In the first of 2 part major report this week on The Big Spring Predictions we cover the Early Spring Market

Home market predictions are like footy predictions in many ways – a bit of fun, not to be taken too seriously and to be treated on the basis of past results.

Sometimes we agents get it right and sometimes we don’t. So why do we do it? We do it for the same reasons that footy fills up just as many pages at the end of the week as it does at the start – because buyers, sellers and market watchers like to read our opinions and insights and they do so in just as great a numbers as those who watch a blockbuster footy game every auction Saturday.

With Spring only a short time away, the musings, the theories and the rumours are surfacing again. Hence we called all the big guns into a Roman Toga type gathering to ask them what will happen in both the early and late Spring markets in the run up till Santa comes.

“Love is in the Air and there is no home more beautiful than one being auctioned on the perfect sun-drenched Spring day with the fence painted, the light streaming in and the garden looking stunning” says Marshall White’s Justin Long – with some poetry and just a little bias.

Historically though, over the last decades Melbourne buyers and sellers have agreed with this statement.  John Clarkson of Hocking Stuart says the market swells by as much as 200% even 300% in terms of activity in Spring months when compared to the winter ones.

However, while every agent assumes the supply of stock is sure to increase on what we have now, there is also a thinking that this increase will be less this year than what we’ve seen on average over the past 10 years. There is universal agreement at the moment that we will not see stock levels approaching what we saw last year. 2010 was a big year at the beginning, in the middle and at the end in terms of activity. So far 2011 has not been – and it will not be.

Why is Spring looking to have new stock shortages? According to Kay and Burton director Ross Savas, it’s because vendors are perceiving that the market is under pressure, so they are holding off placing their homes on the market till conditions improve.

Benmac’s Iain Carmichael agrees: “Unlike last year there are few opportunistic sellers thinking, ‘Wow, our home is now worth a mint – let’s go!’. So the only driving forces are the traditional sellers such as upscalers, downsizers, and job relocators.”

Is this just false spin to get sellers to act? We don’t think so. Richard Winneke of Jellis Craig for instance reports that most agents are admitting to a 25% volume reduction of high end stock being transacted between this year and last. Balwyn and Kew are down around 20% in overall transactions (not just the high end).

In Bayside Jason Gill paints a similar picture of diminishing turnover but uses a different measurement: “In Brighton in July 2009, 2010 and 2011 we have seen stock on the market go from to 92 to 125 to 150 meaning older overpriced stock is simply not selling.”  What this means, he adds, “is that the stock that comes on in Spring will need to be of good quality and be priced correctly, rather than more of the same, if it is to excite the market.”

In our opinion, with the type of market contraction (turnover more so than price) we have had in 2011 we are going to need some excitement to kick start the market in the way that it took the Chinese community in 2009 to lead us from the GFC.

Sellers want prices and while buyers do as well, they also want good quality at the upper end levels. More of the same will only compound the problems of this market for both buyers and sellers.

For vendors who are prepared to swim against the tide, there could be rewards, says Steve Burke of Jellis Craig says, and sure we know he’s biased but he’s right on this occasion. “Forget about when the roses bloom in the garden, it is all about the demand and supply equation. As we are currently in a market place of perceived negative conditions I believe that there will be a real shortage of stock at the start of Spring. This will definitely favor the brave vendors who will be able to capture a market place where there is little competition.”

Next we look at Stales, Price and The Late Spring Market.

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

What is happening this spring after the winter holidays? Hey Mark, c'mon mate! Cheer up -You did sell 27 Rathmines Road Hawthorn East under the hammer with 2 bidders.

At 6pm on Saturday, the James Clearance Rate for $M+ was 48% on the 25 auctions we attended. The Weekly Review Bidderman, our demand indicator, was 1.3 bidders per auction.

This is our last Marketnews summary and auction reporting until Saturday July 30^th. We normally take a fortnight break at this time of the year due to the Winter school holidays, but we have extended it to three weeks due to minimal action in the $M+ Inner East and Bayside market.

Accordingly we have produced our bumper half-year insight on what has happened year to date and what we envisage may happen between now and Santa coming down the chimney.

What has happened on the markets so far this year?

February 19. With clearance rates at 63%, we were thinking this was looking like a healthy balanced market. The $1 million+ was actually looking hottish. But there was little activity on the $3 million+ market, and an increasing number of duck auctions  with no bidders. Overall stock quality wasn’t great and that has been the story all year really.

March 26. Clearance rates dropped to 58%, the first indication that we were moving into a buyer’s market – possibly until Easter and possibly until Spring we suggested. Well, we were right there. The other big issue that portended the future market was the lack of take-up of passed-in auctions from the previous two weekends – just 3 out of 26 had sold over the next couple of weeks.

