HOUSE #2

Legally underquoting? How real estate agents get away with it

Anyone in who has searched though one of the online real estate websites recently, will understand the frustration experienced when price quotes are missing – and judging from Australia’s real estate obsession, it’s no meaningless amount. The REA group alone claim to get “8.8 million unique visitors each month”.

Putting a price on real estate, particularly with homes offered as private treaty, is not difficult.

Ideally, an assessment of the property is undertaken by the sales agent – one familiar with market sales in the immediate locality – and in conjunction with the vendor, a price is set that produces a happy balance between both vendor expectation and local comparable sales.

If interest is lagging in the two weeks following, the agent can negotiate with the vendor to reduce the range.

If sales enquiry is healthy – or an offer in excess of the range is achieved and subsequently rejected – the agent has the ability and ethical responsibility (in conjunction with their vendor) to change the quoted range to reflect the heightened level of interest.

For a proportion of agents acting within their “reasonable” duty of service, this still is the norm.

However, now it seems every second advertisement you click upon, whether auction or private treaty has “contact agent” or a similar term listed underneath the subheading “price”.

An enquiry then produces a roundabout of guessing games with somewhat wishy-washy lines totted out, such as “it’s too early to tell”.

In other words, the agent is indicating he has no idea where to place his price quote, because Joe Blogs buyer hasn’t yet walked through and in some occurrence of pure fiction, stopped to tell the agent exactly what he’s prepared to offer.

Whilst we all agree –in a free market – real estate can only be valued on what a willing buyer is prepared to pay; this is precisely why real estate agents appraise a property against recent comparable market sales in the first place.

When combined with good local knowledge, a market appraisal (not to be confused with a valuation,) will give the agent a very good indication of buyer demand – at least to the degree of being able to publish a negotiable price range that falls in line with vendor expectation at the outset.

I should pre-empt before going further that a proportion of agents I speak to will give me a realistic idea of vendor expectation upon enquiry – however, after years of complaints within the industry regarding those who still choose to lowball their ranges, or quote using a ‘plus’ price, (which in today’s terms, can mean anything from 5-30%) – there continues to be an overall lack of transparency within the sector, allowing a number of agencies (particularly when advertising for auction) to continue selling buyers “false hope” with no fear of reprimand.

To give an example, I recently attended an auction in the Balwyn High School zone.  The property was quoted at $700,000 plus, and later revised to $750,000 plus in the final week of the campaign.

A call to the agent indicated vendor expectation was “very reasonable,” they “hoped” to get over $800,000 I was told, but “who knows?”

The comparable data told a different story.  A price in excess of $850,000 should have been expected.  This selling agent – (an expert in the area) – would have known this, and the auction merely confirmed it.

The opening bid was $800,000 – $50,000 above the price quote.

The property did not reach its reserve until $900,000 – $150,000 above the price quote.

With competition from seven bidders, it finally sold for $1,011,000 – but not before a neighbour I’d been casually chatting to, leaned across and revealed the ‘wish’ price, when she whispered: “I know the vendor, and she wants a million.”

It’s time we valued the ethical side of our sales industry with a little more seriousness than pricing an item on e-bay – with a “quote ‘em low, watch ‘em go” mantra.

The continual problem with different methods of quoting – or lack thereof – runs to the very base of mistrust most buyers have against the real estate industry as a whole – and it’s a brush that tars us all.

Even in a buoyant market, recent data will give a good pinpoint of expectation for the agent to advise their vendor’s of an appropriate reserve at the outset – should market forces take over once the property has reached that reserve, so be it – it doesn’t change what should be a simple exercise.

It seems silly to point out the obvious, but no buyer likes to play guessing games when it comes to putting a price on an advertised listing – and neither should they have to.

Everyone understands real estate is a negotiated asset, however, the verbal game playing that now surrounds the sales industry is often laughable – ranging from “we don’t know yet” to “properties in the area are selling in the $400,000 and $500,000 range” – information a simple internet search could reveal.

