Fair play in contracts

You have found the home you want to buy and live in. You both love it. You sign a contract at a negotiated price. Two days after signing the Contract you phone and ask the agent if a Parent can inspect the property.

What is the problem with this you ask? The problem arises when buyers lose respect for the seller, in one case I had nine relatives inspect a property after a couple had signed a Contract. Legally, you are not entitled to return to the property until the Pest and Building is being conducted. I do not however, see the point in delaying the process, so usually agree to the Parent inspecting. Let me tell you that in my many years of experience the result of this is inevitably a crashed Contract.

If you do not involve your Parents in the process of signing a Contract by asking the Agent for a second inspection prior to signing the Contract, the Parent, or interested party feels slighted and will always find fault with the property – either correctly or incorrectly is of no importance.

My advice to young Buyers is always ask for a second inspection prior to signing a Contract. At that second inspection have all parties whose opinion you respect attend. Sellers get very (understandably) irate when a Contract crashes after 21 days on finance when no pest and building has been ordered and no valuation has been conducted, which would suggest that after the Parent or interested party has inspected you have changed your mind. The writing is already on the wall, so why wait until the 21st day to advise the Seller’s?

Pest and Building inspections are another bone of contention, a number of Buyers are using it as a further negotiating tool on the price. This is not the purpose of a Pest and Building, unless of course there is something that we as Agents and quite often the Owner themselves are not aware of – such as structural problems. You should act reasonably. If you are told a property has a fibro roof, then do not come back and ask for $15,000 off the price to replace the roof.

All Contracts are positioned in favour of the Buyer. You have 14 or 21 days to organise finance and have building and pest inspections. There is also a five working day cooling off period which applies to every Contract. The Seller on the other hand cannot change their mind, which occasionally happens.

Enjoy the experience of looking for your new home, make sure all interested parties are aware that you are thinking of purchasing and ensure they too have seen the property and agree with you on the purchase. Buying a new home should not become a war zone between Seller, Buyer and Agent. Each party must respect the other and a fair price will be paid. The whole experience can and should be very enjoyable.

Comments from my crystal ball

What confusing times we live in, we need a Crystal Ball to know the answers to some of your questions. "Is the New Year the right time to buy our first home, upgrade, stay put, or downsize." We are asked time and time again to help people with these huge and important decisions, so we have done some research for you. HAPPY READING.

To hopefully help you sort the wheat from the chaff we list some extracts from various sources including Andrew Carswell "The Sunday Telegraph and Stephen Johnson "AAP" among others.

Stephen says, "The first home buyer share of the mortgage market has risen to a seven year high in response to big rate cuts and generous grants to new home owners. Some 11,665 first time borrowers made up 23.6 per cent of the home borrowing market in November, the highest proportion since January 2002, a big jump from October's 19.5 per cent share, official data showed.

The Australian Bureau of Statistics (ABS) data also showed that overall home loan approvals rose for the second straight month in December while the popularity of fixed rate loans dived to a record low. The mortgage market also boosted by the Reserve Bank of Australia's (RBA) decision to slash interest rates by one percentage point in October and another .75 basis points in November, followed by one percentage point in December taking the cash rate to a six and half year low of 4.25 per cent.

Expectations of more interest rate cuts appear to have affected the popularity of fixed rate home loans, which fell to a 2.5 per cent market share in November - the lowest proportion since the ABS starting collecting this date in 1991.
"Confidence in the property market is still a bit shaky and the economic uncertainy is still fairly high.

IS IT THE BEST OR WORST OF TIMES FOR REAL ESTATE? Andrew Carswell sifts through the evidence.

Many property fanatics are proclaiming 2009 as the best year in decades to buy a new home. But others vehemently disagree, arguing that house prices are due for a sharp correction.

At the beginning of 2008, 68.9 per cent of respondents for the Mortgage and Finance Assoc. of Australia/Bankwest Home Finance Index believe property prices would rise in the coming quarter.