May 21 saw a surprising lift in the market, with a clearance rate of 84% on the 37 auctions we attended. We certainly didn’t see it coming, but the big difference was the high quality of stock on offer. And buyers snapped it up. As we said though, one swallow doesn’t make a summer. And it didn’t.

June 4. This was the weekend we recognised that this down market was different to last year’s. Last year prices may have been down but there was still lots of activity with buyers and sellers agreeing either at auction or sometime after on a price that was possibly lower. This year the market has been characterised by numerous pass-ins and lots of stales (long term unsolds).

June 18. The wheels of supply really seemed to be grinding to a halt. Clearance rates were 38% but the biggest problems were lack of quality and sellers holding out for unrealistic prices – rather than lack of demand.

June 25. Last weekend saw an uptick in the clearance rate of 58% as an increasing number of sellers dropped their heads back down from the clouds. But, as we saw, it was back down to 48% as we head into the thick of winter.

Consistent Themes of the 2011 Market so far

1. This is a buyers’ market – and basically has been since April last year, 2010.
2. There has been a major contraction of turnover in the $M+ market this year to last year. The A+ sellers have withdrawn and so have the “we also need to buy” sellers. They have become nervous that if they sell now, there will be no good homes to buy.
3. Effectively the market has wound down to a much lower transaction level than last year, initially led by sellers asking prices higher than market, thus reducing turnover. Then as the year has gone on, prospective sellers with A+ homes decided the current market is not for them, reducing turnover further.
4. The underlying market demand is stronger than the stats headlines show. Almost every time we have good stock weekends our demand indicator Bidderman increased (see chart below). Look at the weekends 26 February, 9 April, 21 May and 25 June.
5. Stock overall has been a lot poorer in quality from the beginning of 2011 compared to last year.
6. The key characteristic of price this year has been the stubbornness of both buyers and sellers with regards to movement.
7. Prices continue to improve on selective high quality, well priced homes (yes, it’s true). But this is a very small segment in the market. For many, prices have flat-lined and for lower quality homes the market price has fallen. Overall the market is off by as much as 10% from the last peak in April 2010.
8. Above-market prices are rarely being achieved. So when sellers pass their property in then more often than not they are having to drop their price, wait a long time and go through pain to sell. And even then there is a high chance they won’t sell. In 2011 there is a real risk in sellers going for a big number and not getting any number at all.
9. Stales (long term unsolds) have been building all year. There are hundreds of homes out there that remain unsold and have the potential to negatively affect the market going forward.
10. Selling agents have correctly predicted stock shortages, price corrections and the market gap between good well priced stock and inferior overpriced stock. The market has in fact been predictable if you know how to read the signs.

Buyer Demand weaker, but still there when Quality to be had

 Average numbers of bidders per auction, as shown by our Bidderman indicator above, rarely went above 2 this year. But when stock was of high quality, the bidders were out in force. Clearance rates (below) further supported the argument that there is underlying demand when we have good stock and/or well priced weekends.

On most, but not all, good stock weekends where the sellers have let the market set the prices there has been solid activity. However these figures support the fact, very strongly, that we are in buyers market not a balanced one.

What will happen in Spring?

After a mediocre early Winter market, the question on the minds of buyers and sellers alike is will the market fire back up in Spring?

We asked some quality selling agents to give their predictions.

A number of agents are predicting that we’re likely to have stock shortages again this Spring. Why is that? According to Kay and Burton director Ross Savas, it’s because vendors are perceiving that the market is under pressure, so they are holding off placing their homes on the market till conditions improve.

Is this just false spin to get sellers to act? We don’t think so. Richard Winneke of Jellis Craig for instance reports that most agents are admitting to a 25% volume reduction of high end stock being transacted between this year and last. Balwyn and Kew are down around 20% in overall transactions (not just the high end).

In Bayside Jason Gill paints a similar picture of diminishing turnover but uses a different measurement: “In Brighton in July 2009, 2010 and 2011 we have seen stock on the market go from to 92 to 125 to 150 meaning older overpriced stock is simply not selling.”  What this means, he adds, “is that the stock that comes on in Spring will need to be of good quality and be priced correctly, rather than more of the same, if it is to excite the market.”

As during the GFC, the market has primarily ground to a halt on lack of action and lack of confidence. As with the GFC it will need a kick start of some note (eg Australian Dollar dropping bringing expats and overseas buyers back) to entice WOW and discretionary  sellers back into the market place, thus lifting turnover.

This is where patience presents a conundrum for buyers: if many of us pass on buying in early spring then the late spring surge may not happen at all. And come Christmas time we will still be in a buyers’ market but we won’t have bought. The question is then: how long are you prepared to wait?

For a full wrap of opinions on the Early and late Spring Markets read our Buyer Article section throughout July in Melbourne’s Premier $M+ Home Magazine – The Weekly Review.

