Brighton: 10 Kent Avenue: Nick Johnstone of JP Dixon. Bought afterwards for over $2,100,000; a 16% increase on last year. But for some sellers the 2010 jig maybe up. Next week looming as a real test - are we turning a corner or are we as buyers dreaming?

It is 6pm Saturday and the James Million Dollar-Plus Clearance rate for the 27 Auctions we attended today was 65 per cent.

Bidderman remained steady at 2 bidders per auction. However 1 in 3 of the auctions we attended today had no bidders. 33% of auctions (on OK James rated homes) had no bidders under the hammer today!!

If you look at the REIV auctions reported you would see a more buoyant story than we show, because a  number of the auctions that were passed in, were not reported.

Having said that some of the $2.5m to $5m market seemed quite strong this week; highlighted in the north west by 2 strong sales at 36 Ardmillan St Moonee Ponds (Matthew Febey Nelson Alexander) bought for $4,650,000 and 110 the Boulevard Aberfeldie (David Vaughan also of Nelson Alexander) also bought under the hammer  strongly for $1,770,000 and most would be looking to put an additional million into a rebuild.

The Inner East was also strong in the $3m range. All these sold before today’s Auctions.

• 28 Coleridge Street Kew (Hamish Tostevin/James Tostevin, Marshall White),
• 14 Royal Crescent Camberwell (Peter Batrouney / Campbell Ward, Jellis Craig),
• 94 Argyle Road Kew (Stuart Evans / James Tostevin),
• 18 Callantina Road Hawthorn (Joanna Nairn / James Tostevin, Marshall White),
• and a quiet off-market property in Raheen Drive Kew (Scott Patterson, Jellis Craig).

Bayside was buoyant in most ranges above a million. It’s big $3million sale was an old car museum on less than 374 sq metres of land out the back of Church St Brighton for $3,367,000. Matt Nichols of Nichols Crowder, who runs a really good commercial Bayside selling agency told us there were 6 bidders on this mid week auction.

Port Phillip also strong (except a few misses in Elwood).

Stonnington Top End seems to be a different story with a large number of pass-ins in this range. They may be bought over the next few days - lets wait and see.

Nonetheless across all these markets Bidderman has dropped from 3 weeks ago; even though we just rattled off 8 or so $3 million plus sales in the last week and that’s the conundrum right now.

Strong results but a falling Bidderman.

Feel and Mood
Those that are good homes with an asking price within reasonable expectations are still selling incredibly well and have a strong Bidderman;  but if you have a home that

1)       Is priced above the market view

2)      Has Issues

Then as a seller you may have a home that is not being bought in a frenzy under the hammer at auction – a different story to a month ago or late last year when almost everything was frenzied selling.

A number of credible agents (Andrew McCann of Bennison Mackinnon; John Bongiorno, James Tostevin and Heather Elder of Marshall White) are saying a bit of the gloss of late last year and early this year has come off in the last fortnight. This they feel is in part due to vendors getting ahead of themselves and/or buyers refusing to continue the climb the increasingly dizzy heights on homes regarded as less than the best. We agree with this assessment.

Next week is looming as the big test in our minds. There is a lot of stock to be bought and as we have reported a fair proportion is good quality; so if the clearance rate and Bidderman is strong (over 70% clearance rate and say 2 for Bidderman) then this last week or two is more an aberration (influenced by stock quality) than a trend. However a lower clearance rate and/or dropping Bidderman and we will be forced to consider the possibility of a market mood change or a turning trend for the Top End.

Quoting to Buyers

Most results are being reported - except from time to time Kay and Burton’s and RT Edgar’s in South Yarra and Toorak – the Top, Top End. Fair enough if it’s tactics, but it’s good to know when looking at market trends – you don’t have all the results. Maybe things are a bit light on as this very public quoting war continues. Personally our dealings with both these agencies have been very good in recent times and we have been given accurate information and advice particularly by Kay and Burton for a long time. An increasing number of buyers are saying the quote on the phone is very different to the quote at the inspection; which is different again to the opening vendor bid and then different again to the reserve on a non buy. Hope you can reach a truce soon.

And please we are not just singling these agencies out; our company has a high level of respect for Boroondara agents; Marshall White, Jellis Craig and Fletchers and others but in a number of instances they still quote (in our opinion) inappropriately to buyers; notwithstanding they are working for sellers and the market has been hot and not always easy to predict. Why not explain in more detail the vagaries of the current market when you quote a figure to a buyer and what that figure you are quoting may represent.

Where are they getting quoting right? We think most Bayside agents have got it right at present and in particular, Hocking Stuart across the board, seems in our opinion to be making a fairly consistent effort to quote helpfully to buyers. We still strongly support Benmac’s reserve within the quote and most of the public information we have seen Buxton and Hodges put out corresponds with what we would, as buyer agents, say is generally helpful quoting.

Not easy at present and you cannot expect a perfect record in quoting – at times as buyer agents we get it “very wrong” in this type of market. All you can ask for and should expect from professionals is best efforts; not less than best efforts. An old record but a goodie and I digress.

Just another simple $3 million auction. Why would I need a buyer advocate?

As we said above the $3m market was strong this week in terms of numbers bought and sold. Specifically in the last week around this $3 million mark we bought:

• an off-market property, in the Diamond K of Brighton, for just below $3 million;
• a new home, also in Bayside, bought pre-auction, for just below $3 million; and
• a Boroondara home, bought in a boardroom auction before auction, for just over $3 million.

People often say “It’s just another simple auction. Why would I need a buyer advocate?” Well, let me share with you some of the frenetic 17-hour period that led up to a purchase of the Boroondara home yesterday, which will show you that an auction can be anything but simple and just how much planning and effort is needed to bring off a successful purchase.

Thursday, 9pm: A text message informed us that another party had put in an aggressive, but acceptable, offer for the property and it would be sold.

10.15pm: We quickly got the ball rolling, with conference calls between our clients, our architect, managing advocate and myself. Two calls to the agent (interrupting his viewing of The Footy Show), contact with a pest and building company, and emails to lawyers asking for urgent reviews.

Friday, 5.30am: A late night led into an early morning checking emails confirming pest and building and plans for all key advocates.

7.30am: On-site meeting at the property after we informed the selling agent there was a high likelihood we would compete. At the property, we confirmed land size  (we cannot understand why so many people do not measure up before purchase – the occurrence of major differences between represented amounts and actual bought land is common), looked at renovation options, rechecked our comments and ratings and talked with our clients.

8.30am: Adam Woledge prepared rough drawings of potential renovations. Adam is a very useful man to involve in short time-frame decisions because he is an architect, a licensed buyer agent and still actively involved in the processes of building and renovating – eg in 2009 he oversaw million-dollar rebuilds, new builds and renovations on behalf of our clients in suburbs as far apart as Canterbury, Brighton East and Glen Iris. Questions Adam and the clients discussed included whether there was a good chance the renovation plans would  get through council, and how heritage overlays could affect the build, setbacks and ballpark costings. These are all tough questions that need realistic advice before purchase, not post-purchase.

While talking through possible alternatives with our clients, we were also making sure that the decision (theirs) was definitely what they wanted to do and that overall it was a good decision, emotionally and financially for them to make. At this stage, very little of the talk was about money.

9.30am: Over coffee, eggs and gluten-free toast, we reached consensus with our clients that we would do battle (for want of a better word) today.

We knew this was going to be a tough fight, as the acceptable offer was strong (above the quote) and above what we would have offered pre-auction without proven competition.

10am: That consensus meant pest and building inspections (which were on standby) were completed.

11am: Last-minute preparations included legal checks; contact with council re known building applications for neighbours; opinions from other selling agents; negotiations of extended settlement terms; and the organisation of deposits, cheques, somebody to sign etc.

10.30am to 12.30pm: Our senior advocates discussed possible bidding strategies. As both clients worked full-time, we could only reach them over the phone to discuss and agree on strategies.

11am to 2.15 pm: Our lead advocate set about trying to get a handle on timing and process, both of which changed three times in as many hours.

I personally don’t know how buyers without assistance can keep focus and make good decisions while full of emotion and adrenaline. I have to bite my lip quite often and keep focussed and I’m little more than a bit player with minimal emotional involvement.

2.15pm: For whatever reason determined by the vendor or vendor’s agent, we were informed a boardroom auction would take place at 2.45pm (that’s 30 minutes time!!!) in the agent’s offices. Our client and advocates, who were in the city, Brighton and Williamstown, urgently dropped their other business and made it in time.

2.45pm: After a slightly prickly start, the auction was conducted within the stated rules; a specific strategy was applied against an aggressive, but fair, opposition and our clients were lucky and brave enough to be the purchasers.

4pm: Signatures, a champagne, a welfare check phone call and we all slipped back into our family lives. Our clients have interesting times ahead.

The point of this example is not to say we will always buy if you hire us (we don’t – the opposition may have well-prepared buyer agents representing them, or our clients don’t have, or choose to have, the firepower needed to buy). The point is to show you that there is so much more involved in a supposedly “simple auction process” than people believe.

The property mentioned was meant to be sold in a “simple auction” in a week’s time but events quickly moved ahead of that plan.

In conclusion: None of these around $3 million purchases we made this week were “simple auctions”. It’s our boring, often repeated but true, statistic: of the 68 homes we bought last year in this price bracket less than 1 in 7 were bought under the hammer within 20 per cent of the initial agent’s guide price.

Facts are facts – will you think about engaging a buyer agent afterwards or before you buy?

Buy well

Mal

Toorak: 140 Kooyong Road - Bought $4,040,000 - Bidderman 2. Although this went better than some thought it would, an overall toughish day for Iain Carmichael and an even tougher day for many slightly surprised auctioneers across Melbourne who were performing to less enthusiastic bidders than a fortnight ago.

It is 6pm Saturday and the James Million Dollar-Plus Clearance rate from the 31 Auctions we attended today was 61 per cent. Wow that was a bit of a surprise! Please note we thought the quality of the homes on offer was not as high as the last two weeks in February or the upcoming March 27th auction list.

Bidderman
A major drop in Bidderman today. Bidderman was 2.8 the week before our Labour Day break and today he was 2 bidders per auction.

Wormie the Price Worm took her first breather of the year and flattened, maybe even fell a bit. Prices should continue to remain level or even fall marginally for next fortnight or so – after Easter price rises or falls will in part be determined by how quickly any overhanging (if any) March 20th and 27^th stock is mopped up by the market; and what new stuff is coming on in late April following the Easter hiatus and off course any change in buyer sentiment.

Feel and Mood
There was definitely a more subdued feel out there today. Why? Well it could have been that the overall quality of stock was not at the premium level of February 27. It could have been that it’s the natural ebb and flow of buyer mood. March 27 has some rippers on offer, so maybe buyers are holding off; nonetheless the word around the traps is an easing and todays results for the moment show that. We have said that March 27 and the first month after Easter are the real 2010 tests. February did start very strongly but in part was this a reflection of the angst 2009 unsuccessful buyers felt or was this a pointer to 2010? As we say its early days and all things are still pointing upwards for prices in 2010 but today was not as convincing as the last few auction weeks. As buyers we hope we are not just imagining things -some rebalancing would not be a bad thing. Reminding buyers that they can be little seller hiccups in the middle of a bullish run eg the week after Melbourne Cup. Next two weeks will be interesting.

Stock Levels
We looked at more than 100 homes last week. There were many new ones on the market with sellers trying to get sold on March 27 before the Easter shutdown.  2010 has been both a feast and famine for $1 million-plus properties. The feasts of new stock were three weeks (typical auction campaign length) before February 27  and this week, which is three weeks before March 27. Easter is in early April, so, after March 27, we have a gap of a few weeks before housing stock should arrive on the market in a more orderly fashion. Then there will be a more consistent level (down or up but fairly consistent) before the build-up to Spring Carnival racing, footy and, finally, Santa. If you are thinking about buying a million dollar plus home now is the time to be looking with an incredible 150 auctions scheduled for Boroondara, 70 for Stonnington, 50 for Bayside and 40 for Port Phillip in the next fortnight you mightn’t see what you want but at least you will get an idea of what is on offer.

