Dan is one of the leading expects on researching irrational behaviour.
In his book, Dan discusses the problems associated with overvaluation especially when we invest effort into helping with the creation of something.
Some experiments are set up where random students in a university are asked to create origami and estimate it's value as it's put to auction. Many 'self creators' value their work at 5 x times the amount when compared to the market.
We see this in property too. Most noticeably when an owner has put their hard labour, time and creative skills into perfecting a renovation on their own home. In many cases they 'overvalue' the property when compared to the market.
They might become baffled and even blame the agent for not representing the property correctly. Fact is that many people in this situation don't see the flaws, they only feel what they've put into the project and feel that it's worth more that the market.
As a buyer this is helpful information to keep in mind especially in any negotiation.
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Innovation comes from tough times
Wednesday, 04 August 2010
Recently when travelling in San Francisco, I used a service which I've written about a few times on this blog call airbnb.com
It's an incredible service that I highly recommend to anyone travelling overseas. I used this to acquire a loft apartment for a week.
Basically people can lease out a bedroom, an entire apartment or even a tent in their backyard.
What's so special about this service is that it makes the following changes:
1. It lets people slice up and lease their real estate like never before. Letting out rooms for a short term has always been tough, but airbnb.com lets you do this.
2. It gives travellers to a new city or country another option besides hotels. I don't know about you - but my best experiences overseas have been when I've hired a private apartment and lived without the trappings of a hotel. You get to experience a destination like a local.
3. A service like this gives a mortgage holder a chance to help pay off their property debt by incurring extra income from their asset. This in America, has helped many people fight off foreclosure.
4. Moving into a more mobile society, airbnb lets people well and truly be mobile. A web development guy that is working on the new secretagent.com.au site is currently living off the airbnb.com site in LA at the moment. He swears by it.
So this presents an interesting situation for real estate, landlords and agents. We normally see 12 month leases drawn for most places yet I'm sure we will see a swing in the other direction moving forward.
What's really interesting is that New York has just banned short terms lettings of less than 30 days. Possibly under pressure from big hotel organisations.
In Melbourne, I'm noticing short term accommodation become more and more popular. In fact it also offers another opportunity to investors who are seeking higher returns in a generally speaking poor return environment.
It's a service that helps you identify local planning applications being processed. So I signed up for a property of mine to receive the alerts so I know of any local new planning applications for property.
This (pictured) is what I received. A quick map + street view plus a further link to see what is proposed for the property in more detail.
This is a great service. I suspect that most people will sign up for their own homes - that way they can see anything come up that might pose a threat or an opportunity near their property.
The two quick things that I think services like this will do are:
1. Arm buyers with more local planning information. If someone is selling a property because of some development close by that might disrupt the value of the property - I think more buyers will be aware of these.
2. It may actually force more objections by residents close by. I'd like to say that it would cause less but my feeling is that because a greater amount of people will have this information, it might mean more and more people questing the proposed works.
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Auction Wrap
Monday, 02 August 2010
The auction clearance rate is back up this weekend to 70%, from last weekends 66%.
There were 561 auctions that took place this weekend, of which 393 sold and 168 passed in.
Overall the inner north's performance on the weekend was solid. There were a number of passed in properties, however some good results for desirable property.
Of note this weekend was the sale of 42 Bayles Street, Parkville, which sold for $1,701,000 after 67 bids from four different bidders. The bidding opened up at $1,200,000 and was on the market at $1,610,000.
Next weekend there are set to be 520 auctions to take place. Numbers remain steady until election weekend, where we'll see a big drop to around 130.
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Commonwealth bank gets into the app game
Friday, 30 July 2010
Commonwealth bank are getting into a similar space as to what Westpac has tried to do.
With the craze to create iPhone apps well and truly in monition, this apps delivers some incredible information to buyers as well as some terrible inconsistencies.
If you have an iPhone device - It's worth having a play with.
Last week I spoke about 