When an enquiry is made regarding price, the one bit of information buyers require, is an accurate ‘ball park’ indication of vendor expectation.

Whether it’s too high, or at a reasonable level for market demand doesn’t matter – the vendor is signing the contract and therefore interested buyers need evaluate if it falls in line with their own budget constraints.

As for an assessment of value – if we were operating in an ideal world, buyers would ignore price quotes altogether and do their own research to establish market value, prior to spending hundreds on a pest and building inspections or solicitor fees chasing an unobtainable dream. However, despite recent improvements, closely comparable sales data is not always readily available.  In Victoria, many are still listed with undisclosed prices.

Computer-generated “estimates,” are just that – and more often than not, hopelessly inaccurate at providing the depth of information buyers require for effective negotiation.

Suburb reports are equally unhelpful, and while median data will give a clue of the dollars the majority market is spending, they are no help when evaluating individual property prices.

Using a buyer agent who has access to such information is all well and good – however, agents should not have a monopoly on data, and it’s reasonable to suggest buyers deserve a “hint” of vendor expectation by way of an accurate price quote before wasting time and money chasing a dream.

A handful of agencies dealing with the more volatile luxury end of the market, in which interest is discretionary, understandably choose to sell via ‘expressions of interest’. However, the decision to drop the quoted range all together, from a large percentage of real estate advertisements seems, in a good number of cases, to have been employed as “self-protection” from accusations of “underquoting” – a policy designed to protect the sales agent – and not one that’s necessarily in the best interests of their client.

Vendor expectation can often be inflated.  It’s made worst by the commission-based competition between real estate agents and their respective agencies – which can promote the need to “buy” a listing through selling false hope, or risk missing out to a competitor who promises they can achieve more.

Quoting low ‘legally’ is not difficult. In Victoria – which has fallen under more scrutiny that any other state – if the vendor does not disclose the reserve on the sales authority when assigning their listing to an agent, (which is the general practice and advised by most) the quote does not need to reflect vendor expectation.

Instead, an agent must provide a written estimate of market value, which if a range, should be no more than a 10%.  This range is theoretically based on comparable data, but finding near by results to establish a lower price is not difficult – should that be the intention.

For example, in the story I highlighted above – comparables on nearby streets outside the schools catchment area would have placed the listing closer to the quoted range.

Similar applies within the suburb – if you’re not familiar with the good and bad streets, which attract different levels of demand, the price differences can be stark.

Albeit only by quoting below the agents written estimate of market value on the authority is officially “underquoting”. Therefore, under current legislation, the written estimate does not necessarily need to reflect vendor expectation.

It may not be admitted as such, but when agents list a property it is common practice to encourage the vendor to withhold their reserve price. This enables a conservative estimate of value – as either a verbal or published quote range – to glean as much buyer enquiry as possible.

Once again I stress, that each agent has different ethics. I am talking generally across the industry – and unfortunately, there is enough evidence of the above practices to pollute an overall impression of the whole.

Furthermore, if one agent quotes low, and another in the same suburb quotes at a level more reflective of reality – guess which listing gathers the greatest enquiry? A catch- 22 for agents working to turn over business, in a very competitive commission based sector.

The only time an agent is required to adjust the range higher, is if a written offer in excess of the published figure is received. However, what typically happens in this scenario, is the number – (should there be one) – is removed altogether.

The above process of ‘quoting low,’ is sold to the vendor via an explanation of the “buyer pyramid” – it works a little like step quoting – get the lower priced bidders to build momentum during the auction, to fuel those bidding with healthier bank accounts to step in at the end.

In this scenario, during which emotions are strong, buyers tend to bid to win, rather than bid to buy. In a heated market, rational thinking is generally not employed, especially when competition is fierce and ‘fear of missing out’ ensues.

Without the lower budget bidders, auctions can pull up short lacking the usual frenzy that has – in our boom eras of growth – significantly contributed to pushing medians to unsustainable levels and exacerbating upward swings in the market cycle.