28 Victoria Avenue Canterbury: Auctioneer: Gerald Delany (Kay and Burton) 
Result: Passed In $4,025,000 Bidderman: 1
Fantastic French Provincial house in one of Canterbury’s best streets. Highlights include a 6 car garage and a 2000 bottle wine cellar.  Kay and Burton (Ross Savas and Michael Armstrong). James rating: 771.
James Auction Report:The usual big crowd (180) with a fair level overseas interest for this Gerald Delany Kay and Burton auction. In the $2,000,000 to $3,000,000 price range the newer homes go well in Boroondara but as you rise to $4,000,000 and above the bidders at auction drop and this was no exception with a longish drawn out begging procedure from Gerald after an opening $4m vendor bid which finally, finally resulted in a lone bid and pass-in at $4,025,000.

17 McKinley Ave Malvern: Andrew Macmillan  Auctioneer:
Result: Bought under the hammer $2,460,000 Bidderman: 2
Gracious period home with a light filled extension close to Claremont Ave Village and Malvern Station. Advertised in the $2,100,000 to $2,300,000 range. Bennison Mackinnon (Tim Bennison) James rating: 862.
James Auction Report:
On a sensational sunny day, in a beautiful part of Melbourne, Auctioneer Andrew MacMillan started the auction with a vendor bid of $2,100,000 dollars. After two parties revealed their interest in the Malvern property, the bidding came thick and fast, quickly rising to $2,400,000, at which point Mr MacMillan went inside the house to consult with the vendor, returning to declare that the property was now on the market. Around 60 people turned up to watch the action which peaked at $2,460,000 and was sold to a very happy couple to the sound of cheerful applause.

Mark Stobart from Bennison Mackinnon who is well liked as a knockabout guy and respected within our circles is unwell at present and our prayers and thoughts are with him, his family and those close to him at Benmac. We all hope he gets well soon.

Something Smells

Issue One:  It’s being done
Smart agents and sellers know that buyers are affected in the very critical first 30 seconds by what their senses pick up (our emotions). Smell is one of our senses most easily influenced and smart agents are now incorporating fragrances into the dress-up of houses before OFIs. An increasing number of homes that we visit smell pleasant and evocative: perhaps a salty sea tang or fragrant flowers. Ross Savas and Nicole Gleeson of Kay and Burton are masters at this and are consistently, overall, the best smell presenters of homes we have seen; in fact, they would win that award by a country mile. Painting, gardening, antique furniture, music – they have the ability to convince vendors to spend $50,000, even $100,000, on dressing up their home and, as well, they also get smell absolutely right.

Speaking with Ross, he states that presentation is everything, whether it be a restaurant dish or a birthday present, and  a home is no different. He also said that Kay and Burton has made an effort with fragrances because of the impact they have; for example, many international hotels have a particular and identifiable fragrance, so that you know where you are as soon as you smell that familiar scent.

Issue Two: Prices
Does this result in higher prices? In our opinion, absolutely yes. We went through 482 Barkers Road Hawthorn (James Rating 755/100) mid-week. They are asking $10 million-plus and, besides the manicured grounds, antique furniture and  co-ordinated décor, what we really noticed was the smell. The perfumes, fragrances and aromas throughout the house had been thought through carefully. They were not overpowering in any way but they evoked a response from our senses and to such an extent that we thought about the smells of a few other homes we’ve been through recently. Another one that sprang to mind was 83 Marine Parade Elwood (James Rating 836/1000), also coincidentally Kay and Burton-Michael Armstrong. This home, almost on the beach, had the smell treatment; a bit different from Barkers Road as it incorporated the sea and a more homey feel.

But it’s not just smell; sound is also a big deal.

Issue Three: Disguise problems
Music and water fountains are mood setters but they are also noise disguisers and are especially good at deflecting road noise. Politely ask it to be turned off next time (for a minute or so) if you wish to gauge road noise levels. As an aside, I still go into some houses that have doof-doof or loud music playing – in fairness, it’s rare; but it’s hard to see the positive features in a home with that sensory attack.

The increased emphasis by high-end agents on sound, visuals – furniture, knick-knacks and flowers – and smell only confirms our view that buying a home is dual outcome process – emotional and financial.

Issue Four: Opportunity
Let’s look at one of the senses in isolation. How important is smell in the emotional decision-making process? Well, at the extreme end, smell is an incredible turnoff – for example, the smokers and fresh paint combination giving us the trashed rental home feel; or the damp, dank odour that lingers from darkened corners of a home – makes us all nervous to put our hand deeper into our pockets come auction time. But does bad smell equal a bad home? Not necessarily. It can be an indicator of a problem or a partial cover-up (which a building inspection can help uncover); but on the positive side, though, smell can also be a turn-off to the one or two buyers who would have been your competition. Most smells can be removed in time, via improved ventilation, fixing the problem or removing the source. So if the house flow, room sizes, price and position make sense, then maybe your financial sense needs to override your emotional (and smell) sense.

Similarly, bad visuals – outdated wallpaper or garish paintwork or furniture that only your great-uncle would have used – can act as a turn-off to your competition, but this can often be one of the easiest things to fix in a house. One house currently on the market is 5 Beech St Malvern East, with Adam Cashmore of Jellis Craig(rated 709/1000). While it is a good home, it has a strong individual décor that, in our opinion, is suited to a small minority of people and could potentially be pushing away a number of potential buyers. We don’t think you should be turned off this property because of the pig out the front (please, no, that’s not Adam or Jeff) or the colours inside, as it is a good, practical family home.

Issue Five: Misunderstanding
And one final point on this:  the feel sense – often we are thrown by wobbly floors and we should have a raised eyebrow but many times this big time turn-off to many is a relatively easy and inexpensive fix. It’s called restumping and, in some cases, it’s less money than your new TV.

Issue Six:  First impressions
Perhaps, as buyers, we should not be so keen to accept or reject without a more thorough examination – eg a rating. First impressions are often the best impressions but make sure that these impressions are worked through and don’t lead you to poor decisions.

PS the owners of 5 Beech St Malvern East have a nice home and are perfectly entitled to present it how they wish  -  after all, I’m the idiot in an 18^th century hat!

Buy Well

Mal

Malvern: 17 McKinley - Bought $2,460,000. Bidderman 2. Andrew MacMillan thinking "Phew finally got one over the line - heard it's been a quiet in Stonnington today."

Not a whole lot on offer today and certainly minimal quality for the most part.

Something old, something new. What sells? Well this week it was something old. Two good old sales were: 140 Kooyong Road with Iain Carmichael of Bennison Mackinnon (James Rating 691/1000) which sold for a bullish $4.04 million after being on the market at $3.6 million. Two bidders in a crowd of 70 made strong sure prices on this part of Kooyong Road were confirmed at least at $3400 per sq metre. In our rate we could see why $4m was thought but we weren’t sure it was getting there. It did – and despite today’s drop in Bidderman nobody is saying the market is weak.

The second positive result was at 17 McKinley Avenue Malvern also with Bennison Mackinnon’s Tim Bennison (James Home Rating 862/1000). This was bought under the hammer for $2.46 million – an attractive house and land package – in a good Malvern street. Again two bidders in a crowd of 60.

Meanwhile negotiations are continuing on a very good oldie at 9 Kensington Road South Yarra - Alex Schiavo of Kay and Burton .This  was passed in at $4.5 million after an opening vendor bid of $4.0 million. Three bidders took the property up in $50000 bids to the pass in price.

The outcome of something new? Well unit 2 at 44 Canberra Rd Toorak – Tom Staughton of Kay and Burton (approx a year old) passed in on a opening vendor bid of $2 million while a new Christopher Doyle designed townhouse at 111 Charles Street Prahran – Sam Wilkinson of Kay and Burton also passed in on a vendor bid.

One result that shows the million dollar market is firing for the right home was 5 bidders fighting it out at 15 Nirvana St Malvern East – Adam Cashmore Jellis Craig with sold for almost $1,500,000. Solid.

Results not all that surprising as not  many properties are on the market after the holiday last weekend and the big weekend prior to that. We spent the week looking at newly listed properties most of which are due for auction on March 27. Over 70 homes with a million dollar price tag are expected to be auctioned in the fortnight so keep your eyes open there are bound to be some seller casualties.

Make Good Decisions

Mark Lawson of Jellis Craig; one of the quietest big achievers. Deep in thought and under the radar. Photo: Mal James

Leaving out Glen Iris – talked about that in Boroondara wrap - we saw 24 $m+ campaigns this week with a seller disconcerting 10 passed in at auction. That is a clearance rate of 58% and the main reason the overall James Clearance Rate is as weak as it is today.

Why? Price is why? Many vendors are dare we say it ahead of themselves. We are no longer convinced we are in an across the board rising Stonnington market.

Prahran: 14 Elm: Tom McCarthy and Philip Moore of Biggin and Scott getting the job done. 2 bidders. Bought for $905,000.

Pass-Ins at: Dunraven, Moss, Caroline, Thanet, Hawksburn, Washington, Toorak Rd, Kooyong, Wallace and Rockley. Heavyweight agencies Kay and Burton and RT Edgar having the majority of these pass-ins between them.

Another tick for transparency at auction – quote em sensibly and tell buyers if you are the only bidder you will buy it at the quote type auction with Lachie Fraser Smith of Bennison Mackinnon firing up a big crowd at Jordan St Malvern (report below)

8A Thanet Malvern (RT Edgar – Michael Ebeling and Jeremy Fox) an incredible townhouse which has been on the market for months was bought this week for closer to 3 than the original $4m ask. No harm in trying -still a good result. Nice home.

An unusual area that we don’t hear much about Doon St Prahran (just off Greville and Chapel Streets) saw an interesting development site sell through Dean Gilbert of Marshall White midweek for $2.265m or $4100 per sq metre. Good land price marker for the area.

Bidderman 2.3

We spoke to James Connell, Director of Marshall White who reported a very strong day with 27 out 31 auctions selling.  He said very strong – across the board. The next three weeks are big for Marshall White.

Auctions we attended today:

CAULFIELD NORTH, 13 Carnarvon Rd -Bought – five bidders
John Bongiorno, of Marshall White, jumped straight into this auction with a vendor bid of $850,000. Mr Bongiorno kept the auction moving quickly, accepting bids from five bidders and putting the property on the market at $1.080m. The crowd of around 50 people watched as the property sold under the hammer for $1.090m.

PRAHRAN, 8 Moss St – Passed in – no bidders
A huge crowd of more than 100 people saw Jason Scillio tend to proceedings at the auction of this Prahran house. Many of the crowd seemed to be neighbours who stayed and chatted after the auction. After failing to attract any bids after an opening vendor bid of $1.3m, the property was passed in.

SOUTH YARRA, 25 Hawksburn Rd – Passed in – no bidders
Andrew MacMillan corralled the crowd of 40+ spectators hoping for a spirited auction for this traditional Terrace. But the home alarm which heralded the start of the auction was the only other sound apart from Andrew’s vendor bid of $2.0 million.

MALVERN EAST, 17 Hughes St – Bought – three bidders
James Tostevin led proceedings which moved quickly after an opening bid of $1m. The property was soon on the market at $1.2m and sold upwards of $1.35m. Three bidders and a good crowd of 60 people

MALVERN EAST, 104 Brunel St – Bought – four bidders
In what was described as a very family friendly street, this house attracted a lot of interest. John Morrisby (Marshall White)was exuberant and generated a lot of bids from the crowd of around 65 people.
A vendor bid opened proceedings at $1.1m and the property was on the market at $1.3m. Four bidders and the property sold under the hammer for $1.43m.

TOORAK,2 Brookville Rd - Passed in – no bidders
Gerald Delaney quickly put his stamp on this auction with a vendor bid of $2.75 million. When a member of the audience suggested that the  bid of  was too high Gerald was quick off the mark with the  offer to negotiate with anyone who would make a bid. No one did and the property was passed in.

MALVERN, 56 Jordan St – Bought – six bidders
A massive crowd gathered for this auction to witness six bidders contest an extremely popular residence. Several times the property came close to sale with late bids breaking a few hearts. The property finally sold for $1.895m.

TOORAK,  57 Washington St – Passed in – no bidders
Iain Carmichael desperately sought a bid for this well finished apartment, but alas the pattern of the morning continued with no action apart from 2 vendor bids of $1.35m and 1.375 Million.Another pass in.

