To help us get a sense of what happened this year in Melbourne’s Top End property market, on both sides of the fence, we asked some of the greats of Melbourne real estate – our Legends – to give us their perspectives. We also asked them to take a longer historical view on how this year compared with the recent past and on how it might impact on the market when it opens again next year.

Peter Batrouney – Jellis Craig – 0419 005 236

What happened this year in your area of expertise?
Demand was not quite as strong as 2010. However for a prime property such as 47 Kinkora Rd Hawthorn it is a very strong market still.
Supply is holding and our own stats support that.
Prices are down by 10-15%

Where are we on the price cycle compared to 2007 peak, 2008 GFC or say 2010. And what do you think will happen to price early next year?
Next year I expect the market to open up briskly as it has always done in my 43 years of tracking it. February is statistically the most successful month in which to sell.

What happened this year in your area of expertise?
This has been a year of two markets.. The year stated strongly with supply and demand well balanced after a slow end to 2010. Most surplus stock from 2010 was mopped up early in the new year and prices were comparatively strong.

About mid year however, the news of Europe started to dominate, which initially lowered supply. But at the same time we saw sliding prices (meaning demand dropped even more).
One thing that has become apparent is the flight to quality. Main roads and other distractions have almost become unsalable in Port Philip, particularly in the $2 million plus range.

Where are we on the price cycle and what do you think will happen to price early next year?
In one sense, having a breather after the price spikes of 07 and 09 is not such a bad thing, as 20% growth per annum is unsustainable. The question is, is this a breather or a five year flat market?

What happened this year in your area of expertise?
Demand was steady for the first half of the year across all price ranges. In the second half there was a noticeable drop off in demand above $2 million. Up to and around $1 million has remained steady. Supply contracted sharply mid year and rebounded strongly over October and November, noticeably easing prices. Overall the market faded toward the finish line with many properties failing to attract buyers at any price. Subsequently a significant number have been withdrawn from sale altogether. In closing, it is fair to say that prices across the board have dropped by 10 to 15% this year.

Where are we on the price cycle and what do you think will happen to price early next year?
The current price cycle mirrors the worst of 2008 and much like the early 90s buyers are remaining cautious and largely unresponsive to the downward movement in pricing that has occurred throughout 2011. The ongoing negative media coverage of the market has no doubt influenced many would be buyers to ‘sit on the fence’.

What happened this year in your area of expertise?
In 2011 we have seen a reserved correction in terms of pricing as a result of general uncertainty and fear as a result of world economies and media commentary across the many markets in which we operate.

Where are we on the price cycle and what do you think will happen to price early next year?
2012 in my opinion will represent great buying opportunities to those looking to enter the market or upgrade an existing property.

Alastair Craig – Jellis Craig – 0418 335 363

What happened this year in your area of expertise?
Demand has been strong for the good quality period/modern homes in the A Grade streets
Supply is down approximately 10%
Pricing West of Burke Road is very stable. East of Burke Rd prices are down 10-15%
When the market gets a little tougher, buyers tend to stick close to Glenferrie/Cotham Rd (The school belt)
Pricing is approximately 10% down overall from the peak of the market – Easter 2010

Where are we on the price cycle and what do you think will happen to price early next year?
2012- Hawthorn/Kew to remain steady. East of Burke Road has already fallen 15% and may thus remain stable.

Rob Vickers-Willis – Abercromby’s – 0412 210 066

What happened this year in your area of expertise?
With the economic uncertainty from Europe and the continual fluctuations of the share market in the USA we have seen confidence drop in the Australian economy and share market.
This, along with the negative media over a period of time, has caused the market to drop between 5-10 % this year. Many vendors with A-plus rated properties have not placed them on the market, which has compromised the quality of stock. B-grade real estate is bringing average prices so the quality of property is not on offer and therefore prices have fallen. This is a trend that will most likely continue through the first half of 2012.

Where are we on the price cycle and what do you think will happen to price early next year?
We are probably half way through the cycle and, depending on what happens to the European markets and the RBA (if they have the balls to drop rates by another 75 basis points by April 2012), we will then see the cycle slow or jump ahead. I expect property prices to vary 1-5% up or down or stay constant for the next 12 months.

Andrew Stuart – Hocking Stuart – 0418 329 960

What happened this year in your area of expertise?
2011 has been a tough year! And yet along with that it has brought opportunities!
Opportunities to ‘skill up’ your staff, particularly in the area of selling in tough conditions, keeping track of that elusive buyer, and still endeavouring to achieve respectable outcomes for your clients.
Clearance rates in Bayside have remained fairly steady throughout the year at around 50-60%.
In previous years approximately 30% of the properties we sold were to investors. This year probably that figure is closer to 10%! Given that, coupled with more people looking to rent rather than to buy, you can understand why rental properties are very hard to find and why weekly rent is going through the roof! Demand has slipped! Supply of saleable properties has declined with many vendors still clinging to prices of 2 years ago. Therefore fewer properties have been selling for cheaper prices.

Where are we on the price cycle and what do you think will happen to price early next year?
However, the good news is that I reckon we are at 6 o’clock. Things will improve from here. The question is: When?!!

John Bongiorno – Marshall White – 0418 328 056

What happened this year in your area of expertise?
It has been a challenging year, however properties well priced have continued to sell successfully in this market.

Where are we on the price cycle and what do you think will happen to price early next year?
In regard to prices compared to previous years, there are so many different market places within our markets – it is difficult to pinpoint movement, in some instances prices have held firm, in others there have been price adjustments compared to previous years.

I am optimistic about 2012 and I believe the adjustment to prices will see astute buyers take advantage of the market place that exists currently and create more activity than 2011.

Iain Carmichael – Bennison Mackinnon – 0418 850 988

What happened this year in your area of expertise?
It has become evident that buyer demand for most sectors of the residential market across Melbourne’s inner suburbs has receded from the highs of late 2010. Buyers have become more studied in their approach and are less inclined to negotiate on properties that are overpriced. Accordingly, people are taking longer to make buying decisions and family buyers are quite prepared to ‘walk away’ from properties that do not meet their needs. On the plus side, buyers are still prepared to pay fully for well located properties offering the right accommodation.
When prices fall in inner Melbourne, supply follows.  This time around is no exception to that rule and its not surprising that fewer people are choosing to sell right now. This very fact actually maintains buoyancy in the market.
A clear reduction in the level of ‘irrational exuberance’ in the market place has occurred for all sorts of reasons -  uncertainty, uneasiness and apprehension to name three.

Where are we on the price cycle and what do you think will happen to price early next year?
Who knows where we are on the Price Cycle? On the ‘economic clock’ we are probably at about ‘twenty past’. Prices will be flat at best in 2012. All the more reason to select the right agent who really understands how to maximise selling prices on behalf of vendors, rather than just making another a sale! On the other hand, real estate prices could well re-bound if the European economy falters and private investors move funds from equities. The money has to go somewhere!

Bert Stewart – Buxton – 0418 350 199

What happened this year in your area of expertise?
Demand has been reasonably strong overall, especially at the bottom end of the market below the $1,500,000 range.
Supply is certainly down on the previous year because of the vendor’s uncertainty of what’s happening with the global financial situation, people tend to be conservative in times like these.
Prices have come off 10% to 20% in the top end of the market but have held better in the bottom end.

Where are we on the price cycle and what do you think will happen to price early next year?
Compared to the price cycle of the last 3 years I believe prices are below, but having said that for prestige properties with a wow factor in excellent locations and priced well, they are selling well.
Prediction of the market next year would be steady as she goes with the first batch of auctions in February and March a strong barometer of what will happen going forward.

Michael Gibson – Kay and Burton – 0418 530 392

What happened this year in your area of expertise?
2011 has been the year of continual market fluctuations which has made giving accurate advice extremely difficult. Since the start of May supply and demand have been lower however the properties that tick all the boxes have continued to sell well.
Prices have come off in varying degrees; 5% to 15% depending on the quality of the offering, with market conditions perhaps similar to that of 2008.  The auction clearance rates do not reflect the current underlying strength in the market.

Where are we on the price cycle and what do you think will happen to price early next year?
2012 will be determined by local interest rates and confidence levels of the world around us, and to that end let’s hope rates come down and confidence goes up!!

Phillip Kingston – Gary Peer – 0414 353 547

What happened this year in your area of expertise?
Whilst there were many highlights, overall most agents/agencies will be glad to shut the doors on the 2011 real estate market.

Lower prices, a lower volume of transactions, less competition and longer ‘days on market’ will ensure most agents holiday locally this summer rather than venturing overseas (if they will holiday at all).  A reported closing of eight real estate agencies per month in 2011 meant only the strong, well organised companies survived.

The year started with a bang with good clearances and healthy buyer competition in February and March. This provided a misleading perception about the late 2010 market jitters, which was only temporary. The next three months (April, May, June) really set the tone for the year to come as selling prices were rapidly corrected upon buyers refusing to pay precedent prices. Conversely many vendors who had price expectations based on the prior ‘bull’ year weren’t willing to accept the new market conditions. Those who did were the ultimate winners as prices progressively declined through the year albeit at a very slow rate.

By mid-year the ‘new market’ had set in and transactions were occurring creating a new level of pricing that resulted in many vendors withdrawing from the market resulting in low offerings.

Where are we on the price cycle and what do you think will happen to price early next year?
I would like to think 2012 will be a ‘hot’ real estate year, but realistically I don’t think it will be. It will most likely be a balanced market between buyers and sellers prepared to transact at today’s prices. Good, unique, well-positioned properties will still be sought after and often will attract a premium prices as stock levels are not likely to be as high as they were in previous years.

