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        <item6 Ref="10" type="Text" isSer="true" name="Text1" text="EXTERNAL RISKS - DIRECT INFLUENCES&#xD;&#xA;________________________________________________________________________________________________________&#xD;&#xA;• BUYER RISK – Based on the North Shore the Harcourt’s franchises are reliant on buyers being interested in purchasing property in the Milford, Takapuna, Glenfield and Devonport surrounding area. Mitigant – The areas the Harcourt’s franchises are operating in are highly desirable areas for buyers to purchase property. Once the buyer and seller has signed a sale and purchase agreement for an agreed price the buyer is bound by the agreement to purchase the property provided all of the conditions of the contract are satisfied. Harcourts have a good spread of potential buyers. The amount the buyer is willing to spend on a property is subject to the amount of finance they are able to obtain.&#xD;&#xA;&#xD;&#xA;• SUPPLIER RISK – Harcourts are reliant on attracting a good supply of quality houses to sell in the local area.  Sellers discuss the potential sale of their house with a few agents from different real estate companies to decide which real estate company to list their home with. Potential sellers are reliant on information regarding the reputation of the firm and the real estate agent, the commission amount to pay and the listing price the real estate company recommend when making a decision who to list their property with. Mitigant - Harcourts have a good reputation in the North Shore market and generally hire experienced real estate agents who are honest and operate with integrity. Sellers sign a sole agency contract with the real estate agent usually for a period of 3 months giving the real estate agent a finite time in which to sell their property. If the seller is not happy with the result at the end of the 3 month they can opt to list their property with another company. Sometimes sellers decide to list with more than one company to keep the real estate agents honest. In most cases though they sign a sole agency agreement. The selling price of the property is usually determined by the market however if the seller is desperate to sell their property in a hurry they may accept a selling price below the market price.&#xD;&#xA;&#xD;&#xA;• COMPETITOR RISK – Harcourts operate in an Oligopoly there are many other real estate companies in which they compete with, they include Barfoot and Thompson, LJ Hooker, Ray White, Century 21 and Bayleys. There are also other local operators including Milford Real Estate that operate in the top end of the market. Mitigant – Harcourts are reliant on the strong reputation they have established in the marketplace, they generally hire experienced real estate agents to ensure they maintain their reputation for honesty and integrity.&#xD;&#xA;&#xD;&#xA;• SHAREHOLDER RISK – The inexperience of management. Mitigant – Martin Cooper has many years experience working in the industry he was employed as a real estate agent in the South Island before deciding to purchase the Harcourts franchise. He has owned his own franchise for 18 years and now owns and operates four Harcourts franchises. While his divorce and poor financial management saw him get into some strife in the early 2000’s he has now made a matrimonial settlement with his ex wife and has employed Ciaran Lowney as CFO. He is well versed in all aspects of the business. &#xD;&#xA;&#xD;&#xA;EXTERNAL RISKS - INDIRECT INFLUENCES&#xD;&#xA;________________________________________________________________________________________________________&#xD;&#xA;• ECONOMIC RISK – Real Estate companies are affected by a downturn in the economy, with interest rates rising home owners find the mortgage repayments on their houses increasing. People are less likely to upgrade their family homes or purchase investments properties in this type of environment. Mitigant – Martin Cooper has operated the Harcourts franchises for the last 18 years and is very aware of how market conditions can affect the market in which they operate in. He has experienced many peaks and troughs in his time in the industry.&#xD;&#xA;&#xD;&#xA;• TECHNOLOGY RISK – Technology is changing the way buyers shop for houses. Instead of the more traditional media advertising in the Property press, NZ Herald or local newspaper potential buyers are able to shop for houses online. This gives the potential buyer an opportunity to view a selection of photos of the home to see if they are interested in buying, this gives the real estate agent very little opportunity to up sell the property. Mitigant -  Harcourts have established their own website for potential buyers to view this may save the real estate agent time with tyre kickers who want to view the house but are not really interested in purchasing the property. The agents encourage the buyers to view on line and if they are still very interested in the house then the agent will arrange a time to take them through the property.&#xD;&#xA;&#xD;&#xA;• PRICING RISK – Selling prices of houses are driven by market prices. At the end of the day the seller of the property comes to an agreement with the buyer on the purchase price of the property. Often it depends on individual circumstances how desperate the seller is to sell his property and how emotionally attached the buyer is to owning the property or whether they are able to obtain finance. Mitigant – The Real Estate agents are able to influence both parties and is often aware of the ability of the buyer to increase their offer or the willingness of the seller to decrease their asking price to come to a compromise. Experienced real estate agents like the staff employed by Harcourts are better able to read the situation and come to a compromise.&#xD;&#xA;&#xD;&#xA;• CLIMATE RISK – The housing market is seasonal with sale peaking in the summer months (excluding summer holidays) and slowing over the winter months. 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