Furthermore, any gaping hole between the quote and reserve can be waved off with the excuse that the vendor ‘changed their mind’ – or ‘upped’ expectation.  Hence why it is so easy to get away with purposefully placing the price range below the level at which the vendor will sell – and when that quote is verbal, it’s arguably easier still.

To suggest that a property owner’s expectations fluctuate to such an extent so as to not be represented in the price quote is highly questionable. Having worked as a sales agent in previous years, I can categorically say there was never a time where I didn’t know my vendor’s approximate reserve well enough in advance of the auction, to place a reasonable quoted range on a listing from day one.

Furthermore, vendors are not without blame. Assuming the price quote is a estimate based on “recent comparable sales” and the vendor isn’t in the dark when it comes to the price quoted on his or her vendor-paid advertising, why would he or she agree to list the property and quote at a level they would not be willing to sell for in the first place?

In such instances, I would suggest this is a pretty good example of what should officially be termed “underquoting” – conservative at best, deceitful at worst.

There are many solutions to this puzzle, which would not be difficult to legislate.

Some states have suggested banning quotes altogether – either verbal or otherwise – but this does not take us closer to an effective solution for buyers. Additionally, it makes it very hard for a good sales agent to interact with buyers to enable them to modify their vendor’s expectation as the campaign progresses.

With this in mind, I would suggest, it’s time vendors were required to take shared responsibility (with the agency) for their own paid advertising campaigns and ensured their reserves – or ranges in which they’re prepared to negotiate within – are published at the outset and provide an accurate indication of a price they are willing to consider.

If minds are changed, quotes should be changed, but leaving such a large question mark for buyers, who are increasingly frustrated at having their time, money, and energy wasted, is damaging for all concerned.

-Catherine Cashmore

Tech 2

Five technology trends small businesses need to consider in 2014

With technology always and rapidly evolving, it can be tough for small businesses to keep up.

While nearly all small and medium-sized businesses in Australia have a computer, according to Sensis’s 2013 e-Business Report, more are acquiring laptops and tablet devices, how effectively they use that technology can influence how successful they’ll be.

As Australians increasingly access the internet on mobile devices such as smartphones and tablets, businesses should factor that into their digital planning for 2014, says Sensis’s advertiser insights manager Christena Singh.

“When people come in (to a business website) on a mobile device they need to get a mobile experience,” Singh says, warning that if a customer doesn’t get a mobile experience they will probably go to another business that does.

Australians using the internet on their mobile phones continued to grow over the past year at 68%, up from 58% last year, and half of Australians accessed the internet on a tablet, the Sensis report says.

Here, Singh shares the top five technology trends small businesses should prepare for in 2014:

1. Making sure websites are optimised for mobile

With more and more people using mobile devices such as tablets and smartphones to access the internet, it’s become essential for businesses to ensure their web presence appears and functions well on those screens.

It’s called “mobile optimisation”.

“The proportion of small to medium enterprises with a website that’s optimised for mobile has gone from 5% two years ago to 17% this year,” Singh says.

She says start-ups and small businesses should make ensuring their websites are optimised for mobile devices number one on their list of things to do in 2014.

Singh says optimised sites could include buttons that use a smartphone’s maps function to locate the business or a button to dial its phone number.

2. Consider the devices that customers use to access a business’s website

Singh says if a business is targeting a population demographic that uses tablet devices then they should consider putting in place features that cater to that audience.

She says businesses may look at having apps created that work on particular devices, adding that 5% of businesses have an app and 13% are looking at having one next year.

3. Cloud

Software and data storage in the cloud is becoming increasingly accessible and attractive for small businesses that don’t want to pay the costs of expensive hardware or computer program tools.

“It (the cloud) can save you costs and give businesses access to any number of utilities without purchasing them outright,” Singh says.

She says businesses could use the cloud to access software such as word processing and store files which can be accessed from almost any location.

4. Considering innovative technology such as apps, wearable technology

Singh suggests businesses should consider what technology is gaining traction with consumers and investigate ways it can be applied in their own business.

She says wearable technology is an area that’s emerging as popular with consumers, noting that Google Glass, Google’s wearable computer, is a device that’s eagerly anticipated.

