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First signs of life

Whispers. James Tostevin, 8 Rossfield Avenue Kew. 5 bidders, $3,680,000

Whispers. James Tostevin, 8 Rossfield Avenue, Kew. 5 bidders, $3,680,000.

 

VolcanoeaDucks

Today was the clearest spring buying and selling lessons any us, be we buyer or seller or both, will get before Christmas.

With the auction machine still cranking up its engine, we covered a few spring early bird auctions today – eight Top End auctions in total – summary in the Volcanoes and Ducks graphic above – detailed James Auction Reports below.

The message couldn’t be clearer, the lessons couldn’t be stronger.

Today’s Market Evidence

Volcano = 4+ bidders; Ducks = 0 bidders; Lone Ranger = 1 bidder.

8 Auctions = Volcano, Duck, Duck, Volcano, Duck, Volcano, Lone Ranger, Duck

There were no normal auctions (2 or 3 bidders) witnessed by us today.

Today’s Lessons (even on a small sample):

  • The underlying PPP and market fundamentals are still there (otherwise 3 homes would not have been volcanoes, 1 is a fluke, 3 is a pattern)
  • To be an A-grader you need to get each of the 3P’s right – Position, Property and Price. Yep including Price
  • Auction buyers will punish sellers who haven’t adjusted to the new price paradigm (4 homes were ducks, 1 is a fluke and 4 is a pattern). Buyers could also ask the question if they are a lone ranger, what are the other buyers missing or is it you, who is missing something?

Cliff 1Buyer and seller positions at present.

1. Don’t really know what is going on OR

2. In denial there has been a change OR they acknowledge has been a change, but say they are different OR

3. Accepted there has been a significant and swift drop across the board, with only a few being exceptions.

Cliff 3

Sellers

There are two main types of sellers:

  1. Those who want a price.
  2. Those who want a sale.

In this current market if you are a seller who wants a sale first and foremost, then auctions are still in our opinion, worth considering IF you have good PPP’s.

However, if you are a seller who wants a price first and foremost, then maybe you need to consider whether or not an auction is the only way to go. If you are chasing a price (more important to you than an actual sale) – is it wise to chase that within a three-week period, with a significantly increased chance a duck auction?

Duck auctions are expensive in terms of advertising, but they are a lot more expensive in terms of price.

You have advertised to the world and most importantly to any potential buyers, what your home is NOT WORTH.

It really is more than going to the races and plonking $30,000 (real money – yours) on a long shot – it’s a lot, lot worse than that.

Buyers

Ok, stock is tight and so you decide to go the off-market route. In fact, all of a sudden, all those agents who weren’t returning your calls in 2016 and 2017, are suddenly your new best friends and they are sending you homes – good ól special you.

Why is that?

With an off-market or to a lesser extent an EOI, a good selling agent can control the “noise around a difficult home” – it’s a lot harder to control after a failed auction.

It’s one of these reasons you would hear from agents about an off-market:

1. They have a great home that could suit you and it’s well priced.

2. They are trying to get a listing (not much work around) and they want you to attend to assist them to get that listing – many times the home is not for sale through them in the immediate future.

3. They feel you could be a good buyer for this home at a lot higher price, than if they took it to auction.

Stock

Why the shortage?

Well if you didn’t have to sell, would you be putting your home on the market now?

So you’ve answered the question about why not much stock is out there.

Some good results will change everything as far as stock goes – meaning good results will bring an increased number of sellers to market to try their luck. However, in a down market, the stock increases only have a short lifespan, before discretionary sellers go back into hibernation.

Why?

More stock means more choice and in this market that starts a new cycle of lower prices, as buyers are more discerning when there is a choice.

Price

This takes a lot of skill to correctly answer the concepts below and to know the difference.

Why drop your sell offer if you have no buyers or why increase your buy offer if you have no competitors.

AS OPPOSED TO

If you were 10% below the market as a buyer last year and now you have dropped your budget 10%, then you are still 10% below the market and won’t buy.

If you put your home on the market earlier this year and you were 10% above the market, then dropping 10% in August means – you still won’t sell, as you are still 10% above the market.

PRICE. PRICE is the real issue out there in this volatile marketplace, even more so than stock.

MarketSolutions

Are there price solutions?

These could well make you hundreds of thousands of dollars between now and Christmas.

