Listen: Navigating property in separation

Sabina Read
In this episode of the Separation Guide podcast, we delve into the complexities of property division during separation and divorce. A family home is often our greatest asset, yet knowing how to maximise its worth while navigating the end of a relationship can feel confusing and overwhelming, as well as being peppered with high emotion. To help explore the facts and innovative solutions for buying and selling.
We’re joined by Evan Thornley, co-founder and CEO of Longview and Jules Hewitt, head of Customer Success at Agent Select. With a broad expert offering in real estate, Longview helps people who are trying to stay in the family home or buy the
next home as well as providing services in home equity, fund management, property management and buyer’s advocacy. Evan is passionate about supporting newly single parents facing renting challenges post-separation, after hearing from countless separating homeowners who don’t want to sell and are worried about the prospect of being a long-term renter in Australia because of the high competition and lack of
security. Jules brings more than 15 years’ experience in customer service and a genuine empathy for people navigating the sale of a home. Together, we discuss innovative options for selling and buying properties, how to find the best agent for your needs, the value in retaining an expert to understand and negotiate the sales process, how to stay on the capital growth train during a separation and the pros
and cons of purchasing a rental investment property. It’s a potent reminder that even for those of us that consider ourselves somewhat well formed or commercially savvy,
there is great benefit in seeking expert advice and guidance when it comes to making property decisions. There are lots of gems in this chat for how to navigate property-related decisions during a separation, but also for anyone wanting to ensure our property will support us financially and emotionally over the long haul. I started by asking Evan and Jules if they’ve ever served people’s decisions to stay or leave a relationship being influenced by the current state of property prices and cost of living pressures.

Evan Thornley
I’m reading material in the paper that says that more people are choosing to stay together because the consequences of night are pretty dire. I mean, the consequences
definitely are difficult, right? I mean, obviously many people here are going through a divorce, have gone through a divorce, I’ve been through one myself. I mean, it’s difficult in every possible way emotionally, but also financially. You know, it often leaves people, both partners, in a much more difficult situation in terms of their home and particularly their mortgage, because you’ve then got single income households, or in some cases, not much income at all in a household, and half the equity you had for, and so your position in the home ownership market is dramatically more difficult than it is as an existing couple with the combined equity and the combined incomes. That puts almost everybody, almost all the time, in a difficult position when they ultimately do need to separate. So then it can be very hard for people to get back in the housing market if they have to sell the family and aren’t in a position to what, you know, you need two family homes all of a sudden, you need twice as many family homes with half as much financial capacity for each and that equation is difficult for people. So I can imagine that that is making people think twice about separating and perhaps that’s a good thing. In some ways, you know, we should always think hard about that. It’s never an easy thing to do, but the reality of the housing market is making out a more and more consequential decision, I guess.

Sabina Read
Absolutely, Jules, have you seen any evidence of this from clients that perhaps they’ve come to you thinking about selling and then when they learn further information they reconsider because it feels like too big a jump?

Jules Hewitt
Yes, we do see a lot of that with our clients. Often when they come to us, however, the decision has been made already. So they’ve gone through this, they’ve worked through the steps, they’ve had the conversation of how it may look financially for both parties, but ultimately when the clients reach us, they’re at that stage where they’ve made that final decision to sell their home. So they’ve, you know, they’ve gone through those tough conversations. And I guess where our role here is to just navigate them through those decisions the best that we can, inform them of all the costs involved in selling the home, and make sure we get the best outcome for both parties. It’s really stressful, particularly when there’s kids involved, not knowing where you’re going to go to next, and if either party can afford to go back into the market, and we’re certainly not here to pressure anyone to sell a home, I mean, we’re here to support them through whatever decision they make, but again, ultimately, if that is the decision, we will support them the best we can, we will lay out all the costs for them and help them navigate and make the right choice for both parties.

Sabina Read
So you’ve both acknowledged that this is a high emotional time for anyone who’s going through a separation. When we are overwhelmed emotionally we can shut down cognitively. What do you think some of the biggest mistakes people make very early on in this process? They’ve decided to separate. Where do they go wrong in the early piece?

Jules Hewitt
Sometimes rash, quick, emotional decisions are made. They decide to just select an agent who they’ve heard of or seen down the street. They believe all that they’ve been told about the property value, what they’re going to get, how quickly it’ll sell, and this is amazing. And all those stories that you hear, I mean, we work with agents, so I’m fairly not here to discourage agents and the ones we work with, we certainly have a great relationship with, but sometimes when the emotion is in there and one party, if they’re not an amicable split, they just want to get out and they just make a quick decision and they just decide, “We’re going with this person because they sold next door and they’ve told us we’ll sell in three months and this is what we’ll get.” That’s what I hear a lot and often when those clients come to us at that point, we find their properties have been on the market for quite some time because the decision has been made rashly and emotionally. So we would always suggest to try to take a step back, if possible, it’s a stressful time and if you’ve decided to sell your home as hard as it sounds, perhaps look at it as a transaction. Do you do dealings with beings as informed as you can when researching agents in the market, I guess.

