How does Clearance Rates work.
It is a key property market indicator. It is generally used to establish if the market favours buyers or sellers. Clearance rates are expressed as a percentage and signify the number of properties sold, or cleared, at auction for the week, month or year.
What is the difference between Medium Price & Mean Price
The Medium Price is the price in the midway point of all the houses/units sold at market price (or sold amount) over a set period (monthly, quarterly, yearly etc.) That is, if there were 101 properties sold during the month, the median price would be the house/unit price in the middle i.e. that has 50 house/unit prices above it and 50 house/unit prices below it. This differs to the mean price, which equates to the average price ie. adding the sold prices together and then dividing this by the number of sales
How does the Selling Process work
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What is LVR from the banks
This means Loan to Value Ratio – it is the percentage of money the bank will lend to you against the property you are buying and at the price they feel it is valued at. That percentage varies all the time. It can range up to 95% or on the lower side of 70% for residential. The LVR for Commercial & Industrial property have a lower range. The banks will also base that amount on what they think it`s worth and not necessary the purchase price you paying. For example, if the banks offer you an LVR of 80% and you have a purchase price of $1000 000 and the banks think it is worth $900 000 when they do a valuation then they will lend you 80% of $900 000, which works out to be $720 000. This means instead of you putting in $200 000 as a deposit you will need to put in $280 000.
How does Stamp Duty work
Stamp duty is a tax on written documents (‘instruments’) and on certain transactions. Property is one of them. It is imposed by state and territory governments. It can vary depending on the state or territory, and may be called stamp duty, transfer duty or general duty.
What is involved in getting a Contract of Sale so I can sell my house
When you want to sell, the law requires that would need to arrange a Contract of Sale for your property. This is a set of documents that a lawyer or solicitor would arrange on your behalf. It would include things like land size, conditions of the sale, various certificates, what you included in the property when you sell it ie blinds, pool covers, dishwasher. It also states what is not included in the sale of the property ie – Chandeliers
What is an “off market” saleIt is a term used to define a property that is selling, or has already been sold, without any public advertising. The way an agent markets this is via their database or referral contacts.
How does an Auction work
The auctioneer will start by announcing the laws and rules of the auction and tell you more about the property and its location.
They will then ask for an opening bid and decide the amount by which the bid will rise. If the auctioneer picks, for example, $10,000 increments, it’s still possible to make smaller bids, but they are allowed to refuse them.
If the auction is slow to start and none of the potential buyers make an opening bid, normally the auctioneer will suggest a figure.
That normally starts people bidding and the auctioneer then takes various higher bids that are being given by the various buyers until they get to the reserve price which the vendors have set on the day. At this stage the auctioneer might announce that the property is now on the market or just keep accepting higher offers until everyone is not willing to go higher and then closes the auction. The auctioneer does not have to announce that the reserve price has been met.
If the reserve price is not reached the auctioneer can make one vendor bid. A vendor bid is a type of bid at an auction which is made by the auctioneer on behalf of the vendor, without any desire to buy the property. This is used to keep the bids moving, or to persuade buyers to pay more or even to start the bidding process.
The auction laws and conditions include:
- The highest bidder is the purchaser, subject to any reserve price
- The auctioneer is entitled to make one bid only on behalf of the vendor.
- The auctioneer must announce that the auctioneer is permitted to make one bid on behalf of the vendor / seller
- The auctioneer must announce immediately before, or in the process of making the bid, that he/she is making a vendor bid
- The auctioneer can refuse a bid that is not in the interests of the seller
- The auctioneer has no authority to accept a late bid, that is, a bid after the fall of the hammer
- If there is a disputed bid, the auctioneer is the sole arbitrator and makes the final decision
The successful buyer’s name must be given to the auctioneer as soon as possible.
How does an Agency Agreement work
There are few types that are used when selling a property however the most common ones are the ones below.
