Change to NSW Sales Agency Agreements from 1 March 2015

In late 2014 the Property, Stock and Business Agents Regulation 2014 came into effect. There were several changes introduced as part of the update to the regulations and one of the changes introduced was in regards to agency agreements.

Under clause 8, section 3 of the regulations it is stated that on and from 1 March 2015, if the agency agreement includes a term that a commission is payable even if the sale of the property is not completed, the agency agreement must include a warning notice.

The notice must be in the form of:

“WARNING: The term immediately above provides that a commission is payable under this agreement even if the sale of the property is not completed.”

This notice must be included in the agency agreement immediately following the commission term and must be no less prominent than the commission term.

EAC Agency Agreements Warning Clause.Sample clause from the updated EAC Sales Inspection and Exclusive Selling Agency Agreement.

The change applies to agency agreements for the sale of residential (including land) and rural property and Businesses. We have updated our printed and electronic forms to include this change and they are now available for purchase and use on-line.

To ensure compliance I recommend that you check if the agency agreements being used for the sale of the property types outlined above include a term that a commission is payable even if the sale of the property is not completed and if so that the warning notice is also included.

Federal Government proposes charging of fees for foreign investment in residential property

The Federal Government has released a consultation paper called Strengthening Australia’s Foreign Investment Framework and is seeking views on proposed reforms to our foreign investment framework in relation to residential property and agriculture.

The proposed reforms include the introduction of an application fee where foreign persons will require prior approval to purchase residential real estate. The Government believe that the introduction of the policy will increase the amount of available housing stock. Given recent information in the media I am not sure that there are any real concrete figures on the amount of foreign investment in residential property in Australia.

While most people would think of foreign investors as people who live overseas the paper covers foreign persons who may be temporary residents or non residents.

Foreign persons can apply to purchase vacant residential land for development and newly constructed dwellings in Australia.

Non resident foreign persons are generally prohibited from purchasing established dwellings in Australia. However, reflecting the fact that foreign persons who are temporary residents need a place to live during their time in Australia, temporary residents can apply to purchase one established dwelling to use as a residence while they live in Australia. The purchase of an established dwelling is conditional on the foreign person selling the property when they leave Australia. Temporary residents cannot acquire established dwellings for investment (rental) or holiday purposes.

The proposed fees for foreign investors for residential property are:

  • $5,000 for properties valued under $1 million;
  • $10,000 for properties equal to or greater than $1 million
  • Beyond this the fee would then increase in increments of up to $10,000 for each additional $1 million in property value.

Compliance and enforcement would be managed by the creation of a new area within the Australian Taxation Office and the paper outlines a raft of civil and criminal penalties for both individuals and companies who those breach, or are found to have assisted (read real estate agents) in the breach the foreign investment rules.

The paper will be be reviewed in greater depth by the Practice Support team at Estate Agents Co-operative and a submission made if deemed necessary.

At only 33 pages the paper is an easy read and be viewed at the Australian Government Treasury website.

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First Home Buyer Figures Understated

The Australia Bureau of Statistics (ABS) have released revised First Home Buyer (FHB) figures after an investigation into the accuracy of estimates of loans to first home buyers.

The figures released in November 2014 had put the number of FHB loan commitments at 6,061 but the revised figures now put the number of commitments at 7,627, an increase of 25.8%

“Initially we thought the fall-off in first home buyer loans over the last two years was due to reduced affordability arising from changes in grants, rising house prices, increased investment housing loan activity and general economic conditions,” Ms Hodges said in a statement.

“However, subsequent analysis and follow-up with lenders has confirmed that the drop was partly due to under-reporting by some lenders.” said Ms Hodges.

The ABS is now working with the Australian Prudential Regulation Authority which collects the first home buyer loan data for the ABS to ensure all loans to first home buyers are recorded in the future, regardless of whether they receive a first home owner grant or not. In the meantime, the ABS will adjust first home buyer data for this under-reporting using estimates based on data provided by lenders that reported correctly.

Although the ABS has released revised figures for November 2014 it could well be that the figures released for FHB’s over the past two years has been significantly understated.

The First Home Owner Grant scheme in New South Wales provides a grant of $15,000 and only applies to eligible first home owners who purchase a new home or build their home. This grant will reduce to $10,000 on 1 January 2016.