So what does this all mean to you the buyer

Smart Buying RIGHT NOW involves:

1. New strategies: You need new bidding strategies at auction. Putting your hand up until you run out can work in a hot sellers’  market, but in a buyer’s market it just means that you are burning cash.
2. Realising that not all sales are at auction:  There are an increasing number of homes sold off-market, prior to auction, as expressions of interest and so-on. You need to have a strategy to keep ahead of what’s out there. And then you need to know how to wheel and deal in these methods of sale – not just to pay the right price but to actually get it, if you want it.
3. Knowing that in this kind of market, you as a buyer may need a new modus operandi. In a hot sellers’ market most buyers are reactive, while in a buyers’ market the best buyers are often proactive. Good homes are still selling well -so when a home is sought after, you may still have to compete as strongly as 2009.
4. Understanding what the Real Value is:  Most genuine buyers are getting the best service they have ever received from selling agents in terms of being told what is out there. How much for all these opportunities? Is 10% on the auction quote or 10% off the sale price the right start point? Well maybe, but there may also be daylight between you and the next buyer.
5. Recognising that Patience is Needed. Patience is the forgotten buyer skill. We are not talking about procrastination, but the ability to wait until you have found the right home that meets your family needs. Just because you can buy now and it’s ‘cheap’, doesn’t necessarily make it your family’s best fit.

IVANHOE EAST, 12 Ravenswood Ave: Going, going gone! Rod Watson (Jellis Craig), under the hammer, $1,059,000, 2 bidders

Biggest Sale: Balwyn, 30 Walsh St, Steven Abbott (Jellis Craig); Under the hammer, $1,992,500, 5 bidders
“An entertaining auction, in a fine setting. Auctioneer Steven Abbott looked for an opening bid but none were forthcoming. Mr Abbott then offered a vendor bid of $1,750,000 to get things underway. The auction did not take too long to get started and there was solid bidding between four parties. The property was on the market at the $1,915,000 mark, and bidding looked almost over at  $1,950,000, when a new bidder came into play. The property was eventually bought under the hammer for $1,992,500.   A good result for vendor and agent alike – this property had been around for some time and although the floor plan itself had some concerns, the Reid Estate positioning underpinned value and ultimately buyer interest here.” (Adam Woledge)

Biggest Pass In: Kew, 34 Macartney Ave, Walter Dodich (Marshall White); Passed in, $3,925,000, 1 bidder
“A sense of deja-vu here at Macartney Avenue: about 3 months ago, auctioneer Walter Dodich auctioned No.21 and today it was No.34′s turn. Both properties fine, modern new homes with all the bells and whistles, built by the same builder. In front of a good crowd of around 120 people, a vendor bid of $3,900,000 was placed and just when you thought this was going to be quick auction, a crowd bid of $3,925,000 was offered. There was no further bidding and the property was passed in at this figure.” (Adam Woledge)

Bidderbuzz Auction: 7 Heathfield Rd, Brighton East, Nick Renna (Hocking Stuart); Under the hammer, $1,625,000, 4 bidders
“Another great Nick Renna auction with fierce bidding, big crowds and a great sale price. A genuine bid kicked off proceedings at $1,000,000 and, while low, it was accepted by Mr Renna before he offered a vendor bid of $1,280,000 (which was closer to the quoted price). Two bidders entered the fray and the price quickly rose to $1,405,000 where it was declared on the market. Bidding continued strongly when, out of the blue a third, strong bidder entered into the competition. The price continued to rise and Mr Renna fielded bids from all three parties before bringing the hammer down at $1,625,000. A great, entertaining auction and a strong result for the Hocking Stuart team and vendor alike.” (Jen Milligan)

We only buy homes

KEW, 34 Macartney Ave: A big crowd of 120 people turned out to watch Walter Dodich (Marshall White) in action. Passed in, $3,925,000, 1 bidder

The big talk on the property market is auction clearance rates: the fact they are well below last year (true) and that they are perhaps even lower than what agents are claiming (maybe).

Last year auction clearance rates across Melbourne were regularly in the 70s percentage-wise. This year they are in the 50s – so it is fair to conclude that this year fewer buyers and sellers agree on price and therefore the market is regarded as weaker than 2010.

But while some journalists and publications are arguing that the ‘true’ clearance rate may in fact be lower because agents do not report every unsold auction, some agents  are arguing that the emphasis on a Melbourne-wide clearance rate is also misleading.

Jack Bongiorno from Marshall White, for instance, argues that while papers like The Age are reporting clearance rates in the 50s, his company has seen clearance rates in the 70s throughout May and June . Andrew James of Hocking Stuart Armadale agrees, saying his office is also seeing clearance rates in the 70s all year.

So The Age is saying one thing and agents another. Well there’s nothing new there.

