How to avoid becoming a victim of underquoting

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It’s the hope that kills you. Just ask Carlton fans, NSW Blues supporters, Wallabies sufferers, and hopeful homebuyers who have fallen victim to underquoting. Obviously, you can’t change your footy team, but you can follow these tips to avoid the sketchy real estate practice.

If it hasn’t happened to you, it’s probably happened to someone you know.

You find a dream home that appears within your budget, you get your finance pre-approved, you get your hopes up, and … you get blown out of the water come auction day because the agent has underquoted the property.

But hang in there – all is not lost, as we’ll touch upon below.

What is underquoting?

Underquoting is the misleading practice of advertising a property with a price guide that suggests to hopeful buyers that it could sell below market value, or for less than what the agent knows the vendor will accept.

Accusations of underquoting have been rife in recent times, as national property prices have soared 24% over the past year alone.

Now, there’s no doubt that some agents out there have been intentionally underquoting properties to drum up interest. But not always.

Real Estate Buyers Agents Association (REBAA) president Cate Bakos says on many occasions selling agents get blamed unfairly for their reluctance to predict a strong competitive result, and in many circumstances, vendors exercise their right to change their price expectations without prior consultation with their agent.

“Underquoting is amplified by a rising market,” adds Ms Bakos.

Which means as property prices peak in Sydney and Melbourne, and the rest of the country starts to follow a similar trend, less underquoting should occur.

Why do agents underquote a property?

The main reason vendors and agencies underquote, explains Ms Bakos, is based on the belief that an underquoted property will attract more prospective buyers.

It’s hoped that these buyers will fall in love with the property so much that they’ll find a way to compete against more cashed-up buyers, helping to push the property’s final price up in the process.

“The reality is that many buyers find themselves shortlisting properties that are beyond their financial constraints, and this can lead to disappointment, wasted expenditure for building reports and due diligence, and lost opportunity,” says Ms Bakos.

Isn’t underquoting illegal?

Ms Bakos said while price guide legislation varied between states and territories, the problem was relatively endemic in many cities across the nation.

She said while underquoting was illegal, there were still many legal loopholes that existed in current legislation, particularly in Victoria.

“In Victoria for instance, vendors are not required to state their reserve price for an auction until moments before the auction,” says Ms Baokes.

“And some offending agencies take advantage of this by pitching the property at a price lower than that of a reasonable price expectation or a realistically anticipated reserve.”

How to avoid becoming a victim of underquoting

Rather than rely on the price guide the real estate agent gives you, do your own homework.

You can do this by looking at comparable sales within the last month or two (on websites such as Domain and realestate.com.au), and compare like-for-like properties and locations.

“It’s an approximation, but it’s more helpful than living in the past and working off older, unreliable sales,” adds Ms Bakos.

Here are the REBAA’s other top tips to avoid becoming a victim of underquoting:

1. Compare comparable properties by location, land size and condition.

2. Spend the months leading up to active bidding time (while obtaining finance pre-approval) to inspect, inspect and inspect as many properties and neighbourhoods as you can.

3. Look at other similar properties in the area and see what the agent’s initially-published estimate price range was; what the reserve price was; and what it finally sold for.

4. Consider consulting and engaging a REBAA-accredited buyer’s agent to take care of the process so you can “buy with confidence.”

And last but not least, don’t forget to get in touch with us in advance to get your finance pre-approved.

That way, come crunch time, you can spend less time on your finance application, and more time doing your homework to make sure the properties you’ve got your heart set on haven’t been underquoted.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

How to save a first home deposit in just over a year

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It’s taking young couples roughly five years on average to save for a 20% home loan deposit, according to new research. Want to hear something crazy, though? We know how to quarter that timeframe…

Real talk: it’s never been tougher to save up a deposit for your first home.

In Sydney the average timeframe is 8+ years. In Melbourne 6.5 years. And most other places across the country, 4 to 6 years. 

That is unless you happen to know a finance professional who can help first home buyers purchase a home with just a 5% deposit – and not pay any lender’s mortgage insurance in the process.

And how do we do that?

Well, if you’re eligible, we can hook you up with the First Home Guarantee (FHG) scheme – which will release 35,000 places from July 1 (more on this below).

By getting in early on this scheme and reserving a spot, you can quarter the amount of time it takes you to save up for your first home deposit.

Don’t believe us, check out these stats

Below you’ll see how long it’s currently taking first home buyers across the country to save for a 20% home loan deposit (according to Domain data), compared to saving just 5%.