Rodney Morley – TBM Woodards – 0418 321 222

What happened this year in your area of expertise?
As you know the weaker market we are experiencing is caused by a shift in the demand and supply cycle.  Demand has dropped whilst supply over the year has not dramatically fallen, resulting in fewer purchasers, with a greater choice.

In the last two months the gap has increased further in the buyers favour, i.e. demand down and supply up.  As a result of these market forces prices have softened.

The peak of the market was October 2009 – March 2010, I believe across the board in the area that I operate there has been a 10 – 15% reduction in prices from the peak.

Obviously, there are exceptions, especially when properties tick all the boxes. Few have exceeded the previous peak unless due to exceptional circumstances i.e. – adjoining property holders, unique properties etc.

Due to the rolling crisis in Europe, buyer’s confidence has been reduced.  In good times people confidently purchase prior to selling their own properties but with confidence levels lower, conservatism creeps in and buyers are reluctant to stretch the purchase price as they take a more conservative view of their trade in.  This is why we aren’t experiencing huge percentage increases over and above the reserve prices.

Where are we on the price cycle and what do you think will happen to price early next year?
As mentioned above, we are certainly below the 2010 peak.  My experience is that sentiment is more negative now than the 2008 GFC.  I believe prices in the New Year will be similar to what we are currently experiencing now (10-15% lower than the March 2010 peak) and expect them to remain at these levels in the forseeable future.

Of course if  GFC 2 occurs, as several commentators are predicting, combined with a lack of confidence in the current government, prices could further reduce into 2012.

It will be interesting to see the reaction to today’s second interest rate drop in 2 months.  However, past history has demonstrated the biggest gains in housing prices have been accompanied by considerably higher interest rates than we are currently experiencing.

Geoff Cayzer – Cayzers – 9699 5999

What happened this year in your area of expertise?
Demand
The demand in the Inner City Bayside Area has diminished quite considerably over the last 12 months. The market has been supported by the movement of local people within the surrounding districts. There is strong sales evidence that indicates that buyers have endeavored to upgrade in the current market.

Supply
The supply of properties over the last 12 months has been similar to recent years. With the Melbourne auction conversion rate being in the mid 50% has seen a lot of properties being passed in and available for private sale. With the compression of new auctions and the backlog of private sales it has seen a wonderful cross section of quality properties from which the public can choose on the open market.

Price
With the slowing down of the sales conversion rate and the lack of confidence of buyers it has seen a definite discount across the board with regard to price. In some examples there has been a definite 5 – 10% reduction in the sale price when compared with last year. Whilst all vendors have been prepared to reduce their asking prices they will not accept silly offers as they still retain good equity in their property and are prepared to wait until the market improves.

Why?
With the compounding factors of the overseas economic climate uncertainty in the share market and lack of confidence of the buyers it has seen nervousness throughout the market. Potential buyers have still inspected properties and have shown interest but have been unprepared to make a formal commitment. Conversation with higher priced owners has indicated that they are hoping for an improvement in the market in 2012. That has yet to been seen!

Where are we on the price cycle and what do you think will happen to price early next year?
We are of the opinion that with the rises and falls during the period 2007 – 2010 that the market throughout 2011 has been of a similar type. The major difference that we have noticed is that people selling during the GFC had to sell whereas the people under pressure in 2011 have elected to hang on until the market corrects accordingly. We see a slight improvement in 2012 but do not believe that the market will get the previous heights of prices achieved in previous years.

This Melbourne Auction scene was especially commissioned of Kym Hart and presented to Architect Adam for achieving a significant milestone with the company during the year. We love auctions!

Big auction, big crowd and big bidder numbers: 98-100 Mont Albert, Canterbury, Alastair Craig (Jellis Craig), under the hammer, $3,380,000, 6 bidders

End of Spring Market Summary

Bidderman: The stats over the last 3 weeks (below) highlight in our opinion exactly what has been happening to a large extent all year. Two weeks ago we reported 27 bidders on 5 homes and 14 bidders combined on the other 21 auctions. Last week it was the same story – 17 bidders on 4 homes auctioned and only 15 bidders combined on the other 21 homes that we reported on. This week we had 26 bidders on 7 homes and 24 bidders combined on the other 27 homes we reported on. If you are hot, you can be really hot and if you’re not then you need a panadol and a good agent.

Clearance Rates: Basically on auction day you have a 50/50 chance of selling – although demand for $3m+ properties has weakened in last fortnight.

Stales: (long term pass-ins) The market is acting on properties where prices have been adjusted, and continuing to pass over homes where the vendor remains committed to a price rather than a result. One month after Super Saturday a full third of the homes that went to auction still had not been sold. It is not true for agents to say they are all being cleaned up. They are not.

Expressions of Interest – are no different to auctions. At the Top End last month we nominated 8 homes to monitor as having Expressions of Interest closing dates either side of the Melbourne Cup. Of those eight, four (50%) have sold around the proposed closing time and the others remain on the market. The four that have sold were goodies and they got exceptional prices. The other four – well, they remain unattached to a buyer.

The Top 3 things buyers can do to take advantage of what is on offer before Christmas.

1)   Find: Off markets, stales, rebadgers and pass-ins. Many homes are being re-presented after failed campaigns early in the year. If they failed on price then, why pay it now? Off markets are back in season as many recent buyers would be keen to see a quiet sale before Christmas rather than wait till 2012 – there may be a bargain there. Stales – don’t give up. If it’s a home you like then revisit with a  written offer – even if the asking price is baloney. Rule One in this market: if you don’t ask, you don’t get. Man up and put the offer in!

2)  Assess Price: Use past sales carefully and change their meaning – sales of six months ago are now the ceiling prices, not the floor prices (as in previous years). The market is going backwards in price, not forwards (A graders excepted).

3)   Negotiate: As buyers if you want to negotiate to your advantage while still maintaining a reasonable level of risk in terms of buying versus missing out on the home, then you need to be able to apply the Fisherman’s Friend Wet Fish Slap on overpriced homes. You know the commercial – where she gives him an uppercut with a wet fish. If the price is baloney and you are not going to pay it, don’t walk away – you may be doing yourself and the seller a disservice, as you may in fact be the best buyer. Go and hit the seller with the Fisherman’s Friend Wet Fish Slap and then apply pain relief afterwards. This is exactly what our selling agent friends have been doing for years in post auction negotiations. They hit you hard with a big number, then they offer to relieve your pain (slightly). So if you have a sensible price, go and offer it – you may well be the seller’s best deal and if you walk away because of your timidity, then both you and the seller lose. If aFisherman’s Friend Wet Fish Slap is not your caper consider hiring a professional who can help you – it’s invigorating. And of course if it doesn’t have the desired effect – consider moving on.

Saturday 26th November Weekend Auction Results

Bought

• 98-100 Mont Albert Road Canterbury (Alastair Craig) – $3,380,000 – 6 bidders
• 25 Grange Road Kew (James Tostevin) – Around $3,000,000 – 1 bidder
• 24 Anderson Malvern East (Heather Elder) – Around $3,000,000 – 2 bidders

Passed-In

• 2 Collins St Brighton – $2,975,000 – 0 bidders
• 1022 Malvern Road Armadale – $2,800,000 – 0 bidders
• 21 Wattle Road Hawthorn – $3,050,000 – 0 bidders
• 68 Molesworth Kew – $4,600,000  – 0 bidders
• 20 McGregor Middle Park – $3,200,000 – 0 bidders

Friday 25th November – 58 Howitt Road, Caulfield North has been bought for a record Caulfield price according to the effervescent Ross Savas of Kay and Burton. The price;  well can say they were talking $6 million and the calibre of the home leads us to conclude they would have got that, so over is definitely not out of the question. This was a truly great home, our James Home Rating of 838/1000 is one of the highest we have scored this year. The market is obviously still recognising and paying for great quality.

Thursday 24th November – 25 Montalto Avenue Toorak ( Nicole Gleeson) – Basically land only for the area as the home requires a serious reno – passed-in last Saturday on a lone vendor bid of $3,450,000 was bought today for an undisclosed amount.

Wednesday 23rd November – 58 Glyndon Rd, Camberwell (Jock Langley) Private Auction  BOUGHT over $3,300,000: Attended this mid week private auction  just in case a bargain was to be had. No bargain, with a very healthy Tim Derham – Abercromby’s auction – 3 bidders and passed in for $3,300,000 and bit – deal was negotiated after wards in excess of that figure. Strong result – this is still outer Camberwell!
PROPERTY: James Home Rating Excerpt: Big home in the “almost ‘burbs” on 2100 sqm with tennis court – it’s all about the land. Set down for a private auction as opposed to a public one – (mmmmm, that’s an interesting twist) on November 23rd. What is the land per sqm at this size worth? How many other competitors do I really have in this market? Am I better to go before and if not successful how will I manage a Jock Langley pass-in?

Monday 21st November – 6-8 Myrtle St Brighton (Barb Gregory). This last weekend’s biggest auction – and another private one at that, was completed at a price over the quote of $6,000,000. So another solid Golden Mile sale with land in excess of 1600 sqm plus some solid improvements and another good result for Marshall White in Brighton. While private auctions are very secretive they seem to meet the vendors requirements for privacy and a buyers liking for transparency – perhaps a way of the future for some key homes.

Subdued mood: Toorak, 25 Montalto Ave, Jason Scillio (Kay & Burton), passed-in $3,450,000, no bidders

Saturday 19th November: At auction only two out of ten were reported as sold at the $3m+ level.

• 19 Florence St, Kew (Diana Healy) – Bought for over $3,600,000
• 2 Monomeath Pl, Canterbury ( Richard Earle) – Bought after for over $3,100,000

Pass-Ins at

• 47 York St, Kilda West – $3,800,000
• 24 Monaro Rd, Kooyong – $3,500,000
• 25 Montalto Ave, Toorak – $3,450,000
• 9 Berry St, East Melbourne – $3,200,000
• 11 Victor Ave, Kew – $3,000,000
• 2 Snooks Crt, Brighton – $3,000,000
• 26 Stawell St, Kew – $2,950,000
• 6-8 Myrtle St Brighton – undisclosed

Overall quite a weak day – although having been through many of those pass-ins I can say that a number were not the most exciting of offerings.

