Presentation Transcript

1. The Real Estate Market Today Presented by Chris Greenwood MPRE MScBEng
2. I WILL NOT LIE TO YOU!
3. YourProperty 100 % of the SUCCESS of the sale of yourproperty Mr & Mrs Seller, willbedetermined by your SERIOUSNESS to sell.
4. YourSeriousness to Sell Yourseriousness to sellwillbedeterminedby 3 factors. PRICE TERM FEE
5. The PricingPyramid No Buyers Few Buyers Overpriced The Right Buyers Market Price Selling Price Numerous Buyers Underpriced
6. Do’s & Dont’s of the PricingPyramid Pricing to Sell Marketability is improved by pricing realistically. To the buyer price is the most important negotiating factor. Price compensates for a property’s shortfalls and inadequacies. Demand and not time sells houses – realistic pricing creates demand Initial marketing time is crucial. Buyers buy by comparison and elimination. Buyers compare price and value for money. Buyers can easily obtain market related information and are well informed.
7. Do’s & Dont’s of the PricingPyramid DO: Combine a realistic asking price with initial demand. Maintain negotiating advantage with realistic pricing. Avoid over exposure from unrealistic pricing. DON’T: Eliminate buyers by outpricing them. Chose and agent only on promised price. Spoil your chances of making good impressions on buyers by overpricing.
8. Do’s & Dont’s of the PricingPyramid Over valuation can affect a prospective sale! Prospective buyers can be lost Offers are eliminated. Market activity is reduced. Property can become ‘stale’ on the market. Your home may be used by agents to help sell realistically priced properties. Your sale may become urgent then what offers do you accept? Marketing time and seller inconvenience is extended. Remember BUYERS BUY BY COMPARING YOUR HOME TO OTHER PROPERTIES CURRENTLY ON THE MARKET.
9. Value V Price Agents use the term Price of the home. Its about value not price. Separate a price from value. Value is determined by the conditions of the market place. Let the property professional's talk with you to determine the value of your property. Then we can discuss the price of your property.
10. Compound Growth Rates Overpaid R1000’s
11. Double DipRecession Recovery 7 – 8 Years90 Months June 2007 June 2008 3 Years June 2009 June 2010 42 Months June 2011 18 Months Recovery June 2012
12. Double DipSexwalewarns about the tough times ahead 27 September, 2011 The Sunday Times Human Settlements Minister Tokyo Sexwale said South Africa could be "headed for another recession". Sexwale told the 12th international housing and home warranty conference at Cape Town'sInternational Convention Centre yesterday that, with South Africa's trading partners Portugal, Italy, Ireland, Greece and Spain in a "huge amount of sovereign debt", a second recession was looming. "We hope and we pray that the world does not go back into another recession because we expected that this recession would be a 'V' or a 'U', but it is threatening to be a 'W', " said Sexwale. A W-shaped recession, or "double-dip recession" is one in which an economy experiences a recession, comes out of it, but slides back into recession again. The government has long maintained that South Africa is emerging from its recession, and last month Finance Minister PravinGordhan said there was only a 40% chance of a "double-dip recession" happening. But, according to media reports from last weekend's global finance talks in Washington, US, International Monetary Fund managing director Christine Lagarde warned that the global economy was in a "very dangerous place". European financial websites reported yesterday that Greece is more than R3-trillion in debt, much of this owed to European banks, and will probably default on its loan payment in the next three months. The European Financial Stability Facility would then need to find a reported R17-trillion to support the governments of France, Spain, Portugal and Italy as they bailed out their own banks - or the world would face a second recession. "It is very frightening to hear world bankers saying that the world economy has entered into a very dangerous phase," Sexwale said. "If a bank makes that statement, you have got to sit up because banks are very, very careful in what they say." South Africa and other developing economies were unlikely to recover from a second recession quickly, he warned. "Long after industrialised nations in North America, the Eurozone and Asia have left the hospital, many of us will still be lingering in intensive care. There are many developing economies that will not come out of this that easily," he said. He also warned about climate change, and said the US government had to "come on board" the global drive to combat global warming. Calling for a minute of silence for Kenyan environmental activist and Nobel laureate WangariMaathai, who died on Sunday morning, Sexwale said "cities are threatened". "Cape Town may not be there in the next 100 years, Durban, cities like New York. "If we continue to emit negative gases into the sky at this rate, the biggest impact is on human settlements. Whatever we plan, climate change may negate." He also said the government would not be able to build free houses for the poor forever. "There has got to be a cut-off date. We are discussing that. But you can't cut off the poor right now, particularly in the current national economic environment. We can't sustain what we are doing for a long time," he said. The private sector would have to contribute, and that was why Sexwale would launch the "each one, settle one" campaign at the Johannesburg Stock Exchange on Thursday. The campaign would ask "captains of industry" to "empty their pockets" to build houses, Sexwale said.