“Look at technologies and how they might be able to draw people into your business,” Singh says.

She says a tourism-based business may look at using wearable technology in some way to enhance a customer’s experience.

Location-based technology is also innovative and could be used in stock handling, Singh says.

“Taking a leaf out of the consumer book and seeing how some of the new technology can give you benefits and how you can flexibly do business,” she says.

5. Strategy

Singh says one of the most important things start-ups and small businesses need to have when adopting new technologies is to have a strategy to back up what they’re doing with it.

“Small businesses are spending on average $15,800 on technology. That’s quite a lot of money for business to be spending,” she says, noting that only about 19% of businesses had a digital strategy.

Singh says a business may spend money and time on social media but without a strategy behind it, that money and time could be wasted.

“There should be strategies in terms of website presence, social media and how they work and develop leads,” she says.

 By Gavin Lower
cleaner 2

Tax deductions for cleaners

If you work as a cleaner, some of the tax deductions you may be able to claim on your personal tax return are:

Meals and Travel

  • The cost of buying meals when you work overtime, provided you have been paid an allowance by your employer (you can claim for your meals without having to keep any receipts, provided you can show how you have calculated the amount you spent)
  • The cost of meals and incidental expenses when you are required to stay away from home overnight for work (if you receive an allowance from your employer, you can claim the full amount of that allowance provided it is shown on your PAYG payment summary). If you didn’t receive an allowance, you should keep receipts to prove the amount you have spent on all meals and accommodation
  • The cost of parking, tolls, taxis and public transport if you are required to travel to attend meetings and training courses not held at your usual place of work or to travel between job sites
  • The cost of using your own car for work, including travel to attend meetings, attend training courses, pick up supplies and driving between or around job sites (to claim for car costs it is usually best to keep a diary record of the number of kilometres you travel during the year for work purposes and then we can calculate the amount of your tax deduction at the end of the year) . You can claim the cost of using your own car to travel to and from work, BUT only if you are required to carry bulky tools and equipment for your work AND there is no secure area to leave these items on site overnight

Work Clothing

  • The cost of buying uniforms (including shirts, pants, skirts, jackets, jumpers provided the uniforms have the business’s logo on it)
  • The cost of laundry, dry cleaning or repairs of your uniforms
  • The cost of buying sun protection items (including sunscreen, hats, sunglasses and sun-protection shirts or jackets)
  • The cost of buying other protective equipment that is not supplied by your employer (including overalls, gloves, goggles, masks, harnesses, helmets, steel-capped boots, gum boots, high visibility vests and winter outdoor jackets)

Training

  • The cost of work-related short training courses (for example first aid, OH&S, management, staff supervision which are not run by a University or TAFE. You can claim for the cost of any course fees, books, stationery, internet connection, telephone calls, tools or equipment and travelling to and from the course. You can also claim any accommodation and meal expenses you have to pay if you are required to stay away overnight to attend your course
  • The cost of self-education courses run by a University (not including HECS/HELP) or TAFE (provided they relate to your current work). If you are studying you can also claim for the cost of books, stationery, equipment and travel required for your course

Work Tools & Equipment

  • The cost of buying and repairing equipment you use at work (including tools, electronic organisers and mobile phones)
  • The cost of any materials or supplies that you buy for use at work (for example safety gear, first aid equipment, backpack or belt bag)
  • The cost of stationery, diary, log book, work bag or briefcase

Other Work Expenses

  • The cost of annual memberships or union fees
  • The cost of renewing machinery operating licences and tickets that are required for your work, but not including your normal drivers licence
  • The cost of work-related books, magazines and journals
  • The cost of work-related mobile or home telephone calls and rental (you should keep a diary record of the number of phone calls you make for work for one month and then we can use that to estimate your usage for the whole year)
  • The cost of work-related internet connection fees (you can only claim the proportion of your monthly fees that relate to work use, which could include emailing, research relating to your job and research for your training courses)

General Expenses

There are some tax deductions that all employees can claim on their personal tax returns:

  • The amount of any donations to registered charities (as long as you haven’t received anything in return for your donation, such as raffle tickets or novelty items)
  • The cost of bank fees charged on any investment accounts
  • The cost of income protection or sickness and accident insurance premiums (this type of insurance covers you if you hurt yourself (including when you are not at work) or become sick and you are unable to work. It will pay you your normal wage until you are fit to return to work – if you don’t have this insurance you should see a financial adviser or ask us and we will refer you to someone who can organise it for you. It is definitely worthwhile)
  • Your tax agent fees (the amount you pay to your accountant to prepare your tax return each year)
  • The cost of travelling to see your tax agent (you can claim the cost of travelling to see your accountant to have your tax return prepared. You should keep a record of the number of kilometres you travel and any other incidental costs such as parking, meals, accommodation etc)

We suggest that you keep receipts for all purchases that are work related, even if they are not listed above. That way, when we prepare your tax return, we can decide whether you are allowed to claim a tax deduction for them or not.

If you would like any more information about the deductions listed or if you would like our team to prepare your tax return for you to ensure you maximise your claims this year, contact us at info@kpmc.com.au

marketing apps

10 marketing tools and apps

 

Marketing is one of the most essential areas of business yet it can also be one of the first areas to be sidelined when business gets busy. Here are 10 marketing tools and apps to help you streamline your marketing and make your life a little easier.

1. WhatsApp

Available on iPhone, BlackBerry, Android, Windows Phone and Nokia, WhatsApp allows you to send text messages, photos and videos to clients, team members, collaborators and associates who are also using WhatsApp for free.

2. Evernote

Evernote is a handy app that helps you keep text notes, audio and web pages in the one place for easy access. It’s perfect for writing blogs on the go and recording your ideas with the added ability to categorise them across all of your devices.

3. HootSuite

HootSuite allows you to manage your social media accounts in one simple dashboard. Schedule messages and tweets, track brand mentions and analyse social media traffic at the office or on the run.

4. Buffer

Buffer makes it easy to share pictures, videos and links with your social media fans and followers. Simply put what you want to share into Buffer, and it will be posted at the best times throughout the day, so more of your fans and followers see your updates.

5. Fast analytics

Fast Analytics helps you monitor your website and blog statistics on the go by syncing with your Google Analytics account. The app shows you your daily, weekly, monthly or yearly statistics as well as, traffic sources, search engine keyword reports and visitor browser, country and engagement reports.

6. Portent’s Content Idea Generator

Having a hard time coming up with content marketing ideas? Portent’s Content Idea Generator can help. Simply enter your subject and get hundreds of interesting topics and headlines for your blog posts, reports, e-books and more.

7. Google Alerts

Set Google Alerts for your industry, your business name, your name and any topics that are relevant to your area of expertise so you can see who is talking about your business, respond to any criticisms or thank someone for a mention or endorsement.

8. Wordle

Wordle is a great tool if you’re a blogger, or you are serious about Search Engine Optimisation (SEO).

Wordle creates word pictures from your text and helps you see what words are the most prominent in your copy. The bigger the word, the more frequently it has been used in your copy. So your goal is to ensure your keywords are largest in the image.

9. MindNode

MindNode is one of the hundreds of mind mapping apps available today that are ideal for strategising and planning on the run. Some are paid, and some are free, though most of them are all similar in their function so test a few to see which one you like best.

10. Grammarly

Avoid the embarrassment of missing spelling and grammatical errors in your marketing material, blogs and client communication with Grammarly. Grammarly reviews your text and corrects your grammar, spelling, word choice and style mistakes with far more accuracy than your usual spell check.

What marketing tools do you use regularly in your business?