Type 1
Exclusive Agency Agreement This means the agent is the only one allowed to sell the property. Exclusive agency agreements are commonly used for the sale of residential property. In this kind of agreement, you give exclusive rights to one agent to sell your property. This may entitle the agent to be paid commission if the property is sold during the fixed term of the agreement, even if the property is sold by you or by another agent. The agent may also be entitled to commission if the property later sells to a person who started negotiating for the property with the original agent. This exclusive agreement can be used to sell via private treaty or by auction
Type 2
Sole Agency AgreementThis is similar to an exclusive agency agreement. You give rights to one agent to sell the property but you may find a buyer yourself. If you find a buyer who has not been introduced by the agent, then no commission is payable to the agent
Type 3
Open Agency Agreement This means that you list your property with any number of agents who can then sell the property. You pay a commission to the agent who finds the buyer.
Cooling–off period for an Agency AgreementThe agency agreement becomes binding once the owner and agent sign the agreement. There is then a cooling-off period of 1 business day during which you can cancel (or`rescind´) the agreement. Saturday is included for the purposes of the cooling-off period, but public holidays are not. The cooling-off period starts when you sign the agreement and ends at 5pm on the next business day or Saturday. For example, if you sign the agreement on a Friday, the cooling-off period ends at 5pm on Saturday. If you sign up on Saturday, the cooling-off period would usually end at 5pm on Monday, unless that is a public holiday, in which case it will end at 5pm on Tuesday.
Cancelling the Agreement during the Cooling off periodIf you decide to cancel (or `rescind´) the agreement during the cooling-off period, you need to deliver a `notice of rescission´ to the agent.
This simply means giving the agent a written notice or letter which:
● is addressed to the agent (use their name as given in the agency agreement),
● states that you are rescinding the agreement, and
● is signed by you (and any other person named on the agreement as a principal (vendor) or by your solicitor/s.
You can hand the notice to the agent in person, deliver it to or leave it at the agent’s office or the agent´s address as given in the agency agreement, email it to an address specified by the agent as an address to which emails to the agent may be sent, or fax it to the agent. Be sure to keep a copy for your records. The agent cannot charge you any fees or costs in relation to an agreement that has been rescinded correctly. Any money you have already paid to the agent must be refunded to you in full.
To get a copy of an Agency Agreement please click here and we will send it to you asap
How does a Private Treaty sale work
This is done in the same way as when a property is sold by auction however there is no auction date set and it is advertised as For Sale. The property is advertised and open viewings are set to visit the property. The agent might or might not advertise the exact price that the sellers/vendors want for the property but instead mention a guide price. The prospective buyers are invited to submit their offer at the For Sale price in which case you would then be the new owner of the property or submit their own offer to the sellers/vendors via the agent. The sellers/vendors will either reject, accept or negotiate that offer. If and once it is accepted then a Contract of Sale is signed by both parties and exchanged.
What is Strata Management and How Does It Work
It is an independent company that is asked to look after certain properties. It is appointed by the individual owners of their property who all share a common area as part of the ownership of that property.These could include Residential Blocks of Units, Commercial Buildings, Industrial Units or Industrial Parks, Light Industrial Factories, Retail Shops or Retirement Villages. The services that a Strata Management company offers could include financials, property maintenance, annual meetings, minutes of meetings, regulation compliance etc.
For more info on our service – click here
What is a Strata Title
A Strata Unit’s boundaries are defined by structural divisions of a building.
The owner of a property owns the inside of their unit but usually not the outside which is termed common property.
A Strata Corporation is appointed to administer and maintain the common property for the benefit of all unit owners, and enforce the articles (rules) of the Strata Corporation.All unit owners are automatically members of the Corporation. Funds are raised by levying contributions
Building and public liability insurance must be taken out by the Strata Corporation to cover the buildings and common property of the plan.Contents insurance of a unit will need to be taken out by the unit owner or occupier
The owner of a property owns the inside of their unit but usually not the outside which is termed common property. This means that an external awning over a window needs permission before it can be erected.