Sabina Read
And Evan, what do you wish more couples knew before they made the first move here?

Evan Thornley
Oh, look, probably partly because it’s the nature of the real estate industry, everybody’s focused on the sale decision. Actually, and it’s obviously important when you do sell a property that you do it well. And that’s what Jules and her team ensure happens. But the more important property decisions themselves are actually your buying decisions, right? If you buy the wrong property, that has terrible consequences. The difference between buying a good property and a bad property from a capital growth point of view is easily half a million dollars over the next 10 years, usually more than that. So buying decisions are incredibly consequential property decisions, and people aren’t aware of that. They think that, “Oh, the property market will go up, and therefore my property will go up.” Well, some do and some don’t. And then obviously understanding in the context of a separation, even understanding, well, what will my purchasing power be? I mean, we’ve sold the home, we’re going to divvy up minus paying off the mortgage, the equity that’s behind it. Then what does the world look like? And what mortgage capability will I have? Plus how much equity will I come out with? And therefore, what budget am I going to realistically have to purchase?

And what do they say in carpentry: “measure twice, cut once”. I think it would be very, very much preferable, difficult as it is given the emotional state and often the urgency in some cases of just wanting to move past that difficult emotional state to really plan out the housing outcomes for both partners before putting the property on the market. I mean, once the thing’s on the market, you’re in the middle of a campaign and there’s pressure to decide where you’re going to sell and where you aren’t and if you’re not, what you’re going to do. That’s stressful enough. I think it’s important that both partners have an understanding of what they’re going to come out of that process with and what will be their next set of housing decisions. Now, in our business, we don’t sell property, but we certainly help people buy property and our strong preference in a normal situation or is wherever possible to buy first and sell second. That sounds counter – intuitive, but the really important thing is that you buy the right property and you should be patient and not under time pressure when you’re trying to make a purchase decision. Now, of course, in order to do that, you either need to buy on a long settlement and then sell on a short settlement or you can arrange some bridging finance in most cases. So it’s more complex to buy before you sell. It makes it much more likely you’re going to make the really important decision, which is the purchase decision correctly, but then you need to not be pressured to sell. So it’s tricky. But obviously that’s massively more complicated in the situation of a separation. And so people at least need to plan how they’re thinking about the buying before they go into the selling and understand the consequences of what their budget might be and Therefore, for example, where realistically will they be able to afford a property that will at least meet their basic needs with the budget they’re likely to have. So you really want to think all that stuff through so that by the time you’re executing the decision to sell, it’s part of a complete set of housing decisions. You’re executing a decision to sell so that you can execute the decisions to buy and you know what both of those decisions look like right now as opposed to well sell and then then start
thinking about what the buying opportunities and challenges are going to be. You want to know all that stuff in advance.

Sabina Read
I’ve actually seen a lot of couples that I’ve worked with psychologically over the years who have not got anywhere near close to thinking about buying when they’re in the process of separating. As you both have recognised, they’re thinking about what they do with this one precious asset and often in a state of fear and as you both also acknowledge a desire to Get out, you know to not be in each other’s space Quick decisions are made with the view of renting What are your thoughts on the rental market another of which you work direct. Well, you do, Evan, don’t you? You do work very much in the rental market.

Evan Thornley
Yeah. So for those couples who are thinking, I hear Evan’s advice, he’s saying, put your energy and focus on what you’re going to buy. But if my mindset’s not there yet, and I’m thinking about renting as a transitional step, what do I need to consider? And this is the thing. And I think, you know, people often, obviously, they might physically wish to be separated as quickly as possible, get that out of the way. They also want to reach a financial settlement as quickly as possible. It’s just such a difficult emotional journey. And in some ways, when it’s difficult and it’s fearful, they just want to have cash, right? Like sell the home, I’ll put the money in the bank and then I’ll work out what to do next. So I’ve got the physical separation, I’ve got the financial separation, and I’ve got my kind of nest egg, whatever it is that’s left in the bank and I can understand why people want to get to that place that’s a place of safety or it feels like a place of safety but then unfortunately they discover what an unpleasant place the rental market is.
Look you know we have a phrase to describe everything we try and deliver for all of our clients which is dignified secure housing and unfortunately the private rental market is definitely never secure and often not dignified, you know, it’s often quite a shock for people who’ve perhaps been homeowners for most of their adult lives since perhaps they were, you know, students at uni or something as renters going back into the rental market being in competition for properties, having some property manager asking you very personal questions about yourself coming from someone who’s perhaps much lesser educated and much less familiar with many things in the world than you are, and you feel like they’re assessing you as a human being against others for a rental property. It’s a very undignified experience, and there’s so much about the private rental market that is undignified. We’re trying to work to make that change fundamentally, and part of what Longview is trying to do is to create long-term secure rentals for people. Part of the challenge in the rental market is not just finding a home that you can afford, and then you need to move quickly before, you know, you find a home you actually want, well, then there’s lots of
other people who potentially want it to see after being in a position where you can move quite quickly, where you’ve got all your documents in order where you look like a really good applicant and some of us aren’t of our best as we’re going through a divorce and yet we need to do that. So it’s a difficult process and I think people underestimate, people who’ve lived in their own home for a long time sort of go, “Oh, it’s okay. Look, I’ll rent for a while and then I’ll go back to being a homeowner.” I think they forget how difficult renting is and the process and the problems. And then the question will be if they haven’t really given thought to it, “Well, how realistic will it be for me to get back into home ownership? Am I potentially staring down the barrel of being a long-term renter?”