PRAHRAN, 14 Elm Pl - Bought – two bidders
After a subdued start, two bidders entered the fray taking the sale price of this property to $905,000. A good result for this tenanted, unrenovated house in a quiet pocket of Prahran.
Auctioneer was Tom McCarthy of Biggin Scott and a crowd of 34 people.

TOORAK, 22 Avenel Rd – Bought – three bidders
Phillipe Batters asked for an opening bid of $1.9 million and was rewarded with a firm offer, after which 2 bidders quickly took the price to $2.21million. A third bidder then joined in to take it through the reserve of $2.265 million. Bidders 2 and 3 then slogged it out with increments of $10,000, $5000 and then $1000 with the property being bought for $2.321m.

Glen Iris, 50 Flowerdale: If you can't stand the heat, get into the kitchen. Jellis Craig indoor auction. Bought for a very strong $2.155 million. Three bidders

Boroondara performed strongly this week, with around 20 $m+ properties selling at auction. Another two $m+ properties sold before auction. Those were 5 Carronshore Close Balwyn (Marshall White) and 26 Dower St Camberwell (Bennison MacKinnon).

I think the big suburb move in recent years has been Glen Iris – east of the freeway and west of the High St shops used to be, in buyer’s minds, “Ashie” or a poor man’s Malvern. But, time after time, including 50 Flowerdale Road below, we are seeing $2m+ buyers choose this area; in particular the rectangle between Summerhill and Glen Iris roads.

Auctions we attended this week:

CANTERBURY, 12 Byron St Passed in – no bidders.
A lacklustre crowd and a lack of bids saw this property pass in on a $1.7 million vendor bid. Auctioneer Tim Heavyside.

GLEN IRIS, 50 Flowerdale Rd Bought – three bidders.
A crowd of around 60 was invited inside to escape the heat during this auction. A vendor bid of $1.95 million opened proceedings and the property sold for $2.155 million. Three bidders. Paul Williamson was auctioneer.

CAMBERWELL, 85 Rowell Ave Bought after - two bidders.
Crowd of 100 people attended this auction, which saw two bidders fight it out in the heat. The property failed to sell at auction but did so later for an undisclosed amount. James Tostevin was auctioneer.

BALWYN NTH, 22 Harrington Ave Bought – two bidders.
Strong bidding between two people saw this property sell under the hammer for $1.225 million. Simon Lord was auctioneer.

KEW, 14 St Anthonys Pl - Bought after – two bidders.
Back and forth bidding between genuine and vendor bids dominated this auction in front of around 60 people. Two vendor bids opened proceedings, followed by a genuine bid of $940,000 and then another vendor bid of $960,000. After another genuine bid of $970,000, the house was passed in but later sold for $1.1 million. Auctioneer Christopher Ewart.

Design Smart

Malvern East: 74 Central Park: John Bongiorno of Marshall White schmoozing the crowd at a Park Auction: Passed In.

Surprisingly Malvern East’s Gasgoine Estate was dead as a doornail today with 3 pass-ins from 3 homes (0% clearance); as was Toorak with only 1 from 5 selling or 20% clearance rate but everywhere else was very strong.

Oliver Bruce of Bennison Mackinnon - a star on the way up. Watch this space!

Overall Stonnington which covers Armadale, Malvern, Malvern East, South Yarra, Toorak and we include Prahran was 68% on the 28 auctions we looked at.

Bidderman was  2.6 – which was still strongish considering the properties.

James Auction Reports

36 Peel St Prahran – Bought Afterwards – One bidder
About 60 people attended this auction, which opened with a vendor bid of $1.05 million. The sole bidder made a bid of $1.06 million but there were no further bids from the crowd or vendor and the property passed in at that price. Damien Davis auctioneer.

117 Peel St Prahran – Bought Afterwards – Two bidders
A genuine bid of $1.37 million opened proceedings here. Two bidders from the crowd of 30 people joined in and the property was passed in for $1.44 million. It sold afterwards for an undisclosed figure. Robert Vickers-Willis auctioneer

105 Stanhope St Malvern – Bought – 5 bidders
A bidder from the 80-strong crowd opened proceedings here with a $1.7 million bid. Five bidders bid strongly here, with the bids climbing quickly. On the market at $2.175 million, the property sold under the hammer for $2.4 million. Auctioneer Andrew Hayne

109 Claremont Avenue Malvern – Bought – 6 bidders
In front of 70 people, auctioneer John Bongiorno opened with a vendor bid of $1.8 million. Six parties joined in, bidding strongly and steadily to see this property on the market for $2.2 million and sold under the hammer for $2.31 million. Auctioneer John Bongiorno

6 Cross Toorak – Passed In – One bidder
A quiet auction here, with 40 people watching and just one bidder. Opened on a vendor bid of $4 million and the sole bidder added $20,000 to that figure. The property passed in and remains unsold at the time of writing. Auctioneer Jason Scillio

112 Charles St Prahran – Bought Before

47 Finch St Malvern East – 3 bidders
Just over 130 people at this auction, which opened with a vendor bid of $2.1 million. Three bidders joined it but it was not enough and the property passed in at $2.3 million. Auctioneer Justin Long

3 Forrest Court Toorak – Sold Before

74 Central Park Malvern East – No bidders
This auction was held across the street in Central Park, giving proceedings a festive, summery air. About 200 people enjoyed the warm weather and park setting but this did not translate into bids. Auctioneer John Bongiorno opened with a vendor bid of $2.6 million but there were no bids and the property passed in at that price.

Buy Well and Make Good Decisions

Malvern East: 10 Kerferd: Andrew Hayne bringing the hammer down at $2.315,000. 5 bidders.

There are a huge number of auctions and private sales in Stonnington this week and next week. The most dominating number is 3.875 – that is the average bidders at auctions we reported on below. 31 bidders at 8 auctions. Stock has increased and bidders numbers have actually risen substantially.

Glen Iris: 30 Great Valley Road: Mark Wridgway. Passed In $1.4m. No bidders

Here are a sample of our Auction Reports – these in the most part are randomly chosen.

ARMADALE, 2a Denbigh Road – 4 bidders
Auctioneer: Mark Stobart. A quick auction lasting about 10 minutes saw 4 bidders competing for this well renovated Edwardian. Bidding started with a genuine offer of $1,500,000 with increments of $10000 and $20,000 taking it $1,700,000 when it was announced to be on the market. Twelve more bids took it to the selling price of $1,756,000

ARMADALE, 24 Hume Street – 5 bidders
Good campaigning by Tim Brown to claim 5 bidders, solid performance by Paul Castran and “voila” this hidden gem is polished off with a sale at $1,135,000.

MALVERN, 23 Elizabeth Street – 6 Bidders
Auctioneer Mark Stobart, Bennison Mackinnon. Opening bid $1.45m Actual. On the market $1.6m last bid and sold $1.776m. Crowd 60. Bidders 6. Auction Vibe Steady, Auctioneer worked hard, progressive $1k bids between 2 bidders.

MALVERN EAST, 10 Kerferd Street – 5 bidders
Opened $1.8m and very slow off the mark again, finally picking up pace and bidders – five in total and a great result $2,315,000. Andrew Hayne of Marshall White was the auctioneer.

PRAHRAN, 56 Perth Street – 3 bidders
Lee Pellizzer ran a spirited auction with 3 bidders from a crowd of 60 to achieve a healthy $1,275,000 for this solid, well situated investment. ”

SOUTH YARRA, 6 Cromwell Road – 1 bidder – What only one!!!!
Small crowd of 30 people watched Phillipe Batters of Williams Batters place a vendor bid of 2.4m and then take a real bid of $2.45m at which point it was passed in.

SOUTH YARRA, 2 Walter Street – 4 bidders
Auctioneer: Paul Castran. Vibe good. Crowd 50. Bid start $900,000. On market $1,080,000. Bidders 4. Sold @ $1,135,000

SOUTH YARRA, 67 Darling Street - 5 bidders
Five bidders from a crowd of 30 made close on 80 bids to buy these three apartments (with an indicated annual rental of $90,000) on the slopes of Murphy Street for the very healthy price of $2,512,000 well above the indicated range of $1.8 – $2.2 million. Andrew McMillan launched the auction (his first of 5 for the day) with a Vendor Bid of $1,800,000. The ultimate buyer joined in with an offer of $1,820,000 and spirited bidding took the price to $2,000,000 – when a break was taken. Although the property was not on the market at this stage it quickly reached the reserve of $2,050,000 and then a new bidder joined in at $2.090.000. With further increments of $1,000, $2500, $5,000 and $10,000 the bidding raced to a great outcome for the vendor, auctioneer and buyer. ”
Buy Well

Strength of Character: Quietly in the background Andrew McCann of Bennison Mackinnon is bringing back common sense and decency to the Auction process.

It’s 6pm Saturday and the James Clearance Rate for million-dollar-plus auctions is 83 per cent on the 24 auctions we attended today.

The big news is on a very large day for auctions the bidder numbers per auction has actually risen dramatically to 3 per auction despite the interest rate noises. This is substantial and indicates to us the market is still moving in an upwards direction.

Chinese buyer interest definitely appears to be waning at present.

This week, we return to the issue of quoting and auction procedures. We would like to share a story that we believe has a message about ethics and about doing what is right. The star of this story is Andrew McCann, who manages the sales staff at Bennison Mackinnon. He is a driver of transparency and truth and he is a beacon in the real estate industry. Why? Because Andrew and Bennison Mackinnon have said “Enough is enough” and they have publicly stated that underquoting is wrong. Wrong like dummy bidding was wrong. Andrew and Bennison Mackinnon have made an attempt where others have not.

Andrew has driven Bennison Mackinnon’s PUBLIC policy of trying to, at all times, declare a quote that is representative of interest and has the vendor reserve within it. In doing so, they are returning us to the good ol’ fashioned fair dinkum Aussie auction days (thankfully without dummy bidding).

As you may or may not be aware, there are two types of auctions in Melbourne: yes, two, not one.

A. Bid to Negotiate auction
B. Bid to Buy auction.

They employ very different sales methods but both are called auctions.

Bid to Negotiate Auction
Marshall White, Jellis Craig, Hocking Stuart, Kay and Burton, JP Dixon and RT Edgar, to name a few, run auctions or selling campaigns for the right to negotiate, where they have no written price and no guidelines and/or no reserve declared within those guidelines. You bid for it to be passed into you or until you are told otherwise.

Bid to Buy Auction
Bennison Mackinnon auctions are auctions to buy and there is a price guide and reserve within that price guide. If you pay a set price, you buy it!

Is one right and other wrong?
No, both are legal. We are buyer agents; it is not our role to force down the throat of sellers or selling agents a message about how to run their business. It’s just that the majority of problems and damage to the industry’s image is caused through the Bid to Negotiate auctions as buyers do not like them and some are turning away from them when they have a choice eg Bid to Buy or Private Sale.

Why do buyers dislike Bid to Negotiate Auctions?

1. There are no written guidelines put out by the agencies on how Bid to Negotiate auctions work – they do not understand the process.
2. Bid to Negotiate auctions are open to the greatest misunderstandings when you get into the realm of verbal quotes and verbal reserves. After all, the contract you agree to when buying isn’t verbal and that is for a very good reason: to help prevent misunderstandings.
3. Bid to Negotiate campaigns waste time for many buyers, as they have no initial idea of affordability. Most buyers are time poor and their property searching time is valuable.

Which works the best? Bid to Buy with quoting and declared reserves or Bid to Negotiate with no reserves and no or misleading quoting?

Statistically, it seems impossible to prove either way - what is the yardstick?

Which one should you choose as a buyer?
Until recently, in Boroondara and Stonnington in particular, you had no choice, so you had to look at the home first and then manage, as best you could, the obstacles put in front of you. You only had Bid to Negotiate Auctions.

Which one should you choose as a seller?
If I was a seller, I would choose the system that maximised my price, within ethical guidelines. Either one is still your choice.