EAC meets with NSW Fair Trading and Work Cover about Asbestos

The real estate industry is becoming increasingly aware of the potentially far reaching effects of the “Mr Fluffy” loose fill asbestos issue, with Work Cover identifying 26 NSW Local Government areas currently at risk.

The problem confronting all agents and property managers is that the presence of loose fill insulation containing asbestos is a “Material Fact.”  Currently, affected properties must not be offered for sale or lease and agents have a clear responsibility to enquire from their client whether the property is insulated and if so what type.  . If the answer is “yes” or “not sure” to the presence of loose fill type then the client should obtain an inspection and report from a qualified asbestos assessor.

However, the “Mr Fluffy” issue has become a catalyst for the industry to discuss Asbestos and how agents and property managers are to deal with properties affected by it and what are the correct steps for them to take in enquiring about asbestos in the property.  This is particularly crucial since agent and property manager’s Professional Indemnity Insurance Policy does not cover the risks associated with asbestos related claims.

In January, Work Cover met with Estate Agents Co-operative Ltd, NSW Fair Trading and REINSW to discuss this issue.

During the meeting, discussion was had regarding the need to clearly outline to agents, property managers and consumers the steps that they need to take regarding asbestos in properties.  WorkCover will develop a factsheet regarding Asbestos, to tackle this need.  EAC will provide consultation on the content of this factsheet.

“The protection of agents, property managers, and consumers is paramount in this issue.  And whilst the WorkCover factsheet is necessary, it is very much a first step.  Agents and Property Managers cannot be expected to make a qualified assessment of whether asbestos is present in a property,” said Geoff Hunter, EAC Industry Liaison Officer.

Clear directions are crucial for the real estate industry in the dealing with asbestos.  Whilst the “Mr Fluffy” issue is of a great concern, it has aided in bringing to light how inadequate the procedures, for agents and property managers, in dealing with asbestos are.

The Estate Agents Co-operative will continue to work with Work Cover and NSW Fair Trading to lobby for any and all necessary changes to regulation and policy in order to ensure the protection of agents, property managers and the consumers.

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New Internet Marketing Report Released

EAC is pleased to announce an update to the Internet Marketing Report for realestateworld.com.au.

The update to the Internet Marketing Report has been made available to realestateworld.com.au  subscribers.

We hope that you will love the new features and fixes we’ve packed into this update.

Summary of changes to Internet Marketing Report:

  1. Filter by Agent – Allows the user to run reports on all agents or just on the listings for a specific agent.
  2. Time Frame – Allows the user to run reports for the ‘Total Campaign’ of a listing or for the past ‘Week’ or ‘4 weeks’.
  3. Source – Allows the user to filter search results to the websites that the listing appears on, i.e. ‘All Websites’, ‘realestateworld.com.au’, ‘My Website’ (agent website)
  4. Branding – Allows the user to customise the report to a professionally branded standard.  Including: Agency logo, Agent Photograph, Agent contact details, Social media integration
  5. Professional and easily understood data – Internet Marketing Report provides Full Campaign Details which are designed to be easily understood by the vendors; including: List Price, Date of first advertised, days listed, total campaign interactions, total campaign shares. This feature is available to Pro and Elite subscribers only.
  6. Export – Allows user to easily export report data to CSV file for future analysis.

The new Internet Marketing Report will be available to realestateworld.com.au subscribers from 1 February 2015. Make sure you look out for it in your inbox.

The Best of the Best in NSW Real Estate

Winners named in the EAC/REIA NSW Awards for Excellence 2014.

Sydney, NSW – 25/9/2014 – EAC/REIA NSW Awards for Excellence 2014, today announced its 2014 Winners. Embodying excellence and professionalism in the real estate industry, the honorees were celebrated during the awards ceremony on 25th September at the Sofitel Wentworth, Sydney.

The inaugural awards saw applicants compete for a total of 13 awards covering all aspects of the real estate profession from innovation to corporate support, business broking and of course the highly contested award for the best small, medium and large residential agency.

The Awards for Excellence allowed nominations from the industry, through NSW Affiliate Council Members of the REIA including Estate Agents Co-operative, LJ Hooker, Professionals Real Estate and First National with winners being selected by a panel of industry experts who judged each submission.

