Perth Property Princess Ends Up Losing $1,200,000 Speculating

Self proclaimed "Perth Property Princess" Sasha DeBretton has finally managed to sell her own "Million Dollar" makeover in Sorrento.

This house was bought by Sasha on the 11th September 2007 for $2,175,000 & with Stamp Duty of $105,000, $250,000 Renovation Costs & $75,000 selling costs Sasha needed to sell this house for at least $2,600,000 just to break even.Then there is the interest she had to pay to hang on to this speculative property play.

First advertised for sale July 2008 for $3,100,000 plus Sashas speculative play in the Perth property market finally come to a end when she is forced to sell on the 23rd December 2011 for  

        $1,900,000  a loss of over $1,200,000

Yet Sasha have the front to claim on her Website:

"As long as you've got the right strategy you will always make money through renovation."

Sasha needs to wake up & smell the Coffee if she could not do it for your own property why should people trust her skills to do it for them?

Anyway look below to see the full story that I posted last year, just thought anyone following the adventures of Sasha would like to know the outcome. 

Million Dollar Makeover or Million Dollar Mistake

Beware of False Prophets

Remember when reading the following to keep in the back of your mind the fact that Sasha had complete control of the project. It was not a property she had to work with. But it was a property that she went out & bought specifically to do up for a profit. It was her own money & choices. All her skills & judgement were at work here selecting the right property & paying the right price knowing the cost of renovations etc so we can now judge just how good Sasha's talent to turn a buck really are. Now remember if she can get it so so wrong with her own money & she had complete control, what faith can you have that you wont suffer the same outcome as Sasha in this market?

 

Back in April 2011 I put up a article about failing Professional Property Flipper Sasha DeBretton 

CEO of home renovating company 

"Million Dollar Makeovers"

Sasha DeBretton - Sunk In Sorrento 

(Below is a update that's rather interesting)

Sasha is a great proponent of "Self Promotion" & makes some outlandish claims about her ability to renovate your property in a couple of weeks & add hundreds of thousands of dollars to it's value (If not millions?) But lets just look & see if the claims she makes are all they are cracked up to be. 

Sasha appeared in the following article in this weeks Sunday Times "Home" liftout (27th Nov 2011) 

On her Website Sasha has a link to "Case Studies" of projects she has renovated in the past & she shows how much was spent on renovations & then how much profit was made in the end. Most of her claims of extraordinary profits are difficult to substantiate because there are no names or exact addresses that can be checked & verified. Those that can have not come onto the property market "For Sale" to have their price verified by the buying public. It is very simple to get a Real Estate agent to give a arbitrary price or opinion of what a house might sell for or how much value a makeover may or may not have added, it is a completely different matter actually getting that price in this market.

 

Fortunately one of Sasha's "Million Dollar Makeovers" has come on the market 

#37 Seaward Loop Sorrento

Link to For Sale Listing for : #37 Seaward Loop Sorrento

And as luck would have it it is Sasha's very own house. So we couldn't hope for a better example to test Sasha's claims of being able to add Millions of Dollars value to a property even in these "Difficult Economic Times" in fact Sasha goes so far as to claim it is a "Sure Fire" thing.

So lets see how the CEO of "Million Dollar Makovers" went renovating her own home for a "PROFIT"?

# 37 Seaward Loop

Sorrento 

This house was bought by Sasha on the 11th September 2007 

for $2,175,000 now with Stamp Duty of $105,000, $250,000 Renovation Costs & $75,000 selling costs Sasha needs to sell this house for at least $2,600,000 just to break even. So let's see how she went in the real world shall we?

Original owner First Advertised this house for sale 23-05-2007 for $2,500,000.

Property is then Bought by Sasha (Current owner) 
11th September 2007 for $2,175,000

(Talk about timing right at the peak of the Perth property cycle but that's OK because prices only ever go up don't they?)

Sasha First lists this house for sale 20-07-2008  as "EOI"
{ Very Smart Girl waiting 1 year to avoid capital gains taxes but by doing so missed timed the market. House is listed 3 months trying to get $3.5mil price. Clearly nobody willing to pay her target price of $3.5 mil Plus?} 

 

Actual Price wanted finally advertised 18-10-2008 $3,000,000

{Interest rates in 2008 were 9.5% & the GFC has just hit so price reduced to shift the house fast }

Price further reduced to attract buyers 10-01-2009 $2,990,000  

(Another 3 months pass lets reduce it $10K that will pull in the buyers?)