We don’t want to attempt to hide our bias: we are pro-openness (Bid to Buy with quote guidelines and reserves within those guidelines) for the majority of auctions; because we think truth is the best elixir for deals in our industry, not misunderstandings. Our agenda is we represent buyers – yes – but if you dismiss the arguments for and against as simply “Yeah, they would say that as they are buyer agents”, or because you think we favour Bennison Mackinnon, then that is your opinion. But, as a seller, you may have missed the main game. Trickery, misrepresentation, even ethical Bid to Negotiate does not seem to have a proven superiority over transparency and, in fact, there may be mounting evidence that you get a weaker price and less buyers to your door as a seller than Bid to Buy.

The question to sellers is do buyers perform better, eg will you get a higher price, when buyers are not informed or misinformed?

We as buyer agents buy a lot of homes – how does that work? Part of it is we inform buyers in a timely manner what they may need to do.

If there are the stats out there that show that buyers perform better when misinformed, please send them to us and we will publish next week, next month, next year.

We feel that, overall, the auction system is a superior way to sell when there are multiple buyers. This article is not about auctions per se; it is about the type of auction conducted.

Most people are aware of the Bid to Buy auction system: a home is quoted and the reserve is within the quote. You carry out your due diligence as a buyer and you bid if you think the quote is reasonable and, if you bid high enough within the quote to reach reserve or you bid over the quote, then you are the buyer. Yes, there still can be some shenanigans but they are few and far between. No system is perfect.

But it’s the Bid for the Right to Negotiate auction that we are examining in detail here, as this type of campaign seems to be the one causing the most angst and is more open to problems.

Firstly, Bid to Negotiate on some properties does work (after an auction pass-in, negotiation or in some cases interrogation can bring in thousands of extra dollars and it is the sole reason why we are engaged on some auctions).

We are not calling for it to be banned; with some sophisticated, high-end, or professionally represented buyers, Bid To Negotiate auctions can be most effective for the seller. We are just pointing out some of the “unloved” side that may in many cases hurt the overall price a seller gets.

In many cases, it is difficult for the buyer but it is also not in the seller’s best interests, as this Bid to Negotiate system has downsides for sellers that they may not have considered.

With a no guideline/no reserve “Bid To Negotiate” auctions, you alienate many buyers. What you, as sellers, are telling buyers, is possibly:

1. You don’t think we can handle the truth – meaning there is a reserve but either it is too high for buyers to contemplate or buyers are not sophisticated enough to be told it. Lovely, a buyer has $2 million to spend and the selling agent is telling them that the reserve may scare me so they won’t tell the buyers what it is.
2. You don’t know value yet: great, a supposedly professional selling agent has conducted a four-week campaign and has not been able to ascertain any value parameters for the property. Does that not speak volumes about the level of trust or skill between that agent and the buyer? Sellers, why are you hiring these people?
3. You are greedy. To sell your house to a buyer, you are going to squeeze every last drop out of the buyer. You are going to make it so painful that I almost don’t want to buy this house (more buyers than many sellers think simply walk away under these conditions). It is true that fear of loss is a driving force in our lives. But there are two other powerful forces from buyers: the fear of doing something stupid or that they will regret, and karma. Some people don’t act because they are scared of making a mistake and some people don’t want to buy a home that has bad deal vibes. Within the past month, we have had two homes that our clients were the highest bidders on but did not buy. Our clients have moved on and, in one case, the home was sold for less and, in the other case, the home remains unsold.
4. You still want more and that is your right. Fair enough.

That mistrust is what you, the seller, choose, when you run a Bid to Negotiate Campaign and it permeates through many things. There can be a real cost to you the seller when you hire an agent to conduct a less transparent campaign.

1. First, you get less qualified buyers through your door (granted this last few weekends makes a mockery of this – they are going through everybody’s door – but in normal situations). We know this is denied by any non-quoting agent, but we dispute this- many buyers simply do not look at your property if it has not got a quote on it. Our IT guy, Michael, just bought a home in Nunawading and he did not look at any properties that did not have a quote.
2. Sellers, ask around at your dinner parties – are people seeing more auctions where there is no bidding at all? Why is that? When we first saw this, we were puzzled ourselves but we delved further into it. There are some agents who are running auctions using this Bid to Negotiate method that are so low on the buyer trust scale that buyers just cannot bring themselves to bid and some, at the last minute, bid afterwards but many just simply walk away.
3. Quality Restaurant: Are you happier to go back to a restaurant that provides good and friendly and honest service or would you rather return to a restaurant where you are told it’s $15 for the scallops – they are good but when you leave, you are charged $25 instead. What about if you found another restaurant next door that tells you their equally well-cooked scallops are $25 and actually charges you that?

Running a Bid to Negotiate auction does have the potential for upside, however it also has the potential for downside when you consider on all properties there is only one best buyer and by your choice of auction you the seller may have alienated them.

Next step: the Negotiation (Ethical) / Interrogation (Unethical) part of the Bid to Negotiate Auction.

Fair, tough negotiation is totally respected by buyers and sellers alike. However, are you, as “squeeze the lemon dry” sellers, happy to condone any form of post-auction INTERROGATION?

I mean, nobody is going to shed any tears at a post-auction negotiation if I’ve got five heavies breathing down my neck and fair enough.

But if you are a “squeeze the lemon dry seller” with a Bid To Negotiate campaign and an unethical selling agency, what rules are in place for the post-auction interrogation. Put the shoe on the other foot: what if it was your 28-year-old daughter who was looking to buy her first home? She got a pest and building inspection ($600 to $700) and legal check and was told the home was $800,000ish and also got her finances in place.

She turned up to the auction and bid $845,000. The property is passed into her and she is taken inside by three men in suits.

There is no female present and no water is offered and she is told firmly that if she doesn’t pay $1.05 million, then her dream home will be sold to another buyer waiting outside.

She feels totally intimidated and she was given no warning of this – she thought she was going to a fair dinkum auction, not an interrogation. If she knew it was going to be like this, she may …………

How long does this go on for? PRESSURE. PRESSURE. PRESSURE. Is this a form of assault? Is this harassment?  What happens if she agrees to something she can’t afford because she is so intimidated (deliberately)? Is this coercion – is the contract still valid?

Can she sue you the owner or sue the agents? Is this a legitimate contract?

Should she have got a buyer advocate? Not the real question. The real question to you, as sellers, is: is this right? Is this particular Bid to Negotiate auction how you want to be represented?

With ethical sellers, you now have a choice. Bid to Buy Auctions with ethics. Buyers may still have to face very difficult negotiations with Bennison Mackinnon, but they also have a choice in that they can pay the reserve or asking price.

And, please, we have never witnessed or heard about any of the above intimidation tactics happening at any Marshall White, Hocking Stuart, Jellis Craig, JP Dixon, or Kay and Burton auctions. We have made up the example to illustrate a point about extreme ”squeeze the lemon sellers” in an unregulated and unethical Bid to Negotiate auction. In the above instance is it OK for a selling agent to say I was only operating under sellers instructions.

A strong argument as to why agents don’t put a quote/reserve out; is that it limits the buyers.  We agree but the reverse is also true. We have seen no provable evidence that misinformation or no information outperforms, across the board, genuine information.

We argue with buyers saying you sellers and selling agents are not idiots; so now we ask the question of you, do you think that buyers are idiots and don’t fight back against these tactics?

There are a number of strategies such as:

1. multiple bidders,
2. price with conditions, and
3. raise, raise and then lower strategies. Try getting slightly unreasonable with us and we think we are the only buyer – we will rip back a lower offer than before – that’s right, we go backwards – we will and we have – it is just that maybe your selling agent has disguised it and/or we are very polite about it.

I think some people misunderstand our role or our demeanor at James Buyer Advocate at times. Yes, we are polite and, yes, we have tremendous respect for the negotiating abilities of agents at Marshall White, Jellis Craig, Kay and Burton and so on. But we are not doormats on the buyer’s behalf. We have represented hundreds of buyers and most of the deals are done with respect, aided by a relationship and on a win-win basis; however, the auction practices of no written quote guidelines related to the reserve are counterproductive to our industry. We don’t just “whinge” about them, we develop strategies to deal with them. And so do many other buyer advocates and experienced buyers.

Sellers, you may not believe this but it “ain’t all about the money” for many buyers and we have always thought, and been prepared to pay, the strongest prices when the light is obvious at the end of the tunnel; ie when it is on the market or there is a clear price and rules. We often have two prices – one for openness and transparency and one for smokes and mirrors – guess which one of the prices our clients give us is the higher?

Our clients and many buyers can handle the truth when it is put forward.

We applaud Andrew McCann and Bennison Mackinnon for their ethical and also smart business approach in Bid to Buy auctions with quotes and declared reserves. Is your selling agent offering you the choice of quotes, reserves within the quote to bring more informed buyers to your door or are they telling you that the only way to run your auction is to keep everybody in the dark?

Buy Well

Mal

PS Andrew McCann 0414 643 744 or any other Bennison Mackinnon agent 9864 5000; ring them and hear what they have to say when you are about to list your home for sale.

Brighton East: 1 Regent Street: John Pollard of Woodards. Crowd 100. 3 bidders. Bought $1,853,000

Armadale: 8 Alleyne: Crowd of 90: 4 bidders; Bought for $1,515,000. Justin Long directing proceedings

Well done, Iain Carmichael. Well done, Richard Mackinnon. Well done to all directors of Bennison Mackinnon Armadale.

Toorak: 9 Millicent: Sold last night for around $4m. Jeremy Fox must be gettng camera shy at auction: Thats 2 pre auction sales in 2 weeks.

Have you noticed a change in the air in Stonnington, have you noticed the new hot Armadale company to sell your home through? Bennison Mackinnon. They have taken a stance on buyer respect and it seems to be paying off in spades. They do seem to have more listings we want to buy.

Early days, I know, and fingers crossed that they do not somehow snatch defeat from the jaws of victory. But they have recognised that buying a home is about win-win. A win for the seller and a win for the buyer.

They have started quoting sensibly and, seemingly on the homes they do provide a written quote for, then the reserve is within the quote range.

Over the past decade, I have found all my dealings with Iain Carmichael, Andrew Macmillan, Elliot Gill, Mark Stobart, Tim Bennison and Andrew McCann to name a few to be straightforward and I now trust them (I hope this does not come back to haunt me) that when they put a written quote on the property on the internet I now actually believe the reserve is within that range, if they confirm it to me when I ring.

Sure, we understand that things change, so we check the internet regularly to see if the quote has changed but there seems to be a genuine attempt to get quoting right or at least better.

We sincerely hope they continue. Of course our company has an agenda – really what is it? We do not receive commissions from Bennison Mackinnon – ever (or from any company for that matter). We cannot ever tell you a time when we found post-auction or private sale negotiations any easier than with Marshall White or Jellis Craig or Kay and Burton.

Here is how their new policy is working practically.

We bought this home yesterday. 2 Beaver St Malvern East.

James Home Rating 703 out of 1000: Classic Gascoigne home with most original features in good order. Good land size and car access to the rear and house has such a wonderful street presence. A fair bit of work ahead here but very hard to go wrong. South-facing rear is a concern in terms of passive solar gain in winter, yet with a smart rear renovation, this issue can be addressed in some way. The other concern is that its close to Tooronga Road. Rated as land only here – could easily rate well into the 800s when renovated.

James Control Price: Dirt ($2,006,000) + House ($400,000) = $2,406,000. Multiple sales in area to show land price eg 25 Central Park Road. Land content 83 per cent.

James Auction Report: As expected, given the offering, a good crowd of 70 people saw auctioneer Iain Carmichael open here with a $2 million vendor bid. Two bidders joined in and quick bidding ensured a result. Announced on the market between $2.1 and $2.15 million, this property sold above the reserve and under the hammer. Not an unexpected result: this prime Gascoigne Estate property, ready for renovation, was worth fighting for. Bought for $2.42 million.

James Post-Auction Examination: As expected if there was competition. The quote was $2 to $2.1 million, and the reserve was within the quote. The owner wanted to sell and was straighforward about his needs and he got it sold. For the record 2 Beaver last sold with no improvements at the peak in late 2007 for $2.1m. The sale of today represents a 15% increase during that time.

We did not buy this Benmac home below two weeks ago and it remains unsold:

17 Hunter St Malvern: In this instance, we had two prices, one for on the market and one for pass-in.  We were notified of a signifcant reserve change – we bid – but only up to a level our client indicated as fair. There were other bidders but it was not declared on the market, so no sale. Of course, they may get they price – but one suspects it may be lower than what would have been paid under auction market conditions.