The latest figures, out this week, show only 14.6 percent of respondents retained this optimism in the first three weeks of 2009, with 60 per cent believing we're heading for a decline in property values.

Can 60% of Australians be wrong?
Many property experts say: yes they can.

However, Residex property analyst John Edwards said the biggest factor weighing on property prices is unemployment, currently sitting at 4.4 per cent, unemployment has been tipped to rise as high as eight per cent in 2009 as the global financial crisis starts to hit home.

If those levels of unemployment become reality, house prices could slide.

"The areas that are in close proximity to industry/manufacturing areas or small business, probably have some more suffering to do" he said. Despite job uncertainty, Mr Edwards is positive on house values from the major Cities around Australia and swears by the simple motto: "As long as you pay the right price for the property, it is never the wrong time to buy". I totally agree with him.

"In every year, no matter what, there will be area's of the city that will grow well, and there will be, even in boom times, areas that do fairly poorly," he said.

"So it's not the wrong time to buy property in Brisbane; in fact, it's a good time, because now is the time when you are going to find some bargains. "If you've selected properly and in the righ area, you will not see a fall in value. They may stagnate, but not fall. Other's however, dismiss such optimism as naive. Mr Edwards' argument certainly does'nt sit well with notorious bears Steve Keen and Gerard Minack.

Both men - a professor at Western Sydney University and a Morgan Stanley economist, respectively - have predicted the sky to collapse on housing prices. Their conservative estimate is an accross the board fall of 30 per cent.

However, Shane Oliver, chief economist at AMP Capital, says the severe downturn in housing construction - marked by a whopping 34 per cent fall in residential building approvals in 2008 - should ensure any falls aren't quite so steep. "I've been forecasting 10% falls throughout the year" he said. "I don't think we are going to see the 30 to 40 per cent falls that some have been predicting, because Australia isn't going into a depression and we have an under supply of housing in Australia.

"Interest rates have made a mortgage more affordable, and the first home buyers' grant is helping, but the flipside is that unemployment has only just begun to rise and the rise will be substantial. Normally, when unemployment rises, it puts a big dampener on the housing market." Oliver also said the period of high unemployment during the 1990's put a significant downward pressure on housing prices.

Frighteningly, he now predicts 2009 will bring even bigger decreases because the household debt, relative to income levels, is now four times higher that in the 1990's. "Economic uncertainty has caused a decline in consumer confidence," he said.

In the past 12 months, the average days on market in the Brisbane metro area has increased from 30 to 50 days. "This indicates that buyer phychology is changing, as they have a more considered approach to transactions. But I believe this buyer sentiment will shift in the coming months, as property once again becomes the preferred asset to creating wealth, however, stay within a 10 or 12 klm radius of the Brisbane GPO.

Ed Logue AAP says "New Year 'perfect' time to buy your new home. "Australians could find 2009 an opportune time to buy property, but they should not expect a swift recovery in housing prices, he said.

Loan Market Group executive director John Kolenda says: "Mortgage holders in the coming year are likely to benefit from the lowest variable interest rates ever offered in Australia as the cash rate could fall to 2.5 cer cent."

He also said. "House prices have been sluggish across the eight capital cities in the past two quarters, down 1.8 per cent in the September quarter, this followed a 0.2 per cent drop in the June quarter.

Mr Craig James from CommSec (chief economist)said housing prices are tipped to rise 3 to 5 percent this year due to an undersupply of housing.

The peak home building body, the Housing Industry Association (HIA) chief economist Mr Harley Dale said, we forecast a recovery in the property market in the second half of 2009. We will be some months through 2009 before these lower interest rates translate into a significant stimulus to housing sector expenditure.

If you would like to discuss any of the above regarding selling you property, buying a property or any other concerns you may have please give me a call on 07 3426 8309 or 0411 664490 and I would be happy to meet with you. I HOPE YOU ALL HAD A GREAT CHRISTMAS AND NEW YEAR.