Friday 18th November: The Christmas Stock Flood has really gained some momentum in the last week with a large influx of homes coming onto the market right now – especially at the Top End (look at our stock graphs in Market News). This has to be good for buyers. Where in recent times our main role has been finding quality homes – the bulk or our work has moved to assessment and negotiation. Price is such a movable beast right now and it’s good, as a buyer, to have an open mind and strategies (within your acceptable risk v reward parameters) to take advantage of the lay of the land. Please that is not to say that all the goodies are being given away – far from it – but once a home falls into that certain category (eg stale, overpriced or a B grader) then significant discounts are possible – if the vendor wants to sell. Yes you need to know what to do, how to do it and when to do it – but professional advice can fill that knowledge gap for you. Two properties purchased in the last fortnight or so $700,000+ off the original asking price and that was a $3m home and $300,000+ off the original asking price and that was a $2,000,000 home. The market is operating normally – however now, more so than at any other time this year, it is a true buyers’ market – Great Choice and Negotiable Prices. Buy Well.

Wednesday 15th November: 4 Kiers Court Caulfield North (Phillip French)  one of the more distinctive homes I have seen this year is now reported as sold in excess of $3,000,000. Our James Home Rating was 684/1000 (see below) and what the owners did with a difficult block was in my opinion, amazing and the price was solid. Also a huge block at 181 Gipps St East Melbourne (Sarah Case) over 1000 sqm was bought undisclosed (over $5,000,000) and finally to complete the RT Edgar trifecta 29 Loch St, St Kilda West (Anthony Grimwade) almost 1000 sqm plus period home was bought for $3,800,000.

Tuesday 14th November: 3/61 Nepean Highway Aspendale (Rowan Thompson) which we reported as passed-in on the weekend, has now been bought for $3,150,000.

TOORAK 49 Mathoura Road, Justin Long, 4 Bidders, $5,220,000

Saturday 12th November: 3 biggies – 2 bought and 1 passed in.

47 Kinkora Rd, Hawthorn, Peter Batrouney (Jellis Craig); Under the hammer, $5,660,000, 4 bidders
Grace Park, north-facing rear, big land and beautiful period home. Some may say a drover’s dog could sell this on a sunny day, but that would be unfair on Peter Batrouney and Campbell Ward. This writer knows for sure we will get a first rate performance and in all likelihood a very solid result. About 120 have gathered in the back yard and we begin with a vendor bid of $5,000,000. Quickly in $50,000s between Bidder 1 and Bidder 2 we reach $5,300,000 and a half time break. Two more bidders join in and it’s on the market at $5,500,000. A few more bids and it’s all over at $5,660,000. A typical successful Peter Batrouney and Campbell Ward / Grace Park auction.

49 Mathoura Road Toorak, Justin Long: Under the hammer, $5,220,000, 5 bidders
Justin Long is a very experienced and capable auctioneer and he needed to be today as he was put under pressure by bidders constantly trying to reduce the bids he was calling for. He held firm time and time again, and in the end the vendors would have to think (whether they were happy with the price or not) that without Justin’s skill and endeavours, this property might not have been sold this weekend. Five bidders all with their own individual strategies locked horns for 45 minutes involving breaks and multiple “is it on the market?” questions. The opening bid was $4,000,000, the property declared on the market at $4,950,000 and eventually bought under the hammer for $5,220,000.

Biggest Pass In: 3/61 Nepean Hwy, Aspendale, Rowan Thompson (RT Edgar); Passed in $3,000,000, 1 bidder
The excitement was in the air and the house was buzzing with people enjoying the sunshine and the stunning panoramic view of the beach literally on the doorstep.  With only 500 beach front homes in Melbourne, explained auctioneer Rowan Thompson to the large crowd of 100, the “international standard resort style property” represented  a wonderful opportunity.  Mr Thompson opened proceedings with a vendor bid of $2,800,000 and sought $100,000 rises.  With Mr Thompson’s encouragement, a bidder from the crowd obliged with a bid of $2,900,000.  A vendor bid of $3,000,000 followed and despite Mr Thomson’s best efforts, there was no further bidding on the day and the property was passed in on the vendor bid.

Friday 11th November: This is a typical week at the Top End for me. I have been through the following homes, given them a James Home Ratings (not for public display), calculated buyer value and price ranges and noted a few negotiation strategy issues each home may present when attempting to maximise buyer outcomes:

PRICE: $3,000,000+ (Agent Quote)
POSITION: 7 Linacre Road, Hampton, (Jenny Dwyer)
PROPERTY: James Home Rating Excerpt: Complex family home with water views (quality ones of Yacht Club), multiple living areas, 5 bedrooms on one level, dual staircases, basement and all on 635 sqm in one of Melbourne best inner seaside precincts. Price – that will be interesting as will the method of sale – both rare birds for this part of the world right now.

PRICE: $5,250,000 (Asking Price)
POSITION: 29 Seymour Grove, Brighton (Ian Jackson)
PROPERTY: James Home Rating Excerpt: North-facing rear, brand-new build on a big block around 1,000 sqm. Upstairs is very good, perhaps a lift was needed at this price. It’s to a formula and one that always sells when buyer meets seller or vice versa on price – that meeting price – well that is the big question? I remember going to the land auction around the start of the GFC (early 2008) and it was bought quite well at $2,100 per sqm – bought quiet well, considering what other knockdowns in this street and Wolseley had gone for, a short time before this auction.

PRICE: $8,000,000 ish (Agent Quote)
POSITION: 18 Fitzroy St, Kilda (Michael Gibson)
PROPERTY: James Home Rating Excerpt: Has already received a lot of publicity due to its current owner and the facade photograph is wonderfully enticing. A home of pluses and minuses for different family types. One of the real pluses for some families would be the rooftop pool – spectacular is an understatement. Location is also smack bang in the middle of the action. Building was an advertising agency office in a previous life – although much of the work was already done when this last sold (twice in 2004 between $3,000,000 and $4,000,000) .

PRICE: $6,500,000 plus (Agent Quote)
POSITION: 21 Isabella Grove, Hawthorn (Scott Patterson)
PROPERTY: James Home Rating Excerpt: It’s a trip back in time. The entrance really looks like a movie set from Charles Dickens (love the dome). One of the most powerful views for me was actually through the kitchen window of what would have been servant’s quarters – the form the steps take going back up across the road stick in my mind. The home itself is obviously one for specific tastes and you will have a few issues to get your head around if you are going to be the buyer – but that could be well worth the mental effort.

PRICE: Circle $10m to $12m (Agent Quote)
POSITION: 1 Harcourt St, Hawthorn East (James Tostevin)
PROPERTY: James Home Rating Excerpt: Most “in the trade” would describe this as a big thumper and the agent quote estimate says you are going to need a big wallet to match. Valuing this would require an open mind and purchasing well, would require a firm base on goals and a flexible strategy to test on many levels. The house – well – it’s not about the house, there are bones to work with. No, in my opinion it is all about is the land and more to the point the shape of the land and where the home sits and what you want and can do within its limitations. So is the land worth the $sqm of  say no 49 Harcourt which had two bidders at auction and went for over $7,200,000 last year or is there a discount involved? Challenges for all parties if this is to be a deal.

PRICE: In the picture you can see next door which was also subject to a similar campaign recently at a similar asking price tag ($20,000,000 to $30,000,000). The price –  if it does indeed sell – will be a source of conjecture, supposition and innuendo for months to come just like Shakespeare Grove was last year and just like when this home was so famously bought and sold last time (a decade ag0).
POSITION: 1 Towers Rd, Toorak (Michael Gibson)
PROPERTY: James Home Rating Excerpt: Wow – if you can work out a way to get through this home you should. An art deco masterpiece with pool, tennis court, contemplative gardens all on a Toorak acre. The entrance and view from the kitchen are very powerful. At this price level, there are many more questions, but it always comes back to one final one, when the others have been answered – How can I buy this for the best possible price? Your answer may well be determined by the relationships you keep.

PRICE: Around $3million is Agent Jock’s quote
POSITION: 58 Glyndon Rd, Camberwell (Jock Langley)
PROPERTY: James Home Rating Excerpt: Big home in the “almost ‘burbs” on 2100 sqm with tennis court – it’s all about the land. Set down for a private auction as opposed to a public one – (mmmmm, that’s an interesting twist) on November 23rd. What is the land per sqm at this size worth? How many other competitors do I really have in this market? Am I better to go before and if not successful how will I manage a Jock Langley pass-in?

PRICE: Around $4,500,000 (Agent Quote)
POSITION: 68 Molesworth St, Kew (Hamish Tostevin)
PROPERTY: James Home Rating Excerpt: This is a home of thought and quality – and with a price tag quoted over $4.5m if you are going to be the buyer you are going to have to put some thought and quality into how to go about this – such as, what is this home really worth? It is a very specific home – big in size, lifts, views, a lot of WOW. Attention to detail is obvious. But what about heating and cooling and sun with all that glass. Land value is not hard but home value – is this a $1.5m or a $2.5m build and will that matter? One of those buys where process is so very important if you want to buy well. A rare offering for the modern home buyer and worthy of serious consideration.

Grand Sale Land Sale in Kew - Tender Closing Today (Friday 11th November). It will be interesting to see what happens at 6-12 Madden Grove Kew on this mini-subdivision of 4 blocks around 600 sqm each. Mark Dayman and Antony Woodley taking in the offers and have expectations above $2,000 per square metre.