Sabina Read
And, Jules, what are your thoughts? I know you’re in the business of helping people find an agent to sell. Have you got thoughts on the rental market? Is it conversation that you have with potential clients who are looking at their next steps?

Jules Hewitt
Definitely, particularly in clients who are going through a separation. Sometimes the option to buy just isn’t there yet. I’m also not knowing if families involved, children are involved.
Where are both parties going to go to? You know, that comes up quite often. one of the partner might be moving interstate or into another suburb. So there’s all of that emotional of the separation and then attached to that is where am I going to live? Will I still be able to afford to be close to the children’s schooling or kinder or high school and perhaps not maybe where they live now they can’t afford to buy there now or so they maybe can’t afford to rent there either. So this conversation does come up quite a bit. Luckily for us, we have a great network of agents that we do work with. So when we hear that in our conversations, we certainly raise that early in the piece with the agents, with respect. And we try to support either party if the decision to rent, and maybe it isn’t, but if the decision is that they just financially or emotionally can’t consider buying anything back into the market right now, they’re going to rent in the sticks for 12
months. We try to help them with that part of it as well. So we start to look for affordable rental properties for them. I might send them a link or two to some properties that might suit what they want. So we do try to help navigate them through that, but that comes up quite a bit. Sometimes financial independence comes in a lot. One party might be more financially fewer than the other.
They haven’t split the assets yet. They don’t know what that’s going to look like, but they do want to get out of the home and then start afresh, particularly if there’s a third party involved in the separation and somebody’s already moved on into another home. So all of these stories come up. So we just try to support whatever their decision is, whether it is rental, we can support them in that as well as the sale of the home. But there’s certainly no pressure, we’re just here to, you know, never get them through that process, I guess, the best we can.

Sabina Read
So let’s talk about this as in your wheelhouse, Jules. What are some of the factors that people
should be considering when they’re looking to speak to a real estate agent to sell their house? You’d need to really look for an agent that obviously knows the market and where you are. So you’re wanting to find somebody that knows the area in the market that where you are.

Jules Hewitt
So we do the research. So, our role is to actually do the research and to, I guess, for want of a better term, vet those agents. You know, try to connect the right agent with the right client, the right vendor. And sometimes the top agent in the area might not be the right person for this
situation. You might need somebody who’s, you know, you need someone empathetic, patient, supportive, not just putting the hard sale on from day one. So it’s really important when you are going through a separation. I always just say to my clients, just take, you know, step back, ask as many questions as you want. You know, no question’s a silly question. Ask them about their experience in the market, comparable sales. Have they sold many divorce homes? You know, have they supported people through separations before? Just to try to build a connection because this is going to be an emotional journey for them and they need to make sure they’re working with someone that they feel comfortable with. I think it’s really valuable to have a professional advisor like Jules and her team doing that. We actually help our clients sell properties too by picking ager but they’re only the rental properties not the family homes but for all the same reasons and it’s all the more so important with the family home. The real estate sales industry works the way it works because that’s that’s because that’s how it makes money, but there’s all sorts of tricks, and I think many of us are aware of them, and having someone like Jules’s team help you not get those tricks played on you at the worst possible time in life. So obviously many agents will tell you they’ll get more for your home than in reality they will because they’re trying to get the business. The day after you’ve signed the listing contract, they’ll spend their whole time doing what’s called Vendor management, which is a polite lightweight been telling you how much less you are going to get for the home than what they told you five minutes before when they sold you the property and trying to put you under pressure to sell and to accept a lower price. I suspect that for some agents knowing that someone’s going through a divorce and therefore pretty much is going to have to take whatever price they can get, that would make some of them lick their lips and go, “Oh, this is fantastic. Here’s a client who’s not going to hang out for the best price. They’re just going to be pressured into doing it”. So I think it’s really important at that time that people have a professional advisor who knows all those tricks and knows how those agents are going to behave and can give you honest, steady advice through what is a challenging process at the best of times.

