A house nearby just sold after being on the market for months, for a loss of more than $100,000.00 after 7 years of “ownership” or really having a putrid relationship with a bank who “allowed” the poor “owners” to occupy the property. I know a little of this place and its distraught former owners.
Their total out of pocket expenses in bank interest, rates, building (not including contents) insurance and repairs over the 7 years amounted to roughly $215,000.00
Add to that a loss on sale of $100,000.00 (including agents fees, stamp duty etc) and this house, at first glance, cost them $865.00 per week. But there’s more…
If you add the interest they would have received on the capital they had tied up in the property (less tax at say 35%) you’d come up with a cost to own of more than $1,270.00 per week.
Further down the road is a magnificent two story home that over the last seven years could have been rented for an average over that period of $650.00 a week.
$1,270.00 – $650.00 = $620.00 each and every week.
Rent instead of a odd relationship with a big Bank and take $620.00 and put it aside for the last seven years and throw in some interest, take out some tax and you would be left with $250,000.00. You’d have had a lot more if you’d been a little more creative with your investments.
People just have to start to think more before they dive into the great Australian Home Ownership Trap that has shut its jaws firmly on many and is about to gobble up tens of thousands more. This is not a fun place to be right now and the vast majority put more time into hair and makeup or saving a few cents at the petrol pump than they do into what to do about the biggest “asset’ and I use that term loosely, they own (or share rights with the Bank to occupy).
At a coffee shop this week I overheard an excited young couple discussing the building of their dream home in a suburb I will dub the next big slum of south east Queensland. After introducing myself and assuring them that despite being an Agent I wasn’t about to try and “sell” them anything, we discussed their plans.
An hour later they left ashen-faced with 50 questions written on a number of napkins, ready to confront the liar who was selling them this so-called dream home complete with fantasy finance package!
I’m starting to receive some rather nasty anonymous emails complaining about my outspoken views, stating that I don’t know what I’m talking about and that I should get out into the marketplace and see for myself that everything is “just great”.
I like nasty emails. This is a good thing. Back at you folks – as soon as you’re prepared to identify yourselves I’d be happy to meet you in a public place, or even go on radio or TV to debate you. Bring as many spin doctors as you like. I dare you!
I’ve examined several flyers from local letterboxes this week. My friends scan and email them to me and they’re hilarious.
Recent Sales! They go on to list the addresses of 20 properties they’ve sold. It’s easy to check sale dates. Would you say that half the sales listed as recent sales that actually settled more than 6 months ago count as “recent sales”? Let me know if I’m being unreasonable will you my dear readers and followers.
I drilled down a little further to see how “successful” these sales were. The Agent had presided over 20 sales that produced a loss (including stamp duty in and commissions out but no renovations or other expenditure that I couldn’t know about) of over $3 MILLION!
This same Group announced in the media recently that Gold Coast prices had “jumped by 5%” and that “2013 was going to be cracker of a year for Gold Coast Real Estate”.
The same group keeps appearing on my radar.
How about this for a lie? “The highest price in the area in 2012”…”Aren’t we the greatest?” I researched and sure enough it WAS the highest price achieved in 2012 for any property within quite a radius but it’s just a little misleading when you look at the property’s sale history.
2003 – $1.475 million
2005 – $3.4 million
2007 – >$4.5 million
2010 – $3.3 million
2012 – under $2.9 million
A massive house about 5 kilometres from me is on the market. I know this house and have inspected it many times. It’s huge, with all the toys anyone would want in a home. If you were to try and buy a vacant block of land in this street, it would cost you a minimum $450,000.00, probably closer to $500,000.00 even in this market. The home would be an absolute minimum $800,000.00 to build, meaning that new, with add ons and stamp duty – $1.3 to 1.45 million.
It was bought in late 2009 for $900,000.00. 3 years later its back on the market for an asking price less than that with few inspections and no offers.
More flyers coming through. “Sold in just 9 days!” “I’m a legend!” says the Agent. The whole story is sad. The home had been owned since new by a very old couple who needed to move into a low care environment. In 2008 a very similar home in the same street was sold for $500,000.00 more and I would’ve expected this home to have fetched $1.6 million, even in these times. These old folks signed a Contract with more zeroes on it than they’d ever seen in their lives which made them instant millionaires. The fact they’d “made” well over a million dollars profit was all they could see, poor old dears. They were “done” out of at least $250,000.00…
Someone needs to be lined up and shot.