An article in the Sydney Morning Herald caught my attention this week (Softly, softly catchee chance of slow recovery from doom). It discussed how many of those who lost money in the stock market during the GFC were now impatiently trying to reclaim their lost financial position through high risk investments.

This reminded me of the increasing number of people I meet, particularly since the GFC, who are trying to play catch-up. Many have been burnt by the stock market however the majority have either ignored the idea of saving or have simply taken the ‘she’ll be right’ attitude to money for too long. Instead of setting a measured amount of savings aside each month for the last 20 years, they now find themselves in their late forties or early fifties and realise that they have 10 – 15 years left to achieve what they want financially in the time that really takes 20 – 30 years...

I read an interesting article from the Sydney Morning Herald this week titled Billions at stake as land valuation system comes under fire. The article stated that there were "more than 170 cases where there was a variation of more than $5 million between the initial valuation (by the NSW Valuer General) and the valuation after landowners objected or took court action" over a decade. This discrepancy is particularly important at the high end of the market with property values determining costs such as land tax.

While the properties that were discussed in the article were at the upper end of the market, having 170 properties with a valuation discrepancy of more than $5 million is extraordinary particularly when these valuations were based on the un-improved land value alone. Imagine how far out they would have been if they took into consideration the homes on the land as well?..

Unless you have purchased at auction before you may not know that any purchase under auction conditions is unconditional. An unconditional sale means you can’t make your purchase contingent on having your finance approved, a good building and pest report or strata report, on valuation or completion of another sale. Unlike private treaty sales there is no cooling-off period so once the hammer falls and you sign the contract you can’t change your mind...

Many properties come onto the market way overpriced. There are two main reasons why this happens, either the vendor has insisted on a high price or the sales agent has told them an inflated figure to convince the owner to list the property with their agency (it’s called buying the listing or buying the business).

Sales agents know they shouldn’t do this and that they are setting themselves up for quite a bit of work in regards to a price education process with the vendor, starting the week after the property goes on the market. They do it anyway because they know most (not all) vendors have an over inflated expectation of their own home’s value or are greedy and telling them a figure they want to hear increases their chances of getting the listing over a sales agent that will tell them the truth...

Patrick discusses the ins and outs of renovating with ABC Radio Nightlife host, Tony Delroy.  

To listen to the full interview click here. (It’s a large audio file so it may take a minute to download to enable you to listen to it).

A take away coffee’s just a coffee right? Spending $3.50 to $4.00 a day on your favourite caffeine blend isn’t really a luxury is it? Well, take a look at this…

A recent article I was reading by Mortgage Choice provided tips on how to pay off your mortgage sooner. It included a range of important information from budget setting to reviewing your home loan. One example explained that by reducing your weekday coffee spend from $4 a day to $4 every second day adds up to a saving of $40 a month… and if you put that saving onto your mortgage you could take 2 years off your loan and $31,000 off your interest bill*...

Patrick recently appeared on The Today Show to discuss some of his profit making renovation tips.  For those who missed it click here to take a look!

Patrick talks to Tim Webster on 2UE about his latest book The Insider's Guide to Renovating for Profit as well as the risk renovators face of overcapitalising on their property.

Click here to listen.

The silly season is just around the corner and many people who have been looking for a new home or investment property for months will put the search on hold till the new year while they focus on getting things organised for Christmas. For sellers though, December is an important month, particularly if they have had a property on the market for at least a month already.

Make no mistake, the majority of people with a property currently on the market have a strong desire to sell their property by Christmas. With less than a month to go it’s very likely they are of the mindset to accept a little less and in some cases a lot less then they may have a few weeks ago just so they have closure going into the new year - particularly if they have purchased elsewhere already...

Beware the profit killers – In this edited book extract, experienced investor Patrick Bright shares his tips for finding, buying and renovating residential properties for a quick windfall.

Renovating residential investment property is a great way of building wealth quickly. It’s a relatively low risk strategy if executed correctly and will allow you to manufacture capital value and increase rental returns without relying solely on market conditions.

Back in 1999 a friend of mine wanted to sell a house his parents left him when they passed away. Since he knew that I knew a bit about real estate he asked for my help. The house had been neglected for 18 months and was in very poor condition. A few local real estate agents gave him valuations between $320,000 and $340,000...

In a wise move the NSW Government is tightening up the stamp duty exemptions - after all the savings are essentially passed on to vendors though increased sale prices rather than helping out the buyer. Come December 31 and exemptions and subsidies for first home buyers on existing homes under $600,000 come to an end.

With just over seven weeks to go until the deadline, first home buyers are likely to come out of the woodwork as they try to beat the cut-off and save a little cash. Investors would be wise to tread cautiously in this climate to ensure they don’t get caught up in an emotional bidding war...

Patrick's interview on Real Estate Talk with Kevin Turner

Buyers agents tell us that they are getting enquiries from buyers motivated by the recent spate of TV Renovation Shows. Unfortunately they have an unrealistic view about renovating and making a profit. We get a good grounded view from two buyers agents who tell it as it is. Click here to listen to interview or read the transcript below.

