Real Estate Plus E-News - May 2018

From the Desk of Our CEO

We have in recent times increased our marketing in the social media sphere with some success. In today’s markets we need to find ways to reach further than ever before and we have introduced a number of products to assist in spreading the word on what properties are available for sale. In today’s campaigns we have found a need to use more tools than ever before and in recent times we have fined tuned our social media packages into what we have called Social Plus.

Social Plus – This part of our marketing strategy is to look for people who are not only active now but potentially active in the future. Traditional advertising is limited in exposure to the full market. Docile buyers are not looking at most traditional advertising until much later in their buying cycle. Our position is we aim to bring this part of the market forward in their cycle, encouraging them to look more seriously so therefore making their decisions earlier or more advanced in the cycle. Our strategy is to go into their world of influence rather than wait for them to come to us, which is the traditional way of advertising.

Social advertising is not a new concept but is not commonly used in real estate well as a real marketing tool. We have worked on designing new ways to reach more people with the aim of achieving the best possible results we can for our clients. Currently we are promoting on Facebook, Twitter, Pinterest, Youtube, Instagram and soon on Google Plus as part of the packages. The results to date have been excellent and has helped increase inquiry rates and has led to better attendances to opens in some areas.

2018 has to date seen a mixed bag of results in the market place. We have seen an increase in direct inquiry and our loans division Plus Loans has an increase in inquiries for pre-approvals meaning people are starting to do their homework before committing to buying so is a positive. The later part of last year saw leasing improve with less vacant properties but still a bit to go. At least we are seeing some positives after a difficult year in 2017. We have seen some excellent results in Jane Brook and we have seen some improved results within our hills offices on a number of fronts.

The Midland area has been a tough assignment so we are looking to see how we can promote the area in a more positive light going forward which will influence the surrounding areas. The amount of stock has presented as the main challenge in the market place as a whole but presents an excellent opportunity for investors, as the entry point has been lower than three years ago so we will be looking to promote that. Interest rates remain the same which is a positive in one sense and a negative in another as the rates can be a catalyst for more action if there is talk of increases. Buyer activity does usually improve when this occurs however we will see what the Reserve Bank does in the second half of the year.

– Milton Rendell, Chief Executive Officer

Squashing Rumours from the Banking Royal Commission

I want to take this opportunity to discuss with you all the impact the Banking Royal Commission has had on the mortgage broking industry nationwide. You may have seen or heard the headlines grilling brokers and their ethics; “3 reasons you should avoid a mortgage broker”, “Why it’s finally time to ban mortgage broker commissions” and the list goes on.. I hope to overcome some of these fabrications and restore your faith.

  1. Price – A draft report recently released by the Productivity Commission shows “Mortgage brokers do not consistently get lower home loan interest rates for consumers than would be available to the consumer by going directly to the provider.” FALSE In my experiences, brokers provide comparable if not better rates than if the customer were to walk into a branch. Brokers have the ability to go back to a bank and ask for a “pricing discount”, which means we fight tooth and nail to beat a comparable rate from their competitor. We also have access to small-scale lenders that don’t physically have a shop-front, meaning the opportunity for consumers to know about these low interest rates goes unnoticed.
  2. Conflict of Interest – The Banking Royal Commission has also uncovered conflicts of interest for mortgage brokers. The most obvious of which is that their commissions are based on the size of the loans they provide to the banks, so they’re incentivised to put large-sized loan applications together. The bigger the loan – and the longer it takes to pay it off – the bigger the commission the broker earns. FALSE Brokers are bound by a tonne of policy and regulation it’s almost impossible to access additional money unless there is a valid reason/enough equity/enough income to service the loan. We would only ever apply for a “large-sized” loan if the customer requests it for a particular reason, not because we want more commission. Also, a bigger loan doesn’t take “longer to pay off”, it just means the loan repayments are higher and the capacity to repay must be evident. Loan terms on average are 30 years so saying it would take longer is a complete twist of words.
  3. New technology – The final reason you might want to by-pass a broker is that you could… potentially… do it yourself. Technology’s always evolving and it’s my understanding that in the not-too-distant future, computer programmes will exist that allow you to submit a mortgage application directly to a bank, online, with little fuss. FALSE Being in real estate and a predominately customer service industry, you would all understand that the human element is a very important factor when it comes to client satisfaction. Same goes for the finance and home loans industry. Yes, there are the few who would rather do everything themselves online, but blanketing the entire market under this assumption is just ridiculous in my opinion.
  4. Commission – Broker incentives “potentially lead to poor customer outcomes.” FALSE The value of commission is fairly uniform across all lenders, so there would be no benefit from us going to say ANZ over Macquarie because we get paid an additional 0.055% in upfront commission. Ludicrous! In addition to that, we choose a lender based on the clients suitability and requirements so taking them to one lender over another is often due to lending criteria.

Very recently, when someone asked what I did for a living, I told them, and they proceeded to say, ”oh, you’re one of those dodgy brokers”. It’s so disappointing to think the average person is being educated by a journalist who clearly has ZERO idea about the industry and how it works. Did you know Australian brokers account for roughly 55% of home loan applications originated!!

All I ask is that you’re well informed of whats going on out there and that you aren’t afraid to support the mortgage broking industry despite all the bad press. Unless you’ve dealt with a respectable mortgage broker in the past it’s hard to convince you otherwise, but if you have then you will know how much financial value they add.

Dan and I love a good chat, so if you have any queries or bugbears, please come see us!

Shay Chalmers DipFMBM FBAA, Relationship Manager – Plus Loans

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Real Estate Plus E-News - May 2018