Sabina Read
And Evan, beyond a real estate agent in the process of selling, what are some other professionals that people might want to tap into? And mortgage brokers, you’ve talked about property as legal advisors, who else do I need to speak to to make an informed decision?

Evan Thornley
I do think it’s important to be thinking about what you’re going to do next on the buy side and to potentially have really thought ahead about what you’re going to do and what
you can afford and what that might get you. So, you know, you may also want to be talking to a buyer’s advisor at that time. That’s not in the sense a critical part of the sales process per se, but it’s a critical part of thinking through what happens next, preferably before the sale. And indeed, if you can do these two things together and you could already be working on a purchase with a buying advisor, then that gives you more time in the market and more of a chance of making sure you buy the right home by the time the settlement comes through. You know, I think thinking about whether you might, for example, want to have a longer settlement on the family home to give you time to make the changes and time potentially hopefully to buy another property or even just enough time to make sure that the rental that you choose is going to work for you. You know, it’s probably one of the things you want to think about in advance. What do you think the best thing we can do, because there’ll be people listening to this, who your advice and insights make sense to they can make sense of and then they might be thinking I don’t think my partner that I well my ex -partner that I’m separating from will see things in the same way that I do so we’ve got two different people as we’ve acknowledged there’s often fear there’s power struggles there’s power imbalances and often I think it’s difficult for us to come to a place of agreement about how we how about how we move forward? Are we looking to buy two separate properties? Is that even a discussion that we need to have together? When some of us are going through a divorce, there’s not a lot we can agree on, right? So even agreeing on which sales agent, but you know, you’ve got your mate and I’ve got my friend and I trust them and you trust them. And then, you know, you’ve got to agree on the sale price, right? And what you will accept and what you won’t accept, assuming, you know, both parties are on title and both a party to a sale. So just those processes of selecting an agent and of ultimately making a decision about if there’s been an offer at a certain price, which is probably not what either of you would have preferred, but do you take it or don’t you? So unfortunately, you chain to each other at least through those processes, I think, regardless.

Sabina Read
So what about the individuals who we’ve talked about them? They just want to move quickly And then they want to think about this down the track and they have had very little experience as you say they may never have bought a property before except for this family home could be decades ago. So they’re kind of green in this space and now on their own navigating a world that’s really quite unfamiliar to them. What do they need to consider if really they’ve never been, they haven’t been buying and selling houses all their lives?

Jules Hewitt
There are great support out there. There are buyers agents out there who can really support you and guide you through this process. And even advise you on what to look out for. Our group here, we are also there to really, when they’re very great, we support them with conveyances and solicitors. So just to help them with those sorts of questions. So we have a great team of conveyances and solicitors Just at hand that we can just have them email a list of questions to our clients of what to look out for when buying property. Each state is different as well. So we can support them in that doing research on the market yourselves Even, you know, there’s great resources out there real estate .com You can just have a look around and and there’s great tips on there as well But I think it’s really good to to start with groups like buyers agents Who can support you in what next and what to look out for when buying property. Yeah, and mortgage brokers, it’s part of that too. You really want to meet with a mortgage broker so you can get a sense of how much money you’re likely to be able to borrow because then you’ll have a sense and hopefully you’ve got a reasonable idea of what you’re going to sell for and then what your share of the equity will be coming out of the sale. So then you’ll know how much equity you have and what your borrowing capacity is likely to be, and so then you know what your budget is going to be roughly, and then you can start thinking about, well, what does that mean? Where will we be able to live? What will we be able to afford? Until you’ve got a reasonable idea of what your budget’s going to be, you can’t even think about the next housing decision in any meaningful way. And then potentially you get a buyer’s advisor to help you because obviously what you think you can afford and then you have the opposite problem of whilst the sales agent has lied to the vendor or that they’re going to get the more money, they’ve been lied to you and advertised it for less money, right? So they’re overquoting to the seller and underquoting to the market and so even what you think you’re going to be able to buy, you’ve got a budget of 1.3 and there’s a few properties out there that are 1 .2 to 1 .3 and so you’re looking at them and lo We hold you show up at the auctions and find out they own for 1 .4 and 1 .5 and 1 .6. So again, I think professional advice through this process. And the one thing I would say is that sales agents are not your professional advice. You either get an advisor like Jules and her team to help you manage the sales agent or you get buyers’ advisors on the buy side to help you manage that process and mortgage brokers. So vendor or advocates or vendor advisers like Julie and her team are there to advise you. Buying advisers and buyer and advocates are there to advise you. Mortgage brokers are there to advise you. Sales agents are there to close a deal and they don’t much care whether it’s at your preferred price or the buyer’s preferred price so long as they can get a deal, they’ll take the deal, take their commission to move on. I’m sorry, I’m very cynical but We do this for a living on the other side of sales agents all day long and that’s what’s necessary for them to make a living, but they’re not the place for unbiased advice. I do agree with Evan to a point and that is exactly what we are here to do, to give advice during that process. We’ve been doing this for many years. I’ve been doing this for many years working with agents. You can pretty quickly get a feel for those agents that are going to do the wrong thing by the time and we certainly don’t put them there. And I’m sorry, I’ve slanted a whole profession there, really only about half the profession that I managed to slant.

