Newsletter Issue 27

In the last issue I stated that the market was in transition and we were experiencing a return to a more balanced market (where there are approximately the same number of sellers and buyers). My prediction of a sustained strong market has proven correct - at least in the short term - with Towns Shearing recording the strongest September and October sales figures on record.

Despite our continued strong individual office performance, the market overall is beginning to show signs of softening with an increased "time on market" i.e. the amount of time properties are taking to sell. The warmer weather has also seen an increase in the amount of homes available for sale.

Because of this, homeowners are returning to traditional methods of sale such as newspaper advertising and open homes. People are again beginning to understand the need to promote their properties effectively to make them stand out in the crowd and obtain more inspections.

Prices appear to have leveled out and it remains to be seen what will happen if interest rates rise over the next 6 months. My guess is, there will be very little affect unless we see several increases over time and then those most affected will be home buyers who stretched themselves to the limit in boom times.

Our randomly selected winner for a weekend away at Hobart's Grand Chancellor is Robert and Kim Sherriff. Mr. and Mrs. Sherriff bought a home through Christine Hansen-Coret in 2003 and were ecstatic when Christine told them of their win. Congratulations Robert and Kim.

• I've heard that cardiovascular exercise can prolong life. Is this true?

  Your heart is only good for so many beats, and that's it . . . don't waste them on exercise. Everything wears out eventually. Speeding up your heart will not make you live longer; that's like saying you can extend the life of your car by driving it faster. Want to live longer? Take a nap.

• Should I cut down on meat and eat more fruits and vegetables?

  You must grasp logistical efficiencies. What does a cow eat? Hay and corn. And what are these? Vegetables. So a steak is nothing more than an efficient mechanism of delivering vegetables to your system. Need grain? Eat chicken. Beef is also a good source of field grass (green leafy vegetable). And a pork chop can give you 100% of your recommended daily allowance of vegetable products.

• Should I reduce my alcohol intake?

  Not at all. Wine is made from fruit. Brandy is distilled wine, which means they take the water out of the fruity bit so you get even more of the goodness that way. Beer is also made out of vegetables. Bottoms up!

• How can I calculate my body/fat ratio?

  Well, if you have a body and you have body fat, your ratio is one to one. If you have two bodies, your ratio is two to one, etc.

• What are some of the advantages of participating in a regular exercise program?

  Can't think of a single one, sorry. My philosophy is: No Pain . . . Good

• Aren't fried foods bad for you?

  YOU'RE NOT LISTENING! Foods are fried these days in vegetable oil. In fact, they're permeated in it. How could getting more vegetables be bad for you?

• Will sit-ups help prevent me from getting a little soft around the middle?

  Definitely not! When you exercise a muscle, it gets bigger. You should only be doing sit-ups if you want a bigger stomach.

• Is chocolate bad for me?

  Are you crazy? HELLO . . . Cocoa beans . . . another vegetable!!! It's the best feel-good food around!

• Is swimming good for your figure?

  If swimming is good for your figure, explain whales to me.

• Is getting in-shape important for my lifestyle?

  Hey! 'Round' is a shape!

Well, I hope this has cleared up any misconceptions you may have had about food and diets.

Applying for a mortgage is a very important part of buying a home or investment property. Knowing what to ask your lender could save you a lot of time and headaches, so before you sign your mortgage documents you should find out the answers to the following questions.

1. What is the interest rate on this mortgage?

   It's important you understand exactly what you'll be paying in interest over the life of the loan. Even if you have a 'honeymoon' interest rate for the first year of the loan, you should be clear about what your interest rate will revert to after the honeymoon is over and ensure you can comfortably afford the monthly repayments on this higher amount.

2. Can I lock in an interest rate if I need to and what will it cost me to do so?

   The interest rate of the mortgage you're applying for may go up or down between the time you apply and the time you close so you might decide to lock in the rate for a specified period. Be sure to ask the lender if there is any fee for locking in the rate.

3. What are the bank guidelines for approving the loan?

   The banks guidelines might relate to your income, employment, assets, liabilities and credit history, so be clear about what you'll be asked and ensure you have the documents to support your application.

4. What documents do I have to provide?

   Speaking of documents . . . you will probably need to provide proof of income and your assets and liabilities to get a loan. Find out what documents will be required in your particular situation by asking your lender and make copies of those documents for your lender.