The 2014 Awards for Excellence were presented to:

Awards-for-Excellence-2014-Winners

“The Agents and Individuals named as winners have set the standard for all real estate agents across NSW and Australia,” said DAVID CROMBIE, CEO OF EAC.  “Their naming as award winners is a testament to their skill, ingenuity, and professionalism.”

“These awards are important in not only recognising NSW’s leading real estate professions, but also as they provide an important opportunity for agents to learn from one another and also strive to produce innovative ways of doing business,” said AMANDA LYNCH, CEO OF REIA.

These awards provide an opportunity to be recognised at both the state and national level, with winners from the New South Wales Awards for Excellence progressing onto the REIA National Awards for Excellence in Perth on 12 March 2015.

ABOUT THE AWARDS FOR EXCELLENCE:
Hailed as “Real Estates highest honor” by Estate Agents Co-operative, The Awards for Excellence is the premiere event for EAC and REIA to encourage, recongnise and promote excellence and best practice in the profession.  These awards provide an opportunity to be recognised at both state and national level and winners from the NSW Awards for Excellence progressing to REIA National Awards for Excellence in Perth on 12 March, 2015.

ABOUT EAC:
Estate Agents Co-operative Ltd, or EAC, is a co-operative of real estate agents, which formed in Sydney in 1960 to exchange information about properties for sale.  From humble beginnings, when EAC comprised just seven members in the metropolitan area, the Co-operative has now grown to include several hundred members across New South Wales and the ACT. EAC is a premium service provider to the real estate and property industry and provides a range of services covering, Membership, Practice Support, Training, Listing Management, Property Information, Web Sites and Real Estate Forms to over 2,000 Real Estate offices comprising of both independent offices and franchises from all the major franchise groups, valuers and government departments throughout Australia.

ABOUT REIA:
The Real Estate Institute of Australia (REIA) is the national professional association for real estate agents in Australia and since 1924 has worked to represent the real estate sector on a range of varied and important issues.

My latest From the Boardroom Article

As mentioned in my last update a review of the Property, Stock and Business Agents Regulation is currently being performed by NSW Fair Trading. We reviewed the draft regulation and had no real issues with the proposed changes in the main and a submission was sent to Fair Trading on behalf of our members. One of the changes that we did take issue with was the possible deregulation of certain commercial transactions which Geoff
Hunter will comment on in his article in this edition. This issue was also discussed in some depth when EAC Chairman Dale Whittaker, Industry Liaison Officer Geoff Hunter, Jock Kreitals Real Estate Institute of Australia (REIA) Manager Policy and I met with the new Minister for Fair Trading, Matthew Mason-Cox in July.

On Tuesday, 24th of June, we co-hosted the NSW finals of the Australasian Real Estate Institutes’ Auctioneering Championships with the REIA. This was the second year of our involvement with this event which saw eleven of the state’s top auctioneers fight it out to go through to the Finals. This year’s winner was once again Gavin Croft of Bresic Whitney who won the NSW Final last year and the runner-up was Clarence White of McGrath Estate Agents. Gavin and Clarence will now go onto the National Championships to join contestants from around Australia & New Zealand at the final event which is being held in Auckland, New Zealand from the 21st-23rd October 2014. We wish them luck and would love to see them take out the title for NSW.

Our new eForms solution was released in early June, there were a couple of small issues experienced by some users but the feedback has been extremely positive. We are now working with My Desktop to integrate our forms with their software and will be approaching other CRM and software providers once we have completed the integration with My Desktop. If you are not using our printed and online forms then I suggest you take a look. Our forms are constantly checked and updated to ensure that they are compliant. With savings of as much as $40.00 (compared to one competitor for one single pad of printed forms based on the equivalent pad size) you would be crazy not to take a look.

The deadline for your submissions for the EAC / REIA NSW Awards for Excellence has been extended to the 18th August so if you have not completed your submission or would still like to enter you have some time left. For more information on the awards or to register to attend please click here. We would like to thank our major sponsor OAMPS Insurance Brokers for supporting this event.

The new eac.com.au website that I spoke about previously is now undergoing final testing and we are getting closer to a launch date. The new site will see a change to a totally new platform that will provide us with the foundation to build on for years to come.