Ask more Questions – the right ones;  more so than give answers to the wrong ones you are asked.

Get a Grip – many of us fold under certain pressures – there are ways around this (to your advantage) – but you can’t see those paths if you’re misty-eyed and monkey-brained.

So what to get a grip on?

You can hold onto whatever you like – but we at James like to hold onto the fundamentals, such as Clarity, Assess and Negotiate and Price, Property and Position and the old chestnuts like Happy Wife, 5-Year Future Flex and good ól Demand and Supply.

Develop Strategies to:

  1. Collect evidence and test theories before acting. This applies to positives and negatives.
  2. Avoid situations where you haven’t been able to test theories – that is not head in the sand hoping it won’t come, it may well mean attack first to test strength and make an assessment.
  3. Realise that there will be crunch points, you can’t control all of them, it’s how you manage them and the best way we have found is with good structures.

There are real-life price solutions:

  • Concepts called Traffic Lights,
  • Strategies around Scripts and Dialogues and
  • Techniques that really work, like 3 Breaths. Leverage in this market is so important in a buy/sell situation.

drHH

Real life Investing:

Last week clients completed a buy/sell. Through good decisions, they put an extra and measurable $500,000 into their pockets, tax-free AND over an above what they could have got, if they had of asked poor questions.

What we didn’t mention – even in this market, they earnt a strong $800,000 on their $1,300,000 purchase price over four years.

What we didn’t highlight – even in this market for a 10% deposit and with interest payments, their return would have appeared even better OR in different circumstances as a tax-deductible investment, even allowing for CGT, this home after rent and other deductions, would have worked very well for an investor.

The key was the investment itself – its PPP’s.

  • No, it did not have an 8-page glossy brochure.
  • No, there were not any beautifully manicured tax and depreciation schedules, presented by people in beautifully manicured suits with other agendas, sitting in interior designed offices. No our clients bought this standing in the street, with us yelling over the the top of others.
  • No, it was not new or off-the-plan, with a champagne opening and more hype than a grand final.

Yes, it was hard to buy, yes it was transparent as it was under the hammer and no we didn’t pay too much, just because we had to fight for it.

Yes, we acted for the client to buy and yes they were still speaking to us 4 years later when they sold/bought another (which we did for them).

It was a market fresh healthy investment – not a processed one with obese fees.

Compare:

None of us knows the future, so we can’t guarantee this will always happen like this all the time – but its good to know that in this case, for a James buying fee of between 1% and 2% on $1,300,000 or between $13,000 and $26,000 plus GST, such a thing can happen.

Say a $20,000 fee on an $800,000 “profit” versus a financial planning or accounting or bank fee on an investment that has made you…… in a lot of cases…….nothing.

Are the best property investments sitting in the drawers of accounting / financial planning firms in-house “real-estate divisions”, that magically appear at your 20-minute “tax investment” interview?

Are they good investments or just convenient ones (for your advisor)?

How can 50 of them all be magical investments? We have been offered a number of times to do “ratings” on these magical investments from the “sellers” themselves, for a lovely big fee of course.

We have never done one – nor have we ever in all our history bought an off-the-plan – yes two partially completed ones for homeowners in special situations – but never an off-the-plan  “investment” apartment.

We do buy apartments for clients – already built ones and we buy them for lifestyle, not investment.

Were you “sold” an “investment” –  5, 4, 3 years ago by your accounting or financial planning firm?

How is that investment going after the massive price increases the market has seen?

Are you being advised its not a good time to review now, as you have to ride these tough times out?

Is that advice because the market is a bit off right now or because you bought an “investment apartment dog” or an “off-the-plan dog” a few years ago and the reason it has performed so poorly is not the current market; the main reason it’s performing poorly is because of what you bought and who you bought it off?

Negative gearing is only great when it turns positive – negative gearing that remains negative stinks as an investment.

Yes, we are completely independent of all banks, major accounting and financial planning firms.

Positive:

We see this market as a positive one, if you are a doctor or other “income-rich” professional who wishes to

  • Trade-up
  • Invest for your superannuation,
  • Purchase or assist with purchase, for a son or daughter.

This market is better for you than 12 months ago, if you are buying a certain type of property and NOT BUYING another type.

Is it time to change who with and how you look at investing or buying your next home?

