oc | Tuesday 18th December
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Downsizers New v Old – A clash of generations!

Auctioneer Julian Augustini sold 4/23 South Road, Brighton under the hammer for $1,266,000 - 6 bidders. Its the single level in the back right and its unrenovated - in fact its a mess. Now see the double storey to the left - that type sold for $920,000 only last year. The downsizer market is hotting up - and its a clash of generations - new v old. This was a classic battle and this time the oldies won.

Auctioneer Julian Augustini sold 4/23 South Road, under the hammer for $1,266,000 – 6 bidders. Its the single level in the back right and its unrenovated – in fact its a mess. Now see the double storey to the left – that type sold for $920,000 only last year. The downsizer market is hotting up – and its a clash of generations – new v old. This was a classic battle and this time the oldies won.

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What is starting to interest us, is the real change in what young people are looking for.

Young people are The New Downsizers - even before they’ve upsized.

Young people are the new downsizers in expectations, in mortgage commitments – $2m or $3m mortgages for many, are neither desirable nor manageable.

Many in the younger generation want to travel, to be free; they don’t want or can’t afford the material anchors, that huge homes and huge mortgages bring.

However, whilst they don’t want an impossible mortgage – they still want the groovy location or the location they grew up in; a car space and walk to the shops and train – all those things, that in the last decade have meant an increasingly bigger mortgage – enter the young downsizer concept.

It’s a real change in two of the PPP’s (Price, Property, Position)

They want Position

+ will or have to, accept a less Property (apartments are correctly now seen as poor investments short or long term)

+ are increasingly prepared to – or have to – pay a higher Price for what we will call “Young Downsizer Specials” as demand strengthens.

OUT of the “youngies” shopping lists are the 50′ x 150′ blocks and the lawnmowers a bit further away (as its now too far away).

IN are the “Young Downsizer Specials” – good location, smaller land, building that needs work (maybe you can add to).

However the “youngies” are being forced to enter into these homes in August 2016 at a considerably higher price than 12-24 months ago.

Why?

Well the WOW downsizer homes (town houses) are out of reach for the “youngies”, as the oldies with their big “Asian land dividend” cheque of 2014/2015 have pushed the prices too high – forcing the “youngies” demand to the ” Young Downsizer Special” which is good location, smaller land, building that needs work (maybe you can add value to).

However a couple of other market segments are already there – the “not so rich oldies” and the DIY/super funds/investors/overseas buyers.

As there is a smaller but still significant land component to these well located ” Young Downsizer Specials”, by logic there is also a limited .

Limited supply and increasing demand means that Price will go……. yep, you know the drill.

That’s why it’s harder now, than say 2 years ago for “youngies” to enter this market.

So in Inner Melbourne its Downsizers New v Old – it’s an ongoing battle royale.

It’s not new – we have said for decades, as has other buyer advocates such as Wakelins, Secret Agent and Morrell and Koren;

  • that one of the best investments to buy, is a single-fronter period home with a car space;
  • NOT an apartment with a financial planner, some flashy spreadsheets and a lot of self-interest.

Why is a single fronter so good?

Because a single fronter is a whole of life home – meaning, no ongoing transaction costs and most of your cost base is fixed at today’s prices for the next 50/100 years as you only have to buy once – AND you can live in your investment, you can actually use and enjoy your money.

Whole of Life

  • Singles/Couples – rent it, live in it
  • Younger Children Families – paint it and retile the bathroom and save for a second storey
  • Older Children Families – put the second storey on
  • Downsizers sans Children – all on one level with room for guests upstairs
  • Die – leave a good investment to your children or sell it before and travel the world for free, for a decade on the money you made – yeah that’s a better idea!!!

These downsizer homes are always well located to services; thus reducing time and travel costs to education, work and friends – close to shops, within established communities.

Hey listen to the super fund experts, the stock market jocks and others all you like – but nothing will shine for almost all of you in your life, like a well bought single fronter.

However, these gems, these smaller homes are not as easy to buy as they once were – as we said, the changing young downsizer market is running headlong into the traditional older downsizers and investors – and BANG go the smaller blocks, even with the not-so-great homes.

