Did you know that Bartercard's Property site contains millions of dollars in listings each with a trade component? Sound property investment could provide an ideal way of using Trade Dollars to achieve long-term financial prosperity.
On Tuesday, 13 March 2018, Bartercard Auckland hosted an After 5 Event to educate members on the real difference with Bartercard Property. Carl Hassard, Real Estate and Development Specialist from Bartercard Australia was the guest speaker, and here is some of what he had to say.
Buying
By using Trade Dollars for part of the purchase price you can reduce your cash borrowings, thereby reducing interest costs. This may result in the property being positively geared, providing both cash income and potential capital gain.
Bartercard members earn Trade Dollars by the provision of goods and services to other members. It costs them less to earn a Trade Dollar that it does a cash dollar, as all the overhead costs are already in place. This can result in a margin (or puchasing discount) to the buyer on the total purchase price when buying a property through Bartercard.
A typical example:
| Purchase Price | $500,000 |
| Cash component @ 75% of the purchase price | $375,000 |
| Trade Dollar component @ 25% of the purchase price | T$125,000 |
| Cash cost to generate Trade Dollars @ 60c = T$1 | $75,000 |
| Margin (or purchasing discount) | ($50,000) |
| True cash cost of property | $450,000 |
As the example above shows, by leveraging their gross profit margin, the Bartercard member has achieved $125,000 equity in the property with a real cost of only $75,000 cash.
Bartercard may also be able to offer you an interest-free line of credit, which could give you a fantastic opportunity to purchase a property without major cash outlay.
If you are not a Bartercard member but would like to know more about the benefits, simply call 09 414 6837 or contact us here.
Selling
Bartercard Property offers vendors a cost-effective marketing strategy that can achieve a quick sale and is more likely to achieve the asking price as the purchaser is already receiving a discount by using Trade Dollars as part of the purchase.
By marketing your property through Bartercard your listing has the potential to attract the attention of thousands of business owners - many of whom are looking for investment properties.
Vendors selling property through Bartercard will often achieve a quick sale at the best price and without the expense of paying a real estate agent commission. For property developers selling a new development off the plan, initial sales via Bartercard Property can set high benchmark prices, this is because Bartercard members, by leveraging their gross margin when using Trade Dollars to purchase property, are generally willing to pay the asking price.
From a developer's point of view, selling property on Bartercard can assist with pre-sales of their development to source finance and reduce holding costs, sell slow-moving stock and maintain their margins.
Gain more exposure to boost sales
Furthermore, using Bartercard Property as a marketing tool can also reduce the number of unsold units at the end of an otherwise successful development. The following example shows how effective marketing through Bartercard property can be.
"A developer was marketing a townhouse subdivision in Sydney. To expedite the sale of all units in the development, the developer listed the remaining units with a Trade Dollar deposit of 30% of the selling price. In only a few months the entire development was sold-down with Bartercard members purchasing a large number of them, and without the developer having to reduce the selling price on the less attractive units!"
Another major advantage to vendors, is that sales can be achieved without excessive marketing costs. The only costs involved when selling a property through Bartercard are the normal transaction fees charged on the Bartercard component only.
Bartercard Property provides a platform to introduce buyers to sellers. Bartercard does not participate in the negotiation process between buyer and seller.
Listing Criteria
Standard listing criteria
- Minimum 20% trade component on the asking price
- Asking price supported by either a Registered Valuation completed within the last six months or a Market Appraisal completed by a Licensed Real Estate Agent within the last 3 months
- If the subject property is being marketed via other agency or media (e.g. Real Estate Agency) the asking prices must be identical
- Vendor must own the property and provide a copy of title upon request.
Hot listing criteria
- Minimum 35% trade component on the asking price
- Asking price supported by a Registered Valuation completed within the last three months
- If the subject property is being marketed via other agency or media (e.g. Real Estate Agency) the asking prices must be identical
- Vendor must own the property and provide a copy of title upon request.
Commercial or Residential Lease
- Minimum 25% trade component on the rent for the term of the lease or equitable terms (e.g. first year full trade on four year lease).
Lifestyle Blocks and Vacant Land
- Minimum 20% trade component on the asking price
- Asking price supported by either a Registered Valuation completed within the last six months or a Market Appraisal completed by a Licensed Real Estate Agent within the last 3 months
- If the subject property is being marketed via other agency or media (e.g. Real Estate Agency) the asking prices must be identical
- Vendor must own the property and provide a copy of title upon request.
Business Listings
- Minimum 20% trade component or T$20,000 (whichever is the greater) on a 'fair marketing' asking price
- Full financial information must be available upon request.
For more information, if you're a member you can speak with your Trade Broker, or you can contact us here. Alternatively, you can take a look at the FAQs on the Bartercard Property website.