Thursday 10th November: Another three strongish Toorak buys in the last week.

• 16 Kenley Court Toorak (Michael Gibson of Kay and Burton) – Bought for over $12 million for nearly 2000 sqm of land a very substantial home. James Home Rating 779/1000. Excerpt from James Home Rating:

The big pluses for me are the court location, the look from the street and the gardens – tranquil, serene, sanctuary – all those words that are antonyms to stress. This is what the gardens are, and for me they are the major selling point to 16 Kenley. The home, well for most of us (i.e. those who can’t afford it) it’s a rare and magnificent home. However for buyers at this level I think they will find some issues with the floorplan – especially the position and connection between the kitchen and living area  and the front staircase so close to the front door. This seems an afterthought and does detract a little from the majesty of the entrance. Walking through the home I keep thinking of the gardens, the location and the land size more so than the building. However if you can afford 16 Kenley then you can afford to make the changes you want. And so, like almost offerings at this level in Toorak, it comes back to: when do you want to buy, what is available, what is the right exchange price and how best do you go about the process?

• 24-26 Balmerino Ave, Toorak (Justin Long of Marshall White and Hugh Hardy of Bennison Mackinnon) – 1850 sqm of land inc tennis court. Passed in at the Thursday afternoon auction for $7,000,000 and was bought immediately afterwards for an undisclosed amount. As I went through this home it felt mostly about the land and the sweeping views, however I suppose that is the way with almost all Toorak homes. The end result was $3,800 per sqm approx.
• 4 Lisbuoy Court Toorak (Nicole Gleeson and Michael Gibson) – Townhouse with some land, bought for over $4,000,000.

Greg Costello and Tim Wilson in full swing on the Brighton Golden Mile - continuing to sell at $10,000 per sqm. See report below

Week Ending November 5th: Has the action returned after the September excitement was followed by an early October siesta? We think yes – it is back. People do have cash and they are parting with it when they find the right home. In the last 10 days at least 9 homes over $4 million have been bought and sold.

Some Auction Results this weekend

• Biggest Sale: 2 Mytton Grove, Brighton, Greg Costello (RT Edgar); Under the hammer $6,050,000, 2 bidders
  Brighton Golden Mile Beachfront – these are four words that mean money. In recent times that has meant $8000 to $10,000 per sqm – at least at the northern end. A question our auctioneer Greg Costello asked in his opening spiel was “is this southern part of the Golden Mile more highly regarded than the northern part due to the activity on the beachfront?” Personally, as I run past here every day I think yes, but the auction result will tell us for sure. With the blue sea as our backdrop I’m expecting an exciting auction – irrespective of the market this stuff always sells. Greg Costello is conducting proceedings in front of a small crowd of 30. We start with an opening bid of $4,850,000 from Bidder one. $5,000,000 comes in from Bidder two strongly – solid bid. $5,100,000 from a third bidder – who as it turns out was with Bidder one – so we don’t count him – strange strategy that one. Anyway with a fair bit of action we move up to $5,600,000 in various amounts and then to $5,750,000. At all times Bidder two looks in control and is bidding very well and with some intimidation without being over the top. Normally Greg Costello is in excellent form but today was not his best day with bid retention and there are a number of confusing referrals back to his penciller for clarification. At $5,900,000 the “is it on the market?” question was asked, and after a quick referral, an affirmative answer is returned. There are two more decisive bids from Bidder two and its all his at $6,050,000. Loved the winning bidder’s style – aggressive and sensible and much better than his opponent and also many so called professionals that I have witnessed recently – well done sir – we have a job for you here if you care to apply. (Mal James)

• Other Brighton Golden Mile Results: 2 Mytton at $6,050,000 divided by 613 sqm = $9,869 per sqm or almost identical for previous absolute beachfront sqm rates over the past year (which have maintained themselves in the last year and increased on previous high water marks). 8 Moule Avenue (David Hart) is a classic Golden Mile address (but not absolute beachfront) and sold this weekend for $2,310,000 or $3,510 per metre. On first glance that is not expensive, but it is in fact not too far off previous Golden Mile sqm rates. A third Golden Mile property 15 Dudley St (Regina and Brian) sold for in excess of its pass-in figure at $4,400,000 which, again considering the house was nothing other than a nice facade, was a very, very solid result.
• Biggest Pass In: 58 Kooyongkoot Rd, Hawthorn, Scott Patterson (Kay & Burton); passed in, $3,400,000, no bidders
  Could you find a better setting for a Melbourne Spring auction? A tranquil backyard by the pool! In front of around 60 people, auctioneer Scott Patterson gave his usual professional best to attract some crowd bidding but this was to no avail. The property passed in after two vendor bids – $3,300,000 and $3,400,000 respectively – and remains for private sale. (Adam Woledge)
• Bidderbuzz Auction: 15 Chastleton Ave, Toorak, Warwick Anderson (RT Edgar); Under the hammer, $4,135,000, 4 bidders
  Spirited bidding after a slow start was a welcome sequence at the auction of this single level home in Toorak. A crowd of 80 neighbours chatted quietly throughout the action, eagerly anticipating the value to be determined by the market. After opening on a vendor bid of $3,400,000 and the declaration that the council had valued the property at $3,700,000, auctioneer Warwick Anderson tried to keep pace with the determined 4 bidders. After the second vendor referral, Warwick announced the property on the market at $3,800,000 but the strong bidding continued, with bidder number 4 securing the home at $4,135,000. (Gina Kantzas)

RT Edgar: Has had a pretty solid time with 8 properties selling over $2 million in less than a week, including an off market at 68 Walsh St believed to be around $4 million, not mentioned in above dispatches.

Let’s look at a couple of scenarios, and the risks and rewards they might raise:

Buying Before Auction

Let’s say you decide to make an offer before auction. Making an offer early gets rid of the competition that hasn’t yet made itself known to the selling agent. It can also work because selling agents are unlikely to recommend against an offer that has some grunt about it. At auction day they don’t want egg on their face.

If your offer is accepted, the reward is that you get the main prize, your new home. The risk is you may have paid more than you needed to had you waited till auction. Of course if you are successful you will never know – you can congratulate yourself and nobody can argue the toss with you.

But there is also a risk that your pre-auction offer may not be accepted, but instead be used (correctly and ethically) by the selling agent as a price floor when it comes to auction day – not only for you but for other buyers too.

Overall going early is a strategy we favour only when you have done your due diligence and you believe that the genuine expected price (not the agent quote) is at market value and close to your budget limit. Going early involves a bit of smoke and mirrors and we feel relatively comfortable in that domain. If you don’t then waiting till the auction may be your best bet.

Private Sale Negotiations

When the asking price of a quality home drops from $2 million to $1.8 million due to some tough negotiation most buyers think they are now in a better risk v reward position to buy the home. But if you offer, say, $1.7 million at this point you can put yourself at the risk of missing out on the home. That’s because other buyers may now appear who consider $1.8 million a good price and may be prepared to pay $1.85 million.

Alternatively not trying to lower the price on an overpriced home is also a risk – especially if the home is a B grader. When there is little proof of market competition – in a private sale or vendor bid pass-in – you may end up overpaying. In time that will affect your resale, adding risk to the long term financial benefits of the deal.

On the other hand in a flat and falling market it may be quite a low risk to walk away from an asking price or a pass-in figure that seems very, very high – even if you love the home – as there is little chance of another buyer.

But in other scenarios there is a risk walking away from a home you love, just because you’re reluctant to pay a few thousand dollars extra. Say a property you love has been passed in to you as the highest of three bidders at an auction – why would you refuse to budge on your last bid, even though it was only $1,000 above the other bidder? Sticking to your guns may only mean the underbidder gets a chance to buy and you miss out on a home you really wanted.

Another additional risk buyers often take for no reward is walking away from the auction on Saturday, only to pay the reserve on Monday anyway. The most common time for a deal to be done after a pass-in is that same weekend. So, if you are happy to pay the price why not just buy it on the Saturday rather than run the risk of someone else buying it that weekend if buying the home is your main goal?

At the end of the day, any homebuyer has to take risks to get rewards – unless you have a policy of only going after homes that nobody else bids on. And buying a home that nobody else wants is not a great strategy for good long term emotional and financial outcomes.

Printed each week in The Weekly Review – Melbourne’s $Million Plus property magazine.

The Question: After Super Saturday would these 3 not sell, sell lower or would the Mexican Wave** (see explanation below) kick in and they all sell once one had gone.
The Answer: The Jungle Drums beat loudly and the Mexican Wave kicked in with all three selling within 24 hours of each other. All three had quotes of $5m to $6m during their campaigns. Scotsburn was bought after a weekend pass-in (believed to be around $5m), Montalto was for most of its campaign a private sale (but finished in a Boardroom Auction at just over $7m) and Scott Grove was an Expressions of Interest closing Wednesday (reportedly 3 interested parties and sold 2 hours after the deadline for well over $6m).

October 29th: 54 Hanby St Brighton (above) (Kevin O’Brien) – The only auction I came out for today. Damian Davis – a bit out of his normal territory started up the engines with a solid opening spiel in front of a crowd of around 50. After he had finished his coverage on the home’s flow, light and feel, he asked for $3,300,000 from the crowd. Nothing was forthcoming, so a vendor bid at $3,300,000. Another vendor bid at $3,350,000 and a half time break did nothing to excite and so the words pass in brought an end to the proceedings on this lovely home that has a vendor at one level and potential buyers seemingly at another.

October 25th: 25 Scott Grove Glen Iris (Rae Tomlinson and James Connell): Bought within 2 hours of close of play for well in excess of the $6m+ price tag. This was a very good home on a very big parcel of land and the result was deserved and expected for a quality A grader – we rated it at almost 3 hats or 791/1000 (see our rating below). And a good night for Marshall White overall with 34 Chatsworth Prahran being sold through Madeleine Kennedy for $3,137,000.

