ACRES: Articles

ACRES – Helping vendors to take advantage of the changes on real estate selling

Wed, 09 Nov 2011 11:07:00 +1300

The act of property selling has radically changed with the advent of the internet. We see this every day now in the way people respond to and deal with information which they get online.

In New Zealand the foremost internet site for selling property is Trademe. The site receives 1.4 million hits a week which is 3.5 times more than the Open2View and REINZ sites. The site is almost invariably the first “port of call” for anybody wanting to purchase a property.

If we look back 15 years the way in which Purchasers gathered information was through real estate agents. The agents held the information regarding their property listings tightly, with some agents shielding their listings even from their colleagues. A typical visit to a real estate office saw a potential buyer being driven around a number of properties which were on the books of that agency. The only way that Purchasers could gather information about what was on the market was through the real estate agents who were marketing the properties which were available for sale. Typically also the agents would meet the costs of promotion of the property knowing that they had sole agencies which were not likely to be pilfered or even known by other agencies.

Oh how this has changed. The advent of the internet has meant that the sharing of sales information has become not only desired but demanded by property Vendors. In an effort to meet their obligation to get the best price for their clients, real estate companies have had to change. They are only too aware that a reversion to the old “tightly held“ practices in respect of listings could see them being accused of torts such as negligence or breach of their duty of care to their clients. There is an internet saavy client base out in cyberspace which opens up new opportunities for selling property. Not only have new opportunities arisen but the whole process has become far more transparent and (dare I say it) straightforward. No longer can real estate agents make any claims that they sell properties. Real estate agents are now conduits, putting in place a marketing system which is essentially governed by the traffic generated through internet exposure of the property.

ACRES has taken advantage of the changes. ACRES puts in place the system for selling property at a price which will more often than not be half the commission rate of the established real estate firms. ACRES also provides legal advice from day one for Vendors in respect of what will normally be their most valuable asset. ACRES is the complete package to selling real estate.

Source: ACRES – Helping vendors to take advantage of the changes on real estate selling

CASE - ANZ Bank V Manthorpe

Tue, 08 Nov 2011 11:10:00 +1300

This is a case where the Defendants had been unable to pay their mortgage payments on their investment properties and as a result were issued a Property Law Act Notice by the bank. The Notice expired and the two properties were sold. The Defendant’s argued that the bank didn’t do enough to get a good price for the properties and that they should have received more advice from the bank when they purchased the properties.

The High Court determined that the Manthorpes had legal advice from the outset and that the bank had no duty whatsoever to give them advice on the pros and cons of buying investment properties.

Further the Court was satisfied that the steps taken by the bank ie listing the properties on Trademe, Open2 View and in the NZ Herald were sufficient to discharge the banks responsibilities to properly market the properties.

THE MESSAGE HERE IS THAT IT IS IMPORTANT TO GET GOOD LEGAL ADVICE BEFORE YOU SELL YOUR PROPERTY FROM YOUR LAWYER AND THE DECISION BASICALLY ENDORSES THE MARKETING APPROACH WHICH IS ADHERED TO UNDER THE ACRES SYSTEM

Source: CASE - ANZ Bank V Manthorpe

The Property Lawyer - Lawyers Challenge Traditional Real Estate model

Fri, 09 Sep 2011 16:51:34 +1200

The Property Lawyer back in April published a great article about ACRES. To read the article, download the full PDF here.

Source: The Property Lawyer - Lawyers Challenge Traditional Real Estate model

The State of the Real Estate industry

Tue, 16 Aug 2011 22:32:00 +1200

Consumer recently posted an article on the state of the real estate industry. A worthy read, go to consumer.org.nz to read the article.

Source: The State of the Real Estate industry

Recent Leaky Home Case

Tue, 16 Aug 2011 22:26:00 +1200

Here is a case which was recently decided in the High Court.

Mr and Mrs Adams had a leaky home. They had the home fixed and then did nothing for some years. Several years after fixing the home they decided to bring a claim against potentially liable parties.

Luckily for Mr and Mrs Adams the High Court on appeal from the Weathertight Homes Tribunal ruled that they had a claim notwithstanding that over 6 years previously they had decided not to pursue the matter. Keane J decided that the claim was eligible because there was nothing to say that it wasn’t in the relevant legislation. This is a fortunate case where a lack of activity on their claim probably saved the Adams and gave them the right to bring their claim. However this will not always be the case and the lesson here is clearly that where you feel you might have a claim get in touch with your lawyer at an early stage to avoid disappointment.