Apologies for the lack of glossy brochures – all we can show you is results.

Bit fired up aren’t I? It’s just some of what I have seen at the Royal Commission and read in other reports lately, gets me motivated to speak.

No surprises though.

About ten years ago I went and did 8 DFP (Diploma in Financial Planning) subjects to I thought, improve my education.

I battled through (passed) 7, however on the 8th subject, on the last assignment I walked out in complete frustration, at what I was being taught by this Bourke Street company.

On their major assignment, I was not allowed to put a residential property in as my investment example – it had to be a managed fund or similar investment type – I was never told why, but we all know why and I left as you can feel, disillusioned.

No wonder the Royal Commission happened with underlying training like that – or is that too harsh?

Disclaimer: There are a few really good and ethical financial planners – we are happy to refer to them (for no fee). We at James Buyer Advocates do not give general financial advice and nor should we, it is not our area of expertise. You will need to decide that buying an investment property or a great home to live in, is the thing that is best for you and that we can help you achieve that.

Can I also warn you that at James Buyer Advocates, buying a good investment or a good home takes longer than a 20-minute interview and a few emails.

We want to get to know you and understand what you really, really want.

We want to show you on the streets what works and what is happening.

Then we (James) go through a reasonably exhaustive due diligence process (full ratings) and maybe a few false starts (price too high) before you settle on the right one.

I acknowledge this is a bit of a rant and I have my own agendas. Sometimes its a waste of time and sometimes it is how to start a conversation, where all of us arrive at a higher level of authenticity.

MarketFresh

76 Sutherland Road Armadale. James McCormack. $2,500,000 under the hammer. 2 bidders

76 Sutherland Road, . James McCormack. $2,500,000 under the hammer. 2 bidders.

Stonnington

76 Sutherland Road, Armadale
Agent Quote: $1,950,000 – $2,100,000
James McCormack – Marshall White
Crowd: 110
Opening Bid: $1,950,000 vendor bid
On the market: $2,300,000
Sold under the hammer: $2,500,000
Bidders: 4
James Auction Report: This felt like an Auction from days gone by; a good-sized crowd, multiple bidders, a fast pace and a result under the hammer. Auctioneer James McCormack had described the property at 76 Sutherland Road as a ‘needle in a haystack’.  Opening with a vendor bid of $1,950,000, Mr McCormack encouraged the crowd to dig deep to bid to buy. And bid they did. First one, then two and then three bidders in rises between $10,000 and $50,000 with Bidder 2 responding to every bid. At $2,300,000 the property was on the market and Bidder 1 was out. At $2,360,000 Bidder 3 stepped away and then, catching us all by surprise, Bidder 4 entered the fray. Bidder 2 remained firm, securing the property for $2,500,000 under the hammer.

4a Eva Street,
Agent Quote: $1,800,000 – $1,900,000
John Manton – Marshall White
Crowd: 20
Opening Bid: $1,700,000 vendor bid
Passed in: $1,700,000
Bidders: 0
James Auction Report: A small crowd of 20 gathered in the living room for the auction. Suggesting an opening bid of $1,700,000, auctioneer John Manton was met with silence and a vendor bid was placed and called for a $20,000 rise. With no forthcoming bids, the home was passed in.

63 Donald Street,
Agent Quote: $1,800,000 – $1,900,000
Andrew McCann – Jellis Craig
Crowd: 45
Opening Bid: $1,800,000 vendor bid
Passed in: $1,800,000
Bidders: 0
James Auction Report: A modest and shivering crowd lined the footpath outside 63 Donald Street to watch Auctioneer Andrew McCann do his best to out call the vocal magpies. After calling for bids and being met with silence, Mr McCann opened the bidding with a vendor bid of $1,800,000 and asked for a rise of $25,000. The crowd stayed quiet and even after a quick visit inside, no bids were made. As Mr McCann began to wind down the auction, one bidder offered $10,000, which was promptly rejected as too low. The crowd laughed when Mr McCann explained that this was a house to buy, not vegetables. Despite Mr McCann’s best efforts, no other bids were made and the property was passed into the vendor bid of $1,800,000.