Further Price reduction 28-03-2009 $2.59 mil to $2.89 mil 

(Still No Takers)

20-02-2010 Advertised as "EOI"

(Fishing for buyers but No takers so property rested for a few months.)

Back on the market 6-03-2011 $2,680,000

(Still no takers after 3 months property taken off the market & rested)

Now November 2011 Sasha is coming to her senses & has reduced the price to $1,990,000

Sasha has been holding $2.5 mil debt on this property for close to 4 years. 

However if her strategy  worked all she intended to do was flip it in under 12 months!! 

So now  the interest on this has cost her $700K Plus!! 

Yes she has had a house to live in but she could have rented a house just like this in Sorrento for under $150K for the same period.

So her actual holding / speculation cost has been over $500,000 This is why she needs $2.68mil to try and break even. 
On top of the interest bill she has had to fork out for advertising etc for 3 years of marketing the property.

So what do I think Sasha's property is worth in this market?

Sorry but I would not pay more than $1,500,000 not in today's market!!

Why? 

Well look at this substantially better house listed in Sorrento for 

$1.53 Million: 

http://reiwa.com.au/Buy/Pages/More-info.aspx?SearchType=RESSALE&prop_no=1&listingid=10116000&listingno=3116665&puid=0 

A far Far better home that needs no more than 21 days & $1,000 worth of paint from Bunning's.

I like to call this a $1,000 Makover.

Below are Images of Saha's Million Dollar Mistake

Before

 

AFTER

 

 

Posted by Not The Greater Fool at 1:02 AM

Australian Banks Pulling The Plug on Valuations

 See article below that was in the "Weekend Financial Rewiew" Property Liftout page #6 Jan 14th 2012

Read it for yourself but the highlights are:

• Housing markets on the outskirts of Australian Cities are showing signs of stress & Banks are concerned refusing to accept "Sale Price Valuations"  in a housing market that is falling.
• Banks are forcing Buyers to tip in 15% more money to cover the shortfall between developers  "Sales Valuations" & Their  "Bank Valuations" or forfeit the sale.
• Major Melbourne Developers reporting a "Large Increase" in buyers cancelling sales after coming up short of "Bank Valuations"
• Cancellation rates that were only at 10% 12 months ago are now running at 25% with many buyers walking away from House & Land contracts.
•  Major Developer Mirvac reporting a "Sharp Rise" in contract "Cancellations" right across Australia because of "Bank Valuations" coming up short.
•  Property "Experts" are warning of a "Bleak Outlook" for new estates on the outskirts of Australian Cities with further "Price Falls" expected despite RBA cuts in interest rates.
• New Housing Estates were the "Greatest Risk" in today's property market & were now at the "Margins"
• Developers were now offering buyers "Extended" settlement periods so that Buyers could save up discrepancy between "Bank Valuations" & "Sales Valuations" to appease the banks.
•  Builders & Developers offering "Artificial Rebates & Bonuses" to maintain a high "Face Valuation"  to banks so that Buyers can borrow enough to procede with contracts.
• Example given of a ING Bank Valuation that came in recently at $174,000 against a Binding contract a buyer had signed 12 months earlier for $200,000

 Is it any wonder Perth land Sales dropped by 70% in Aug 2011 & Developers are slashing prices by $30-$50-$190,000 to shift land to also appease their banks:
(See Post I put up previously on the topic below)

have a look at the charts for housing Finance & notice how low activity really is despite recent interest rate cuts: (Thanks to  "Unconventional Economist in Australian Housing" http://www.macrobusiness.com.au/2012/01/nsw-fhbs-drive-housing-finance/ ) 

Thursday, January 5, 2012

Perth Land Sales fall 70% ... (Prices slashed $50,000 or 20%)

2012 has arrived with a big thud & Perth Land Developers have started a mad dash to the exits to dump stocks before;

A) Prices fall further

B) To also appease their Banks who are getting alarmed at the low numbers of sales in the Perth  land market & are now questioning the value of the security they are holding against loans.

Land developers rarely use their own money, the majority borrow from Banks to acquire the land & then borrow from Banks again to develop the land. 