Download full case PDF

Source: Recent Leaky Home Case

Recent Case Law and Statute Developments

Tue, 24 May 2011 16:19:00 +1200

At ACRES we know the importance of being up to date with the latest caselaw from the Courts and changes in law from Parliament. As a consequence we intend to bring you a case or two of note each month and keep you abreast of any Parliamentary developments.

1. Abolition of Gift Duty

It was announced in November 2010 by the Revenue Minister Peter Dunne that the abolition of gift duty would go ahead from 1 October 2011. This means that all trust gifting programmes can be ceased as from 1 October 2011 and gifting can be completed in one lump sum. If you have a trust and you have not received advice to this effect from your lawyer or trust administrator we recommend that you contact your ACRES lawyer to obtain advice as to how they can complete your gifting for you on 1 October this year.

2. Property Ventures Investments Ltd v Regalwood Holdings Ltd [2010] 3 NZLR 231

This is an interesting case concerning the rights of a party to cancel an agreement pursuant to a breach of warranty or a misdescription of the property. It examines principles of contract which have been in place for many years and found that those principles still hold firm.

It was held that a misdescription of a property which but for the misdescription a purchaser would not have entered into the agreement, gives right to the Purchaser to cancel the agreement.

A breach of warranty on the other hand generally only gives rights of compensation given that it will amount to a matter which can be compensated by damages which will put the Purchaser in the same position as they should have been had the breach of warranty not occurred.

The Supreme Court held that the sale of a building which did not have a Warrant of Fitness under the provisions of the Building Act amounted to a breach of Warranty and was not a misdescription. Consequently the purchaser was not able to cancel the agreement on the grounds that there was no Warrant of Fitness.

Source: Recent Case Law and Statute Developments

The ACRES Philosophy

Sun, 15 May 2011 16:24:00 +1200

The ACRES philosophy is centred around three basic principles – Price, Presentation and Promotion. We believe that if you get all three of these right you will substantially increase the chances of selling your property at a price which is at least the same as or above its market value.

Price

At ACRES we believe that Vendors should get an up to date valuation appraisal of their property from an independent source prior to placing their property on the market. It is vital that prior to listing Vendors are properly advised as to what their property is worth so that they can make informed and sensible decisions regarding the selling of what is likely their most valuable asset.

Presentation

Purchasers of residential property are generally going to live in the property which they purchase. It is important therefore for most people that they get a good feeling about the property immediately. If the property is poorly presented it is less likely to give people that "good feeling". If a property has had a makeover, is "staged" and is generally well presented it is more likely to attract buyer interest. Not only that but it is also more likely to draw an offer from that interest which is close to or above its value.
It goes without saying that prior to marketing it is important that all the painting and general tidy up jobs which most properties require from time to time, are completed.

Promotion

At ACRES we believe that the old adage of "spending money to make money" generally applies to property. While the modern day mediums such as Trade Me make it more likely that a buyer can be attracted through a modest outlay there is no substitute for a well thought out, structured selling programme. While an outlay of $2-3,000.00 may sound high taken as a percentage of the average Auckland sale price ($420,000.00) it represents an outlay of less than .04% point of the property's value.

In selling your property for you your ACRES lawyer will be encouraging you to adhere to these three basic principles of selling real estate. Not only that but they will also be charging you a fair and pre-negotiated fee for the selling of your property. This fee will likely be substantially less than a fee charged as a commission based on the value of the property's sale price.

THE MESSAGE IS CLEAR – SEE YOUR ACRES LAWYER FIRST BEFORE YOU LIST YOUR PROPERTY TO SEE WHAT THEY CAN OFFER YOU.

Source: The ACRES Philosophy

More Lawyers Should Sell Real Estate

Wed, 04 May 2011 09:44:00 +1200

By Craig Sisterson

LAWYERS HAVE to take advantage of the opportunity they’ve been given to sell real estate, because it will mean clients get a much fairer and more cost-effective service, while being legally protected throughout the entire process, experienced Auckland practitioner Mike Tolhurst told NZLawyer extra. “It’s a total no-brainer, particularly for property lawyers. Real estate agencies have been a monopoly, but ... it’s going to be good for the industry that they’ve now got competition.”

Glaister Ennor Special Counsel Joel Fotu noted that New Zealand lawyers, under the provisions of the Lawyers and Conveyancers Act 2006 and the Real Estate Agents Act 2008, are allowed to market and sell real estate as long as they don’t charge a commission on the sale of the property. Tolhurst and Fotu, who has experience working for the Land Transfer Office, are part of a team that has recently established ACRES (A Complete Real Estate System), a web-based initiative developed over the past two years, that Tolhurst said offers “a true alternative” to the services currently offered by real estate agents and agencies.

