Wednesday, 11 August 2010 

 By: Belinda Luc

The federal government and the federal opposition party have ruled out the prospect of abolishing negative gearing.

At a debate held at the National Press Club in Canberra yesterday, both parties said they would not consider abolishing the investment strategy.

Real Estate Institute of Australia (REIA) president David Airey welcomed the government’s unanimous stance.

“This is fantastic news for renters, affordable housing and real estate investors,” Mr Airey said.

Mr Airey added that negative gearing for the purpose of property investment was necessary as it addressed the supply of rental accommodation, which benefited the overall industry.

“The Hawke Government abolished negative gearing for property in 1985 only to have it reinstated in 1987,” he said.

“During that period rents increased by 57.5 per cent in Sydney, by 38.2 per cent in Perth and by 32.0 per cent in Brisbane.

“At the same time building approvals fell by 13.8 per cent,” he said.

According to Mr Airey, when negative gearing was reinstated, the government said that any tax advantages conferred by negative gearing were countered by the CGT regime when capital gains were realised.

“To amend the current negative gearing provisions for housing as some critics have suggested would be treating real estate differently to other asset classes and create a resource misallocation,” he said.

Need advice on buying an investment property? Contact buyers advocate Warwick Brookes at Domain Property Advocates on 9853 5599.

ROB’S BLOG – NO. 4

What is a vendor advocate ?

According to The Macquarie Dictionary, to advocate is to support, recommend, act on behalf of, to defend or one who argues the cause for another.

A vendor advocate does all of the above including independent advice on not only who is the best agent to sell through but also what your property is really worth, long before you are asked to sign any authority. And who better to advise you than an advocate with over 25 years experience.

Me !

Selling property is one of the most stressful decisions you will ever make, so having access to accurate, independent and objective advice including the same data that agents use is critical. It will empower you to make informed decisions and ensure you get the best possible outcome. The best part is there is no additional cost! Sure, the fee negotiated with the agent will apply, of which we retain a portion but you will pay no more to have Domain assist you with your sale.

How do agent’s feel about advocates ?

The agents we appoint welcome our support as we make the entire process more transparent and see us as an ongoing stream of revenue ( subject of course to our high expectations). Domain only use the best agents, we arrange the appraisals, interview the agents, assess their advice and then oversee the entire selling process right through to settlement and beyond.

So what is the big deal ?  

 It’s the transparency. The biggest fear agents have is that if they tell you the what the property is really worth ( the dreaded bottom line ), the next agent won’t and they will miss out and all the future listing opportunities that goes with it because they were “too negative”.  Most vendors will invite 2 or 3 agents to appraise their property from which the winner is selected…..a bit like Master Chef and guess what ? The final candidates are usually outstanding. More often than not, the advice is the same, the advertising schedules are identical and the pricing is…..you guessed it, the same ? Even the testimonials are glowing ! Have you ever read a bad one ?  Each agent will have their point of difference upon which the battle lines are often fought and won. Depending on who is the most plausible will often decide who gets the listing. Some vendors flip a coin, others go on gut feeling and the positive relationship they have built up through all the  unnecessary contact points that the agent puts in place to win your business ! The problem with all of this is there is no objectivity and that is precisely what an advocate does.

 Here is an excellent case study :

Recently a client contacted me to seek my advice. They had already called in their preferred agent who was now pressing them for the listing and I guess they just wanted some reassurance that they were making the right decision. I advised them to seek a 2^nd opinion and recommended an agent. The object of seeking a 2^nd opinion was to seek clarity and since I was not involved with their dealings with their preferred agent, another opinion was critical. The advice the 2^nd agent provided was far more realistic and after all the options were explained to my clients in a plain speaking approach, they still decided to go with their preferred agent but with a very different price platform recommended by the 2^nd agent which I endorsed. You should have seen the grin on his face when I handed over the authority…not one word was said about the price range but if my client had gone ahead with their original proposal, the auction would have been a disaster. Whilst this was not an agency that we would have recommended for this particular property, the person handling the sale was well known to me and rated very highly.

Footnote :

 There are many outstanding agents to choose from but the listing driven nature of this industry makes it highly competitive. Our aim is to engage an agent that will be honest and achieve the highest possible sale price without the stress.

David McMillan from Domain Property Advocates can be contacted on 03 9853 5599 or 0418 323 723.

For all your property buying needs.