That odd, dark and dingy Art Deco era home with the shocking floor plan – but in a good location – is worth a hell of a lot more than it was as little as two years ago.

Evidence 4/23 South Road Brighton – see our James Home Rating click here.

Here is a block of half dozen older style and pretty boring  “Nanna’s” townhouses – but in a great location. Last year in March a double-storey one in this block sold for $920,000. Today a single-storey one sold for $1,266,000 and in need of a total renovation – there were 5 bidders!!

It was classic younger v older, in a battle to exhaustion.

The market is so, so interesting and challenging right now and its very enjoyable work for us, to be making a difference. Hands up at auction without real knowledge, without commitment is so old school, if you want to buy and buy well.

More and more parents are engaging us to buy for/with their children, picking up our costs and helping out with the deposit.

You need a plan, you need the on-the-ground knowledge and research and you need a strategy.

Auctioneer Kevin Chokshi sold 21 Devon Street, Cheltenham under the hammer for $1,370,000 - 7 bidders out of the large crowd of 150

Auctioneer Kevin Chokshi sold 21 Devon Street, Cheltenham under the hammer for $1,370,000 – 7 bidders out of the large crowd of 150. 62% increase in one year for land. Who said land goes out of style. How are those stock market boys going?

Today with significantly lower $M+ auction numbers in and Inner East, we thought we would push out into an ever increasing $m+ market for us – the middle of Melbourne. Its low stock across the Board – but James Bidderman was nearly 3 bidders per auction again and the James $M+ Clearance rate was 80% – that is strong – but we are in a low stock period – it may change later in Spring.

Here are some insights from the wider market – not just the Inner East and Bayside Market.

Overall the auction market is continuing its strong start after the depths of the Winter holiday break.

Three clear reasons it’s a strong start;

  1. Reinvigorated bidding from people with an Asian background
  2. Strong Local Bidding
  3. Really tight (meaning low) supply of new family homes coming to the open market.

But there is more afoot in this very interesting market, than just the overall market demand and supply dynamics.

There are big (and we mean very big) movements within specific market segments whilst there are little, if any movements (and possibly some movement slightly backwards) in other market segments.

The big moves are the lower end -see our words above.

In Bayside and surrounds it’s currently ‘The Perfect Triumvirate’ for sellers.

We have said for a few years now, that Bayside has been very much undervalued, when you compare it to Inner East suburbs such as and (schools, traffic, beach, transport, safety). We have been buying for investors and home buyers alike at the $1m+ range. However our tact is starting to change marginally, as we look for the new “good buying”.

That is not to say that there is not still upside in Bayside – however it is getting a lot more competitive.

Last year we bought in Eden St in Cheltenham on the “better” or beach side of the highway at almost $1 . Today at 21 Devon St, Cheltenham (Kevin Chokshi – Ray White) on the “other” side of the highway, a something of a similar offering, sold with 7 bidders for $1,370,000. Next door to 21 Devon, which is identical in land size and home value, sold in March of last year for $847,000.

There were 7 bidders today and the opening bid of $1,000,000 didn’t really shock anyone – in fact the first to be knocked out with the knock out bid, was the knock out bidder.

That result according to Craig, our Bayside $M specialist was a 62% increase in one year – no emotional outlier – there were 7 bidders on this one!!!

For our James Home Rating on 21 Devon – click here

Auctioneer John Bongiorno sold 43 Kerferd Street, Malvern East under the hammer $2,305,000 – 6 bidders.

Auctioneer John Bongiorno sold 43 Kerferd Street, East under the hammer $2,305,000 – 6 bidders.