125 Victoria Road Hawthorn East. Paul Walker. $1,860,000 under the hammer 4 bidders

125 Victoria Road, East. Paul Walker. $1,860,000 under the hammer, 4 bidders.

InnerEast

8 Rossfield Avenue, Kew
Agent Quote: $2,700,000 – $2,950,000
James Tostevin – Marshall White
Crowd: 70
Opening Bid: $2,700,000
On the Market: $3,100,000
Under the Hammer: $3,680,000
Bidders: 5
James Auction Report: Although grim faces dotted the crowd due to the chill in the air we felt some anticipation that this could be a solid auction. Initial bidders dropped out and it soon became a battle between two before an earlier bidder reappeared.

10 Stodart Street,
Agent Quote: $2,700,000 – $2,900,000
Ross Stryker – Jellis Craig
Crowd: 55
Opening Bid: $2,550,000 vendor bid
Passed in: $2,600,000 vendor bid
Bidders: 0
James Auction Report: 
Ross Stryker put on a show for the street but there was not much going on otherwise. A decent-sized crowd had indeed rolled up for a look, in the end though, it was a regulation vendor bid of $2,550,000 to open and another at $2,600,000 to close.

 125 Victoria Road, Hawthorn East
Agent Quote: $1,750,000 – $1,925,000
Paul Walker – RT Edgar
Crowd: 80
Opening Bid: $1,550,000
On the Market: $1,780,000
Under the Hammer: $1,860,000
Bidders: 4
James Auction Report: An optimistic opening of $1,550,000 came from the crowd. A good number of bidders ensured the price rounded $1,700,000 relatively easily, although bidding wasn’t vigorous in general. At $1,780,000 agent Rachael Fabbro ducked inside and the home was soon to be announced on the market. Auctioneer Paul Walker made the most of the scene, having some fun with the crowd and pointing out the CBD clearly visible from our standpoint. There was professional bidding, young families and the middle aged, all having a go before the property was successfully knocked down to the last bidder in.

6 Wilson Street Brighton. Nick Johnstone, Passed in $4.4m 0 Bidders

6 Wilson Street, . , Passed in $4.4m, 0 Bidders.

Bayside

65 Moubray Street,
Agent Quote: $4,600,000 – $5,000,000
Greg Hocking – Greg Hocking Holdsworth
Crowd: 100
Opening Bid: $4,800,000
Passed in: $4,800,000
Sold after auction – undisclosed
Bidders: 1
James Auction Report: A rugged up crowd of just over 100 people, numerous dogs and soccer playing children came to witness Auctioneer Greg Hocking at 65 Moubray Street. Mr Hocking had barely finished outlining the home’s merits when Bidder 1 spoke up quickly and made, what would be the only bid of $4,800,000. After a brief step inside to consult the vendor and no further bids, the property was passed in to Bidder 1.  It sold later after negotiations.

6 Wilson Street, Brighton
Agent Quote: $4,500,000 – $4,600,000
Nick Johnstone – Nick Johnstone Real Estate
Crowd: 60
Opening Bid: $4,400,000 vendor bid
Passed in: $4,400,000
Bidders: 0
James Auction Report: Utilising the large front yard, Nick Johnstone was keen to get this auction started. When no opening bids came forward a vendor bid of $4,400,000 was placed and a rise of $50,000 was asked for. That is where the action stopped, Mr Johnstone passed the home in at $4,400,000.

MelbourneFHP

Eighteen months into our journey to find better housing options for younger homebuyers.

Six months into this project.

1. We have clarified the reasons why?

2. We have found a site – Warleigh Grove in Brighton.

Possible additional 3 homes to make 5 family homes on Bayside site

Possible additional 3 homes to make 5 family homes on Bayside site

3. We have got together the initial team – more to come.

First Day on the Bayside site with Mal James, Lyndon Hayward and James Hayward

First Day on the Bayside site with Mal James, Lyndon Hayward and James Hayward.

 4. And now finally after much argy-bargy, we have a brief, a roadmap if you like, about how we are to run this project.

YHBG Road MapStay tuned it’s exciting!

Spring100Auction

Early Spring 2018

25th August: Week One – Early Spring James 100 Auction Market Test

1st September: Week Two – Early Spring James 100 Auction Market Test

8th September: Week Three – Early Spring James 100 Auction Market Test

It will be interesting to compare the results of Early Spring 2018 to Early Spring 2017 – where we started to first see signs on the street of a changing market.

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