On the realestateworld.com.au front, traffic and content on the site continues to grow. In July we brought on all First National offices across Australia onto the site and are currently finalising a feed from Century 21 which will see all the group’s offices come
on board.

realestate.com.au’s recent change to area based pricing has sure created some discussion in the industry. We have seen groups being formed to try to negotiate better rates with realestate.com.au. Several new so called industry portals and other new portals are popping up along with some revamps of existing portals, all looking to capitalise on what is going on. EAC has been working quietly in the background on several initiatives with agents in different areas of the state but has also been sitting back to see how all the cards fall; it is a very interesting time so stay tuned.

Finally I would like to take the time to recognise two members of the EAC team who have been with us for some time and are leaving us. First is Damien McDonald who was responsible for marketing who left us after 8 years in July to pursue the next stage in his career. The second is Sandy Eime who has worked in various roles including Publications, Red Square Support and more recently Communications who is leaving us this month after 17 years. We wish both Damien and Sandy all the best in their future endeavours.

As always if you have any questions please do not hesitate to call or email me.

New Insurance Offering for EAC Members

Estate Agents Co-operative Ltd and OAMPS have worked together to negotiate a new insurance offering for members of the Co-operative.

The Professional Indemnity insurance provides a broad range of coverage which enables agents to comply with their legislative requirements. In addition, the policy coverage also automatically extends to a number of key benefits:

  • Fidelity (Employee Theft) – cover included for no additional premium to a sub-limit of $100,000;
  • Employment Practices Liability – cover included for no additional premium to a sub-limit of $100,000;
  • Franchisor’s coverage – the policy extending to Franchisors as insured’s where they are joined to an action with the insured, or as a result of the insured actions;
  • Insurance Distribution Activities Extension – Cover is specifically extended to include distribution of insurance products as part of a Real Estate Agency’s activities. This is very relevant in the case of property management, where commonly agents provide insurance solutions or hold agencies with insurers to provide products for property owners, tenants or strata plans. With the changing landscape of strata requirements, this is especially prudent.
  • Referral Services Extension – Agents provide their client with a number of referral sources, be it property maintenance, tradespersons, conveyancing, building and pest inspections, mortgage brokers and many more. It could be alleged that the agent has a duty to perform due diligence on any persons or companies they recommend to their own clients. The policy cover extends to protect agents for their liability arising out of any allegations or claims arising from a referral relationship.
  • Bodily injury or property damage in any way is not excluded under the policy.  This is a common exclusion that relates to a primary exposure for agents, whether showing clients through open houses, hosting auctions or providing property management activities.
  • Legal costs are in addition to the policy limit, that is the limit is available for payments of any awards against the agent, rather than being used up by applicable legal defence costs;
  • Sub-Contractors and Consultants – the vicarious liability to the insured agency is covered for the actions of any sub-contractors and consultants;
  • Dishonesty of Employees – cover is provided to the agency for the actions of dishonest or fraudulent employees, provided such acts were not condoned by the Insured;
  • Minimum premiums for a Professional Indemnity cover of $1,000,000 in any one claim, with $3,000,000 in the Aggregate begin at $1,250 including all taxes, fees and charges.
  • Higher levels of cover are available as required.

We have also negotiated reduced rates for office insurance and public liability, as well as a policy for management liability cover for members in order to provide a holistic solution to their business needs.

EAC Director Anthony Chapman stated “I recently renewed my business insurance options using this new facility and I saved over a thousand dollars in premiums whilst getting superior cover at the same time.”

For more information, or to obtain a quotation, Members can speak with their local OAMPS branch, or contact Drew Ferns at OAMPS on 02 4226 8700.

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Estate Agents Co-operative Ltd

Change to Swimming Pool Provisions have been delayed

The NSW Office of Local Government has announced that the provisions that require a property with a swimming pool to have a certificate of compliance before it can be SOLD or LEASED will now commence on 29 APRIL 2015 (NOT 2014) an extension of 12 months.

This means that the requirement to attach a valid Certificate of Compliance or current Occupation Certificate to the Contract for Sale or to the Residential Tenancy Agreement will now not apply until 29 April 2015.

Click here to view NSW Office of Local Government circular to councils.

For further information members can call EAC Agency Practice Support on 1300 137 161