13. Consumer Confidence 08 August 2013 Consumer confidence levels improved across all income and population groups, reveals the FNB/BER Consumer Confidence Index (CCI) which shows that having slumped from -3 index points during Q4 2012 to a 9 year low of -7 in Q1 2013, the CCI rebounded to +1 in  Q2 2013. Middle and high income consumers are notably more optimistic about the outlook for their household finances and less concerned about the appropriateness of the present time to buy durable goods compared to low income consumers, according to the index. The rise was larger and the actual levels remain higher for middle and high income consumers compared to the low income group (earning less than R2 000 per month). Middle and high income consumers are notably more optimistic about the outlook for their household finances and less concerned about the appropriateness of the present time to buy durable goods compared to low income consumers, according to the index. According to SizweNxedlana, chief economist at FNB, Q2 2013 level of consumer confidence is still well below the post apartheid average of +6 index points, signalling a significant moderation - but not a collapse - in household spending. Nxedlana says the index is typically a good indication of consumers’ willingness to spend or use credit, while disposable income growth and their access to credit determine their ability to spend. “The improvement in the CCI in Q2 2013 suggests an increased willingness among consumers to spend and helps to explain the improvement in retail and car sales in recent months.
14. Determining Real Value What did you pay. When did you buy. How much do you owe. Bank valuation. Municipal valuation. N.B. Completed 2007 escalated by 40% Comparative Market Analysis. N.B. Consumers no homework Replacement costs. N.B. 40% cheaper to buy than build. SARS price! Sellers opinion. Agents opinion to obtain mandate. Buyers Highest Price.
15. Boom and Bust Sellers expectation in the real estate market R900k bond = +-R50k net income per month The Real Estate Market Foreigners Banks Sellers Agents Press Buyers Exchange Rate Mandela’s Release Etc Etc Wishing Price Asking Pice Replacement Price Market Price Municipality Roll Bank Price Credit Act Price SARS Price CMA = Priced to SellPrevious 90 Days of Sold PropertiesThe first offer could only come 180 days later 2005 2006 History Stock Market Oil Price Credit Act Interest Rate Foreigners Zimbabwe New Bank Legislation Banks No Cash ANC Youth League Debt Levels Black Listings Incompetent Government Auctions Etc Etc 2007 High 2013 2008 Low 2012 2000 Medium 2011 2009 2010 Negative Equity. Second wave of credit crisis = Commercial default.
16. Recovery? Excessive optimism Excessive optimism Over Bought Over Bought Credit and Cash Dry Up Bulging Inventories Production Slows Prices Slip A Little Worry Buying Dries up More Lose Confidence Layoffs Begin More Worry Savings Build Put Off Buying Excessive Fear Panic Time Positive News Negative News WE ARE HERE Smart Money Buys/ Invests Some Buying Excessive pessimism
17. Statistics Total Sales Per Price Band Source – SAPTG October 2011
18. Statistics Average age of ownersKnysna Central Source – SAPTG October 2011
19. Statistics Growth and ActivityAverage Property Price Knysna – Source LIGHTSTONE OCT 2011
20. Statistics Growth and ActivityNumber of Property Sales – Source LIGHTSTONE OCT 2011
21. Statistics Growth and ActivityTotal Value of Property Sales – Source LIGHTSTONE OCT 2011
22. TERM Statistics show that the average buyer is stalking the market for up to 293 days before he or she makes a decision in buying. The buyer of today is a highly educated and knowledgeable property purchaser. He has all the tools available on Internet to even know more about the property, and area he wants to buy in than the owner or even most of the Agents. He is spoilt for choice as Knysna for example has in excess of 700 properties on the Market. It is fact that about 87% of people are selling for less than there asking price. In 2004 only about 33% of sellers were not getting what they set out for. This is due to the fact that we have extremely knowledgeable buyers in the market place.
23. FEE If the rule for buying real estate is Location LocationLocationthen the rule for hiring an agent is Skill SkillSkill. The higher the skill of the agent, the higher the price you will get. The lower the skill the lower the price. Cheap agents get cheap prices that’s the way it is. Think of it this way Mr Seller if an Agent is prepared to give his or her money away, how much quicker will they give your money away when they have to negotiate. You see we don’t give our money away and we don’t give yours away either, that’s the way it is.
24. THANK YOU!