5. How long will it take to process my application?

   The approval process for your loan will vary from lender to lender. It often depends on how much business your particular lender is doing and how much business the market is seeing as a whole. When borrowers are knocking down doors all over town, loan approval will probably take longer. Just make sure you get a realistic estimate on how long your approval will take and use that estimate to determine when you should start house hunting.

6. Is there a minimum deposit required for this loan?

   Depending on the amount of your deposit and its percent of the price of the home you're buying, you might be charged different interest rates or quoted different loan terms. Loans at high loan-to-value ratios can cost more than loans with larger down payments. Still, customers with good credit or those who are willing to pay mortgage insurance may be able to borrow more than 80% of the value of the property.

7. What other costs will be charged on this loan?

   Every mortgage comes with fees and charges for various services that lenders and other parties involved in the transaction provide. These may include application fees, valuation fees, bank solicitor's fees and stamp duty on the mortgage documents. You need to find out what you'll be charged and whether these costs can be rolled into the loan or need to be covered separately.

8. Can I make additional repayments on the loan?

   Some mortgages only allow you to make the minimum monthly repayment, while others will let you make additional payments. If you can make additional repayments you should find out whether these payments will be credited towards the loan interest or the principal amount.

9. Is there an early repayment penalty on this loan?

   The early repayment question is most important for loan shoppers. Generally speaking a home loan is not tax deductible and should be paid off as quickly as possible. Therefore, if you do come across extra money which allows you to pay off your loan early, it's important to ensure you won't be penalized for early repayment.

10. What might delay the approval of my loan?

    If you provide the lender with complete, accurate information, everything should go smoothly and fairly quickly. However, there could be a delay if the lender discovers credit problems or requires extra paperwork, which is why it is critical to get everything in order (as much as possible) before you visit your mortgage provider.

In today's market, homes that are priced competitively should sell readily. A lack of "action" usually means the property has been priced so it doesn't compare well to other properties. When setting price, be objective. Try to look at the property as if you were a buyer. What do you like, dislike? How does your property compare to others in the market? Is it worth more, less? Answer these questions objectively and you're on the way to pricing your home competitively . . . and on the way to a prompt sale!

Negotiating on a property price can be one of the most difficult aspects of home buying and selling. Both the seller and the buyer will want the best possible price and walk away with the feeling of "winning". Successful negotiation is not about luck, it's based on the ability to use certain specialized skills and techniques to bring two parties to agreement. While real estate professionals are trained in the art of negotiation, there are some simple tips that both home buyers and sellers can follow to help the process.

1. Think fair pricing

   Naturally, the most important aspect of successful negotiation is price. If a property is overpriced to begin with it can deter home buyers from making an offer. Similarly, making an offer on a property that is far too low could alienate the seller. Look at sales of similar properties in the surrounding area and base offers and selling prices on this.

2. Respect the other side

   Understanding the other side can be important in negotiating. For example, a buyer who has an urgent move in date may be willing to pay a little bit more for a property. Or a seller who has committed to another property purchase may also be willing to compromise, either on price or perhaps inclusions.

3. "Winning" may mean compromise

   A win-win negotiation may not mean the buyer and seller get everything they want. More often, it means give and take on both sides, so focus on your top priorities and don't let emotions overrule sensible judgement.

4. Meet in the middle

   If the buyer and seller cannot decide on a settlement date, price or inclusions in the sale, it can pay to simply meet in the middle. Meeting half way is a time honored negotiation strategy beneficial to both parties.

As you read this newsletter Christmas is just around the corner. Every year (and I am sure that most of us are the same) we tell ourselves that this time it will be different. Christmas is such a rush, buying presents, planning get-togethers with family and friends and organizing holidays, to name just a few things that need to be done. When it's all over we often feel exhausted and wonder what it was all about.

But, . . . it can be different. All it takes is a little planning. Determine to organise everything well ahead of time. If you use a diary write a "to do" list and start ticking it off now. No matter when you undertake the required activities they have to be done at some time, and you will usually achieve them faster if you are not in a panic.

I can attest to the advantage of doing this. Last year I had Christmas cards written, presents bought and family gatherings planned by the start of December and it gave me extra time to relax over the Christmas break with family, and to think about the deeper meaning of Christmas. And the bonus was that my wife loved it too.

As usual if you would like clarification on any issues in this newsletter, please contact me.

Noel R. Towns
Managing Director