Evan Thornley
There are very good people and very decent, hardworking, ethical people in real estate sales and I don’t want you to think otherwise. That’s really my point. Jules and her team know who those people are and who they aren’t. You’re exactly right. There are those people and that’s what we do and we would certainly never navigate anyone towards somebody. We felt that was going to do that ’cause it’s not the best outcome for anybody. And that’s what we’re ultimately here to do is get the best outcome for all parties and take away some of that stress during what is really a stressful time. And just to add to other things to consider which we do hear quite often is people are quite shocked to know what marketing fees are and how much they add up. often we hear that quite a bit. They’ll call and say, “Our marketing fees are $3,000, $4,000, $6,000 sometimes just to put my property on market.” That’s quite a lot of money for some people. That’s quite a shock. I would also like to advise people to consider those costs as well. You might need staging or maintenance on the property. These are the other things, just through the process, just consider there might be extra costs that come along the way but marketing fees has been one that people do bring up quite a bit so we have to sort of talk through them with that. When you’re in the process of separation divorce and moving home it can feel very much peppered with loss.

Sabina Read
Do either of you have thoughts on how we can shift our mindset towards one of opportunity and new beginnings when the unknown lies ahead for us in a real estate sense. As you said, we might be moving into a rental home. We haven’t rented since we were at uni. We might be downsizing from a large family home to a much smaller property. And so this sense of letting go of what I thought I had and what I thought I valued and finding a way to value the next step.

Evan Thornley
Yeah, you know, Sabina, I’ve personally owned properties at every end of the property market. I’ve been out looking at $10M and $20M homes and I’ve been looking at $0.5M homes and there are good properties at every price point. And there are surprisingly horrible properties at every price point. So I think the first thing is not to, you know, you’re probably going to be more likely than not moving down in price point. That doesn’t mean that you can’t find a home that you love. You might have to change the way you look at it, but the process of buying a home doesn’t change. You want to look at 50 properties and find the one that really speaks to you as your future home, not rush into the process. Buying a home is the last thing you should do in a hurry under pressure and time if you can avoid that, because the difference between buying the right home and the wrong home firstly is it really going to work for you and your family? Like really you need to think that through and a good buyer’s age will also help you think that through. Hang on, those bedrooms are small, your kids are going to grow up and in four or five years those bedrooms aren’t going to work for you, right? That sort of stuff.
So making sure you’re buying the right home that’s really a good fit for you that where the location is not going to ultimately make you go oh my goodness why do we move here? This is just too hard getting the kids to the schools through the bloody railway line that’s always shut, all that sort of stuff, but also financially, right? The difference between your next home being one that might help you rebuild your financial position surprisingly quickly versus one that’s going to go absolutely nowhere for you and just kind of not really be back on the property ladder, just be treading water. So, you can find a lovely home at any price point that is a place that you can feel warm about and that’s going to be a good base for your family. So don’t feel it when you’re moving down in price point. That means you can no longer have somewhere you can be happy. You will just take time and when you get immersed at any price point you’ll find good properties and bad properties.

Sabina Read
What about grey divorce? We’ve seen a big uptick in grey divorce. So people separating after post 50, often initiated by women, the stats tell us. How might this impact real estate decisions at that period of life, at that stage of life?

Jules Hewitt
It actually seems to be, I mean, from my experience, it seems to have been more of a mutual decision sometimes and both parties seem to be, they both agree that maybe this is their time to separate and they both tend to be on board. I mean, I’ve helped lots of clients when we’re all speaking together on the phone and I’m speaking to both parties and we’re sort of coordinating the next steps to sell at the home. That’s been my experience. They seem to be both on board and an amicable decision. So it hasn’t seemed to be too much of an issue from my experience. But there’d be different considerations because you’ve both talked about, you know, being in close proximity to schools and things and in a greater force the school situations move.