You may think this is some con – fair enough – OK – your business. If quoting gets under control in Stonnington and Boroondara (like it is, last time we bought, with say Nelson Alexander in Carlton or Hodges in Bayside or Hocking Stuart in Bentleigh to name a few) – which it can through the leadership of Bennison Mackinnon and Marshall White, Jellis Craig, Kay and Burton and RT Edgar, then, as James Buyer Advocates, we will lose a percentage of our business from clients who hire us simply because they do not trust agent quotes. What is our secret agenda then please?

Real life yesterday: I was under the pump yesterday: had an auction to go to in Rosanna, a meeting and then the Beaver St auction and then a family commitment. I also had a new client in Malvern that I needed to give some feedback to. Hand on heart, I went to four Bennison Mackinnon properties because I felt I would not be wasting my time, as I knew roughly where the thoughts of the vendor were.

Sellers – more buyers will come to your home when buyers know a sensible guide price for it and they trust the agent. We paid $300,000 more than the reserve yesterday on Beaver St and we were happy, the client was happy, Bennison Mackinnon were happy and the seller was happy.

On some occasions, we have a two price strategy. One price for on the market and one price for pass-ins – guess which price is higher? When you think about listing with an agent, think about an agent who can get more buyers through your door – the agent that will do that will be the one that buyers can trust and have trustworthy price indications. As a buyer, if you have 20 homes to look at on a Saturday and five have known, believable price guides within your range, which five will you look at?

This is not to say that, on some properties in this current market, that no quote is not the right thing. High-end homes; quirky homes; runaway demand homes - no quote is advisable and sensible. I mean look how wrong we are on some homes with James Control Prices. As a vendor, you have the right to have any or no reserve – but, on some homes, to exercise that right, you may be paying a very big price when you do not get qualified buyers to look at your home.

Sellers, we are not saying that across the board Bennison Mackinnon agents are better negotiators than Marshall White or Jellis Craig or Kay and Burton agents. What we are saying is that by putting a quote that represents your price wishes, adjusting it along the way to reflect buyer/agent feedback and advising a reserve prior to will get more buyers through your door than if you did not advertise a credible price reserve (eg. unless your reserve is well above market – which you rarely get and, more often than not, torpedo your selling campaign).

Sellers, can we also add that over the years, despite what you may be told, that many buyers will pay a higher price for surety – eg when buying they know the price they have to pay rather than some wishy washy crap about my vendor has a buying range.

Sellers you have a real choice now – a company like Bennison Mackinnon will put out sensible price guides with your reserve in it if you so desire and we as a buyer agent are going to support that company by directing as many buyers and clients to their homes as we can - and we will actively support any other company within Stonnington, Bayside and Boroondara where they are making a genuine attempt to inform and not mislead. Not expecting perfection just integrity. Of course for our clients we will still look at all homes – it is just Ben Mac homes will be first cabs off the rank if they are the only ones with price guides with integrity. Life is short.

We as a company have the utmost respect for the people at Marshall White and Jellis Craig and Kay and Burton and so on and what we say here may only hurt our relationships with them – please we do not wish to – we really do respect many of the agents that work there. As a whole they are great agencies. But this is too important. If we as an industry can get quoting right and maintain the integrity of the auction system then we will have the best, fairest and MOST RESPECTED (through its transparency) system for selling homes in the world. And that has to be a good thing.

Surely agencies are smart enough to come up with a system that maximises the interests of their clients and buyers. Agents should talk price.

We support our competitor; David Morrell of Morrell and Koren on this issue and his aggressive stance. Low or misleading quoting is counterproductive and very damaging to our industry. Maybe it is not up to the regulators, maybe it is up to our industry to get its house in order.

Bennison Mackinnon seems to be genuine and trying and we trust Iain Carmichael and we are sticking our necks out here to support them so blatantly.

We at James Buyer Advocates have a new policy for Bennison Mackinnon if their reserve is within their quote range - with our clients permission we will adopt a far more transparent bidding modus operandi at Bennison Mackinnon auctions and any others that care to show buyers respect.

Apologies if we are over the top. Buying a home should be an enjoyable meaningful experience (to quote Trudy Biggin) – one that does not have to be full of mistrust – one where you can focus on the home and not the personality of the buying or selling agent.

Like umpires; the less you notice about us (buying and selling agents) and the more your see of the game (homes) the better for you (seller and buyer). It should not be about us.

Thank you directors of Benmac Armadale, a breath of fresh air. Please continue.

Stonnington had a strong weekend with most of the 10+ auction selling before or at auction. The other strong sale was 9 Millicent Toorak with Jeremy Fox of RT Edgar, selling the night before believed to be over $4m and if you said house value was $800,000 then land ended up $3600 per sq metre continuing the strong run of the last few weeks of this area.

Buy Well

Mal

Glen Iris, 27 Scott: One of our favourite auctioneers, Rodney Morley, actually took a bid from this car but it wasn't enough. Passed in at $2.15 million.

Iain Carmichael is a tough cookie and one of the best, if not the best, auctioneer in Melbourne. We exchange thoughts often and I find that enjoyable. The discussions are always quick, robust and, occasionally, I need a disprin afterwards. But I would never say that Iain gives you anything other than his genuine opinion and that, to be frank, is why we often seek it. Not always one I agree with, but always one that is genuine. There is more to Iain than you may think if you just saw him at a difficult auction. Iain’s contact number is 0418 850 988.

Mal: Morning Iain. Nice little stick it up ‘em ad in the Melbourne Weekly re Price Quoting.

Iain: Morning, Mal. Well, it’s the truth.

So my next question that the heat on quoting seems to have gone is not going to get a standard response?

Correct. The heat on auction price quoting is full-on! Buyers should expect to receive a guide as to what vendors expect. Too many agents are ignoring buyer sentiments at their peril. What is good for buyers is good for sellers! Good agencies will know what their vendors expect and will make it easy for buyers to get this information asap.

I read your ad where your survey says 97 per cent of buyers prefer to see auction advertising containing price ranges. What about the blow-up a month or two back where it seemed all buyers were saying quoting was a waste of time.

Accurate and/or sincere quoting, not misleading quoting, is what buyers want and 47 per cent of buyers have said they have chosen not to view because it did not have a price estimate.

But, Iain, you can’t get it right all the time.

True, but, like you do in your Buyer Control Prices on your website, you can try and get it right, Mal, and make a genuine attempt.

And what about those that say it limits the vendor’s price?

Buyers deserve a transparent and open approach. Look at how well the auction system now works. Is it open and transparent, Mal?

Yes. Geez, you’re full-bore again Iain – obviously the holiday treated you well.

Yep. A lot of good properties coming on in the next few weeks and we’re ready to go. Next question!

The market?

Market prices up overall around 20 per cent from March 2009, past six months, ie $2. million = $2.4 million minimum. Top end 25 -30 per cent.

And until Christmas?

Here to Christmas – more of the same. Power on through Spring Carnival and maybe a 5 per cent rise for the final quarter of 2009.

Strongest market segment ?

No doubt at all, family homes over 700 sq m in Malvern/Toorak.

Weakest market?

No idea, too busy working in our own markets!

Iain, that’s a weak answer.

It’s true, although I’ll concede highly overpriced is not getting there, even with us.

Auction bidding is in the news – your thoughts?

If you want to buy, put your hand up or risk missing out. That’s what an auction is about. If you are not going to bid on the day, you are just an observer – which is fine, but don’t whinge about missing out after it is sold!!!

Just like that, hey!

Yes, Mal, it is as simple as that. And if they can’t do that, then get a professional to help you.

What, like an advocate?

Maybe. Next question!

How much effect is money from mainland China having in your market and do you think that money is here for the long haul? Another question: has there been a bigger influence on price recently?

We have experienced a significant increase in buyers from Asian origins. In recent years, our internet sites have provided greater levels of inquiry than traditional press mediums and this is likely to increase exponentially in the years to come. Fairfax and other major press outlets will need to move quickly from ink to digital. Last to move loses!

I think that was an answer to the question.

Yes, increasing Asian buyers and one of the key reasons for price increases. That and lower stock levels.

The most humorous or strangest thing you have witnessed this year at auction?

Actual event – auction, East Malvern, July 2009. Auctioneer, knowing that two buyers are keen, passes in on a vendor bid of $1 million. Both buyers front up to pay ‘post auction asking price ‘ of $1.06 million. Ten minutes later, a well run private auction  yields $1.15 million for the delighted vendors. Moral of story – BE THE HIGHEST BIDDER – at law, the agent must negotiate with you at the reserve price. (in the above case – $1.06 million and not the eventual price of $1.15 million. When will buyers wake up!

And,Mal, it happened again at Balnarring last month. I rarely do this but I said first bid over my $1.15 million vendor bid buys it. Nobody bid. The seller wanted it sold but he firmed up post-auction and the eventual buyer (who was in attendance on the day) paid $1.3 million a week later.

Yes, Iain, but you just don’t bid at all costs.

True, Mal, but when it’s well priced, you should and we are in a rising market.

Agreed. Any other pearls of wisdom?

To property sellers – appoint the best people, within the best agency, and trust them to do a great job. Pay a full fee for quality service and enjoy the benefits that a great result bring you. In reverse, if you pay peanuts, you get monkeys!

That was your free plug, was it? Thanks, Iain, for your thoughts.

Enjoy your day and good luck at auctions tomorrow.

Same to you.

Bentleigh: 22 Yawla. Nick Renna - Mr Dynamo firing up a huge crowd of 100 to a 4 bidder final result of $1,065,000.

It’s 6pm Saturday and the James Clearance Rate for million-dollar-plus auctions is 68 per cent on the 19 auctions we attended today.

In this week’s Market Wraps, we are most appreciative of the time and effort Scott Patterson of Jellis Craig (Boroondara), Iain Carmichael of Bennison Mackinnon (Stonnington) and David Hart of Buxton (Bayside) put into answering our Market Wrap questions. As this weekend is a quieter weekend, with weaker homes and land sales and smaller turnover, we thought the focus should be on a Q&A with quality, key agents on what to expect between now and Christmas.

Please note Chinese translation pdf to the right of this article.

But onto our Market Insight. Buyers – a time to perhaps keep your head?

We think the hot topic of today is definitely buyer panic. You can see it at auctions, you can hear it in buyer voices at opens and you can feel selling agents are thinking we are back to 2007 buyer mindsets.

As a buyer, you can panic if you wish; that is your prerogative, but there is no need to do it and there is no value add for you, the buyer, while you are in that state of mind.

Yes, the market has moved and, yes, it is still rising and, yes, it is hot. Many credible agents have been advising for some time that “now” was a good time to buy – that “now” was last year and early this year – that “now” was five years ago. We are at another “now” – now. So is it a good time to buy or should we throw up our arms and say it’s all too hard?

Look, why not throw up your arms and give up? Or why not just go and buy something – anything – just something to get off the treadmill of inspections, bid and miss.

Why not? Because such a decision could lead to a lesser, unhappier life for you and your family.

When the pressure’s on, when – to use sporting parlance – you are in the premiership quarter or, if you are a golfer, when you are on the back nine on Sunday, or, if you run marathons, when you hit the wall at the 36km mark, when the real pressure is on, do you achieve anything by giving up? No. The “winners” are those that can keep their head and make good decisions under pressure.

And there is no doubt that buyers in the $1 million to $4 million range in Inner Melbourne are under considerable pressure right now.

So let’s look at the pressures. Let’s examine what is happening in the market and then let’s look at some practical solutions.

Pressure No 1: Overseas Demand: Scott Patterson from Jellis Craig (the full interview, full of interesting insights, is in our Boroondara Wrap below) pointed out broadcaster Neil Mitchell’s article in the Herald Sun examining our population increase as reported by the Bureau of Statistics. (It was a good article: http://www.heraldsun.com.au/opinion/how-many-is-too-many/story-e6frfhqf-1225780951508). But let’s move on from the article’s point as to whether we should be encouraging population increases. The fact is that we are actually having migration increases, have been having them for a long time and, from all reports, we will continue to do so for decades. Population is the key to Demand and Migration is the key to major price shifts (new ideas, new money, new price levels). So what evidence can we see of this in the market? The clearest evidence is at auctions (if you attend them) and statements from Marshall White and Jellis Craig that 25 per cent of their sales over a million dollars in Boroondara (Hawthorn, Kew, Canterbury) are to Chinese or Asian buyers.