October 24th: The collection of Expressions of Interest campaigns finishing in late October/Early November will be watched by many. There are some great homes, but the results this last weekend indicate they may not sell as strongly as September results suggested they might. We are monitoring a geographically widespread sample – all over $3m and will bring you the results as they come. Lets see if the K&B Mexican Wave** is in play for the Top End buyers or have taken their bat and ball and gone home.

**K&B’s Mexican Wave: It is possible that the above marketing campaigns could in fact produce higher results if we see more marketing campaigns in the style of Kay and Burton’s Mexican Wave effect. It’s just like at the MCG: Kay and Burton brings a group of homes together and push and prod till they get one buyer to perform and then uses that result to get other buyers to put their hands up on other homes. This is planned months beforehand, it’s totally legitimate, it’s brilliant in concept and it’s why people like Ross Savas and Mike Gibson are worth their fees and then some. Other Mexican Wave agents who plan and execute well are Marcus Chiminello, Rae Tomlinson, Heather Elder, Justin Long and Peter Bennison of Marshall White to name a few. However K&B are the absolute masters at the Mexican Wave.

Alastair Craig and Richard Winneke maneuver 3 bidders to a bought price of $2,855,000. This is where some of last spring's $3M plus action is right now at $3M minus.

October 22nd: During 2011 the $3M+ market has been as fickle as we can remember: it disappeared for most of the year, came back with a vengeance in September and has now seemingly run away lost again.
To demonstrate the point, only two homes out of 150+ scheduled $M+ auctions reported a sale price over $3 million today.  Yes two – that’s not many.

They were 34 Stevenson St, Kew with James Tostevin, which sold after auction and 7 Barrington Ave, also in Kew, with Scott Patterson, which sold before auction.

Mid- Week Apartment Auction: 3002/368 St Kilda Road (Marcus Chiminello) – Thursday night auction @ 7.00 pm. A similar property in the same building on the same side, same square metres, same décor, sold for $3.3m a short time ago. Quoting $3.3m plus then $3.5m plus. Surprising to have an auction in St Kilda Road but Marcus Chiminello and Nicole French (the new Batman and Robin) lined up auctioneer Growling Jack Bongiorno and 3 bidders fought it out past the last sale sales, past the first quote and the last quote and all the way up to $3,800,000.

Why did it sell so well? Demand exceeding Supply for North orientation; 315 sqm size with car parking on the 1st floor (no dizziness getting in and getting out) and Shrine views. Well marketed by one of the best in the business at this stuff.

Price: Has been gently improving in some key blocks on some key apartments – but it’s all about the apartment characteristics. There are literally hundreds of apartments above a million that have no buyers at all, because they have nothing unique to offer except a very cheap price.

Biggest Sale: 38 Kerferd St, Malvern East, Glen Coutinho (Hocking Stuart); Under hammer, $2,862,000, 4 bidders
Wow what an auction! This is as intense as it gets. Glen Coutinho has firmed as one of the best auctioneers in Melbourne in my humble opinion. What started out with meek interest from a lively crowd of around 70 people turned into the most hotly contested auction I’ve ever seen. A modest opening bid of $2,350,000 was announced from one party in the crowd and was quickly overtaken by another for $2,355,000.  The two went back and forth in increments of $5,000, then $2,000, then $10,000. Once the price reached $2,501,000 it seemed as though the action had come to a head, and Mr Coutinho retreated to his vendors to discuss the situation. Confident of reaching the price he and his vendors desired, Mr Coutinho continued unabated, knowing full well there were several other parties very interested in the property. As the property was being called down for a fourth time a third party entered the fray, bidding $2,540,000. This guy was ready for a showdown, but the original bidder stuck to it and was relentless in his pursuit of the Glen Iris home. Unable to continue, the young lion who made a worthy challenge correctly backed off, leaving the fight wounded but not insulted. At this point the crowd was able to breathe momentarily, but it wasn’t over! A fourth man entered the mix, and began his challenge. He proceeded to walk across the road towards the original bidder attempting to eye him down, but the original bidder was having none of it. As those who play enough poker know, when someone shows aggression towards you, it is generally a sign of weakness. Fortunately, the original bidder (who probably doesn’t play poker) picked up on the bluff and showed no signs of folding. Once the figure reached $2,862,000, the new combatant gave up announcing: ‘he can have it,’ and the auction ended with a standing ovation from the crowd, although it may have only been an ovation as they were already standing. (Daniel Ehrenreich)

Biggest Pass In: 11 Scotsburn Grove, Toorak, Jeremy Fox (RT Edgar); Passed in, $5,000,000, 1 bidder
A small crowd of around 40 and half are Toorak agents just looking. Jeremy Fox gives us a good solid spiel and we are away. Or are we? Jeremy calls for a $5,000,000 opening bid and gets nothing but silence. He goes inside for his half time break and leaves us all in the rain – actually he was pretty quick to return. I’m typing in Passed in on my Ipad and – whoops no – there was a genuine bid and $5,000,000 is taken up. Then it is passed in to the lone bidder. We await the outcome. (Mal James)

October 15th: Quality Stock Levels have improved for Buyers:
Good levels of good stock came into the market late September and buyers began to take deeper breaths and relax a little.  Angst dissipated somewhat as quality buyer saw more quality homes they could buy, diminishing the spectre of missing out on a home, leading to a drop in buyer urgency and ultimately price.

This Quality Supply Increase is best demonstrated at the Top End.

Want a home with a Tennis Court in Toorak? Got around $6 million dollars?

In the last week we visited, assessed and rated: 11 Scotsburn Toorak (Andrew Smith), 10 Montalto Toorak (Mike Gibson) and 25 Scott Glen Iris (Rae Tomlinson). All have tennis courts. So even if there are 10 buyers for tennis courts at this price level, there’s a fair bit a choice there. If normal market forces prevail and the buyers have good representation, then the prices on all three could be lower than if there was only one of these homes on offer. That’s unless, of course, one home is more strongly favoured than the others by a significant number of those 10 buyers – or if the Mexican Wave effect happens (see below).

Similarly in the last week we have been through some really good new home offerings at over $6 million, including 14 Kilsyth Toorak (Michael Armstrong); 15 Vista Toorak (Nicole Gleeson) and 33 Coppin Grove Hawthorn ( Scott Patterson) – see our ratings over the coming week.

These are just some examples. And in fact, quality stock levels have improved at all price levels. This is good news for Top End buyers and the reason we think October 2011 and hopefully November 2011 will be better months for buyers than were Winter 2011 and September 2011 in terms of:

1. More choice

2. Less chance of the runaway prices.

This price segment is all about either side of the Melbourne Cup – as a number of Expressions of Interest, Private Sale and Auction campaigns are scheduled for some sort of conclusion at that time. We anticipate publicly reporting in  early November as to market movements since September’s price and activity spiking.

Let’s start with d) Panic. As a homebuyer you effectively have a month to find a home or else you probably won’t be settled in a new place until at least Easter 2012. That is six months away, well into the next school year and – oh my god – the footy will have already started again. Six months more of your family unsettled and in limbo. Have you broken into a cold sweat yet?

Well stop it, right now. Take a deep breath and don’t panic. Panic only encourages one thing – poor decisions. Poor buying decisions now will give you and your family weaker long term outcomes – both financially and emotionally. Poor decisions can lead you to buy the wrong home or miss out on the home you should have bought. Panic leads to weaker negotiating stances.

With four weeks to go and with no obvious target home, the first thing to consider is an alternative home strategy. You could rent, move into a holiday house, move in with family, or buy an interim home. The key to getting temporary family shelter is not perfection but it does have to be comfortable. You want to be in a home that is not going to add stress that will encourage panic and lead to forced decisions – instead of waiting for the right 10-20 year family home.

Assess your form: If you were a racehorse would you back yourself at the next start to win after your last few months of homebuying performances? Have you missed the podium each time the auction race was on?  Was it because you didn’t get the values right, which meant you were shocked by the result every time. Even if you knew how much you needed to pay, did you miss out because you just didn’t perform when it counted? Truthfully assess your skills and your shortcomings and plug the holes either with alternative strategies or some professional assistance – otherwise you will get the same result.

Assess your goals: It’s possible you may not have actually found a home you have wanted to buy yet. You are not alone. We have been in a low quality stock environment all year and even as professionals we have found it hard sometimes to find good homes to buy. That’s not the case right now, but it has been. However your goals still may need some tweaking – especially if money seems to be front and centre of almost every family discussion. You may have $3 million tastes with a $2 million budget. You may have bought into what the papers have been saying about the world coming to end, yet the homes you like have 3 or 4 bidders and your buy cheap policy is not working. Whatever it is – take a look at what it is you really want. Write down your three Ps – Price, Property and Position – and then get a suburb report of the last 12 months sales and see if there are any homes within your price range. This will give you a clear idea of how realistic your current goals are.

Finally, improve your decision making processes: This can be in the form of DIY improvements or by getting some professional help. A process that will lead to informed and good decisions is 1) Clarity of Purpose – know what it is you want and match the home to your goals not the other way around. 2) Accurate Assessment of a home as to value and whether it meets your needs and 3) Planned and Professional Negotiation to maximise your chance of success within acceptable risk and reward parameters.

You have four weeks after Melbourne Cup to do some things that will make your life better for the next decade. Whatever those actions are base them on good decisions and on clear goals that will result in your family’s best long term emotional and financial outcomes –  and get on with it!

Printed each week in The Weekly Review – Melbourne’s $Million Plus property magazine

Buying a home is a significant emotional experience – and for many buyers there’s an extra emotional stress when we start dealing with agents and negotiating.

