Tag: local market

How to set a reserve price for auction

Posted on by jacintaj

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How to set a reserve price for auction

As part of our on-going series on ow to sell your property by auction, this month David Holmes, National Manager, LJ Hooker Auction services, looks at how to set a reserve price and what factors you should consider.

 

What is a reserve?

A reserve is the minimum figure you would be happy to sell the property for.  If the bidding reaches the reserve the property it will definitely sell to the highest bidder.  The good news is any bids achieved above the reserve is essentially bonus money in your pocket!
 
In some instances, if bidding doesn’t go over the reserve, then a sale is negotiated between the vendor and any interested buyers.

When setting your reserve make sure you consider the following:

1. Your initial appraisal

At the beginning of your campaign your agent would have appraised your property.
 
To get to this figure they would have conducted a comparative market analysis and looked at similar properties that have sold within the last 90 days.  They would have considered current competition, wider market trends and your properties structure and conditions to arrive at a value that they believe you could achieve if you sold your property at that point in time.

2. Buyers sentiment

Auctions often achieve high sales prices because 2 or more emotional buyers keep bidding against each other, motivated to buy the property.  Understanding buyer sentiment is important when setting your reserve.  Talk to your agent and see if there are any passionate buyers, what does the agent think they would be willing to spend, what is the general feeling at the open homes?

3. Advice from your agent

Your agent is at the coal face of your marketing campaign, they are hosting open homes, fielding calls, sending contracts, following up attendees after inspections.  They know how much interest there is in your property plus any positive or negative feedback.  They know what the market is thinking about your property and are an important resource to tap into when setting your reserve.

4. Any offers and market feedback

It is important not to get sentimental about your property and set an unrealistic reserve.  It is very important to talk to your agent, to review any pre-auction offers and listen to market feedback from your agent.
 
Over the course of the auction campaign, which is normally 3-4 weeks, the property market can fluctuate and it’s important to factor these changes in when setting your reserve.  You want to be “in the market” not “on the market”.  Consider carefully – are you prepared to sell for what the market is prepared to pay?


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    Selling? Do you understand the key auction terms?

    Posted on by jacintaj

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    HIGHLAND PARK | NERANG | CARRARA | GOLD COAST

    Selling? Do you understand the key auction terms?

    You may have heard many of terms below, but you many not know what they mean.

    Here is an overview of the main auction phrases:

    1.    Opening bids & bidding

    After the auctioneer has run through the property being auctioned, detailed the features and an overview of the what is included with the property one last time, they will invite the buyers to put in an opening bid – or in other words for someone to place the first bid on the property.  Other interested parties will then bid on the property in increments until either the property is sold or it is passed in (not sold).

    2.    Vendor’s Bids

    A vendor’s bid is used to encourage bidding from buyers. Think of it as a momentum bid…..a bid to keep buyers interested, to keep the process flowing.  This is placed by the auctioneer on the vendor’s behalf to assist the property reaching its reserve price.

    The amount of the bid needs to be below the reserve price and must be disclosed to all buyers in the interest of transparency.

    3.    Dummy Bids

    A dummy bid on the other hand is a false bid made by a non-genuine buyer.  All dummy bids are illegal and attract significant penalties for the vendor, the dummy bidder and in some cases the agent.  Professional auctioneers will not engage in dummy bidding.

    4.    Bidding increments

    This is the amount by which bids increase during an auction and is usually dictated by the auctioneer.

    5.    On the Market and Passed In

    If the bidding does not reach the reserve price or a price the seller is happy with, the property may be passed in. In this case your agent will encourage interested parties to stay behind to negotiate a sale with the agent.   Don’t panic, in my 12 years’ experience a sale is normally made soon after the auction.

    If the bidding doesn’t reach the reserve price, the auctioneer will ask you if you are willing to adjust your reserve and sell the property for the highest price. If you are, the auctioneer will announce to the crowd that the property is on the market or in other words, that it will be sold to the highest bidder.

    The final and usual scenario is when the bidding has reached the reserve price.  The auctioneer will briefly stop the auction and confirm with the seller that they are happy to sell at that price.  If they are the property will be sold to the highest bidder.