“We have allowed the REINZ to entrench the practice of price-related commissions simply because it held a protected monopoly on the selling of real estate in New Zealand,” said Tolhurst. “Now that lawyers are able to offer an alternative, there is an opportunity to make a real change to the way real estate is sold in New Zealand. The fees being charged by lawyers will inevitably be lower than those charged by most real estate agents, given that lawyers are only able to charge a reasonable fee for their services and are not able to charge commission.” It's unfair to consumers to charge commission based on the value of a property, said Tolhurst. “There is as much work involved in selling a $500,000 property as there is in selling a $2 million property. Based on the principles of quantum meruit (a fair fee for effort expended), there can be no justification whatsoever for [real estate agencies] taking $15,000 plus out of the sale price of a $500,000 property but then taking $50,000 plus out of a $2 million property.” Tolhurst estimated the fees lawyers using the ACRES system will charge for their services could be as low as $5,000-10,000, with all fees being agreed between the lawyer and their client from the outset. Such fees would be substantially less than the three to four per cent commission traditionally charged by real estate agencies for their role in the selling process, and vendors will also receive the additional benefit of their lawyer’s advice from the very beginning of the sale process for no extra cost. “Selling a house through a lawyer will provide a real point of difference to what is currently available to consumers who sell through REINZ agents,” said Tolhurst. Lawyers also don’t need to be members of REINZ. Tolhurst told NZLawyer extra that in Scotland more than 80 per cent of real estate is sold by lawyers, a figure that New Zealand Law Society President Jonathan Temm has also referred to when calling on more lawyers in New Zealand to sell real estate. “Clearly this is an area where lawyers should get involved in an endeavour to reduce the [property] marketing and selling costs to their clients,” said Fotu. “Consumers and society would benefit as a consequence through the striving for efficiency and economy that a system like ACRES will bring to the real estate market.” ACRES helps lawyers guide their clients through the selling process, arrange a comprehensive marketing plan online, control the contractual process, and be on hand to give professional advice in dealing with the house sale and subsequent purchase of a new home. It is a group of lawyers and experts who are “totally focused on ensuring that lawyers are able to increase their income through the real estate selling opportunity”, with the support of the Auckland District Law Society, Inc (ADLS) It aims to build brand awareness – the annual ACRES fee for users will be used solely to market the brand and raise public awareness that lawyers sell real estate. The initiative grew out of discussions at the ADLS in 2008 when Fotu was Senior Vice-President, when the organisation was investigating the viability of lawyers selling real estate. “The idea was to develop ACRES for the use of ADLS members in an endeavour to cut costs of marketing and selling a client’s home and other real estate through a real estate agent,” Fotu told NZLawyer extra. A Working Group was established, meetings held, and a plan submitted, but subsequently other projects became priorities for ADLS, so a small team (Fotu, Tolhurst, former real estate agent Kim Hemus, investment banker Mike Hocking, and legal consultant Grant Aislabie) funded and developed ACRES independently. Although the ADLS hasn’t funded the initiative, it is still “very keen” to promote and support ACRES, and encourage its members to consider selling real estate as part of their legal practice, said Tolhurst. Several Auckland property lawyers have already signed up to use the ACRES system, and Tolhurst is issuing an Auckland-wide invitation for lawyers to attend an official launch on 13 April at the ADLS premises. Long-term, ACRES will “definitely” be going nationwide, he told NZLawyer extra. Recently REINZ chief executive Helen O’Sullivan addressed the issue of lawyers selling real estate, telling The New Zealand Herald that lawyers could provide a “competitive offering” and legal skills, but she questioned their marketing backgrounds (“Lawyers grab property selling role”, 27 March 2011). However, Tolhurst told NZLawyer extra that ACRES would assist individual lawyers with marketing, create a growing network, and provide experienced real estate practitioners that lawyers can contract to provide the “same or better” marketing skills and real estate nous available via real estate agencies. Tolhurst said the aim of ACRES is to encourage every property lawyer in New Zealand to sell real estate. “ACRES believes that there is an opportunity to take a significant market share for lawyers,” he said. “In doing so, lawyers will substantially increase their bottom lines, which have seen an erosion over the past few years with the undertaking of core services by other providers. ACRES firmly believes that selling property through a lawyer is the safest way to sell what is most people’s biggest asset.” For more information about ACRES, visit http://www.acres.org.nz/. NZLawyer extra, edition 22, 1 April 2011 Copyright 2010 LexisNexis NZ Ltd | Legal | Your Privacy | Site byWebstream

Source: More Lawyers Should Sell Real Estate

Lawyers Launch New Real Estate Alternative

Wed, 16 Mar 2011 08:36:00 +1300

A group of Auckland Lawyers are involved in launching a new real estate initiative which they believe will offer a true alternative from that which is currently offered by real estate agents. Not only will the fees charged be substantially less than those charged by real estate agents but consumers will be legally protected throughout the real estate selling process by their lawyer. The lawyers who are part of the initiative will order services through ACRES, an acronym for A Complete Real Estate System to facilitate sales on behalf of their clients.