Evan Thornley
There’s just a lot of different considerations that someone in their 50s or 60s will be thinking about when they are leaving a long-term relationship and considering their real estate options. A lot of people are at the time in life when they were considering downsizing anyway. There’s multiple motivations for downsizing. One is, hey, we no longer need five-bedroom three-bath and this big garden. But also, you know, actually, they’re looking at the equity that’s sitting in their home going, gosh, we could actually get get access to a few shekels here and have have a more enjoyable life, having access to some of that equity that’s been tied up in our home because we’re moving from a, you know, $2 million home to a $1 million home or whatever it might be. So, that’s a motivation for people to downsize often anyway. Now, if it’s a great divorce, that might be bringing on a downsizing decision for both parties and including potentially freeing up some equity for both parties and that may even be an attraction for people in that process. So, you’re thinking about that, that what I would say, putting on my investment lens is this, if you’re in a good family home, you’ve been sitting, though you may not have known it, on what I will call the capital growth train. And it’s been steadily progressing you up the wealth stakes while you’ve been busy doing other things. Most quality family homes double in value every 10 years. Not all of them do, though. A lot of the types of property that you’re considering potentially downsizing to may not be on the capital growth train, you know, you may like the idea of this nice inner city apartment with the Mealay kitchen and yada yada yada, that might feel like a better lifestyle choice for you. And that’s fine. A brand new high -rise apartment will almost certainly deliver zero capital growth for you in the next 10 years, whereas staying in the family home would have delivered you a huge amount. But moving to a smaller, say, a terrace house or something, you’ll still be on the capital growth
train. So there are really significant consequences in your next housing decision, including a downsizing decision because you’ve been steadily building wealth whether
you know it or not in most family homes. And you may suddenly not only have less of that because you’ve separated and you’ve divided those proceeds, but if your housing decisions at that point, then move you into a different type of housing that doesn’t have the same capital growth, you’ve stepped off that wealth creation train and that’s material. So I think very few people are really aware of that dynamic
and certainly the people that are selling luxury apartments don’t make them any more familiar with it.

Sabina Read
So is there a takeaway there, Evan, for you around a standalone property as opposed to an apartment as far as staying on the capital growth train? What are your top three tips for staying on the train?

Evan Thornley
Let’s just start with the underlying fundamentals, and I guess this is sort of the Gospel according to LongView, but I think any property professional would agree with us. Land appreciates, buildings depreciate, right? And so the more of the value of the property, that is in fact the value of the land underneath the property, broadly speaking, the better the capital growth. That doesn’t mean that, for example, all apartments have low capital growth. If you’re in a small art deco apartment in a good location, the value of the land under it is, let’s say, one -quarter of the value of the total land divided by the four apartments. That can still be 70 or 80 % of the value of the property, and that apartment will continue to grow 5%, 6%, 7 % per annum, terrific. So this is not houses are good apartments are bad. A new build high -rise apartment, I absolutely categorically guarantee you will never grow in value. Almost never. The LongView Data Science team has analysed every single sale price of every
single property in the country for the last 50 years. So when I say these things definitively, I say them based in deep experience and facts. If you take that simple
lens, the properties that grow in value. And as I said, it’s not purely about housing type, but what we call rod wells, robust older dwellings on well-located land. So whether that’s an inner-city terrace house or an Arteco apartment or a villa unit, for example, which is a very appropriate form of downsizing, versus a new-build high-rise apartment, you’ll get much, much stronger growth in all of the, as well as obviously a detached home on a block of land, then you will likely in a new high-rise apartment as the counter example. I just want to follow that through because I’ve also worked with many clients who have said, “I don’t think
I’ve now got enough in my half pot post-separation to stay on the capital growth train or to buy something that feels like the kind of place that I want to make home.”

Sabina Read
Is there any sense in buying an investment property using some of the insights that you’re sharing, Evan, and then renting? So you’ve still got a foot in the market, but it might not be where you lay your head at night.

Evan Thornley
Yeah, look, the rentvesting, which is often a piece of advice given to young people who can’t afford to buy their first home, but they at least want to look. I’m a bit cautious
about that strategy for a couple of reasons. If it’s possible for you to own a property that has good capital growth, it’s infinitely preferable that it’s the property that you live in for the simple and obvious reason that if it’s not, then
you’re going to pay a lot of tax on it. The investment performance of the property you buy as a rental property would have to be so much stronger than the capital
growth performance of a property you’re able to live in that it overcomes all of the tax burdens and other costs that your net returns. So, if you could live in an older style apartment that might get 3 % or 4 % capital growth or 5 % capital growth, you still may end up doing better than if you bought a rental property that might do 6 % or 7 % capital growth, but then you’re paying land tax because it’s
not your principal place of residence, you’re the paying capital gains tax when you sell it, you’ve got all the other costs and taxes and taxes are being allowed. So I’m not saying it’s not possible for the rent -vesting strategy to work, but it’s always preferable if you’re going to own a property with, firstly, that you own property that has good capital growth, and secondly, that you focus first and
foremost wherever possible on living in the property with good capital growth, because that way it’s the only tax -free investment you’re ever going to make. So even if it’s a smaller home or perhaps an older style apartment or a villa unit or a townhouse, something that’s going to get reasonable capital growth versus not is preferable. If you can’t do that, then you have to accept. And there may be other
reasons. You know, people often, obviously they want to feel, for example, a single woman wanting to feel she’s living in a secure location where she’s safe. And you know, that might make it more attractive to be in one of those apartments that is less likely to get capital growth. I mean, obviously, that’s the right decision for her and she should do that. But then recognising that her home is not going to be a source of – and I shouldn’t – you know, could be either of you, but not going to be a source of capital growth, then you might be looking to invest what money you do have in an investment. And whether that’s a property investment or a share or other investment, Then you just got an investment decision to make and you can make a decision about whether the right investment decision for you is a property investment or a share or an ETF or other investments. One of the reason LongView created the Home Equity Fund is that’s where people invest to get capital growth returns without having to be a landlord. So that’s a separate part of what we do,
but if people are in the fortunate position where they’ve got excess capital coming out of the and they want to stay on the capital growth train, but the home they’re going to live in is not in the capital growth train, then that’s what our home
equity fund allows them effectively to do.