Full transcript:

Kevin Turner: You’ve heard us in the show talk about Buyers Agents from time to time. There’s a buyer’s agent in Sydney by the name of Patrick Bright who is a good friend of mine, we’ve had him on the show a number of times he’s written many, many books and is very knowledgeable about the market.  His company is EPS Property Search and I was taken by a comment he made the other day about shows on television may be misleading people about the cost of renovations.  He joins me...

In a strong and/or rising real estate market pretty much anything sells even properties that are not well located, well designed, or built to a high standard. However in a flat or declining market only quality A and B grade property is highly desirable. It’s important to keep this in mind when you’re looking to buy. My advice to my clients is that it’s always better to pay fair money to secure a well located, quality home or investment property rather than buying a property that, well...simply just isn't...

According to figures just released by SQM Research there are 22% more properties available for sale nationally than there were 12 months ago. In Sydney that figure is 18%. My team and I have certainly noticed this surge in available property stock when searching for property for clients. At the moment we are spoilt for choice with the amount of real estate currently on the market. In addition there has been a noticeable drop in the general public’s appetite for taking action (particularly over the past few weeks due to global share market fluctuations), so we are seeing a lot of vendors being much more flexible in price...

For “The Block” enthusiasts, Sunday night’s finale was a flop with only one of the four properties selling under the hammer. Instead of popping bottles of champagne contestants were crying on each other’s shoulders. The program highlighted some important points and plenty of warnings that would be renovators should pay attention to as it goes to show that renovating and making a profit is not easy to do, even with significant resources and support…

This week on the Channel Ten show called The Renovators (episode 3) we saw two teams battle it out to renovate a terrace each – but they only had a 12 hour day to do it! The challenge was designed to see which team could add more value to their property based on ‘before’ and ‘after’ valuations. We saw skilled renovators hard at it all day investing in new kitchens, renovating the bathrooms, painting in and out, installing plants, putting up back yard fences, landscaping…. you get the idea it was a complete makeover.

But the big thing that stood out to me was that after all their hard work the post renovation valuations barely increased relative to the work that was done and once you factor in the cost of labour and materials they lost money. This is a great example of how easy it is to overcapitalise even when you’re supposed to know what you’re doing. Renovating is not just about making the property look good it’s about adding significant value to the bottom line or, I have to say, why bother?...

Now is certainly a good time to add value to your property, particularly for investors who are looking to manufacture equity and increase their rental returns allowing them to add to their property portfolio sooner rather than later.

If you’re going to renovate then the first decision to be made is if you are going to manage this process yourself or engage a project manager. If you decide to go it alone rather than hiring an experienced project manager then you need to make sure you’re prepared. Here are a few tips to make sure you start the project with a realistic outlook…

The strength of the Australian dollar against the US and other currencies has seen many expats, who are paid in US dollars or other foreign currency, put the brakes on buying Australian property. Understandably they don't like the fact that their money isn't currently giving them the advantage it did when those currencies were far stronger.

However, is this ‘wait till the dollar drops’ strategy the right move for those who are planning to return home in the next few years...

I was speaking with a finance broker last week and he was telling me a story about one of his clients who purchased a property for $661,000. Ok, so there’s nothing unusual about that but here's where it gets interesting. The finance broker knew the area as he lived close by and thought that $661,000 was a lot for a two bedroom apartment in that location so it must be something special. As per standard practice the bank ordered a valuation which came in at $661,000 (the purchase price). This surprised him as he was sure the valuation was going to come in well below that figure.

In sharing the story with a co-worker, they discovered that a different client had asked the co-worker to help them with a re-finance against a two bedroom apartment that they owned in the same street. As it turned out it was the same property and the valuation came in at $500,000...

Do you find that sometimes when you ask a sales agent a question you get the feeling they might as well have hired a parrot to answer you? Well, the other day one of my team members emailed a sales agent to ask for a price guide on a property as it was listed for auction. The email answer he received was "buyers feedback has been $XXXXX". My team member was laughing so hard that he literally fell off his chair. I asked him what the joke was about and he replied “how do you get buyers’ feedback on a property that has been on the market less than 24 hours and is yet to have an open!”...

With the end of the financial year fast approaching it’s a good time to sit back and analyse your financial position in the same way that a small business does (or should!). Regardless of whether you have 1, 3, 5 or more properties you need to treat them all like a business. Undertake regular reviews, no less than six monthly.

As a stocktake here are a few things that you should ask yourself...

If you ask experienced sales agents how to attract a crowd and virtually guarantee a sale over fair market value then they will tell you to market the property as a "deceased estate".  People want a bargain and the promise of one is guaranteed to spark interest, in fact very strong interest! 

The problem is that most bargain hunters are so focused on securing the ‘bargain’ on offer that their ability to rationally and objectively assess a property’s true value in such circumstances often goes out the window in much the same way it does when a home buyer falls in love with a property.  They think that whoever buys the deceased estate will have bought a property below market value (the bargain price) and so their strategy is simply to be the winner by offering or bidding the highest amount rather than basing their negotiation or maximum purchase price on unemotional research...