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Camberwell, 19 Currajong Avenue (David Gillham) – Under the Hammer $4,440,000, 4 bidders

Fitzroy, 52 Nicholson Street ( Paul Caine) – Under the Hammer $3,310,000, 3 bidders

Hawthorn, 10 Oak Street (Cambell Ward) – Under the Hammer $3,225,000, 2 bidders

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Cheltenham, 21 Devon Street (Kevin Chokshi) – Under the Hammer $1,370,000, 7 bidders

, 43 Kerferd Street (John Bongiorno) – Under the Hammer $2,305,000, 6 bidders

Brighton, 4/23 South Road (Julian Augustini) – Under the Hammer $1,266,000, 6 bidders

Caulfield South, 22 Sycamore Street (James Paynter) – Under the Hammer $1,450,000, 6 bidders

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Kew, 15 Barry Street (Simon Shrimpton) – Passed In $6,450,000, 2 bidders

Toorak, 1 Ross Street (Gerald Delany) – Passed In $4,000,000, 0 bidders

South Yarra, 16 Davis Avenue (James Tostevin) – Passed In $2,525,000, 1 bidder

John Pollard and his wife Vicki, sold 53 Purtell Street under the hammer for $1,307,000. There was 4 eager bidders and a large on looking crowd of 100

John Pollard and his wife Vicki, sold 53 Purtell Street under the hammer for $1,307,000. There were 4 eager bidders and a large onlooking crowd of 100.

Offies

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Welcome to part 3 of the 3 part Off Market Series.

Beginning the Off Market negotiation – below is a combination of three Off Market negotiations that James Buyer Advocates completed in July 2016.

  • One in the $10M+ range
  • One in the $3m to $7m range
  • One in the $1m to $2m range

In other words, the three Top End $M+ Market segments we operate in – Lower, Middle and Upper.

All three were family homes and all three were Inner Melbourne – Scotch Hill, Grace Park and near Gascoigne – but they just as easily could have been Golden Mile, Beachfront, Tara or Sackville precincts.

Involved were four agencies Kay and Burton, RT Edgar, Jellis Craig and Abercrombys.

So we begin at the beginning. Actually for many Off Market buyers, the beginning can be the end, even though it should have just been the beginning.

It’s the end for some Off Market buyers, because you have given a narrative of how much you will spend and how you will be doing things with/to the agent. You will have done this via opening your mouth, in the one brief conversation that introduced you to the potential Off Market.

Game Over…

  • You either won’t be the buyer on a home you could have been or;
  • You will be the buyer on a home you shouldn’t have been or;
  • You will pay a very different amount to what you could have paid

and you haven’t even been to the home.

Here is a typical conversation we have;

G’day Mal

Hi RAJJ (Ross, Adam, Jock and Jeremy) how is the market treating you?

Not bad – have you still got that $7M buyer looking for land in Hawthorn?

RAJJ we got a few new clients at all price levels. What have you got that may be of interest? You know the routine just give us the PPP’s – Address, Land Size, One sentence on description and Price Guide ………………………………..

RAJJ there are a couple of goodies on that list, when can I get through D, E and maybe A. I’ve been through B and C and they are not really for sale and F doesn’t make sense to me on the price you are talking about. And I won’t bother with J or K, as not enough detail …..

Mal, how about Wednesday at 10 and we can do all three D, E and A. Who is your client and are you bringing them?

Sounds good RAJJ, no just me to begin with – let’s see if they are as good as you say they are.

This is a conversation we like to have weekly with key selling agents in Top End Melbourne.

It’s a good initial conversation and one an Off Market buyer without a buyer agent cannot usually have:

  1. no closed minds
  2. some filtering
  3. no real price giveaways

Fast forward – we’ve been through the home (without clients) and during the visit, we liked what we saw and one home passed the JAMES OFF MARKET DUCK TEST.

Next step is to send photos and a JAMES HOME RATING to our client. Here is a sample of a number of James Home Ratings – click here

Confidentiality for our buyer is an important commodity on three fronts:

  1. Not becoming an Open Book on $
  2. Privacy
  3. Management of Contact from Agents over a longer time frame

Hi Kellie and Ben, Mal here; I think we have one, possibly two OFF MARKETS that are worthwhile having a look at.

If you could check out the JAMES RATINGS, the pics and videos I sent you and do a drive-by (if overseas Google link) both 14 Tara and 33 Greystone, Armadale in the next few days that would be great.

Ok Mal.

Next day I’m giving some feedback back to RAJJ and asking some more questions – my main focus is to confirm the JAMES DUCK TEST and to give the agent the heads up that we (client and I) maybe wanting to go through.