What is a Community TitleIn a Community Title, the land is divided to create Lots (as opposed to units) and common property similar to that of strata titles. However, a Community lot`s boundaries do not generally relate to a structure, but the surveyed land measurements, which are unlimited in height and depth unless specified on the plan.
A Community Title Corporation is also appointed, comprising of registered owners of the lots, and is responsible for the administration of the group’s by-laws (rules), maintenance and insurance of the common property. The cost for the insurance over the common property is shared between the lot owners according to their lot entitlement.The owner is responsible for the maintenance and insurance of any structures on their own lot, and has no obligation for maintenance of other lot owner’s buildings.
What is a Torrens Title A Torrens
Title property is one in which the purchaser owns both the house and the land on which it is built.
Income Tax Variation Form (Previously knows a Section 221YD variation)It is used by property investors to vary the amount of tax they pay on their wages on a weekly, fortnightly or monthly basis instead of waiting to get a refund at the end of the financial year.
What is Tenants in Common or Joint Tenants
Property may be owned under joint tenancy or tenancy in common. Joint tenancy is ownership in equal undivided shares. If one person passes away the share of the property automatically goes to the other share owner. Tenants in Common are where each party owns a percentage of the property which might be different to the other party ie 60/40%, 90/10%, 99/1% etc. In Tenants in Common you can pass your ownership of the property to who ever you want.
What is a 149 (2) Certificate & 149 (5) Certificate A section 149(2) certificate shows the zoning of the property, its relevant state, regional and local planning controls and other property issues such as land contamination and road widening. A section 149(2) and 149(5) certificate provides the same information but also includes other factors such as advice from other authorities, subdivision history etc.
What is a Depreciation Schedule
It breaks down the depreciation of the properties long-term and short term assets. It calculates the depreciation expense for the property and allocates the cost of each part of the property over the useful life. This can then be used to reduce your tax payable. For more info click here
How does Capital Gains Tax in property workA capital gains tax (CGT) was introduced in Australia on 20 September 1985, one of a number of tax reforms. The CGT applied only to assets acquired on or after that date. There is a misconception about GCT and the way it works is, you add your profit you made (less buying and selling expenses) to your income for that year and pay the income tax on it as if your salary was that amount for that year.
The GCT is worked out using a few steps.
Here is an example of how one works it out. Say you purchase a property for $1.000.000 and you paid stamp duty, solicitors fees & pest and building inspections and that expense was $45.000 and then you sell the property for $1.500.000 and you have to pay solicitors fees, agents commission and advertising and that expense is $20.000.
Step 1 You add your buying and selling expenses together and deduct it off your profit. In this example it works out to $65.000. Your profit is $1.500.000 – $1.000.000 – $65.000 = $435.000. This is your profit.
Step 2 If you have kept it under 12 months you add this to your personal income you earned for that year and you pay income tax on that total amount. So if your salary was $100 000 for the year, you add $435.000 to it, you are now taxed on the total amount as if you had earned a salary of $535.000. If you keep it over 12 months then you are allowed a 50% discount on your profit. So in this case your original profit was $435.000 less 50% discount = $232.500. So if your salary was $100 000 for the year, you add $232.500 to it and now you are taxed on the amount as if you had earned a salary of $332.500.
How does the 6 year rule work for Capital Gains Tax if I rent it out
Whenever a property is occupied as a main residence, it is exempt from capital gains tax (CGT) for that period of time. Under the 6 year rule, a property can continue to be exempt from CGT if sold within six years of first being rented out. This means any capital growth accrued until then will be exempt. You would need to live in it before renting it out in order for the 6 year rule to apply.As a general rule, a dwelling ceases being your main residence once you stop living in it. However, you can choose to continue treating a dwelling as your main residence for capital gains tax (CGT) purposes even though you no longer live in it.