Selling agents are masters at managing buyer emotions. They’re quite capable of bending the truth when it’s in the interests of their client – the seller. As a buyer though, being at the other end of that manipulation can be incredibly unsettling.

When it happens – or rather, when we perceive it is happening – we feel a charge of emotion. We feel we are losing balance and self interest and ego comes into play. Emotion literally builds up inside us and we change chemically. Our decision making processes alter – not necessarily to our benefit.

Feeling that we’re being lied to undermines our trust in the salesperson and in the whole buying process. I’m not dealing with that lying salesperson, we think. I’m not buying my home through an auction because it’s unfair.

That’s what you feel. However misdirected emotion can cause intolerable stress, leading to poor decisions which can result in missing what should have been bought, paying way too much or buying the wrong home just to get rid of that stress.

As buyer advocates, the technique we use to help buyers maintain their equilibrium while knee deep in difficult negotiations is to ask themselves some questions about how they are responding to the process. Only by being a master of your own responses can you remain in a balanced state to have the best opportunity to make the right decisions.

Ask yourself: Is it the action of the agent or your reaction to it that is causing you angst? The way you react to an agent’s manipulations may well be what is creating the emotion, increasing your stress and potentially lessening your outcome.

And if you are feeling outraged by what you believe are an agent’s lies, consider whether you as a buyer, haggler or negotiator are not also capable of the same when it suits your own interests.   Is your role as a buyer really more noble than the role of a selling agent?

For instance, if a selling agent asks me if my client has any more money to give in this deal, I don’t say yes, not if I feel the deal can be done there and then at that price. Is me telling the agent ‘no that’s the absolute limit’ a mis-truth, acceptable salesman’s puffery or a straight out deceitful lie?

From the other side, if as a buyer agent I knew I could buy this home at $2,000,000 but instead answered truthfully when asked the more money question as yes actually I have $2,080,000 or $2,340,000 have I committed a greater sin of deceit?

Should you even presume that your relationship with a selling agent will be based on trust? After all the deeper the relationship, the greater the emotional effect of the lie. But why would you try to form a normal trusting relationship with the specific people whose allegiance is completely to their client and whose role is to create conflict amongst buyers (auctions) and to minimise buyers’ interests where that benefits their client, the seller? (That role has legitimacy according to the Estate Agents Act and Common Law).

Why not form those relationships with people whose role is to minimise your conflict and to maximise your interests!

Selling agents are not bad people. They engage in techniques to maximise the interests of their client (the seller), most of which are legal and that you yourself would engage in, if you were skilled enough to do so.

Feeling aggrieved about being manipulated or feeling that you have been lied to by an agent rarely helps you.  All it does is make you emotional, alters your chemical balance and changes your decision making processes generally for the worse.

You can minimise the “lying effect” and the emotional roller coaster responses by engaging professional buyer representation, acquiring a deeper understanding of your main goals and good questioning technique when you hit the bumps along the way. All of this hopefully leads to a different, more beneficial perspective of what it’s all about – buying the right home not about “getting the agent”.

Printed each week in The Weekly Review – Melbourne’s $Million Plus property magazine

There were three steps to the process. First we asked them to give their valuation of three 250sqm beachfront blocks in Sandringham that were up for sale. Then we informed them there was a conservative valuation of $5,400,000 from a reputable valuer, and asked them to revalue the blocks in the light of this information. Then, after telling them the asking price was $8,000,000 and there was possibly a winning consortium’s bid, we asked them to give a third and final valuation. Their final valuation had to be above the possible winning consortium’s bid – after all there is no point coming second if you want to buy something.

Three clear things came out of this exercise:

1. At the Top End people have a very wide opinion of values: In this exercise the estimates varied from $3,000,000 to $12,000,000 on the same offering. People were genuinely trying to estimate correctly – there was self interest involved.
2. The Power of Suggestion: While the value range remained wide for the second lot of “valuations” after the $5,400,000 value was tabled, not one participant’s valuation was now below $5,400,000. Once a credible suggestion had been given, it seems everyone put a floor under the price. Very interesting if you are the only taker on a home.
3. The Power of Step Quoting: Scenario Three produced a wide range of valuations but NOT ONE was below the valuation the respective participant had put in Scenario Two. In other words, for every one of the participants the price had gone up. This is again about the power of suggestion and the power of Step Quoting.

For buyers who believe that an asking price is an asking price and a valuation is a valuation – like rocks set in stone on which to build a platform of action – this scenario may seem a bit perplexing.

But the fact is that when you’re buying a property – especially at the Top End – opinions, suggestions and questioning are how a final sell price is established.

When agents are dealing with buyers – including us as buyers agents – they use suggestion firstly to frame an area of thought e.g. a price range and then to move you the buyer up the price ladder. Depending on the agent’s credibility you will either go with that suggestion or you won’t.

Agents also use questioning to work out if you are actually on the price ladder – and if so at what position. They do this to ascertain broad interest which they report back to the vendor, and to ascertain your interest so as they can decide on a plan to take you up to the next rung.

As buyer agents our role is to do the reverse.  Our job is not to establish a credible floor, but to establish a credible ceiling. We use the power of suggestion to indicate to the selling agent where a client may be on the price ladder. We use questioning to gain information and to see if those suggestions have been effective.

Remember that in home buying there are three opinions that really count when it comes to forming or framing your price thoughts. Firstly: the vendor’s sell price (not their asking price). Secondly: the highest other bidder’s buy price. (That is the only other buyer competition we are concerned about). And thirdly: your own thoughts on price. Which is actually the most important opinion on price.  Not the valuer, not the buying agent and not the selling agent, not Uncle Jim’s – but yours. If it is informed and considered then it is correct and more important than all others.

Some of you may view this all as a game and some may not want to be involved. But here in Melbourne, it’s the way homes are bought and sold (yes, even auctions). It’s called haggling or bargaining, and what that involves is a contest between seller and buyer. In many cases it’s unavoidable – and when it is, you might as well play the game as best you can.

Printed each week in The Weekly Review – Melbourne’s Million Plus property magazine

25 Campbell Road Balwyn - Peter Mitchell - Under the hammer - $3,000,000 - 5 bidders

Week 4 September 24th: Overall market interest is down this week, best evidenced by the fact we had 30% less Marketnews readers on the Monday of  this week than the past two month average (alternatively we may be just getting boring). While some new AFL coaches bobbed up, so have some interesting homes and it may be worth your while to revisit your contacts to see what new offerings are on the horizon. The internet portals are showing more homes in the Upper End than they have for a while and this is due to the agents planning an extended campaign to manage arrange the Grand Final while still trying to get the home done and dusted prior to the Melbourne Cup. So this week may have been more interesting than you thought but soon it will be back to “quiet and low new stock” as far as listings go until the second week of November post Melbourne Cup (hopefully).

Biggest Sale: 2 Albert St, Brighton, Leigh Hallamore (Buxton); after auction, in excess of $3,100,000, 3 bidders
With a relatively big crowd of 60 lining both sides of Albert St, there was a feeling in the air that this auction would be an exciting one. And, although he had to open on a vendor bid of $2,500,000 to kick-start proceedings, auctioneer Leigh Hallamore soon had a tightly contested battle between three parties on his hands. Bidding was strong and constant with bidder 3 eventually earning the right to negotiate after the property was passed in at $3,120,000. Bought after for an undisclosed amount. (Jen Milligan)

Biggest Pass In: 324 Beaconsfield Pde, St Kilda West, Andrew Stuart (Hocking Stuart); Passed in, $5,000,000, no bidders
Auction Andrew Stuart took great pleasure in explaining to the crowd how the under-ground car lift and turning circle worked – with a  practical demonstration. Demonstrations over, Andrew asked for a bid somewhere near the lower end of the quoted range. No one offered a bid and  a vendor bid of $5,000,000 was made – still no interest and half time was called. Half time was short and sweet. The property was reoffered again and surprise, surprise – no bids and the property was passed in at $5,000,000. It has been a long time since a property on Beaonsfield Parade has sold under the hammer. Sales are being transacted its just taking some time for vendor and buyer to reach that all important middle ground. (Guy Angwin)

Bidderbuzz Auction: 25 Campbell Rd, Balwyn, Antony Woodley (Marhsall White); under the hammer, $3,000,000, 5 bidders
Antony Woodley took the helm and fielded bids from 5 parties before the hammer fell at $3,000,000; after being on the market around $2,700,000. Around 70 people attended this auction. Full report in Market News (Adam Woledge)

Some clean ups from previous auctions and another few off markets and quiet results for the month.

• 34 Tormey St Balwyn North – James Tostevin – after auction for around $3,000,000
• Brighton 12 North Road – Jonathan Dixon – off market – over $5,000,000
• Toorak 67 Lansell Road – Andrew Harlock – after auction – over $3,500,000
• Toorak 1 Sargood – Lachlan and Paul Castran – Expressions of Interest – new home – undisclosed
• Balwyn 49 Metung St – John Bradbury – Expressions of Interest – new home – undisclosed
• Kew 26 Dean St – James and Hamish Tostevin – Expressions of Interest – new home – over $4,000,000

Not everything sells at the top - 111 Walsh South Yarra - Passed-In $3,250,000

Week 3 September 17th: Good quality Top End (around $3m and above) continues to change hands in strong numbers.

• 40 Balwyn Canterbury Peter Dixon over $3,000,000
• 37 Fairview Hawthorn Jeff Gole just under $3,000,000
• 3 Gardiner Hawthorn Hamish and James Tostevin – 5 bidders $3,850,000
• 41 Drummond Carlton James Keenan – $3,160,000
• There were $3m pass-ins at 111 Walsh South Yarra and 2-4 Sandown in Brighton.