Sabina Read
Okay, and looking ahead, I’ll start with you, Jules. What trends do you foresee and how the property market might intersect in this separation divorce space as relationships, you know, almost one in two end in divorce? So this is, we’re seeing an increase I guess in separations. And when we get data actually that suggests that divorce is not on the
rise, there’s skewed data that’s informing why it’s not. In other words, people sometimes haven’t actually got married in the first place, so we can’t get up them as a divorce. But the relationship space is changing and there’s going to be a
flow -on effect here in the real estate game. What do you think some of those trends might be?

Jules Hewitt
You see commentary every day about how the property market is in a bubble and house price to income ratios are higher than they’ve ever been and they’re going to come down. There was a story going around not long ago that house prices are only up because interest rates are going down and then once interest rates go up, house prices are going to crash. We published a white paper saying all of that stuff was nonsense, and it turns out that it was. What drives the housing market is very simple. We have the second highest population growth rate in the world, second highest in the world, and we concentrate our population growth almost entirely into just three major urban centres, Sydney, Melbourne and Brisbane. And what
that means is very simple. There are more and more people every day who want to live on the same pieces of land in the established suburbs of those cities and as a consequence the value of the land underneath these homes has been doubling every eight years for a hundred years. So I’m here to tell you that unless we stop having the second highest population growth rate in the world or we stop cramming most of that population growth into Sydney, Melbourne and Brisbane that the value of the land underneath our homes is going to continue to rise much more rapidly than our incomes or anything else. So, that’s difficult news to hear because everyone thinks that if, you know, if we only change negative gearing policy, suddenly house prices have crashed or if we only built more properties, suddenly house prices has crashed, they’re not going to, okay? It’s not the house, it’s the land. And that’s almost unique to Australia. We have the second highest population growth rate in the world, but we also have the most level of urban concentration in the world and it’s that combination that leads to a very unique housing market. That’s tricky. And in particular, the homes that grow the fastest in value tend to be the ones where the land underneath the home is the bulk of the value. Many of our family homes are in that bucket. Ironically, most people’s family home turned out to be a better investment than the investment property they thought they were buying to make money. And that’s even before we get to the tax issues I raised earlier. So that’s one of the many reasons, I mean, the more important reason obviously is just the emotional
environment, particularly when there’s kids involved, but where we can help someone stay in that home when they might otherwise have had to sell it as part of the divorce process. First and foremost, that often is just the most absolutely
stabilizing force you can have for the family and particularly the children and staying with the support network and the neighbourhood that you know and all of
those things. But secondly, that can be a very important part of the financial outcome. Part of the reason, you know, we came to talk to separation guide was we were finding that we were meeting an increasing number of clients who are using long views home flex, which gives you access to some of your home equity without selling the home or without taking out a mortgage or having any monthly repayments. We’re finding people using that to try and find a way to get enough when they’ve got to pay out a partner and it’s often both partners would actually like one partner to remain in the home with the children right that’s often what everybody wants and yet it’s hard to get the financial settlement if too much of the marital asset pool is tied up in equity in that home and therefore the only way to liberate that equity is to sell the home even if the person who was going to be paid out doesn’t want that outcome we’ve been able to give access to some of that equity to the partner who’s staying in the home. They can then use that as part of the settlement for
the partner who’s leaving so that they’ve got some equity to start looking for their next home for, that might be their four days of fortnight or whatever it might be.
And then sometimes we can also give extra equity to that partner in buying another home. – I mean, it’s so useful, I think, to broaden our minds to think about what
options there are available because we’re often limited just by knowledge. And so hearing some of these ideas I think will be really useful for a lot of people.

Sabina Read
Jules, you mentioned things like REA .com before. What else do you think are some of your favourite tools or resources or checklists that people might want to access to make informed decisions?