These borrowings are backed by the value of the land they have in their holdings & with land values plunging developers hands are being forced by their Bankers who naturally reassess the value of securities used to support a loan {Every 3 Months if not Monthly}. 

Banks are asking developers to top up the discrepancy in valuations made in today's market.

Land Valuations have never been a problem for developers when prices were rising, however in today's market the only choice Developers have is to dump land quickly at reduced prices & get the cash to appease the banks or tip in their own cash which they don't want to do in this market.

By Mid 2011 all Major Land Developers in Perth were coming under pressure from their banks, they  have tried to shift stocks that were not moving with discounts that were hidden as "Bonuses" $20,000 Harvey Norman "Home Starter Cards" , $15,000 Fencing & Landscaping Packages, Stamp Duty Paid, Builder Bonuses etc etc .... none of these worked

It was important that Land Developers only reduced the price of their "Overpriced & Overvalued Land" by way of "Bonuses" because these so called "Bonuses" could be classified or explained to the bank as a "Marketing Expense" or "Promotional  Expense" & not really "Fall In Land Values" 

Banks also prefered to have it this  way so that they did not have to show their "True" exposure to risk on their balance sheet.

Remember if Developers simply reduced the price by the same value of these bonuses being offered it would have lowered the "VALUE" of the land triggering the banks to call in more equity from the developers to bring their loans back to agreed conditions or terms of the loans. 

Unfortunately for Developers these little "Marketing Stunts" & "Tricks"  did nothing to shift stocks as consumers are not really that stupid, they know the land is still overpriced despite the bonuses being dangled in front of them.

Good luck trying to pull the wool over today's consumers eyes they are just too well informed or cautious & suspicious. 

As you can see from the WA Gov't Landgate chart below sales for Perth Land in August 2011 were down to 324 lots a fall of 70% against the last 10 year monthly Average Sales for August of 1105 lots.

Just pause for a moment & think about it. What is wrong with this picture, a City of close to 2 million people & there were only 324 blocks of land sold in a month? 

Banks are accountable for their balance sheets to their shareholders & they know that if land sales have imploded by 70% despite efforts from developers to shift stock it has to be because the Land is "Overpriced"

Developers might try & blow smoke up a Retail Consumers Arse  but try taking a puff & blowing it up a Bank Managers Arse & see how far you get. Banks are no longer buying the valuations put on Perth land.

 

The Big four banks are concerned about their exposure to Perth property & are putting pressure on developers to stump up more cash or else. No more time for games my Banking sources tell me Developers have till March to get their "Shit Together" or else.

Have a look at the adverts & promotions below from some of the Major Perth Land Developers & you might better understand why a land developer would slash $20K - $50K of blocks of land (typically around a 20% discount.) 

But whilst you look at the Adverts from the big boys with deep pockets think  about the smaller ones that are about to go to the wall bringing the whole house of cards down with them.

$60,000 Range Rover + $50,000 cash  off Land valued at $550,000 = 20% DISCOUNT!!
The only thing Peet & Co are not offering is a "Happy Ending" 

. . follow the link to Peet Site & see for yourself: http://www.peet.com.au/landsale/ 

Just have a look at some of the discounts being offered:

Avon Ridge down to $375K after $50K discount, 
Burns Beach down to $399K after $30K discount (Last year same blocks were $465K!!) 
Lakelands down to $139K after $36K discount (Thats a 20% Discount of a $175K Block) 
The Sanctury from $135K after $20K discount, 
Shorehaven down to $190K after $50K discount (That's also a 20% discount) 
Wellard down to $172K after $30K discounts. 
Notice something? The size of the discounts on "Budget" priced blocks are enormous, 

Now just imagine what these 2012 discounts will do to the value of the "House & Land Packages" people signed up to in 2011 believing the crap served up to them by PROPERTY Spruikers in 2011. 

The paint will hardly be dry on their 2011 House & Land Packages & they have already lost $30,000 - $50,000 in equity on a $300k - $350K house & land Deal signed up to less than 12 months earlier. 

Remember this is just the start of discounting & it's only January come March it hits the fan!!

Perth Land Sales fall 70% ... (Prices slashed $50,000 or 20%)

2012 has arrived with a big thud & Perth Land Developers have started a mad dash to the exits to dump stocks before;

A) Prices fall further

B) To also appease their Banks who are getting alarmed at the low numbers of sales in the Perth  land market & are now questioning the value of the security they are holding against loans.

