3 things I wish I could change about the real estate industry
The real estate industry is ripe for disruption and change; and these are my wishes
I think it is fair to say that real estate as an industry doesn’t have a great rap. I’m not really sure if it ranks higher or lower than car sales! As someone who built a career in law & banking before moving over, I feel I bring a perspective that is different to those who have built their careers solely in real estate.
If the TimTam Genie appeared and gave me 3 wishes to change the industry, this is what I would choose:
1. Auction Reserve price is linked to any advertised price guide
This is the biggest challenge for buyers, in any market. Currently:
The advertised guide is set by the selling agent, before the property comes to market. It may change throughout the campaign.
The auction reserve is set by the vendor, usually in the 2-3 days prior to the auction
Spending time and money on a property you don’t buy because someone else has more money than you is a tough pill to swallow, but most people accept it. Being in this situation because a property is passed in >20% above the price guide just feels like a massive kick in the guts!
What I wish was required:
The auction reserve on the day of the auction, must be within XX% of the most recent advertised price guide.
Somewhere between 10%-20% feels like the right number.
This continues to allow for market feedback to shift the price guide, while also ensuring buyers are not wasting their time.
Selling agent objections to this:
There has long been an argument from selling agents that it wouldn’t work as the price guide can change. That’s ok! The reserve price can change in line with the price guide. Not rocket science.
The vendor / owner is unrealistic or cannot commit. Again, this is ok. Run the campaign as private treaty and advise buyers that each offer will be assessed on its own merits. At least then buyer’s know what they are getting into.
2. Land Tax cannot be shifted from vendor to buyer
NSW Land Tax is a tax which applies on properties which are not a principal place of residence. Like all taxes, it is inherently linked to a person. In this scenario, that person is the current owner / vendor of the property & the total value of all land they own determines if they are required to pay land tax.
The calculation is based on the value of all the land THE VENDOR owns.
There is a tiny little box on page two of the NSW Contract for sale and purchase of land that looks like this:
Land tax is calculated annually, on the calendar year and is based on property values as at 1 January. If you sell a property later that year, you do not get a refund.
Where this little box is marked yes, this means that the current owner of the land requires the new buyer to pay THEIR tax, for the portion of the year where the property changes hands.
For example, if you buy a property in February, and settlement follows six weeks later into April, the contract says:
From 1 Jan until XX date in April - the vendor pays the land tax
From XX date in April until 31 Dec - the buyer pays the land tax
This applies even if the buyer is using the property as their principal place of residence. The Vendor is asking the Buyer to pay their tax, based on all the land the vendor owns. How is that even allowed in a residential agreement?!
Thankfully solicitors and conveyancers know to look out for this and will request the little box to be marked no (potentially saving their client thousands). However, I also shiver when you read a story about someone who buys a property at auction having only seen it that day as you know it is unlikely they’ve had a contract review completed.
It simply should not be allowed in a residential sale contract to shift land tax from a vendor to a buyer. There is no logic there.
3. Accessibility filters applied to major search portals
This wish is less controversial (I think!). Real Estate & Domain websites are used by every house hunter and offer a range of filters you can apply to narrow down your search results. For example, you can filter for properties with a balcony, solar panels, an alarm system. a dishwasher, a tennis court etc. Great - those things are important to lots of people.
What about people who have impaired mobility? People in a wheel chair, people who have a child with special needs, people who wouldn’t consider a property with stairs etc.
Wouldn’t it be great if there was a filter that indicated a property was wheelchair friendly? Can the property be accessed via wheelchair and can a wheelchair move around freely inside the home?
While the amount of home buyers that would require this filter is likely a small percentage, it would have a MASSIVE positive impact for those people. Way more so than knowing if a property has an alarm system which you can easily install after you buy the property.
I don’t think I am asking too much with my 3 wishes
