Elwood, 45 Dickens, Jason Scillio (Kay & Burton): The biggest auction we attended in Port Phillip on Saturday. Bought under the Hammer, $3,535,000, 3 bidders and a big crowd of 80.

Key Point

• There were three bidders at both hammer auctions and none at the two pass ins.

Biggest Sale: Elwood 45 Dickens St:  Jason Scillio (Kay & Burton) Under the Hammer, $3,535,000, 3 bidders
“A large crowd gathered in the front garden of this magnificent property to hear Jason Scillio provide a well prepared preamble prior to inviting bids from a large crowd on this beautiful afternoon. After the usual hesitation, strong bidding emerged from three buyers and it was on the market at $3,450,000. The house was soon bought with a strong bid $3,535,000.” (David James)

Bidderbuzz Auction: Elwood 69 Ruskin:  Sam Gamon (Chisholm & Gamon) Under the Hammer, $1,600,000, 3 bidders
“An opening bid of $1,000,000 was quickly surpassed by the effervescent Sam Gamon, who offered a vendor bid of $1,350,000. This produced brisk bidding from three buyers with a fourth entering a little later. The property was declared to be on the market at $1,500,000 and, with a strong knockout bid of $1,600,000, was successful in obtaining this well located house.” (David James)

Biggest Pass In: St Kilda 94 Wellington:  Jason Scillio (Kay & Burton) Passed In, $1,700,000, zero bidders
“Following a brief but well prepared preamble, Jason Scillio invited bids for this magnificent two storey period home, a really sumptuous residence just so close to every amenity. Unfortunately his appeals failed to produce a response and the property was passed in on a Vendor Bid of $1,700,000.” (David James)

Agent Q & A: How do you value a home?
Matthew Young, Buxton, St Kilda:“When valuing a property there are two forms: a market appraisal which is what most agents conduct and a valuation that only a sworn valuer is licensed to carry out. As a licensed estate agent, the most important aspect when appraising property is to look at comparable sales. That is, what other properties have sold for in a similar area, the market conditions, the property’s size, features and importantly quality. It is almost impossible to find an exact match so adjustments will need to be made.  This is where experience and local area knowledge play a vital role. We also need to look at a several properties to eliminate any irregularities such as buyer emotion or a freakish result. When buying property don’t hesitate to lean on the experts for professional advice, be it buyer advocates or estate agents.”

Damian O’Sullivan, BenMac, Albert Park:”In order to accurately value a home, comparable sales evidence is of utmost importance. Relying on factual data, rather than guess work is imperative. In particular, our due diligence is based around researching recent sales of a similar / relevant nature in the immediate vicinity of the home being appraised. The research compares homes that are similar in style as well as taking into account the land size, the orientation, the condition they are in, the streetscape and more. We feel that home owners not only deserve a transparent and realistic approach to valuing property but advice they can actually rely on.”

Sam Gamon, Chisholm & Gamon, Elwood:“When we appraise a home, we adhere to certain consistent guidelines in order to ensure we take a scientific approach and provide our clients with a logical estimate, based upon recent sales of like properties. In the event there are no direct comparable sales, we assess properties which might have less features or more features and then add or subtract depending on the perceived value of those attributes. Our first port of call when appraising a home is the “walk-through”. We like to do an internal inspection so we can get a feel for size, light, floor plan, etc. All of these factors weigh into a buyer’s decision making when they’re comparing one home to the next. We then step away from the property and undertake extensive research on comparable sales within the area before we make some judgements on the final appraisal range…and submit our client with their free marketing appraisal report. We take every care to ensure the accuracy of the estimate we’re giving is fair and reasonable.”

8/27 Hill Street, Hawthorn

Let’s take a look at a property which sold recently with Danielle Henry of Hocking Stuart:  8/27 Hill Street, Hawthorn. It was a beautifully renovated first floor unit in a nice quiet pocket of Hawthorn.

On  the surface it had all the right investment grade attributes: it was a secure first floor unit, with a workable floor plan, onsite parking, outdoor space (albeit quite small) an abundance of natural light and very appealing neighbourhood views to top it off.

So why didn’t we buy it….?

It was on a Company Title.

What is a Company Title? Simply, it’s where you purchase shares in a company that provides you with the exclusive rights to a defined area. This is very common in Melbourne – especially in older style unit blocks. Company Title has been has been replaced by strata title, which affords the owner a simpler and clearer form of ownership.

Two considerations when looking at purchasing company title from an investment perspective are Growth and Security.

Growth

Banks see a higher degree of risk when lending against company title as new share ownership needs to be approved by a board of directors. This may restrict your market on re-sale and can drag out settlement.  Additionally tenants require approval and, while in most cases this is merely a formality, there is greater opportunity for issues and complications.

As a result banks (in most cases) require a lower loan to value ratio (LVR). Essentially what this means is that people looking to purchase company title need a greater deposit. This can be seen as a positive for cashed up investors as they can generally purchase the property slightly cheaper than an equivalent strata title unit. But if one of your key goals is growth, your market will be limited on re-sale and there are more suitable investment properties in the market place.

Security

One of the key elements to a good investment is its ability to hold its value during tough times.  As most downturns in the property market coincide with a tightening in lending criteria, the ability for this form of investment to hold its value becomes more and more difficult. Selling this type of property in a downturn may be problematic – as such it’s very difficult to recommend this form of ownership as a viable investment vehicle.

In summary: there is a greater degree of risk when investing in Company Title property and if you are thinking of purchasing such a property, it is wise to conduct additional due diligence prior to purchase and to familiarise yourself with the various regulations and limitations.

Invest Well