    Pre-Auction Offers

    When you list your property for sale by auction, you still have the ability to accept pre-auction offers before the auction day deadline.  All pre-auction offers need to be submitted in writing to your agent who in turn will present it to you for consideration.

    However, in order for this to be rewarding, the offer needs to be solid and stand out to catch your attention. Otherwise, it may be a good plan to allow your property to go to auction and see what the market will give you for your home.


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      The auctioneers job and rules of auction

      Posted on by jacintaj

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      HIGHLAND PARK | NERANG | CARRARA | GOLD COAST

      The auctioneers job and rules of auction

      Auctions can be daunting – but they don’t need to be! 

      An auction can be a great way to buy or sell, as the bidding process is transparent. This series of blogs will help explain the auction process.

      Essentially the role of the auctioneer is to control a public negotiation process where potential buyers are competing to buy a property.

      The auctioneer has to make sure the process takes place in an orderly and legal manner and they must always conduct themselves professionally. A good auctioneer though stands out from the rest as they use tools like humour and wit to make the buyers feel more comfortable.  I’ve found the more relaxed they are, the better the results.

      Auctioneer announcements

      Before the auction commences the auctioneer will introduce themselves and the agency they work for and they will announce terms and conditions in accordance with state law and any rules that surround your auction in particular.

      Following this the auctioneer will give a detailed description of your property and list its valuable features and benefits.

      Rules of auction

      Terms and conditions of the auction are on display before and during the auction and are always available from the agent throughout the campaign.   
       

      Bidding at the auction

      Following the introduction from the auctioneer, the auction will get under way.  The auctioneer will call for an opening bid or in other words the first bid from the crowd.  

      From this point onwards the auctioneer will control the flow of the bidding and will encourage bidders to go higher, but at the end of the day, each bidder decides how much they are prepared to pay and the seller decides whether they’re prepared to sell at that price.

      All bids must be acknowledged and recorded, so there are no misunderstandings over who has bought the property and for how much.  And no bid can be accepted after the hammer falls.

      Auctions by nature are often emotionally charged, but a good auctioneer knows how to take the pressure out of this very serious process by making the buyers feel comfortable.  They have the ability to get the best out of the buyers and to achieve the best possible price for the seller.

      We can’t stress enough the importance of choosing a professional auctioneer with a commanding presence as they are the decider in all disputes.


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        Local Market Report – July 2018

        Posted on by jacintaj

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        HIGHLAND PARK | NERANG | CARRARA | GOLD COAST

        Local Market Report – July 2018

        Every month the market changes and staying up to date with the latest information about your local market is a great advantage if you are thinking about buying, selling or investing.


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          Downsizing contribution into superannuation FAQ’s

          Posted on by jacintaj

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          Downsizing contribution into superannuation

          As of July 1, 2018, home owners aged 65 or over will be able to make an additional non-concessional contribution of up to $300,000 from the proceeds of selling their principal residence, if owned for 10 years or more.

          Both members of a couple will be able to take advantage of this measure for the same home; meaning $600,000 per couple can be contributed to superannuation through the downsizing cap.

          This initiative is aimed at reducing the barriers to downsizing with the objective being to encourage some older people to downsize from homes that no longer meet their needs and free up housing stock for younger families starting out.

          Here are some frequently asked questions to help you understand what it means to you.

          Why has the government introduced this incentive?
          Older home owners are currently unable to invest proceeds from selling their home into their superannuation which has been discouraging older people from downsizing. This means that many larger family homes sit occupied by only singles or couples. Encouraging downsizing should enable more effective use of the housing stock by freeing up larger homes for younger, growing families.

          What will be the impact of the new downsizing incentive?
          It is hoped that this measure will encourage some people to downsize into housing that is more suitable to their needs, freeing up larger family homes for younger families.

          It will assist people aged 65 and over who are currently unable to contribute all or any proceeds of the sale of their home into superannuation because of the existing restrictions and caps.

          What property can you sell to get this incentive?
          This measure will apply to a principal place of residence held for a minimum of 10 years. Both members of a couple will be able to take advantage of this measure for the same home, meaning $600,000 per couple can be contributed to superannuation through the downsizing cap.