Pressure No 1a: Local Demand: We are experiencing a mini baby boom, more family homes now, and, in 20 years’ time and beyond. That will put more pressure into the housing market. But, right here and now, local demand is very strong and that is best evidenced by the fact that, despite the world being in the greatest recession/depression since the last depression/recession, there is genuine talk of interest rate rises in Australia from Glenn Stevens of the Reserve Bank. This, in our opinion, proves that people are feeling good, acting on it and this is shown locally in, say, Bayside (Brighton) where there are some overseas buyers but nowhere near the same extent as in Boroondara (Kew, Balwyn etc); however the Bayside market is buoyant and also rising steadily and, while not at the same level as Inner Eastern, is fast approaching the 2007 price peaks and will, in all likelihood, surpass them before Christmas. Bayside demand is still largely driven by local buyers.

Pressure No 2: Supply: While right here and now in early October 2009 we are seeing some good supply, this, according to the best advice from selling agents, is a small window created by the Melbourne sporting and religious calendar. In Spring, there are three key weeks for stock: the first week in September (to get it sold before Grand Final), the first week in October, after Grand Final (to get it sold before Melbourne Cup), and the first week in November, after Melbourne Cup (to get it sold before December and Christmas). This week, we have experienced the second of the three one-week bursts and there were literally hundreds of homes brought onto the market in the past week. However, there will not be that number next week or the week after. We are in an overall low stock environment right now and that is confirmed by figures such as from Scott Patterson of Jellis Craig: year to date Jellis Craig in 2007 – 909 auctions; YTD in 2008 – 794 auctions and YTD in 2009 – 700 auctions. Marshall White, the other dominant Boroondara agent, reports similar drops in activity. It is the same in Stonnington (Toorak, Malvern etc) and Bayside (Brighton to Albert Park).

Why is this happening?

Three key reasons:

1. Overseas buyers find it easier to buy than last year and do not have another home to onsell. Increased demand and reduced supply.
2. Local buyers are buying homes for their future generations. Increased demand and reduced supply.
3. We are an increasingly wealthy society and homes are seen as a store of wealth and many can afford to hold multiple homes as investments. Increased demand and reduced supply.

As an aside, reasons one and three are actually encouraged by government through FIRB changes and the negative gearing tax regime.

Adam Smith, in his book Wealth of Nations back in the 1700s, said, and we, as agents, witness this every day; when demand goes up and supply goes down, then price, without artificial interference, will also go up and the stronger the demand and the weaker the supply, then the greater the price increases across the board.

So, for buyers, the pressures are very real. But you know that.

On top of these pressures, buyers who read and listen may also be influenced by commentary, some of which is not necessarily well informed. These comments, while well meaning, can also spook “panicked” buyers into changing course.

Remember the doomsayers of last year? Well, the world didn’t end.

Equally worrying can be seemingly well-informed commentary such as an article I read recently by Tim Lawless from the respected RPData. It stated “That capital growth apartments are virtually on par with detached houses … This puts to bed the myth that houses appreciate at a faster rate than units.” (See http://www.realestate.com.au/doc/Resources/News/tim-lawless-units-versus-houses.htm).

While by some statistical twist this may appear true, in practical terms we strongly disagree that this is a helpful or relevant comment in Inner Melbourne. And these sorts of statements may encourage the wrong buying action.

Across the board in Inner Melbourne, the above statement is not true and, in fairness to Tim, he may not have meant it to be read in such context. Also in fairness when you look at the reported $15m paid for the Melburnian Penthouse this week through Ross Savas of Kay and Burton, or you just look at the incredible growth in some bottom rung 1 and 2 bedroom apartments in say Hawthorn recently, you may correctly argue that some apartments are money spinners. And finally it is fair to say that a small number of investors dealing in multiple apartment purchases with very sophisticated purchase and “flip-on” or purchase and hold strategies have made excellent returns. But overall if the article was meant to imply that apartment buying was the almost the same as home buying in terms of capital growth ceteris paribus (with other factors being equal) then we find the article not helpful and therefore we feel these sort of blanket comments, around one selected statistic should be qualified a lot more than what they are.

Labouring the point a little, yes it is true that there are some well performing apartments (yes, we buy apartments) particularly in the suburbs, particularly low rise and particularly brilliantly located ones. So, yes, some apartments have performed very well BUT there are vast numbers of apartments out there that have been investment dogs (for all except the developer) and, if these sorts of articles encourage younger people (who can afford to buy either land or apartments) to buy apartments instead of well-located land as their new family home, then it is doing a great disservice to those people if longer term financial outcomes are important in their considerations. I will leave this for another day, but I ask the question: what about resales v new apartments in the RPData figures? What about Docklands, St Kilda Road, half of Port Melbourne (eg the big blocks not on the beach)? What about suburb by suburb comparisons, such as below?

Government – Valuer General Median Prices:

Hawthorn

2003 Homes $662,250; 2003 Apartments $313,700

2008 Homes $1,292,500; 2008 Apartments $372,000

Five-year increase homes – 95%.

Five year increase in apartments – 18%.

Toorak

2003 Homes $1,450,000; 2003 Apartments $430,000

2008 Homes $2,600,000; 2008 Apartments $560,000

Five-year increase homes -  79%.

Five year increase in apartments – 30%.

Brighton

2003 Homes $886,000; 2003 Apartments $475,000

2008 Homes $1,550,000; 2008 Apartments $590,000

Five-year increase homes -75%.

Five year increase in apartments – 24%.

Port Melbourne

2003 Homes $560,000; 2003 Apartments $475,000

2008 Homes $775,000; 2008 Apartments $478,500

Five-year increase homes – 38%.

Five year increase in apartments -1%.

Do these figures prove we are right and Tim is wrong? No, we respect the work of RPData, and we use their stats. What this proves is that figures can be made to say anything. Practically speaking, and all things being equal, we would encourage all young buyers to think position first, land second and building (apartments) third. Of course, with spousal approval being even more important than position. If your buy is more than emotional, consider land before apartments, if you can afford it.

Wars are not fought over apartments; they are fought over land. And finally with any data analysis (including ours), if you throw enough ingredients into every different soup, then they all taste the same.

Please don’t panic and change course or just react to a headline because you are under pressure!

But I digress. Continuing with Buyer Pressures which are real and increasing. Do you give up or make poor decisions? Is your case hopeless?

Practically, let’s look at a sample of what we have bought in the past month of September. These homes are worth a million dollars or more.

Northcote (Jellis Craig): couple who wished to move from Outer Melbourne, considered Kew etc and then decided the Fairfield area was more affordable. Great purchase at auction: a lovely renovated period home, with good land content, near shops and Fairfield station. Over a million.

Toorak (Marshall White): Over $2 million, this home had been sitting around for months and months with several agents as well. With $300,000 spent on cosmetic renovations, this home will be simply stunning and will have made up for any market movement in the six months it took to find. Land content more than 70 per cent of the price. We love quality stale properties when the market meets the asking price.

Sandringham (Biggin and Scott): Lovely family home bought at the second attempt to buy for around a million dollars. Good position, street, land content and north-facing rear.

Brighton (Kay and Burton): Family home twice offered, bought after four weeks of negotiations for a fair price to both buyer and seller. Good selling agent work. Over $2million.

Canterbury (Marshall White): More than $3 million. Block of land in Canterbury’s Golden Mile bought after two previous attempts for this client. Great land.

Balaclava (Beller): Off-market: Great initiative by buyer who found the home with a letterbox drop and then asked us to negotiate with the appointed selling agents. Robust but pleasant negotiations and a fair price to both parties. Great land and well done to buyers who did something different but then were smart, not cute, when it came to doing a deal. More than a million dollars.

Hawthorn (Jellis Craig): Off-market: Boardroom auction. Flexible buyers who had tried with us to buy three homes before – kept their nerve – adjusted their PPP (Price, Property and Position) and still bought in a good location with a reduced budget and it’s still a good solution for an expanding family. Over a million.

Hampton (Hodges/JP Dixon): Over $2 million. These clients had been looking for more than two years (with us). Saw it and we bought it pre-auction. In one of Melbourne’s great locations (Hampton Beach, Railway, Shops and Brown Cow). Good land and a brilliantly designed and built home.

South Yarra (Hocking Stuart): Over $1 million. This was the clients’ second attempt with us, but they stayed true to what they wanted and could afford and just shifted suburbs a little. Good land content.

But, please, we are not claiming a perfect strike rate – a sample of where we missed at auctions. Richmond, Camberwell, Surrey Hills, Glen Iris, Mont Albert and Malvern during September in various $1m to $4m price brackets.

Our point is that the successful buyers didn’t give up (not even after two years) and still bought sensible (yes some strongly priced) well located, good land content, workable floor plan properties.

It’s not the price now (within some parameters), it’s the quality of what you buy that will protect you into the future.

Please for young people in particular (if you haven’t nodded off) all of this is to encourage you not to panic, but to stay your course and to not jump at shadows. The market will not be easier in the future; it will be harder – act now (if it makes sense – if not keep looking till it does). When you act do so with streetsmarts. Don’t bury your head or just buy or, worse still, buy crap. Think!

1. Understand clearly what you want emotionally (room for future children?) and financially (growth for your next purchase?) both now and in five to 10 years.
2. Make a plan and, in that plan, understand the value of land content, happy wife and happy life, floor plan flexibility and position.
3. Act on that plan with an accurate assessment of your needs match and values.
4. Negotiate to buy well, not buy poorly or just keep missing out.
5. While understanding that selling agents work for the vendor (always), we would still encourage you to listen to quality selling agents that do tell  truths. We learn more off them than any other group of property professionals.

Finally, we know you are under pressure. While it is almost always better to miss an opportunity than make a mistake, sometimes continually missing good opportunities becomes a mistake.

If all else fails, ring us.  We may be able to help you achieve your dream.

Apologies if it’s sounding like a lecture – we are genuinely trying to help.

Stay cool, buy well and be brave (at the right time).

Mal

PS We all really enjoy the people that come up to us at auctions and open for inspections. It’s good to meet you.

Toorak, 78 Clendon Road: Our job has its moments! The absolute joy of buying a dream!

Malvern, 81 Stanhope Grove: Iain Carmichael guiding his buyers to $2.52 million.

Of the 19 $1 million-plus auctions we looked at today in Stonnington (inc Glen Iris) 17 sold, or 90 per cent.

Couple of highlights:

37 Armadale St Armadale with Bennison Mackinnon, which had been hanging around for a few weeks post-auction, sold for, we believe, a tick under $2.3 million.

9 Valley View Road with Maddie Kennedy of Marshall White sold for $2.2 million. Some would say almost land only. 1083 sq metres. Does that confirm land at around $2000 per sq metre here? Yes, we think so, with last week’s sale at 18 Valley View around the same sqm rate, allowing for that home to have value at $800,000.

6 Kensington Road in South Yarra - Jeremy Fox of RT Edgar

James Home Rating and Comments: 777 out of 1000. Looks a really good period home with a first-class renovation. Good land size, space and flow – good separation of bedrooms – great location. If I keep talking, I’d sound like a selling agent – certainly worth a look.

James Control Price: Dirt $3,960,000 + House $1,100,000 = $5,060,000.

James Auction Report: A small and quiet gathering of 40 people here. Auctioneer Jeremy Fox was offered two crowd bids. The opening came from the crowd at $3.85 million and was topped later by a bid of $3.86 million. The property was passed in at this price with negotiations with the highest bidder hoping to generate a sale post-auction. Sold figure believed to be around $4 million.

James Post-Sale Examination: We got it wrong and underestimated the negativity of the next-door flats and we’ve talked about this in the main Market Insight article.

