Archives

PAYING LAND TAX TWICE IN ONE YEAR

I have a weekender on the South Coast and a home in Sydney. The weekender attracts land tax. Every year in January we receive our land tax bill from the Office of State Revenue (OSR) and we pay it in February, with 2008 being no exception.

On 23rd May 2008 Shoalhaven City Council wrote to me about the risk (hopefully very small) to my land & many others on the coast, of falling into the sea.

On the 27th May the Office of State Revenue wrote to me saying the Valuer General has reassessed the value of my land so I have to pay more land tax for 2008. I am left to think the OSR has panicked & thought, we had better pluck this goose whilst it is still perched overlooking the beach, because, if it falls off the edge they are not likely to get anything more.

I have rung OSR & they are blaming the Valuer General. I am not arguing about the amount (at least not for the moment), just the concept of a retrospective tax.

In January the OSR wrote in their letter “Land Tax in this notice has been assessed for the 2008 Tax Year”, and in May the heading of the letter is exactly the same. On page 4, I read that the second letter replaces the previous notification, because of a valuation change!

There is no guarantee that I will not be hit with another increase by the 31st of December 2008. I bet I won’t hear from the OSR if my house does fall off the cliff onto the beach!

Where is the fairness in all this? Surely the OSR can’t have two bites of the cherry in the same year?

In the OSR’s brochure they state at the outset that “land values are determined as at 1st July each year & reflect property market conditions at that time”.

Any valuation by the Valuer General after that time should purely be applied to the next 1st July, and not be backdated to the previous July. Alternatively, if at 31st December, when the OSR wants to issue land tax notices for the coming year and they have not yet got updated valuations then they should mark the notice as provisional. My first notice was not so marked and it should be allowed to be considered final.

The sneakiest part of the whole exercise is the fact that because of the averaging process this increase will have a double effect on the 2009 assessment.

For any of our readers who have been issued with a similar notice. You have our commiserations.

Comments anybody?

, , , , , , dsadsaPosted by on

ETHICAL AGENTS LEFT DISAPPOINTED AGAIN

The heading read “ Real estate agents busted for low quotes” on news.com.au this week and our first reaction here at Beach & Bay was “finally they catch those dodgy agents that ruin the reputation of the industry”.

Amongst ethical agents it is a source of never ending frustration that some agents continue to list auction properties that on the agency agreement with the seller are at a much higher figure than what those agents quote to buyers.

In 2003, the State Government introduced the Property, Stock and Business Agents Act, banning underquoting but we as agents have not seen much change, the same offenders continue to do the wrong thing. In principle it was good to hear that the Office of Fair Trading was inspecting and fining agents for this breach.

On closer inspection of the reports in the news, we were slightly alarmed. From what I read it seems that real estate agents need to throw caution to the wind and forget about being conservative in giving an owner a price for what their property is worth, in this very uncertain market or maybe we need to study palm reading.

The news.com.au article mentions the McGrath agency at Lindfield’s case where they have been fined for the following:

They quoted on the agency agreement $820,000 to $920,000. This means the owner agreed with the agent that their property was worth somewhere between these 2 figures. Then the article says “But Fair Trading investigators found buyers were told of a likely selling price of over $820,000”. Now surely the cisn’t getting narky over the wording of this? Should they have quoted to buyers “$820,000 and over”, rather than “above $820,000”?

The property later sold at auction for $1.1 million. Now this doesn’t seem to have been an issue, at least not the way the article was written. And really this can not be a problem because it is an auction and people are supposed to get carried away, auction properties are properties that are unique, that can’t be compared, are scarce and are auctioned because they are difficult to price. I am hoping the problem does not lie in this final price because from now on if the price goes way above our agency agreement we might have to stop the auction and tell people they are getting carried away and they must stop?

If I was John McGrath I would be fighting this case too, if these are all the facts. The main point with this example is that the owner/vendor/seller has agreed with the agent as to what they think their property is worth. If the buyer thinks it is worth more, that is the buyer’s problem.

Real estate agents in NSW are the most regulated industry you can find and yes I agree that there are agents doing the wrong thing all over town. But the above case is just going to make us as agents scared to open our mouths with any quoting. Maybe for auction properties we should just tell buyers to go and do their own research.

And one other point I would like to make is we are working for the seller, they are the ones who pay us. Mind you we wouldn’t make any money if we didn’t have any buyers.

In USA they have buyer’s agents and seller’s agents and both get paid. Maybe this is something we need to think more about because as a real estate agent in NSW we have a very conflicted job.

, , , , , , dsadsaPosted by on

IF AN AUCTION GO TO AUCTION

Several auctions have been cancelled or withdrawn lately on the day of the auction and signs posted on the signboard saying “Under Contract” or “Under Offer”.

A real estate agent interprets this as “There are no buyers”. This might seem cynical but there are several reasons for this. Practically it should not be possible to be “under contract” or “under offer” on the day of the auction or during the course of an auction campaign. One of the reasons sellers choose to market their property for auction is so the pressure is put on the buyer. If you buy at auction or negotiate and buy after auction (until midnight on the day of the auction) you must exchange contracts and put an unconditional deposit on that property, normally 10%. The buyer loses that if they pull out after exchange for any reason. The big difference with “Under Contract” is that the buyer exchanges contracts on a small deposit (0.25%) and has 5 working days to pull out for any reason (otherwise known as exchanging under cool off). The seller can not pull out, only the buyer. Why would a seller accept worse conditions the day before an auction, or on the day of the auction, it just does not make sense.

Even worse is “Under Offer” which means the buyer has made a verbal offer, no contracts signed and can pull out at anytime with absolutely no financial penalty. Better to hold the auction than cancel under those conditions. If you have committed to an auction make sure you go to auction.

Recently there was an “auction cancelled – under offer” sign on a property on auction day, then the ad in the Leader appeared the following Tuesday with the same property advertised “For Sale”. This is interesting as the Leader advertising deadlines mean that they must have known on Thursday prior to the auction that the offer in place on auction day was no longer an “offer”, 2 days ahead of the Saturday auction!!! I am confused are you?

Even during an auction campaign it is not smart to exchange a property under contract with 5 day cool off. In these uncertain times, imagine the situation where a seller accepts an offer of say $800,000, contracts are exchanged under a “5 day cool off” with a $2000 deposit. For 5 working days the seller waits to see if the buyer goes ahead, in the meantime, no one else can buy the property. 5 working days is a long time in a month marketing campaign. Worse case happens and the buyer pulls out. Even mid way through the marketing campaign, all momentum is lost. All the other interest has gone elsewhere as they thought the property was sold. Even worse the buyer could have pulled out for any reason ie decided to go on a holiday or buy a car instead but other buyers start to think the worst, maybe the pest and building was bad…

My advice to the public is, if your agent tells you in the course of marketing your property for auction that you should accept “under contract” or “under offer” conditions, ask the agent why you are paying extra to do an auction campaign and ask him to go back to real estate school!

, , , , , , dsadsaPosted by on