefer to put my trust in the general public when it comes to forecasting where prices will be in a year from now; after all, they are in the market place, every day and have a better feel for the market than our celebrity economists and real estate agents.

    In 25 years I have never heard a member of the real estate industry correctly predict the market. For example, did anyone predict the 42% increase in house prices in the 2006 boom, or the 10.2% decline in prices in 2008, or the 32% reduction in the number of sales in 2010?

    There are too many external factors which influence a market, whether it be the sharemarket or property market, not least of which is consumer sentiment. Consumer sentiment is so unpredictable and can literally change with the weather. As much as economists would like us believe that the direction of economic growth can be predicted using fancy and complex computer models, they leave out the one important element which overrides everything else: “desire”.

    Without desire nothing happens. That’s the truth!

    Its Official… Auctions are No Good!

    Last modified on 2011-03-30 00:57:53 GMT. 0 comments. Top.

    President of the Real Estate Institute of WA (REIWA), Mr Alan Bourke, was reported in the Sunday Times (March 6, 2011) as saying that auctions are a poor choice for sellers.

    With almost 17,000 homes on the market in Perth, buyers are ever cautious with their money, following the GFC, in a market which has hardly moved since 2007. In such a market Mr Bourke said, auctions limited the number of buyers a property can attract. He said, “Today’s buyers wanted the extra safeguard of a property purchase being subject to finance or subject to the sale of their own home”. Auctions do not allow for that.

    Very few people are in a position to offer cash for a property and then settle in 30 days! Therefore auctions greatly reduce the number of buyers able to bid on the day. Of course real estate agents love auctions and some of the larger franchise groups are actively promoting auctions. The reasons are, of course, obvious…..

    With an Auction Program the agent gets maximum exposure, at the seller’s expense. It doesn’t matter to the agent whether the property sells on the day. He has collected possibly dozens of enquiries which he can then use to obtain more business.

    And all at the seller’s expense, which more often than not, runs into the thousands of dollars.

    DON’T BE FOOLED! – Auctions get lower prices; that is if they sell at all!

    For more truth on auctions please visit Neil Jenman’s website.

    Finally, here comes the price crash!

    Last modified on 2011-03-30 00:58:22 GMT. 0 comments. Top.

    That was the title of an article I read the other day by Kris Sayce, editor of the daily blog “Money Mornings”. Now you may or may not agree with Kris’s sentiments but nonetheless, his views are worth consideration as an alternative to the usual spruiking of vested interests in the real estate and banking industries.

    Over the past 30 years or so we seem to have acquried an unhealthy obsession, as is the case with other English speaking countries, with house prices.

    There was a time, in the good old days, when houses were seen as a place to provide shelter. Now it would be a rare event to go to a social gathering without someone asking me “How is the real estate market?” and then proceed to tell me how house prices always go up!

    The truth is, house prices have become so expensive that, according to a study by Bankwest, a person on the average wages of around $47,000 per annum, is unable to afford the median priced house of $485,000.

    Maybe this is the reason it takes two incomes to provide shelter for the average family! What are the social consequences of that?

    Do you know some people actually think real estate agents set property prices? If only!!

    Of all the “expert” predictions by the real estate industry I have seen over the past 25 years, I don’t think even one has come remotely close to getting it right. Same with economists and stockbrokers!

    If real estate agents, economists and stockbrokers had the power to set prices, by definition we wouldn’t have a free market economy. We would have a command economy, which is what they have in China.

    A free market is exactly that; the market determines the value of a good or service. Real estate agents and stockbrokers simply interpret in hindsight, what the market has done in the past.

    The truth is we don’t even know whether prices are going up or down at present. It is only in hindsight, that we can say what has happened.

    Anyway, check out the article by Kris Sayce on his daily blog at www.moneymorning.com.au

    RBA Rates on Hold

    Last modified on 2011-03-05 09:01:57 GMT. 0 comments. Top.

    Reserve bank governor Glen Stevens has flagged that interest rates are likely to be on hold until at least the middle of the year, saying the central bank is “ahead of the game”, in its fight against inflation.

    However, the rate rise cycle appears far from over as Mr Stevens warned that people would need to watch spending as a flood of income flowed through the economy.

    The big fear for the Reserve Bank is rising rates due to demand for labour, resulting in inflationery pressures.

    If inflation looks like trending up towards the end of the year, the bank will certainly increase interest rates to slow the level of consumer spending, and excessive wages rises.

    Mr Stevens also said the reason they put interest rates up back in November was because of the high prices Australia is getting for its exports like iron ore and coal and it needed to take the heat out of the economy and they thought it was the right decision.

    You can listen to the full story here:

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    Say ‘No’ to Vendor Paid Advertising

    Last modified on 2011-02-22 16:39:42 GMT. 0 comments. Top.

    Anyone who has sold a property through me will know my views on Vendor Paid Advertising (VPA), you know, that practice where the real estate agent charges the seller thousands of dollars (usually upfront) to market their property.

    Basically this is simply a way of shifting the financial risk from the agent to the seller.

    Since the advent of the internet, it has been shown that approximately 95% of all buyer enquiry comes from the internet. So where is the justification for agents charging sellers for advertising?

    I recently came across an interesting article by well known consumer advocate Neil Jenman on this very topic with which I totally agree. He says and I quote:

    “It’s probably real estate’s biggest con. And it’s affecting thousands of property sellers every month.

    It’s the advertising stitch-up and here’s how it works.

    You decide to sell your property and you call the agent. The agent tells you that you’ve got a fine home and it’s likely to fetch a top price. All very plausible.

    But then the agent starts to talk about the M word – “marketing”. In effect, the agent is not talking about ‘marketing’, he’s talking about ‘advertising’. And you are about to be conned into coughing up several thousand dollars, most, if not all of which, will be totally wasted.” Read the rest of Neil’s article…..

    Or for further tips on how to achieve a risk free sale visit Our tips for Sellers

    2010 – Annus Horribilis

    Last modified on 2016-02-19 01:13:08 GMT. 0 comments. Top.

    2010 – Annus Horribilis

    Most real estate agents, if they are being honest will agree that 2010 was a year to forget. In my 24 years in the business it is the worst year I have experienced and that includes the recession of 1990-91. A fellow agent said to me recently, about 2010, that there were times when he had to call his own phone number just to make sure the phone was still working!

    Consumer sentiment is a funny thing in that it is so unpredictable and a mystery as to why collectively the mood changes. It is a perennial problem for economists, businesses and governments as it affects major investment decisions involving billions of dollars. The wrong decision(s) can result in massive losses for big business, which subsequently affects employment.

    Fortunately, so far at least, the level of enquiry and inspections has increased significantly since the Christmas break and January was our best month for quite some time in terms of the number of sales and buyer inquiry. Buyers are back in the market and making offers.

    That’s the good news.

    The bad news is that there is still an excess of stock on the market and sellers are having to lower their expectations to meet the market. That’s not too bad if you are a seller and have owned your property for more than five years. Thanks to the boom of 2006 (in Perth) when property prices increased by 42% there has been virtually no real increase in the median price since 2007. In fact Perth has been the worst market in Australia over the past three years with Brisbane not far behind.

    However, the prospects for 2011 are looking bright notwithstanding any major economic shocks as the income from the mining boon starts to flow through the WA economy.

    This is not expected to result in a property boom but hopefully the worst is behind us and at least genuine sellers will find it easier to find a buyer, so long as they are prepared to meet the market. After all if you are buying and selling in the same market, it is all relative.

    Best wishes

    Bernie Kroczek
    You’re as safe as houses with us.

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