Jules hewitt
Yeah, so There’s REA, Domain, even if you just look online
and you’re selling home, you’ll get some checkpoints there, even through Google, RACV site actually has some good links for people who are looking to sell their properties. I guess we are sort of that vendors advocate that can help when they
come to us, that sort of got weed or I would do that research and I would answer any of the questions and concerns they have, set up strategies, I guess we’re a good tool to use.
What do you do? Yeah, that’s what we do, yeah. Yeah, that’s what you do.

Sabina Read
So where can people find out more, Jules? What’s the best way for them to?

Jules Hewitt
Just jump online, agentsselect.com today. It’ll give you a great insight to who we are and what we do. I guess we’re a small team here but we’re independent and we’re a neutral team. I mean that’s the best way that I can say we’re really here to get the best outcome for everybody if the decision of the sale of the home is what they’ve decided. So again we’re not pressure, we’re not here to pressure but if they have
decided to sell then we’re here to support them through that every step of the way, ensure that they meet any deadlines, answer any concerns or questions they have. We provide market appraisals for them. We can step through those market appraisals with them. We can compare agents’ fees and commissions. We also have the difficult conversations of negotiating the agents’ fees and commissions for them, which is fantastic. We can save them thousands and thousands on the sale of their home. We can also assist with in any costs. So any of the costs that they don’t want to pay for up front, we can support in deferring that to come out of settlement. We
love what we do and we’re just really here to support them through a really difficult emotional time. As I said, be an independent neutral party for both parties if they have decided that they need to move on in the sale of their home. Well said.

Sabina Read
Evan, do you have other resources, checklists, tools that you think?

Evan Thornley
Yeah, look at longview.com.au. So property is a long game,
so we’re with Longview. Look, we’ve got a team of about 120 professionals and we do everything except selling homes. You know, first and foremost in this situation, if people are wanting to try and stay in the family home, but it’s hard to see the math adding up, then potentially views, home flex might get them access to some of that capital to help them do that. Or similarly, if they’re now needing to buy a
new home and they don’t have as much equity as they would like, that maybe the departing partner or it could be both partners having sold the home, then longviews buying boost also gives people access to additional equity in exchange for a share of future capital growth. So on either staying in the home or buying a new home, we potentially can be a financial partner there. And if you’re buying the new home, then we also help you make sure you buy the right home. So our buyers’ advisors help you make sure you’ve thought through your needs and then can assess the homes that you’re looking at and then negotiate a purchase for you, like any good
professional buying advisor does. And even sometimes people choose to rent out the home for some reason or have that.
Obviously our property management team can do that as well. And for those who are fortunate enough to be downsizing, liberating a pile of money and need to invest it
somewhere and have stepped off the capital growth train in particular, then our home equity fund allows them to stay on the capital growth train without having to live
in it and still without having to pay land tax because we’re co-investing with homeowners, no one’s paying any land tax.
So, that’s a wide range of options at Longview, but the one I was most concerned about was to make sure people were aware of Homeflex, because if that can make the difference between being able to stay in the family at home and not, that’s a huge opportunity. If we can help with that, we’d be really, really pleased to do so.

Sabina Read
Thank you both. I think You both bring a very informed, supportive, empathetic and steady hand to this conversation, which we know for so many people can feel overwhelming and often out of our wheelhouse, I think.

Evan Thornley
It’s not unusual for people to say, “I don’t know. I’ve never bought or sold, except this one family home. I’ve never invested or read.” A couple of times in your life. I mean, Jules does this for a living. Our buying advisors do this. Our buying advisors have literally bought a thousand homes. They’ve been through that mill a thousand times. Chills will have been through the sale process thousands of times. So I think on the opposite, some people think it’s more in their wheelhouse than it is. Often professional people who are very able in their professional life and might even consider themselves to be quite commercial. I often see people trying to negotiate with a real estate agent thinking they’re the first person who ever thought of having an exploding offer or, you know, all sorts of stuff and the agents just quietly roll their eyes and go, “Oh yeah, another person who thinks they know what they’re doing.” Property and transactions in property, like anything else in life, you get better at it the more you do. And if you do it thousands of times, you’re much less likely to make a mistake. And that’s why at this time, of all times, it’s a good time to get professional advice.

Sabina Read
Yeah, thank you both. I think there’s a lot of practical, tangible tips that you have both shared. There’s some new ways to think. There’s a lot of tools and resources, but perhaps above all, there’s a sense of reassurance
that there are people, including those at LongView and Agent Select that can help guide this process. And why would we try and do something outside of our wheelhouse at any stage in our life but particularly at a time when we’re feeling emotionally and therefore cognitively overwhelmed. So thank you both for your time, lots to take away there and lots to digest but there’s quite a high level of hope in what
you’ve both discussed today.