This new Agent Conversation we can guarantee you will also contain:

  1. A very high Client Dream Price and a very low Agent Buyer interest figure – giving you a “wide as” price range and as definitive as a politician’s pre-election promise. If you bothered to record the initial conversation, you will also notice a change in the figures from RAJJ’s first price indication – the change will be in a northerly direction.
  2. You will also hear about how the selling wife wants X and the selling husband wants Y and that they are not quite on the same page. This is the standard wide range price justification technique. It’s sensible work from the selling agent, whether you agree with it or not – personally, I have no issue with it. To be too narrow on price is not representing the sellers’ interests, as well as a good selling agent should be doing.
  3. There will also be ‘another buyer lurking in the wings’ conversation. A standard time pressure and fear of loss agent technique. You need to have a three-sided strategy to deal with this to:
    *Actually deal with another buyer if real.
    *Deal with your emotion of another buyer whether real or not.
    *Return serve, so as not to be always on the defensive.

OMS

Fast forward – Clients have done the drive-by and felt comfortable with the area.

We have supplied more information re land size, past sales and/or sales campaign history (eg when offered in the recent past and for how much and with which off market agent), owners and our initial thoughts on value and market interest from others. Eg sometimes these homes have been on the market for two or more years with two or more agents– its all useful information if you know what and who to ask.

And so fast forward – we’ve been through the home – have been really careful again, not saying too much – not to be tricky, just to be prudent.

Out the front of home D with the clients.

Hey Mal, I really like this home – me too.

OK, let’s give it the sleep test and talk tomorrow.

Next conversation

Hi RAJJ. We have some interest in D, mild interest in A and no interest in E. Talk tomorrow.

Fast forward and Ben and Kellie confirm interest via a coffee meeting or phone call.

Ok, great Ben and Kellie – can we please frame what might happen from here.

We still don’t know that this home is really for sale and we won’t until they return our first serve – meaning they:

  • counter or
  • accept or
  • choose not to respond to

our initial offer.

Why don’t we wait till the agent has made the first offer, Mal?

Well they have via their quoting and conversation – and if you are holding your breath for a firm figure, then in almost all cases you will expire prior to hearing a firm selling agent figure.

So our best advice is, this is what works in Off Markets – having bought hundreds – you are going to have to make some of the running or you will be run over.

Here is the Buyer Big 3 at the start:

  1. You need to have clear goals, as you are going to be stress tested by the other side, either accidentally or deliberately (almost always the latter with good agents) and it’s easy to move off track and not achieve what you set out to achieve. Eg snatch defeat from the jaws of victory.
  2. You need to have a good internal expectation management system right from the start; that can help regulate your emotions, so as you can actually keep sight of your goals.
  3. You need a play book – not a rule book – a play book of what to do when this happens or that; or this and that; or this without that.

So what I personally use is a good old-fashioned notebook. And in that notebook I record:

  1. Key conversations
  2. Goals
  3. Expectations
  4. Additional facts
  5. Insights and gut feels
  6. Possible scenarios – flow charting doodles etc

It’s like a dear diary, and it has helped many a difficult deal stay on track with a review from time to time.

And so we begin the Negotiations!

Next Week – we begin our Series on Negotiations – we are super excited to be bringing you this special series.  It will dovetail into our Off Market Series nicely.

For near on 10 years James Buyer Advocates has pioneered Architects working with Advocates for our clients PRIOR to purchase. Kathy Russell, Bachelor of Architecture (Hons) Melbourne - supports our James Buyer Advocate clients with professional, up to the minute architectural and design options on any property currently on the market or off market. This has been such a positive James Buyer Advocates initiative. Its personal, one on one, it’s free to all clients and tells you what you need to know architecturally BEFORE you buy. For a confidential meeting call 9804 3133.

For near on 10 years James Buyer Advocates has pioneered Architects working with Advocates for our clients PRIOR to purchase. Kathy Russell, Bachelor of Architecture (Hons) Curtain University – supports our James Buyer Advocate clients with professional, up to the minute architectural and design options on any property currently on the market or off market. This has been such a positive James Buyer Advocates initiative. It’s personal, one on one, it’s free to all clients and tells you what you need to know architecturally BEFORE you buy. For a confidential meeting call 9804 3133.

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