By Amanda Jesnoewski

engineer 1

Tax deductions for engineers

If you work as an engineer, some of the tax deductions you may be able to claim on your personal tax return are:

Meals and Travel

  • The cost of buying meals when you work overtime, provided you have been paid an allowance by your employer (you can claim for your meals without having to keep any receipts, provided you can show how you have calculated the amount you spent)
  • The cost of meals and incidental expenses when you are required to stay away from home overnight for work (if you receive an allowance from your employer, you can claim the full amount of that allowance provided it is shown on your PAYG payment summary). If you didn’t receive an allowance, you should keep receipts to prove the amount you have spent on all meals and accommodation
  • The cost of parking, tolls, taxis and public transport if you are required to travel to attend seminars, meetings and training courses not held at your usual place of work or to travel between job sites
  • The cost of using your own car for work, including travel to attend meetings, attend training courses, pick up supplies and driving between or around job sites (to claim for car costs it is usually best to keep a diary record of the number of kilometres you travel during the year for work purposes and then we can calculate the amount of your tax deduction at the end of the year) . You can claim the cost of using your own car to travel to and from work, BUT only if you are required to carry bulky tools and equipment for your work AND there is no secure area to leave these items on site overnight

Work Clothing

  • The cost of buying uniforms (including shirts, pants, skirts, jackets, jumpers provided the uniforms have the business’s logo on it)
  • The cost of laundry, dry cleaning or repairs of your uniforms
  • The cost of buying sun protection items (including sunscreen, hats, sunglasses and sun-protection shirts or jackets)
  • The cost of buying other protective equipment that is not supplied by your employer (including overalls, gloves, goggles, masks, harnesses, helmets, steel-capped boots, gum boots, high visibility vests and winter outdoor jackets)

Training

  • The cost of work-related short training courses (for example first aid, OH&S, technical updates, management, staff supervision which are not run by a University or TAFE. You can claim for the cost of any course fees, books, stationery, internet connection, telephone calls, tools or equipment and travelling to and from the course. You can also claim any accommodation and meal expenses you have to pay if you are required to stay away overnight to attend your course
  • The cost of self-education courses run by a University (not including HECS/HELP) or TAFE (as long as they relate to your current work) . If you are studying you can also claim for the cost of books, stationery, equipment and travel required for your course

Work Tools & Equipment

  • The cost of buying and repairing equipment you use at work (including tools, electronic organisers, laptop computers and mobile phones)
  • The cost of any materials or supplies that you buy for use at work (for example safety gear, first aid equipment, backpack or belt bag)
  • The cost of stationery, diary, log book, work bag or briefcase

Other Work Expenses

  • The cost of annual memberships or union fees
  • The cost of renewing machinery operating licences and tickets that are required for your work, but not including your normal drivers licence
  • The cost of work-related books, magazines and journals
  • The cost of work-related mobile or home telephone calls and rental (you should keep a diary record of the number of phone calls you make for work for one month and then we can use that to estimate your usage for the whole year)
  • The cost of work-related internet connection fees (you can only claim the proportion of your monthly fees that relate to work use, which could include emailing, research relating to your job and research for your training courses)

General Expenses

There are some tax deductions that all employees can claim on their personal tax returns:

  • The amount of any donations to registered charities (as long as you haven’t received anything in return for your donation, such as raffle tickets or novelty items)
  • The cost of bank fees charged on any investment accounts
  • The cost of income protection or sickness and accident insurance premiums (this type of insurance covers you if you hurt yourself (including when you are not at work) or become sick and you are unable to work. It will pay you your normal wage until you are fit to return to work – if you don’t have this insurance you should see a financial adviser or ask us and we will refer you to someone who can organise it for you. It is definitely worthwhile)
  • Your tax agent fees (the amount you pay to your accountant to prepare your tax return each year)
  • The cost of travelling to see your tax agent (you can claim the cost of travelling to see your accountant to have your tax return prepared. You should keep a record of the number of kilometres you travel and any other incidental costs such as parking, meals, accommodation etc)

We suggest that you keep receipts for all purchases that are work related, even if they are not listed above. That way, when we prepare your tax return, we can decide whether you are allowed to claim a tax deduction for them or not.

If you would like any more information about the deductions listed or if you would like our team to prepare your tax return for you to ensure you maximise your claims this year, contact us at info@kpmc.com.au