Sydney: 8 years 1 month (20%), down to 2 years (5%).
Melbourne: 6 years 6 months (20%), down to 1 year 7 months (5%).
Brisbane: 4 years 10 months (20%), down to 1 year 3 months (5%).
Adelaide: 4 years 7 months (20%), down to 1 year 2 months (5%).
Perth: 3 years 7 months (20%), down to 11 months (5%).
Hobart: 5 years 10 months (20%), down to 1 year 5 months (5%).
Darwin: 4 years 3 months (20%), down to 1 year (5%).
Canberra: 7 years 1 month (20%), down to 1 year 9 months (5%).
Combined capital cities: 5 years 8 months (20%), down to 1 year 5 months (5%).
Combined regionals: 3 years 10 months (20%), down to 11 months (5%).
Australia-wide: 4 years 5 months (20%), down to 1 year 1 month (5%).

So if you’ve been saving towards a 20% for at least a year, you could be ready to hit the ground running when the 35,000 FHG schemes become available on July 1.

Tell me more about the First Home Guarantee scheme!

Ok, so the First Home Guarantee scheme (previously the First Home Loan Deposit Scheme) allows eligible first home buyers to build or purchase a home with only a 5% deposit, without forking out for lenders’ mortgage insurance (LMI).

This is because the federal government guarantees (to a participating lender) up to 15% of the value of the property purchased.

Not paying LMI can save buyers anywhere between $4,000 and $35,000, depending on the property price and deposit amount (it’s also worth noting that property price caps apply).

But places in this scheme are on a first-come, first-served basis.

So don’t let the recent expansion to 35,000 spots lull you into a sense of complacency.

They’ll go fairly quickly, which means if you’re interested you’ll want to get in touch with us asap to ensure you’re ready to lodge the application come July 1.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Three (financial) New Year’s resolution ideas

Cut calories, increase your steps, abstain from alcohol: each year we set ourselves some pretty lofty New Year’s resolutions, most of which are doomed to fail. So why not add a nice straightforward financial goal to the list this year? Here are three to get you started.

Ambition is an admirable quality, but somewhere between the Christmas pudding and the “three, two, one, Happy New Year!” we tend to overcommit.

So this year, we’re encouraging you to add a financial goal to your list of New Year’s resolutions.

Here are three to get you started.

1. Set yourself a finance or property goal

Perhaps you’ve reached a point in your life where you can start making additional payments on your mortgage each month.

Or, you might have saved up enough money to buy your first investment property, or upgrade from an apartment to a house.

Or maybe the thought of owning your first home still feels a long way off, but you haven’t yet heard about the federal government’s First Home Loan Deposit scheme, which helps first home buyers crack the market four years sooner, on average.

Whatever your position, consider taking stock of what you want to achieve in 2022 so that you can work out a plan to achieve it.

And when you narrow in on what it is you to achieve, get in touch with us to explore some funding options that can help turn your goal from pipe dream to reality.

2. Call us for a home loan health check

Do you know the interest rate on your home loan?

Don’t fret if you don’t, about half of mortgage holders can’t recall it.

But not knowing the rate is usually a good sign that it’s time for a home loan health check.

That’s because an RBA study found that for loans written four years ago, borrowers are charged an average of 40 basis points higher interest than new loans.

For a loan balance of $250,000, that equates to an extra $1,000 in interest payments per year.

Other good reasons for a home loan health check could include seeing whether locking in a fixed rate might suit you better over the next few years, or switching to a home loan that has extra features, such as an offset account.

Rest assured we’ll make it all very quick and painless. Simply get the ball rolling by giving us a call today.

3. Go through your bank statements and trim the fat!

When was the last time you had a thorough look through your spending account?

Subscription services have taken off in recent years in Australia, so much so that the average Australian household pays $42 per month for their streaming service.

If you can halve that, you can save between $200-$300 per year.

Other micro-transactions that most families can cut back on include food delivery services such as Uber Eats, as well as alcohol, and takeaway coffees.

In fact, buying a $4 takeaway coffee each day costs you a whopping $1460 per year, whereas making it yourself using a french press or Aeropress costs just $260.

That’s another $1200 in savings each year. And for two family members, you can save $2400.

Take steps to achieve your goals today

Resolution inertia can be a real thing – it sets in when once you’ve set your goals, and when you realise now you’ve actually got to start taking steps to achieve them.

That’s where we come in – get in touch today for resolutions one and two: setting yourself a property/finance goal and getting a home loan health check.

And by getting the ball rolling on these resolutions you can be well on your way to resolution three: saving money!

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Don’t drown in Buy Now Pay Later debt this Christmas

Christmas is fast approaching and there’s a good chance you’ve started turning your attention to gifts for family and friends. But be careful this silly season: more than half of Buy Now Pay Later (BNPL) customers are struggling to pay day-to-day living expenses.

Christmas and overindulging: name a more iconic duo.