During the week these $3M+ were bought

• 48 Hampden Road Armadale Andrew Baines over $6,500,000
• 45 Martin Brighton Ian Jackson just under $4,000,000
• 42 Matlock Canterbury Sam Wilkinson just over $3,000,000
• 198 The Esplanade Stewart Lopez – were quoting in excess of $6,000,000 – undisclosed

This September, to date, we are aware of 26+ sales in the is $3m and above price range – see our $3Million Plus report. If you look at our $3Million Plus market report for last year, September 2010, we got to 46 boughts by months end – http://marketnews.com.au/2010/09/two-9-million-homes-bought-on-monday/ and that was pretty much a solid activity time in the market. The Top End has some ooomph just now.

Michael Gibson and Justin Follett of Kay and Burton were both a bit chipper when I spoke to them this weekend and assured me that while the market may seem a little boring until the end of the school holidays, there are some good homes coming on after that. Hopefully post Melbourne Cup as well. Michael added that vendor moods have improved with the Top End good news of recent times. We hope he is right as that will mean more choice for buyers.

78 Blessington St Kilda - John Bongiorno - 6 bidders - Under the Hammer for $3,400,000

Week Two September 10: With the third week in a row of significant competition on A grade Top End homes there is little doubt we are now firmly in the midst of  an activity spike due to significant stock shortages of “ready to move in family period and new homes” in the $2m to $6m range.

On top of what we saw 2 weeks ago (11 sales at $55m with an average of 2 bidders each) and last week (7 from 8 bought over $3m) we saw solid results this weekend at:

1. Kew 20 Barry – Peter Batrouney 3 bidders, under the hammer, $3,850,000
2. St Kilda 78 Blessington – John Bongiorno $3,400,000, 6 bidders.
3. Armadale 46 Stuart – Andrew Hayne 2 bidders, after auction, over $3,300,000
4. Malvern East 58 Kerferd – John Bongiorno, 1 bidder after auction, $3,075,000
5. Malvern East – Little Como – 50 Finch – Gowan Stubbings – Expressions of Interest – It was a long battle but there is a sold sticker on the board.
6. Toorak 8 Ultimo – Justin Long – After Auction – 3 bidders – $2,900,000

Whilst the market is giving a big tick to those it likes (well priced A graders); it is marking very harshly those that is doesn’t and they are best summarized as B or C graders – homes that have issues. Some examples below

1. Toorak 32 Canberra – its old and tired – big land though.
2. Kew 2 -4 Heather – No backyard, no garage and no real interest.
3. Malvern East 4-6 Finch – 0 bidders – a big reno required and only a few metres from Dandenong Road

And then there is 22 Surrey Road Toorak – Auction was due today – converted to Expressions of Interest at the last minute. What does this mean?

Yes our focus in Marketnews seems to be all at the top of Top End ($3M+). Right now that is where the real action is. There has been an unequivocal mood change that does not seem to have been shared by the market at the lower dollar values.

Buyers are now having to answer some very real questions.

What is the real price? – Eg What is the highest other bidder prepared to pay, if indeed there is one? As a buyer am I trying to buy an A grader or a C grader – am I $300,000 below the other bidder or $300,000 above nobody!

What should my new strategy be in trying to purchase a Top End home? Extract from an MW St Kilda auction report “This market now plays to MW’s great little system and strength – shake the buyers up, show ‘em their competition, work out who is the strongest, then pass it into them and mentally torture them in post auction dealings by referring to those outside. It’s very hard to argue with it’s effectiveness, for if you don’t play the game, on a good home in this market, then there is a high chance somebody else will. This market is now spiking in the direction that will enhance MW’s reputation amongst sellers but …  um how do I say un-enhance their reputation amongst buyers.” This applies to not only Marshall White, but Jellis Craig, Kay and Burton, RT Edgar, Benmac and many of the Bayside agents. The main question for buyers is not it’s legitimacy (the sellers absolutely want this); its how do I best manage it and achieve my main goal within my buyer risk profile.

How will you manage a negotiation situation under extreme pressure – then is not the time to work out a plan. After the event is not a time to say I could have done it a lot better. The market has changed at this level, and may well change again, as a buyer have you moved with the times?

Strong Crowd at South Melbourne 210 Nelson Road - Anthony Grimwade - Under the hammer - 3 bidders

Week One September 3: My week this week. A good week with another $3M+ purchase for a satisfied client – which makes a good string of activity in the last month for our company. Overall a solid start to Spring after a less than exciting Winter (well I enjoyed Scotland with my son anyway). A magic moment for me was the home at 8 Torrington Place in Canterbury (Michael Armstrong of Kay and Burton). We will have a rating up in the next few days – but in a nutshell it’s a very brave new build home. Its Olde English for a start, which already loses most of you; but it is built to such a standard that when its attracts a suitor to its sweet offerings they will be entranced and will move to a mindset of I have to have this. The French Provincial being built next door will attract more; but this home will attract a greater intensity of interest. The price – well its asking $5million and for me the end result will be give or take a million and the sold sticker will be slapped on in an almost impossible to guess timeframe. That will depend on when the specific bee walks into this very specific honey pot. A lovely, well thought out, beautifully crafted home – go and check it out – its open mid week and weekends or google for our rating by weeks end. Please we are happy to be more specific on perhaps how best to buy it; if indeed it’s of interest to you.

My other magic moment was the 29 Rose St Armadale Auction: I really love watching Heather and Rae (Marshall White) at work – they are masters at their craft also – just like the developers of 8 Torrington. The two of them had positioned buyers on this home (last sold for around $2,500,000 in mid 2008) to get involved in the biggest shootout I have personally witnessed at an auction this year. And they lined up one of the best sheriffs to take all-comers on – Growling Jack (John Bongiorno) and boy did he fire up – to use the vernacular he stuck it right up ‘em and corralled 9 bidders into the final $3,030,000 result. It was very powerful to watch and while not reflective of the overall market right now, it did provide a pointer to the current lack of stock at the $3m+ level and a beacon for those that feel the only way forward is without hope. Sure we are all a bit nervous, but things are simply not as bad as The Age daily headlines make you think they are – well not right now in the $3m+ segment anyway.

Again the standout $ segment – granted on very low numbers ( 6 from 8 ) Yes there were some big pass-ins like 67 Lansell Road Toorak ($3,200,000 vb) but it has some challenges. Also passed-in 2 Iona Toorak ($5,000,000 vb) – postscript: was bought over the weekend.  However the ones that were bought this week showed, in the main, multiple interest.

• Toorak 2 Iona – Jeremy Fox – bought after auction $5,080,000
• Armadale 29 Rose  – see report below 9 bidders $3,030,000
• Malvern East 7 Bates – Heather Elder and Rae Tomlinson – 3 bidders – bought after for $3,500,000+
• Hawthorn 34 Coppin Grove Jack Bongiorno – 3 bidders – under the hammer – $4,110,000
• South Melbourne 210 Nelson – Anthony Grimwade – 3 bidders – under the hammer – $4,215,000
• Toorak 19 Sargood – Jeremy Fox – 2 bidders – bought after – $4,700,000.
• Balwyn 12 Creswick – William Chen – Bought Before – Undisclosed – around $3,000,000 . This was after a failed auction earlier in the year.
• Canterbury 52 Mont Albert – Karen Gornalle – Private Sale – over $3,800,000.
• Hawthorn East 5 Constance – John Chartres – After Auction – just under $3,000,000. 2 bidders.

Agent Step Quoting is a contentious part of our industry: It’s how selling agents nudge buyers up the staircase towards a price their clients are hoping for. Done badly it can make buyers feel cheated and manipulated and invite accusations of under-quoting. Done well it’s a legitimate haggling process agents use to get a buyer and a seller to meet at a price point they’re both comfortable with.

We usually only hear of Step Quoting when it’s done badly as it highlights the low skilled, unethical agents almost immediately. When highly skilled agents use step quoting successfully it goes unnoticed except through careful examination at a later date. Yet within the Inner East and Bayside $M+ Markets it is a particularly common practiced black or noble art depending on your point of view.

How does it work? Well at the top of the stairs in Step Quoting you have a seller, a mum or dad just like you and they think their home is worth $4 million. At the bottom of the stairs in step quoting is you, the buyer and you think the home is worth early three’s, but your dream price is $2,950,000 – you don’t want to admit to a 3 in front of it at this stage.

Both you and the seller are interested in the transaction because the seller feels it’s time to move on and you hoping it’s time to move in.

You’ve seen the home in The Weekly Review and you’ve rolled up to the first open for inspection. The selling agent at the door says $3,200,000+ when you ask the “how much” question, while not in any way looking interested under your recently purchased “anti-agent” dark sunglasses.

“Mmmmm $3,200,000 – a bit more than the $2,950,000” you thought it was worth and maybe you will have to concede it’s going to have a 3 in front of it. You’ve moved a step to Step Two – not that painful.

But hold on, wasn’t that $3.2 million quote underquoting by the agent? Hasn’t the agent committed an offence by quoting at this stage a price much lower than they said the property may sell for?

Let’s press rewind for a minute.

OK Mal, how can the owner realistically think the home is worth $4,000,000? Trust me, this for many is not a dream figure, this is a cast in stone, almost religious belief and it comes from one of four sources: the agent told them, their mate told them, another agent told them or the tea-leaves told them – but they believe right now their home is worth $4,000,000 when quite possibly in this falling market the home is considered low $3m’s by most serious buyers and even the agent currently trying to sell the home.

How come? Time lag and the well known leap of faith valuing technique. 10 weeks ago the owner met with a number of agents – some competent, some not so competent and some downright rascals and the average of what the seller was told seemed to be $3,400,000 to on a really good day $3,700,000. One rascal agent did say $4,300,000 but the two other competent agents said mid $3,000,000’s. With each of the two “mid $3m’s quote” competent agents the seller asked “do you think I can get more, could I get $4,000,000” Each agent, who still wanted to get the job replied “it’s possible but unlikely”. Luckily for the seller one of the competent agents was engaged, even though they were not the highest in value estimate.