           

          Why do people downsize?
          Many Australians downsize their home because they:
          Are approaching retirement
          Have become empty nesters
          Want to free up some money to enjoy their lifestyle
          Are overwhelmed with the upkeep and maintenance of the property
          Realize they have just too much empty space

          What are the benefits of downsizing?
          Reducing the size of your living space has many financial benefits
          Reduced mortgage payments
          Less real estate taxes
          Lowe utility costs
          Lower insurance costs
          Less maintenance costs
          Enable you to reduce the clutter and enjoy a simpler life
          Enjoy a simpler lifestyle, less cleaning, less work to do in the garden and less cost to maintain
          After July 1 2018 a key benefit is being able to add up to $600,000 per couple into your superannuation fund.

           

          How old do you need to be to be eligible for the Government incentive?
          You must be 65 years or older to be able to make the additional non-concessional contribution to your superannuation fund.

          What is the eligibility criteria for the incentive?
          The ATO website states you will be eligible to make a downsizer contribution if you can answer yes to all of the following:

          • You are 65 years old or older at the time you make a downsizer contribution (there is no maximum age limit)
          • The amount you are contributing is from the proceeds of selling your home where the contract of sale was exchanged on or after 1 July 2018
          • Your home was owned by you or your spouse for 10 years or more prior to the sale
          • Your home is in Australia and is not a caravan, houseboat or other mobile home
          • The proceeds (capital gain or loss) from the sale of the home are either exempt or partially exempt from capital gains tax (CGT) under the main residence exemption, or would be entitled to such an exemption if the home was a CGT rather than a pre-CGT (acquired before 20 September 1985) asset
          • You have provided your super fund with the downsizer contribution form either before or at the time of making your downsizer contribution
            You make your downsizer contribution within 90 days of receiving the proceeds of sale, which is usually the date of settlement
          • You have not previously made a downsizer contribution to your super from the sale of another home.

          How much can you add to your superannuation as part of the downsizer contribution?
          If eligible, you can make a downsizer contribution up to a maximum of $300,000. The contribution amount can’t be greater than the total proceeds of the sale of your home.

          Example 1

          A couple sell their home for $900,000. Each spouse can make a contribution of up to $300,000.

          Example 2

          A couple sell their home for $500,000. The maximum contribution both can make cannot exceed $500,000 in total. This means they can choose to contribute half ($250,000) each, or split it – for example, $300,000 for one and $200,000 for the other.
          Where do I get more information about the downsizer contributions scheme?
          Visit the ATO website here

          *Source:
          Note: The downsizing and super contributions proposal was announced as part of the 2017/2018 Federal Budget (May 2017 Budget). The proposal became law on 13 December 2017.

          This article was originally published on ljhooker.com.au


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            The First Open Home at 4 Balfour Crescent Highland Park

            Posted on by jacintaj

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            HIGHLAND PARK | NERANG | CARRARA | GOLD COAST

            Open Home Results
            4 Balfour Crescent

            The first open home for 4 Balfour Crescent, Highland Park was held on Saturday, May 5th.

            A great entertainer’s home set on over a quarter acre with a big backyard for the kids.

            Jane was hopeful her marketing would pull a good crowd.

            Was it a success? Let’s find out!


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              Goodbye, 5 Venn Court, Mount Nathan

              Posted on by jacintaj

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              HIGHLAND PARK | NERANG | CARRARA | GOLD COAST

              Goodbye, 5 Venn Court

              5 Venn Court, Mount Nathan will soon be home to a new family.

              I went to see my seller Justin before he moved on to his beautiful new home.

               


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                Local Market Report for April 2018

                Posted on by jacintaj

                My goal is to provide you with the information you need to make confident decisions about property – whether you are buying, selling, investing or renting.

                LJ Hooker Nerang have created this report which details local market conditions and how property is performing in your area which at times can be very different to the combined performance of the capital cities. Let us help you stay on top of changes in your local property market every quarter.

                If you would like to be mailed (or emailed) a copy of this report, simply leave me a message below and I will organise that for you.

                Regards,

                Jane


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