26 Chesterfield Avenue Malvern - Joanna Nairn of Marshall White

James Home Rating and Comments: 663 out of 1000. Good solid home in a premier part of Malvern. South-facing rear on a small block does reduce light. Bedroom set up works well, although would have liked to see one downstairs. A real feeling of solid establishment values when you walk through and very well presented. A typical 1920s/1930s that has been very well finished. Despite tandem garaging, it is hard to fault the building.

James Control Price: Dirt $1,893,000 + House $1,200,000 = $3,093,000.

James Auction Report: Auctioneer Justin Long reported in, as we got caught at another auction. Two bidders, passed in at $2.95 million. Vendor is well north of that.

James Post-Sale Examination: At present we and the market agree but the vendor does not. This home was bought off-market not that long ago.

35 Chatsworth Prahran - Chris Stoupas of Bennison Mackinnon

James Home Rating and Comments: 641 out of 1000. A beautiful period home with good space and a good feel.  A car parking issue is the only drawback (and may make it hard to sell) from this classic Victorian home and Chatsworth is THE Prahran street.

James Control Price: We didn’t pre-auction price it.

James Auction Report: A big crowd of 120 people here but a quiet auction. Auctioneer Damien O’Sullivan kicked things off with a vendor bid of $2 million but silence followed. The property passed in at that price and several interested buyers hung around to talk post-auction.

James Post-Sale Examination: If you’re talking $2 million, you need a car park.

Buy Well

Robert Vickers-Willis of Abercrombys getting 41 Henry St over the line at $1.036 million

TooraK 10 Irving Road. Sold $3.575m. Kevin Sheehan enticing a lazy $7771 per sq metre

Spoke to Bennison Mackinnon’s Iain Carmichael this afternoon – tell Mal you won’t find me saying I can see a lull that you may have implied a few weeks ago. Very strong is my read of our and other company’s selling results and don’t worry I was about a million out on 10 Irving Road as well. Incredible!

Some very strong results again with almost all properties selling and selling well – some incredibly well highlighted by

10 Irving Road Toorak – Kevin Sheehan of Kevin Sheehan Property

James Home Rating 644 out of 1000. Location, location – really good spot for a townhouse, small house development. This should fly if at market.

James Control Price: Dirt $2,300,000 + House $0= $2,300,000 Is the market going to pay a strong price for a smaller block in a prime position – is the market right now as strong as $5000 per sq metre for a townhouse block?

James Auction Report: This auction opened with a genuine bid of $1.8 million and four bidders from the crowd of 70 joined in to push this to a sold price of $3.575 million, however there were two main bidders from $2.2m. Auctioneer Kevin Sheehan

James Post Sale Examination: Wow we were only a million out and as Kevin said post game – the power of a good old fashioned auction where two people wanted it badly and had the resources to get it. Kevin also stated he thought anything over $2.2m was a buyer premium. This is $7771 per sq metre but we are not adjusting our sqm rates on this alone – exceptional circumstances another Lambeth Armadale – Urquhart Hawthorn – Heathfield Brighton all rolled into one and so we have a new legend auction 10 Irving Road Toorak. This property because of its desirable location shows the power of inner Toorak and may well have achieved this result even in a flat market.

74 Mary St Richmond – Chris Murphy of Hocking Stuart

James Home Rating 681 out of 1000. This pretty double-fronted Victorian cottage has been renovated well and has a great feel. Location is good - Mary Street is one of Richmond’s better streets and close to everything. Some may not like the position of the bathroom and there is no ensuite here. Secure off-street parking is a big plus and the way natural light is brought into the living areas via the private northern courtyard area is quite smart.

James Control Price: Dirt $672,000 + House $300,000= $972,000

James Auction Report: Crowd of around 50 saw auctioneer Chris Murphy open take an opening bid from the crowd of $900,000. Three bidders, quick and good auction, on the market at $1.05m and sold under the hammer at $1.106m. Good result for Mat Pape of Hocking Stuart.

James Post Sale Examination: Strong result and symptomatic of the day.

4 Armadale St Armadale – Dean Gilbert of Marshall White

James Home Rating 803 out of 1000. A lot to like about this home. It has a good facade, land size and the position is good Armadale, with perhaps a bit of tram noise being its only positional negative. Car access is to the rear/side but the laneway is useable and the garage is big. Anyway, that is outside; inside is where the home shines. It’s an excellent marrying of period to new. Ceiling height and Victorian features ,combined with a bit of glitz that, while slightly old, is not really dated, gives this a homey and exciting feel all at once. For me, the big plus is rooms: there are plenty of them, key rooms are a good size and there is good separation of master from children bedrooms, with the master also being on ground level and with ensuite. Few steps, so for older people this is a great home. Should go very well and well over the initial quote of the agents.

James Control Price: Dirt $1,265,000 + House $1,100,000= $2,365,000 The hard thing to estimate was how would close to Wattletree Road be viewed – eg would there be a land discount and the home we thought was move in as is and therefore was a $1m to replace plus pool etc.

James Auction Report: Just two bidders from the crowd of 70 at this auction but it was enough. Opening with a genuine bid of $2.1 million, this was on the market for $2.35 million and sold for $2.37 million.

James Post Sale Examination: Exactly as expected

19 Thanet St Malvern with Justin Long of Marshall White

James Home Rating 720 out of 1000: There is a real market for these types of half houses that are brilliantly located, affordable and nicely renovated and those markets are older couples and single women. It has the necessary two bathrooms, although one is well located to entertaining but not for guests. Garaging is not as secure as it may need to be. Overall the renovation and indoor/outdoor flow works well. The neighbour to the North shouldn’t worry after a while and there seems to be enough space for good light. Up to a price this should sell well and should also resale well if this is an interim step for you.

James Control Price: Dirt $796,400 + House $500,000 = $1,296,400. We put land at $2200 per sq metre based on a number of recent sales and did not discount and we put the value at estimated replacement cost on a stand alone single fronted rebuild.

James Auction Report: Better Thanet looks from the outside … a tasteful renovation attracted 90 people to watch Justin Long take 27 bids from just two steady bidders. Opening with a vendor bid of $1 million, a good outcome saw this on the market for $1.23 million and sold for $1.267 million.

James Post Sale Examination: We were interested in this sale to see how period 1/2 homes were going and this sale went pretty well exactly as expected.

Useful land value sales in Lauriston Precinct. 15 Adelaide St Armadale $2,710,000 for 685 sq metres = $4000 sq metre approx. 60 Adelaide St at 813 sq metres got $3,005,000 or $3700 sq metre. Does this mean Tim Bennison of Bennison Mackinnon is a better seller than Rae Tomlinson of Marshall White, well no, not unless you speak to Tim (only joking) - because they are both excellent salespeople. What it means is that the market still values each block on it’s merits (and we did no major due diligence on either block) and land values (plus building) while the best guide we know are still not an exact science.

Adam

Toorak, 657 Toorak Road: 60 people. Five bidders. Sold for $2.59 million. A fairytale ending for the buyer of this fairy-like castle from the fairy-loving auctioneer Andrew Macmillan. That is a misprint, should read from the fun-loving auctioneer.

Armadale, 25 Glassford St: Auctioneer Iain Carmichael opened with a vendor bid of $2.8 million. Three bidders joined in. On the market at $3.3 million and sold under-the-hammer for $3.584 million.

As much action as we have seen in Stonnington for many a day with 14 sales over a million dollars and four pass-ins. Three substantial sales were 25 Glassford St Armadale with Susan McGlashan and Iain Carmichael of Bennison Mackinnon – see our auction report. If you said the home was $1.2 million, then that would put land around $2800 per sq metre. If you said the home was worth $1 million, then land was $3065 a metre and north-facing land at that. We have had this discussion a few times and land seems to be approaching or around $3000 per sq metre and significant value is still placed in period homes in this area.

A similar sale to this was today’s auction at 4 Chastleton Toorak with Peter Bennison of JP Dixon. $3.02 million for 650 sqm of south-facing rear, buy and bulldoze land - that is $4646 per sq metre.

657 Toorak Road Toorak

James Home Rating was 518 out of 1000. From an emotional point of view, the home is charming and we really like the feel. It has a homey feel and it is a real “fairy at the bottom of the garden” house.

There are other issues that you need to be comfortable with:

• Road noise is substantial.
• Second storey house slope.
• Back garden is impractical except to look at.
• The position is not as ideal as it may seem with regards to walking to shops.
• Exiting and entering premises in peak hour.

James Control Price: Dirt $2,210,000 + Building $200,000 = $2,410,000. Based land on sales such as 2 Selwyn Court, which sold a few weeks ago and was a difficult block as this one is because of its sloping rear and the street it is on.

James Auction Report: About 60 people attended this auction and there were five bidders. It opened with a genuine bid of $2.1 million, which was followed by a vendor bid of $2.3 million and eventually sold for $2.59 million. A fairytale ending for the successful purchaser of this fairy-like castle.

James Post-Auction Examination: House is an iconic home by 1930s architect Geoffrey Sommers, with garden attributed to Edna Walling (got that from the selling brochure). The level of bidding did surprise us a smidgeon and really showed the market placed significant value in this home and, by logic, maybe less value in the land than we thought. It’s hard to put a figure on it but $500,000 seems the right number for the home now. Perhaps we at James should never underestimate the value of something a bit special.

The agent quote and reading of buyers was spot on. Well done to Andrew Macmillan, Chris Stoupas and Mark Harris of Bennison Mackinnon.

33 Hunter St Malvern

James Home Rating was 726 out of 1000. This property has a very appealing facade with wide street frontage leading to a simple, workable floorplan. Fine to live in now, but provides the opportunity to update and extend in the future. Consideration needs to be made regarding off-street parking. There is access from the ROW from the rear, but a car at the back will affect land available for living. There may be a possibility for cars in the front yard, as there is room. There is no ensuite to the main bedroom, and this could be an issue for some if not wanting to extend/renovate. With most Malvern period homes in brick, this is a weatherboard, as is much of the street, and, as such, may not appeal to some buyers in this area.

James Control Price: Dirt $1,162,800 + Building $500,000 = $1,662,800. Houses that were looked at were 21 Valentine Grove Armadale, which is also timber, and 28 Llaneast St, also timber, and a finished home like 20 Viva St Glen Iris ($2.3m+) on what you might be with a good reno.

James Auction Report: Sold before in a Boardroom Auction for an undisclosed price, believed to be in excess of $1.6 million.

James Post-Auction Examination: Pretty well as expected. Good interest and strong result.

The agent quote was conservative and agents were John Morrisby and Heather Elder from Marshall White.

Design Smart

Richmond, 2 Gipps: I'm Chris Murphy and don't mess with me (please). Three bidders did not, buying at $1.878 million under the hammer. Good quote at $1.7 to $1.8 million. Good result. Good agent.

It’s 6pm Saturday and the James Clearance Rate for million-dollar-plus auctions is 60 per cent on the 20 auctions we attended but that may change by Sunday.

The market today (Saturday) was again strong across the board but crowd numbers continue to drop and there was a 40 per cent pass-in rate at auctions we attended (and higher if you remove the bought befores) – this is obviously related to the number of homes on offer. The jury is out as to whether this will lead to a price leveling, because today says quite clearly it is strong and steady as she goes, despite big stock increases. It was a shocker of a day weather-wise; well done to our photographers on getting a few good snaps and thank you to the auctioneers for allowing us to take those snaps inside.

Sunday note: The Sunday James clearance rate is now 70 per cent clearance and the norm and we’re not seeing any stat today that says the market may be leveling. Auction stock levels have increased dramatically and our Bidderman (bidders per auction) actually moved upwards. There are three big weekends of auctions to go until the footy is over and this is the real test of market depth and strength. If sellers get through this unscathed, then it may be next year or another GFC before we see any meaningful price leveling. The past few weeks may have been no more than a lull. But let’s wait and see, as a month is a long time in this market.

Markets

How do we know what is happening in the market and what do we think the market is doing? Why are markets  important to read?

We, as buyer agents, need to read markets because our clients expect us to be able to offer information on expected price, reasonable value, expected competition, negotiation strategy and so on.

To be able to read markets reliably, we have found that, for us, Bidder Depth or Bidderman is the most reliable market reader. It is, in fact, the market’s DNA. It shows healthy and unhealthy, rising and falling, strong and weak markets. And, in our opinion, it does it better than clearance rates – although we still like this a lot as a measure.