But one temptation to avoid indulging in this silly season is BNPL services such as Afterpay and Zip.

There are more than 5 million active BNPL accounts in Australia, which make up about 20% of online retail transactions.

And a new report by Financial Counselling Australia has revealed BNPL debt is causing significant financial stress to users who have overcommitted to the products.

The BNPL report, titled “It’s credit, it causes harm and we need safeguards”, shows ​​61% of financial counsellors say most or all their clients with BNPL debt are struggling to pay day-to-day living expenses.

“Financial counsellors are seeing people with multiple BNPL debts. They are really concerned that so many clients are using the product to cover essentials like food, medications and utility bills,” said Financial Counselling Australia CEO Fiona Guthrie.

“This is very worrying, especially as we head into Christmas which is traditionally a time of heavy spending. Buy Now Pay Later could leave people with a financial hangover come January.”

The emergence of the BNPL market

These days, BNPL can be used for small purchases such as a pair of shoes, to a night out at the pub, to larger purchases of up to $30,000 for cosmetic surgery or solar panels for your house.

“And as the market grows, financial counsellors are seeing more clients with BNPL debt.

“84% of financial counsellors surveyed said that about half, most or all clients presented with BNPL debt now. This compared to just 31% a year ago,” says Ms Guthrie says.

And it’s a trend that has the federal government worried – this week Treasurer Josh Frydenberg announced plans to reform and tighten the rules around new digital payment systems, including BPNL and cryptocurrencies.

Other important reasons not to overcommit to BNPL

While financial regulators and credit reporting agencies have been caught a little flat-footed by BNPL, one of the three main credit reporting agencies in Australia, Equifax, recently announced that BNPL accounts and transactions will be included in credit reports from 24 July 2021.

And most (if not all) lenders pay attention to whether or not you use BNPL services when they’re assessing your home loan application.

That’s because BNPL is still a credit liability that needs to be disclosed when applying for a home loan.

So if you have any doubts about whether a BNPL purchase might affect your ability to secure a home loan – or pay off your existing one – then feel free to get in touch.

We’re all about the Christmas cheer around here, and there’s nothing more cheerful than not suffering from a BNPL financial hangover once the silly season has come to an end.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

How to protect your business and your customers from scams

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When you pay a supplier or service provider, are you certain you’re paying the right account? You’ve got to be super careful these days, as scammers are compromising inboxes and requesting payments to a new account. Here’s how to protect your business and its customers.

It’s Scams Awareness Week 2021, and over the past year scams have hit Australian businesses hard, resulting in $128 million in losses.

And as alarming as that is, one-third of people who are scammed never tell anyone, so the true numbers are probably much higher.

So what scam is catching out businesses this year?

Perhaps the most dangerous scam this year is “spoofing”, which involves scammers compromising a business’s email correspondence by imitating either your, or your customer’s, email account or website.

The scammers then email you, or your customers, requesting that payments be made to a new account for all future invoices.

The unsuspecting business or customer then makes the payment – in this example $10,000 – not realising they’ve paid the scammers. This not only costs the victim money, but disrupts business cash flow and operations too.

How to pay and receive with confidence

While spoofing is on the rise, there are some simple steps you can take to make sure your business and its customers are sending money to the correct account.

“If you have staff, talk to them about this scam to make them aware of how it works and what to look for if they are targeted,” warns small business ombudsman Bruce Billson.

Small businesses are also being encouraged to register for PayID, use BPAY, or implement e-invoicing when paying or receiving payment for invoices to help beat scammers.

That’s because these payment services will show who you’re paying before you pay, ensuring money is going to the intended account.

“PayID for example is a unique feature that will help prevent scams for individuals and businesses,” explains Australian Banking Association CEO Anna Bligh.

“Unlike paying to a BSB and account number, PayID gives the user the ability to confirm the name of the account holder before you transfer your funds.”

And the good news is that PayID is easy to register for and use.

So far, there are more than 8 million PayID’s registered across Australia, many of which are for businesses.

“As banking becomes more digitalised, no longer do customers prefer to sign a cheque or pay with cash. As a result, we all need to be more cautious about scammers and utilise services that ensure our money is being sent to the right business or individual,” Ms Bligh said.

Other steps you can take to protect your business from scammers

Other steps to protect your business from scammers are to use services such as two-step authentication where possible, and double-check the authenticity of webpage links before you click.

“These are easy and simple steps to protect yourself from these very costly and abhorrent scams,” says Alexi Boyd, Chief Executive Officer at the Council of Small Business Organisations Australia.

And last but not least, if you ever have any doubts about whether you’re making a payment to the right account, or if you receive a request to change payment account information, simply pick up the phone and speak to your contact at that organisation.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.