Says Mike Tolhurst, a group spokesman, “ Mike Pero announced this month that he was providing an alternative real estate selling option at 2.95% commission. Some real estate agents currently charge in the region of 3% or less so Mike Pero is not actually offering an alternative to what is now available. All he is doing is purporting to undercut current agents. The prices the public will pay for the services being offered by Mike Pero are still based on the value of the property being sold which all adds up to him offering nothing new or different at all.”

Mike Tolhurst’s view is that it is unfair to charge commission based on the value of the property. There is as much work involved in selling a $500,000.00 property as there is in selling a $2million property. Based on the principles of quantum meruit (a fair fee for effort expended) there can be no justification whatsoever for taking $15,000.00 plus out of the sale price of a $500,000.00 property let alone taking $50,000.00 plus out of a $2 million property.

There are a number of lawyers already selling property pursuant to the Real Estate Agents Act 2008 and the Lawyers and Conveyancers Act 2006. These Acts allow lawyers to sell property. The fees being charged by lawyers will inevitably be lower than those charged by most real estate agents given that lawyers are only able to charge a reasonable fee for their services and are not able to charge commission.

It is estimated that the fees which lawyers using the ACRES system will charge for their services could be as low as $5-10,000.00. At the end of the day all fees must be agreed between the lawyer and their clients from the outset. Says Mike Tolhurst “ experienced real estate professionals employed by the lawyers will ensure that the services offered are the same or better than those available from real estate agents. Given that Vendors will receive the benefit of their lawyer’s advice from the very beginning of the sale process lawyers are seeking to provide a real point of difference to what is currently available to consumers”.

Unlike the Mike Pero initiative, lawyers are not seeking to undercut real estate agents. Rather they are seeking to juxtapose the entire industry with a new concept in selling real estate, an initiative which, according to Mike Tolhurst is long overdue.

Mike Tolhurst says that website testing is currently underway and it is hoped that the service will be available from the beginning of April 2011.

Source: Lawyers Launch New Real Estate Alternative

Updates for Property Market March 2011

Mon, 14 Mar 2011 11:31:00 +1300

There is no doubt that the property market in Auckland does not appear to be as buoyant as it has been over the past couple of years. However looking at historical evidence it would appear that the market may be as buoyant and may be following similar trends to previous years.

In 2009 there were 2,190 sales in March at an average price of $435,000.00 which took a median 38 days to sell. In February 2009 there were 1,590 sales at $421,500.00. There were again in excess of 2000 sales in April 2009 with the average price of each sale being maintained at $435,000.00.

In March 2010 there were 2,187 sales at an average price of $475,000.00 taking an average of 34 days to sell. In February 2010 there were 1,578 sales at an average price of $453,500.00. Sale numbers dropped slightly to 1,750 in April 2010 but the time to sell also dropped to 35 days. Again, as with 2009, the average price remained by and large at the March level.

During January 2011 there were 1,428 sales at an average price of $455,000.00 taking an average of 33 days to sell.

Looking at the above data there are some good signs. The average selling time for 2011 is down to 33 days which is good news for Vendors who are keen to sell. If the historical trends are anything to go by we can expect a rise in property sale values this month. Judging on the March rises in the last couple of years that increase could be as much as 5%. We can also expect the level of sales activity to be maintained both as to the number of sales and their average value through to May.

Looking at the anecdotal evidence with which we have been presented over the first couple of months of 2011 there is no doubt that if a property is priced correctly and is well presented it will sell. There are buyers out there. The real problem is that there are also Vendors out there who are unrealistic about the value of their properties who are not willing to sell in a market that has in the past year lost roughly 5% of its value. The good news however is that if the market follows the trends of the last two years we can expect as much as 5% gain this month.

LOOK OUT FOR OUR REPORT NEXT MONTH TO SEE WHAT THE MARKET HAS DONE AND WHETHER OR NOT IT HAS FOLLOWED THE TRENDS OF THE LAST COUPLE OF YEARS.

Source: Updates for Property Market March 2011