That was 10 weeks ago, this is now.

The vendor, who is now getting more emotional, is convinced more than ever that the news of the world doesn’t apply to him – when in fact it does and his $4,000,000 was always $3,700,000 on a good day – yet the market has dropped 10% in 10 weeks and his home is now worth $3,400,000 – on a good day with plenty of bidders. The selling agent doesn’t know yet if the home will have plenty of bidders as this is the first open for inspection and so being professional and with an obligation to the seller’s interest first and foremost they are quoting $3,200,000 plus. You tell me – are they dealing morally, legally or ethically?

The first open actually went pretty well and the selling agent put 7 names onto their list. As one of my favourite agents and master of the Step Quote once explained there are 3 lists: the door list (everybody who goes through is on that), then there is the engaged list and finally there is the buyers list.

But that’s another story, back to the steps and Step Quoting. It’s Week two and you notice in the papers the home is quoted at $3,400,000+. “Mmmm you think they must have interest”. Well they may and quite possibly they may not. Think about it – the $3,400,000+ quote would have gone in before the first open to meet printing deadlines, the new quote is not a response to the first Open For Inspection(OFI) but part of a well planned Step Quoting process.

You are back at the second OFI and you ask about the quote – of course in a manner behind your “anti-agent” dark sunglasses so as the agent knows you’re not interested. A reply comes either “that was a printing mistake” (one of my favourites if the campaign hasn’t leaped out of the blocks in the first week) or “yes we’ve had a lot or interest and so we put the quote up”.

At this point a number of things have happened – you the buyer have made it onto the second list – the engaged list – as you are a “repeat inspector”. Second time round you really like this home and you, the buyer, have now gone to Step 4 begrudgingly. Step 1 was your dream price $2,950,000 and you blew past Step 2 ($3,000,000) and Step 3($3,200,000) and your teetering around Step 4 ($3,400,000).

Meanwhile back at the ranch the selling agent is also doing all they can to pull the vendor back down from their top step of $4 million – talking about clearance rates, and falling prices and global recessions. The vendor won’t budge. “You said I could get $4million,” they say.

Week 3 and you are back at another open for inspection – you are now being considered a serious prospect. But the price has gone up again: “We have had some interest at around $3.7 million. How do you feel about that? “ the agent asks you.

Actually you feel sick, but behind your special “anti-agent” sunglasses you trot out “Mmmm  guess that puts me out” $3,700,000 – you think – OMG. What – I’m not paying over $3,600,000 and so welcome you’ve arrived at Step 5 in the Step Quoting process.

The agent has deliberately not asked the vendor for a reserve as he/she is aware of what they “may” want and also aware of the law. Meanwhile the agent is pummelling the seller with reports of how the serious buyers have either fainted or been abusive when they hinted at a price of $3.5 to $3.6 million.

So come auction day; you the buyer are at Step 5 with a lean and our vendor is at Step 7 with a lean.

The home is naturally passed-in and the selling agent runs up and down the stairs until a result either happens or the vendor sticks to their guns, and the home is listed for private sale the following week.

So, has the agent acted unethically or illegally?

They would have if they had told the seller that they could get “$4 million, no worries, I promise, maybe even $5 million”, and then once they had “bought the job” given the buyers a quote of $3 million at every open for inspection and never made any effort to work (explain to) the buyer or the seller along the steps.

Such agents are unethical and lazy and unfortunately they are too plentiful in supply through deliberate training or poor supervision.

But are agents who work to bring the buyer up to maximise the vendor’s price, and the vendor down towards what the market will pay, which ultimately achieves what the vendor wants (a sale), doing their job ethically and professionally? In these cases it’s a fine line, but if you are a buyer that moves up the steps and you have been informed along the way then well………… are these quality agents not just doing their job very well?

Why you as a buyer may need some professional help? In this market what happens if you are the only buyer on the engaged and buyers list since the first quote of $3,200,000+?

You mightn’t like being run up the Step Quoting stair, but that’s how the property market works, and the highly skilled selling agent’s job is to get the best price for their client, which by the way is not you.

I took the opportunity to go through each property a few weeks before the auctions and assessed them according to our James Home Ratings criteria. What stood out most, apart from the fact that it was a hugely popular show that captured everyone’s imagination, was how many rules were broken. Breaking those rules has led almost inevitably to the end result, where only one of the properties sold under the hammer at auction. Sorry guys, but this was always going to a disaster in the making. For us though as viewers, it was an invaluable lesson in how not to make money through property.

So what did we learn from the show apart from the fact that Josh is getting married to Jenna?

Rule No 1: You make your money when you buy

If you’re buying property as an investment and you’re hoping to make a profit on the resale, what really matters is not the selling price but how much you pay for the original property. Okay we understand that Channel 9 was more interested in the show’s ratings than the profit they’d make on reselling the properties. But the price they paid for the initial properties was way too much. Sure it was a big block, and it had four houses on it, but at an average of around $900,000 per site, plus stamp duties of around $50,000 each, plus holding costs of 6% (another $50,000+ each), plus the selling agent fees…Well each home was priced at well over a million dollars before the first contestant even showed up and the first nail was hammered.

Rule No 2: Buy the best position you can

This for me was the real killer – the position was a shocker. Yes the properties were close to all amenities but anything in Richmond is close to all amenities. Have you been down that street at night? It’s scary. Stand in the street or look on Google streetview and do a 360 degree turn – what do you see? Industrial sites, multi storey car parks.  And who knows what is going there in the future? What if it’s a panel beater shop and you end up with the smell of paint thinners in the morning? There’s a vacant block of land to the west of No 37 that has recently changed hands for just over a $1million: who knows what will go in there?

Rule No 3: Consider your target market – before you start!

The properties themselves had some real positives in terms of the land. The north orientation will bring light and winter warmth into those back living areas. So sure, that’s a tick. They all had good street appeal (tick) and the block widths were above average for the area, meaning the homes could give that feeling of space which is very important in a home (tick). However they all had another huge negative: on top of the scary street there was no car-parking. Which means that your future buyers or renters are going to have park their car at night somewhere in the street. So that is going to knock single women, young married couples, and older couples out of your target market. In fact, just about anybody except students and local lads would have concerns about living here.

Rule No 4:  Don’t overcapitalize.

If you are about to spend $1million or so even before one sod of earth is turned or one nail is hammered AND you want to make a profit, you need to know whether you’re likely to recoup the costs of your renovation – and hopefully more. Otherwise you’re going to end up overcapitalising. How can you work that out? Well, look around you. What sales evidence was there in The Block area for $1.5million homes? Zippo. We can tell you this because coincidentally on the same day of the Block auction we bought a property at auction for a client in Richmond only a few hundred metres away. It was on bigger land,  it had car parking and good period features – and we got it for just over $1.2million. So if $1.5million is the minimum amount you need to make serious money, but there is little or no sales evidence of properties selling for that amount in the area – DON’T BUY.

Rule No 5: Amateurs don’t make money on renos – they make money because they are lucky that the market happens to be in an upwards phase.

Whenever someone tells me they made money on a renovation, I think, well, no you didn’t, you made money by buying the right home in the first place. They would have made the same, and maybe even more, by doing nothing. It’s the market that makes you money. If the market is not in your favour, most amateur renovators lose money and the Block confirmed this. The bloke at 35 Cameron St Richmond (the vacant block) made more money than all the renovators combined by doing little.

Rule No 6: Don’t think short term with property unless you like excessive risk

The Block also highlighted the risks of short term flipping. Besides the fundamental error in the initial choice, the market was also unkind to the contestants. Which again highlights the short term risks in property. To buy this year, tart up and flip next year is a strategy fraught with danger and can cost you a packet. Each of these homes lost at least $200,000 if you factor in all costs – and they probably lost a lot more.

Rule No 7: Choose local selling agents, who are experienced at your price range – and choose the best not the cheapest.

The four auctioneers chosen to sell The Block properties are all very good at their job. But it was interesting to note that the only home that sold under the hammer was sold by a local agent, Russell Cambridge. He is a good operator, as is his partner Sam Davenport, who got the buyers there. Glen Coutinho is a really good auctioneer but his patch is Hawthorn, which may be close but it is quite a different market to Richmond. Ruth Roberts is a top female auctioneer from whom we bought a property less than a fortnight ago – but she is well known in Carnegie, and that’s a long way from Richmond. And again, while Clayton Smith is a strong local agent, he was always up against it having to market the weakest home in terms of floorplan. There can’t be that many people wanting to buy in Cameron St and he was always going to get the leftovers. Tough gig. (By the way: well done to Jellis Craig and Biggin and Scott for their very generous donations to charity.)

Rule No 8: Good Buyer Agents are of value.

Apart from Frank Valentic who is a smart operator with Advantage, the buyers agents who showed up to The Block auctions were just embarrassing. Our apologies – this is not how normal quality buyer agents represent the clients and just shows that when you put a camera in front of an idiot, they are still an idiot. Notice how you didn’t see quality buyer agents like Morrell and Koren there trying to buy rubbish or making a fool of themselves – they simply didn’t recommend The Block homes to their clients.

Rule No 9:  Substance v Puffery

In homebuying, digital TVs, paint colours, furniture etc come and go. If you view our online ratings you will notice that we give a total of 1 point out of 1000 for stuff like cabling and shower screens etc. The other 999 points are for land, position and floorplan. And if you’ve learnt one thing off The Block then hopefully it’s that it is the price, property, and positional fundamentals that really count.

Unfortunately on all those three counts the contestants were doomed even before they started.

Printed each week in The Weekly Review, Melbourne’s million plus property magazine.