Archive for July, 2013

Do You Know What You’re Signing Up For?

Saturday, July 27th, 2013

Just about every piece of software you download these days requires you to click on the “I agree” button before you can access it. Those guys have really got the public over a barrel – if you don’t click, you don’t receive.

Being asked to sign paperwork can be similar but with one big difference: you can choose to cross words out. Before you sign a contract to buy a house it’s a really smart idea to employ a professional to look over the documentation for you first. It’s the job of a solicitor or conveyancer to read the contract and let you know if it contains anything dodgy. Sure, you can do this yourself but of you miss something you’re on your own. It’s quite common for a contract to be sent back from the buyer’s solicitor to the vendor (house seller) with a paragraph or two crossed out. As everybody knows, buying a house is a big financial decision and you want to make sure that everything in that contract is exactly as it should be.

But what about all the other things you sign. Do you read every word in a credit card contract, your employment contract, your electricity supply contract and everything else you are asked to sign before you scribble your John Doe? You should.

This week I was asked to sign a form before I went to do a job for work *Spoiler alert! If you don’t know what sort of work I do, read the Introduction to the Financial Freedom For Gens X and Y course first.* The job was covering a visit by the Attorney General to an event where the Department of Defence was carrying out explosions. The paperwork that had to be signed before we were allowed access to the site read as follows:

            I………….(insert full name) HEREBY UNDERTAKE that I will at all times hereafter will and sufficiently indemnify the Department and the Commonwealth and keep them indemnified against all actions, suits, proceedings, claims and demands which may be brought, made or prosecuted against the Department or the Commonwealth arising out of death or injury caused to me in any circumstances whatsoever or any claim made against the Department or the Commonwealth in respect of my attendance to the said demonstration.

Then there was a space to sign as well as a space for it to be witnessed.

I’m no lawyer, but to me that may as well have read:

            If we stuff up and you are injured or killed in one of our explosions, neither you nor your family can sue us. In fact, if you are injured or killed on our plot due to any stuff up of ours (including stepping on a live electrical wire or being run over by us) you still can’t sue.

I refused to sign and the Attorney General’s visit wasn’t covered. However, I did wonder if Australia’s top legal bloke was asked to sign the same document.

The real value of housing

Saturday, July 20th, 2013

Many people believe, quite rightly, that shares are more volatile than property. Share prices can go up and down from one day, one hour or one minute to the next. But housing isn’t this volatile, is it?

Although they’re hard to compare directly like this, property looks much less volatile as it is usually only bought and sold (and therefore valued) once every couple of years/decades. What you don’t see is the price/value of property rising and falling in those years when it’s not sold.

If your house was bought and sold as often as, say, a parcel of BHP shares are, it would start to mirror the same degree of ups and downs as the shares.

Don’t just take my word for it. Ask a dozen people who are familiar with your place of abode the most they would pay for it. Then you could start to see the real volatility of bricks and mortar. After all, something is only worth what someone else will pay for it.