Where did the year disappear to? Did you think 2008 seemed to be a blink of the eye? Anyway, it was not the best year by any stretch of the imagination. Whilst the market definately slowed, I still have achieved very good results from July with 15 properties sold in Coopers Plains, Salisbury, Moorooka and Annerley, so I cannot complain, my Vendors were all very pleased with their results. However, one thing I have noticed is I now work twice as hard as I have ever had to work to sell a property, most Buyers crash a contract at least once, that is mainly due to the media saying property prices are going to fall another 20% or whatever, buyer remorse sets in very quickly and so it goes.

A lot of properties are on the market at the moment and that keeps the price much lower than when few properties are for sale, which has been the case over the past couple of years when it was considered a "Sellers market", it has become a "Buyer's market" over the past six months or so. Presentation should remain the main priority in this market to achieve the best price.

A very happy Christmas and New Year to all my blog readers and customers and if you would like some excellent tips to sell your home in the New Year and obtain top dollar please call me over the holiday period on 0411 664490.

Still many reasons to buy a home

Yet homeownership still offers the same benefits and advantages it always has.


These include:

• The opportunity to build equity and create wealth over time.


• Protection from rent increases or eviction at the whim of a landlord.


• The pleasures of a relatively larger home, suitable for a family, and with a backyard, garage or other auxiliary space.


• The freedom -- design review boards notwithstanding -- to improve, remodel or redecorate to suit one's own style and budget.


• A variety of lucrative income-tax breaks.


• Pride of ownership and a greater sense of security and stability.

Housing's nightmare has been intense and its aftereffects will not be easy to cure, yet there is still hope for U.S. housing markets and the many businesses that depend on them. Real estate, as an industry, needs to explain those benefits of home ownership to a new generation of understandably skittish potential homeowners, bring back the sexiness of home ownership and recreate the Australia Dream in a way that's meaningful today.

Home builders, mortgage brokers and Realtors intuitively understand this argument. But that understanding must be translated into action if home ownership is to regain its footing and brighten its faded glory. Here are some suggestions:

• Build smaller homes and discourage mansionization to make home ownership more affordable for more people, not just at the time of sale, but until long after the mortgage has been paid in full. Super big houses may have been mildly irresponsible in the good ol' days, but today they're inexcusable.


• Support sustainable housing that incorporates green living and proximity to public transportation.


• Introduce basic home loans that are easy to understand and free of hidden "gotchas."


• Reduce the cost and complexity of buying and selling a home and make the process friendlier, easier and more efficient.


• Encourage home buyers to spend only as much as they can truly afford to buy a home.


• Support home buyer education and counseling programs that create lifelong homeowners, not just renters-with-mortgages.


• Think long term. Encourage home buyers and homeowners to adopt financial plans and set aside savings for expensive home repairs.


• Adopt ethical standards and practices that rise above the competitive fray and instill confidence in home buyers and sellers.


• Reinvigorate community involvement. Step up. Volunteer. Take part. Be seen. Set an example. Make a difference. Social networking may be an effective way to generate new business, but it's no substitute for showing up in person and helping out.

And lastly, if you work in real estate, but don't already own your own home, maybe it's time for you to go ahead and buy one.

Marcie Geffner is a freelance real estate reporter and former managing editor of Inman News.

Questions and Answers Segment

Question: Can a seller ask buyers who claim their finance was rejected to provide proof?

Answer: Only if it is in the contract.

When a seller is presented with a contract of sale on their property and it is subject to finance, the seller will often ask "If they don't get the finance, can we ask to see the proof from the Bank?".

The answer to this is unfortunately is "no". While all contracts rely to a certain extent on "good faith" there is no obligation on the buyer to produce evidence that they have made an application for finance or what the outcome of that application was. What we can do however is add a special condition to the contract that will at least give you some protection from the buyer who simply "changes his mind" or "find something better" and that clause should read:

Should this contract be subject to finance and such application is declined by the financier or approved on terms not satisfactory to the buyer, further to the terms.

Seller's solicitor the seller shall be under no obligation to refund the deposit monies to the buyer.