The Bidderman measure is better than how you went against agent quote or median price or other measures that are either artificially manipulated or well out of date.

Our pre-auction offers and post-auction offers rely on Bidderman data also. We keep Bidderman records on agents. Some agents have lots of bidders because they communicate well and others have smaller numbers. We also keep records on types of homes – eg Bidderman is strong and alive for family homes in Hawthorn but has gone missing on high-end apartments.

We are finding the media are now starting to talk about a very strong rising market. That was true from February to July, when people were reporting doom and gloom. We are now not so sure that the market is in a strong rising phase. Our bidder depth per property is dropping (except today) and this may be telling us that the market may be in a leveling phase, price wise. But it is still too early to call and, of course, may change direction again anytime soon.

So, just repeating: we are not saying that the market is falling in price or will fall soon, and we are not even convinced that it is leveling, but the price increase incline could be flattening after an incredibly steep rise in the past six months of anything between 10 and 20 per cent. In the case of Boroonadara, that represents a return to the peak; in Stonnington, a return to near the peak; and, in Bayside, a return towards the peak but nowhere near as strong as in Boroondara.

As stock levels increase – and they have dramatically in the past two weeks, as sellers seem to need to get their home auctioned  before the Grand Final, when all Melbourne stops to witness a Collingwood victory. Whoops! Got sidetracked – sorry! Stock level increases in the past few weeks are, in our opinion, the biggest this year, and this is having a significant effect on crowd numbers per property. We have recently been below (but above today) two bidders per auction on our 20 Auction Basket we review each Saturday. In July, we were above three bidders per auction average. By way of comparison, in late 2008, we were below one bidder per auction on average.

We need to see how the increased stock levels are taken up before the Grand Final (the last Saturday in September) and what happens immediately afterwards before we can say the market has altered course (if indeed it has). We may be just having a slight breather in bidder numbers as bidders assess the lay of the land and they may return to average more than three per auction, thus pushing up prices.

It was bidder depth that first alerted our clients to a possible market change in February 2009 and it was a significant increase in bidder depth that led us to push harder for our clients in May. It became clear the market was about to explode and it did.

There are two slides in The Million Dollar Price Worm to the right of this article that hopefully explain bidder depth a bit more of, as we say, Market DNA.

The first slide shows where we think the market has gone most recently. The gyration at the pointy end in August is meant to represent a possibly changing market. It may also represent a false point, as there is so much stock on the market and buyers are there, but are more neutral in their actions at present because they can see more stock coming on. However, they may go back to stronger bidding once stock levels are clear, take up all that stock and then demand more.

Slide 2 shows the MARKET DNA. This example is our Saturday Key Auction basket (the 20 auctions that we report on each weekend). A stronger market’s DNA in July 2009 is at the top and a weaker market’s DNA in November 2008 is below. What does this tell us? It tells the trained observer plenty and selling agents also keep records on numbers through opens, contracts sent out, second inspections etc. All are pointers as to whether to take an early offer, to run to auction, to adjust price etc. Similarly, accurate bidder depth number on markets, on specific parts of markets – eg Kew land or Malvern period homes or inner city apartments – and on agencies really help cement negotiation strategies going forward. But this information needs to be up to the minute. The line, in our opinion, is market balance. It’s very approximate but when we average between one and two, or around 30 bidders per 20 auctions, we think the market will remain even over the next short period. Above the line of, say, more than two bidders, the market is strengthening and prices should go up. Below the line, on average, the market seems to be weakening and prices should ease.

PRICE INCREASE

When there is good bidder depth, the market is strong because, if one or two bidders drop out, then the bidding is taken up by others and almost all homes sell and some sell well above market.

PRICE VOLATILITY

When the bidder depth starts to wane, there are spasmodic results as some homes simply do not have the bidder depth to push the top bidder higher or, in fact, get a deal done but some homes still sell incredibly well even with one bidder because that one bidder didn’t know the market is changing or had changed and they were the only bidder – a good selling agent was also involved.

PRICE DECREASE

And, finally, the market starts to fall across the board when everybody knows the bidder depth is simply not there.

Quoting

The heat has gone out of the issue of quoting. Why? Because there are properties to buy and lots of them – buyers have more important things to do! We acknowledge that we have changed our views during this debate. We no longer support mandatory declared reserves, just as we would not support mandatory declared maximum buyer offers (it was Iain Carmichael and Jeremy Desmier who turned us on this issue). But we are seeing a few publicly declared reserves now and we definitely think that voluntarily declared reserves is a plus. We acknowledge that there is a selling agent mindset of conservatism, which we still find hard to fathom. Why can’t an agent say something along the following: the land size of this home is 720 sqm and land goes for around $2300 per sq metre, so that says around $1.6 to $1.7 million for the land. We think this building is worth around $400,000, because people do keep these buildings, and it would cost around $600,000 to renovate to bring it up to a million-dollar building. There are renovated homes (building + land) selling in this area for $2.6 to $3 million and therefore we think that $2 to $2.2 million is a good basis to start your thinking on this particular home if you are going to renovate this building.

But, with a bit of tongue in cheek and hopefully some humour, here is a representation of what some buyers are hearing more of lately. It is a compilation of things and I have exaggerated it a little to get a point across, but it is not without some validity:

Set the scene at 12 Great Street Canterbury: picture yourself walking in the front door at a quiet midweek open-for-inspection a few weeks into the campaign and being greeted at the door by an impeccably groomed and badged agent. Below is all the agent speaking – like in a Bob Newhart or Monty Python skit.

“Hello, my name is John from agents Conti and Bostock. Can I take your name and number? Thank you, here is a brochure. Sooorry I didn’t hear the question. You want to know pppprice? Mmmm, that’s a tough question. It is company policy to not declare that. Sorry, what was that? You’d like to buy and you want to know the price? Yes, well, we are not allowed to say price. You want to offer. Are you sure? You don’t want to go away and think about it, talk to another agent? Oh, you want to offer now? Oh, great. $1,630,000 – that’s your offer? No, it’s too low. Yep, too low. You’re telling me you would like to know what offer would be satisfactory? Can’t tell you that – I don’t know it. Sorry, you want to know how I can refuse the offer of $1,630,000 if I don’t know what is an acceptable offer? Sorry, I mean I do know the price and that offer is too low – it’s just that I can’t tell you. Madam, this is unfair to ask me these tough questions. After all, I’m just the agent selling the home. I have other people to hand out brochures to and calls to make. Look, I’ll be honest, lady, this is how it is. I don’t know the price and, even if I did, I can’t tell you and that is why your offer is not enough. I’m sorry, I can’t talk to you anymore. You’re a buyer and I’m just not authorised to discuss price or buying this home with buyers. Now, next person. Hi, my name is John, here is a brochure, can I take your phone number …”

It’s like going to a coffee shop but you can’t get a coffee as the barista only makes sandwiches. The uproar was not that agents quoted – no, buyers want agents to quote – it’s just buyers would like agents to quote professionally. And, yes, buyers need to understand that selling agents represent sellers and that price is a a living, breathing thing and price quoting, even with experts who are genuine, is not an exact science. Let’s continue to ask questions of those that have gone missing, that have become so estranged from dealmaking that they can’t TALK PRICE TO A BUYER (PROFESSIONALLY).

Late, Disputed and Non-Bidding

In our Negotiation Section below, we have an interesting discussion on late and no auction bidding with expert auctioneer Phil de Fegely. This topic has had some ongoing interest, especially with Marika Dobbin’s page 3 article mid-week in The Age and I got the “interesting Market Insight Mal” comment  from Peter Bennison of JP Dixon when I was through one of his opens recently. I didn’t read this as a compliment. I read it as code for “You’re wrong on late bidding, Mal”. So I thought I’d better investigate further and, while it’s not that common at auctions (perhaps one or two deals out of 1000 have late bidding), we thought it would be good to hear the issues from an expert. Phil de Fegely coaches a number of Melbourne’s best auctioneers, as well as those who are up-and-coming. Yep, that’s right, auctioneers have coaches, go to training sessions and do courses, and yet many buyers still think they can just rock up at auction and they are taking on somebody akin to a first-day cab driver. Occasionally you are, but if it is an auctioneer from Marshall White or Kay and Burton or Jellis Craig or Bennison Mackinnon or a Phil de Fegely-trained auctioneer, you are taking on somebody akin to a skilled league footballer (granted, with a physical fitness cloud). But we digress. Phil’s Q&A and audio is below in Negotiation Corner.

Buy Well and Make Good Decisions

Mal

Malvern East: 55 Ardrie Road. Lovely day for a quiet auction. Trouble was 120 people showed up with six bidders and it sold for $1.21 million against an $850,000+ quote. Tim Derham of Abercrombys was directing traffic.

Andrew McCann of Bennison Mackinnon says we are now very close to 2007 prices.

Apartments
Sam Wilkinson and Tim Blackett of Kay and Burton got 2-4 Lansell Road Toorak away pre-auction. It was a $2 million-plus sale but the apartment market at the Top End really does appear to be non-existent right now. Unless this offer was considered a stand out, it was sold because they felt the auction may have proved embarrassing. Chastleton in Toorak, asking $4 million and one of the best apartments we have seen this year, still hasn’t attracted a suitor, despite Peter Kudelka’s best efforts. We may look stupid some time soon, but we really don’t think there is a $2 million-plus apartment low rise market (now ), of course there will be one in the future. Also with Asian buyers now being able to purchase land, we think a driving force in high-end high-rise may have also moved on.

Big Sales
1 Horsburgh Grove Armadale: As a postscript to last week’s auction, during this week, the sellers took the antidote to “40Lambethitis” and accepted the top bidders’ very good offer of $2.3 million. Eventually, most people come to their senses. Well done to James Redfern of Marshall White for a good result.

55 Ardrie Malvern East: The Ardrie Park area is a precinct to watch. We remember buying a little single-fronted in Repton Road (around the corner) post-auction for $600,000 only a few years ago. Today, we saw five bidders fight it out to more than $1.2 million for a double-fronted home that needed a big reno. But the buyers were smart. North-facing rear, good feel to home, across the road is an almost completed French Provincial (worth north of $2.5 million?), the tram is 100 metres away and access to the fantastic Ardrie Park just across the road. Speaking of roads, what a beautiful olde English type street Ardrie is. Don’t worry about the price, this was a great buy – well done to whoever it was. Tim and Michael Derham of Abercrombys managed the sale and managed it well – except the usual courageous quote. We required two quick visits on the same day and they accommodated at short notice – good agent work. 55 Ardrie confirms to us the young renovator yuppie market has returned and is now a force to be reckoned with.

68a Clendon Toorak: Nicolas Day home. Auction report: ”A huge crowd of 150 people turned up to this auction but just one bidder was prepared to play. The bidder opened proceedings with a $5.6 million bid but, with no further bids eventuating, the property was passed in.” This auction was to tell us if the jury is still out on $5 million-plus homes. It still is out.

Stock levels are the issue in Stonnington.

Jeremy Fox, director of RT Edgar, says he has almost nothing in his forward auction book for the 8^th, 15^th and 22^nd of August weekends. He says the Top End $5 million-plus market is still not moving like other markets but there are both buyers and sellers, so it’s not interest but price discrepancies that are holding things up. He re-emphasised buyer frustrations: do you go now or wait and is waiting going to mean lower prices? Jeremy says no, because there is little stock coming on.

Andrew McCann, director of Bennison Mackinnon says there is no pressure for sellers to sell and August auctions are looking very quiet. He says sellers are still watching the market. Finally he doesn’t see Spring homes flooding the market and dropping prices and, even if there is an increase in stock, there is enough pent-up buyer demand to soak up increased stock levels without a noticeable price drop.

Next auction weekend seems to be a renovators auction week.

We think the renovators and developers are coming back. Here are two of a number of sales that will tell us one way or the other. See our ratings on:

33 Murray St Prahran – Guy St Leger of Biggin and Scott – great area – love the Flying Duck pub.

25 Central Park Road Malvern East – Andrew James of Hocking Stuart – how much will the $4 million renovated version across the road affect things?

Pricing

Wormy’s not seeing a lot of action in the Stonnington area, so we need to be careful predicting any medium-term trends but pricing action to date seems upwards.