Generally: You can treat the dwelling as your main residence for:
Up to six years if it is used to produce income
Indefinitely if it is not used to produce income
How does the First Home Owner Grant work
It is a government scheme that was introduced in 2000 to offset the effect of Goods and Services Tax (GST) on buying or building a home. It is a national scheme funded by the states and territories and administered under their own legislation. Under the scheme, a one-off grant is payable to first home owners that satisfy all the eligibility criteria. Please visit www.firsthome.gov.au to see what you get in your state.
How does Zoning work for my property
Zoning refers to municipal or local government laws that dictate how real property can and cannot be used in certain areas. Zoning laws can limit commercial use, height restrictions, property sizes etc. so do your research on this before buying or selling
How does Subdivision work
Subdivision is the act of dividing land into pieces that are easier to sell or otherwise develop. Each council has their own rules on how this can be done.See the new rules from the NSW Govt that could help increase the value of your property click here
How does the Agents Commission work when selling a property
There is many ways that an agent or agency can structure their commission. Below are a few examples. We offer all 3Option 1 Have one percentage rate of the selling price irrespective of that selling priceOption 2 Have one percentage rate of the selling price up to a certain amount, then add in a higher percentage rate if the property sells for more than an amount that the vendors have mentioned – its like a bonus they offer the agent if you get them their dream price.Option 3 The Lifestlye Real Estate Group Performance Guarantee . If we sell the property for less than what we originally said it would sell for, we reduce our commission percentage rate. The Lifestyle Real Estate Group are the only ones that offer this guarantee in the industry. We stand behind our performance guarantee and if the sellers/vendors take less then so must we. At the end of the day we should know the market and what a property should sell for.
What do real estate abbreviations stand for
To see the full list please click here
How does it work for foreign investors and what are the fees when buying property or renting out their property in AustraliaUnder Australia’s foreign investment framework, foreign persons generally need to apply for foreign investment approval before purchasing residential real estate in Australia.
The Government’s policy is to channel foreign investment into new dwellings as this creates additional jobs in the construction industry and helps support economic growth. It can also increase government revenues, in the form of stamp duties and other taxes, and from the overall higher economic growth that flows from additional investment.
Foreign investment applications are therefore generally considered in light of the overarching principle that the proposed investment should increase Australia’s housing stock (be creating at least one new additional dwelling).
Consistent with this aim, different factors apply depending on whether the type of property being acquired will increase the housing stock or whether it is an established dwelling.
The annual vacancy fee is part of the Government’s comprehensive housing affordability plan and seeks to increase the number of properties available for Australians to live in.
Foreign persons who purchase residential real estate will be subject to an annual vacancy fee where the property is not residentially occupied or rented out for more than six months in a year. The vacancy charge, administered by the ATO, came into effect retroactively on 9 May 2017.It is important that foreign investors understand and comply with Australia’s foreign investment framework as strict criminal and civil penalties may apply for breaches of the law, including disposal orders.
For more info for the Foreign Investments Review Board – www.firb.gov.au
For more info for Foreign Residential Real Estate – Annual Vacancy Charge – click hereFor more info for Foreign Residential Land Fees – click here
What do I need to do when selling a property or buying a property
Australian resident vendors will have to provide a clearance certificate to the purchaser prior to settlement to avoid the 12.5 per cent withholding amount.From 1 July 2017, vendors selling real property of a contract price of $750,000 and above, down from the previous threshold of $2 million, are subject to a foreign resident capital gains withholding tax rate of 12.5 per cent unless they are able to prove their residency status with a clearance certificate from the ATO.
Clearance certificates
A clearance certificate provides certainty to purchasers regarding their withholding obligations. It confirms the withholding tax is not applicable to the transaction.The purchaser must withhold 12.5% of the purchase price in transactions involving taxable Australian real property, or an indirect Australian real property interest that provides company title interests, with a market value of $750,000 or more, unless the vendor shows the purchaser a clearance certificate from us.To avoid possible delays at settlement, a vendor should apply online for a clearance certificate at least 28 days before it is required.