Land developers rarely use their own money, the majority borrow from Banks to acquire the land & then borrow from Banks again to develop the land. 

These borrowings are backed by the value of the land they have in their holdings & with land values plunging developers hands are being forced by their Bankers who naturally reassess the value of securities used to support a loan {Every 3 Months if not Monthly}. 

Banks are asking developers to top up the discrepancy in valuations made in today's market.

Land Valuations have never been a problem for developers when prices were rising, however in today's market the only choice Developers have is to dump land quickly at reduced prices & get the cash to appease the banks or tip in their own cash which they don't want to do in this market.

By Mid 2011 all Major Land Developers in Perth were coming under pressure from their banks, they  have tried to shift stocks that were not moving with discounts that were hidden as "Bonuses" $20,000 Harvey Norman "Home Starter Cards" , $15,000 Fencing & Landscaping Packages, Stamp Duty Paid, Builder Bonuses etc etc .... none of these worked

It was important that Land Developers only reduced the price of their "Overpriced & Overvalued Land" by way of "Bonuses" because these so called "Bonuses" could be classified or explained to the bank as a "Marketing Expense" or "Promotional  Expense" & not really "Fall In Land Values" 

Banks also prefered to have it this  way so that they did not have to show their "True" exposure to risk on their balance sheet.

Remember if Developers simply reduced the price by the same value of these bonuses being offered it would have lowered the "VALUE" of the land triggering the banks to call in more equity from the developers to bring their loans back to agreed conditions or terms of the loans. 

Unfortunately for Developers these little "Marketing Stunts" & "Tricks"  did nothing to shift stocks as consumers are not really that stupid, they know the land is still overpriced despite the bonuses being dangled in front of them.

Good luck trying to pull the wool over today's consumers eyes they are just too well informed or cautious & suspicious. 

As you can see from the WA Gov't Landgate chart below sales for Perth Land in August 2011 were down to 324 lots a fall of 70% against the last 10 year monthly Average Sales for August of 1105 lots.

Just pause for a moment & think about it. What is wrong with this picture, a City of close to 2 million people & there were only 324 blocks of land sold in a month? 

Banks are accountable for their balance sheets to their shareholders & they know that if land sales have imploded by 70% despite efforts from developers to shift stock it has to be because the Land is "Overpriced"

Developers might try & blow smoke up a Retail Consumers Arse  but try taking a puff & blowing it up a Bank Managers Arse & see how far you get. Banks are no longer buying the valuations put on Perth land.

 

The Big four banks are concerned about their exposure to Perth property & are putting pressure on developers to stump up more cash or else. No more time for games my Banking sources tell me Developers have till March to get their "Shit Together" or else.

Have a look at the adverts & promotions below from some of the Major Perth Land Developers & you might better understand why a land developer would slash $20K - $50K of blocks of land (typically around a 20% discount.) 

But whilst you look at the Adverts from the big boys with deep pockets think  about the smaller ones that are about to go to the wall bringing the whole house of cards down with them.

$60,000 Range Rover + $50,000 cash  off Land valued at $550,000 = 20% DISCOUNT!!
The only thing Peet & Co are not offering is a "Happy Ending" 

. . follow the link to Peet Site & see for yourself: http://www.peet.com.au/landsale/ 

Just have a look at some of the discounts being offered:

Avon Ridge down to $375K after $50K discount, 
Burns Beach down to $399K after $30K discount (Last year same blocks were $465K!!) 
Lakelands down to $139K after $36K discount (Thats a 20% Discount of a $175K Block) 
The Sanctury from $135K after $20K discount, 
Shorehaven down to $190K after $50K discount (That's also a 20% discount) 
Wellard down to $172K after $30K discounts. 
Notice something? The size of the discounts on "Budget" priced blocks are enormous, 

Now just imagine what these 2012 discounts will do to the value of the "House & Land Packages" people signed up to in 2011 believing the crap served up to them by PROPERTY Spruikers in 2011. 

The paint will hardly be dry on their 2011 House & Land Packages & they have already lost $30,000 - $50,000 in equity on a $300k - $350K house & land Deal signed up to less than 12 months earlier. 

Remember this is just the start of discounting & it's only January come March it hits the fan!!