Who is right and who is wrong – and does it really matter?

Well,  they are both right. And as for whether it really matters, the answer is yes – and no. Is that a splinter I can feel in my bottom from sitting on the fence? Well no, in fact this goes to the crux of what clearance rates can and cannot tell buyers.

According to Andrew McCann of BenMac, clearance rates measure across a very broad number of suburbs, price bands and demographics. “The reality is,” he says, “that some parts of the market will always perform better than others so it is not unrealistic to think that while some areas are soft, others are strong. A good case in point is that our firm sold 11 from 12 Auctions last weekend, while the market returned 56%.”

Scott Patterson of Kay and Burton supports this: “The clearance rate in The Age of 59% is a general rate for the whole of Melbourne and does not reflect what is going on in certain areas.”  Hawthorn for instance has had a clearance rate of 80% for the year so far, which seems a different picture from the outskirts of Melbourne.”

This makes it important for buyers to take Melbourne-wide clearance rates with a grain of salt.

Brad Pearce of Miles in Ivanhoe says that as a buyer you need to be area-specific on clearance rates to ensure you are in line with your market. “Buyers can become too confident with the lower Melbourne wide clearance rates and miss opportunities to buy in their area, where in fact properties are still selling well.”

Hawthorn and Kew, for instance, are currently shining with clearance rates in the 70s and 80s, according to Richard Winneke of Jellis Craig. But next door, Camberwell, Canterbury and Balwyn North have had clearance rates in the 50s so far this year, he points out.

Clearance Rates are wonderful things for analysts and journalists, says Steve Abbott of Jellis Craig, “but they are only part of the story for buyers and sellers.” Kay & Burton’s Michael Gibson reminds us too that clearance rates only represent a few hours within the selling week.

And according to BenMac’s Iain Carmichael: “Some weeks we have shockers and the next it’s a dream, so clearance rates are area specific, very cyclical and not always predictable.”

As a buyer, along with clearance rates, you also need to look at stats on areas, on specific agencies, on different types of homes, price ranges, stock level indicators, Bidderman (number of bidders per auction) and a variety of other measures.

Indeed, while $M+ Melbourne may be down on turnover this year, of the last 10 homes we as buyer agents went after in the last two weeks of May, all were sold quickly (and not all to us). So to our mind,  the late May 2011 “good home” index (describing the kinds of home we go after) had a clearance rate of 100%

The buyer message in terms of Melbourne-wide clearance rates is to understand what they represent and to not limit your research to the changing weekly auction headline number when determining your individual buying strategy.

Printed each week in The Weekly Review – Melbourne’s Million Dollar Plus Magazine

Welcome to the new world. Well, not so new – it arrives every winter in Melbourne when the favourite weekend sport that is the public auction quietens down and a version of the Melbourne Club opens for the $M+ homebuying business. For four months between a certain royal’s birthday and a hoped-for Collingwood victory on Grand Final Day, auctions diminish as the favoured way to do business at the Top End – and private sales, off markets and expressions of interest take over.

For unwary buyers, private sales can present some issues. In fact a number of potential buyers start out on the back foot with private sale negotiations simply because they think they are easier than auction bidding.

We are not sure why anyone would think private sales are necessarily easier to negotiate than auctions. Sure, some private sales are straightforward enough: it’s simply a matter of paying the asking price. But it’s worth realising that private sales have no rules like the ones they have to read out at the start of an auction. There is no start and stop time and no bells to say the property is: ‘On the market’. For casual buyers there is no public confirmation of the right price level in the form of other bidders as in an auction.

As well, over the last few years the curious practice of not stating a price has crept in on some private sales. So when you ask a salesman the price, the response can vary from: “Make us an offer” to “Buyer interest is at $3,000,000 and the vendor wants around $3,350,000 (we think)” to “Price range, sir, is between $1,800,000 and $1,920,000”.

Even the inexperienced buyer should be able to see the dangers in being asked to “Make us an offer” – especially if they want to buy the home. There are solutions for a buyer involved in this process, but hand on heart you as a buyer would be best served by getting professional representation in this instance.

In the case of the other two price types which are a version of the range, it’s just as confusing. Could you buy the property simply by paying the Top End of the range? That depends on the process and on which agent you’re dealing with.

Which leads us to the second traffic stopper in private sale negotiations: process. Even if you offer top dollar, your offer may still be referred to others and that involves a 24 hour feedback process during which time you may be asked if you have any more (even if there is no other offer). Or you could be asked to participate in a Boardroom auction, which involves a new set of rules. Or you could simply be told nothing – which could mean it is sold to someone else, maybe because as a negotiation tactic your offer had a clause stating this was your final offer and they believed you and didn’t refer back to you.

Even if your offer of the top price in the range is accepted on the spot, you may wonder whether you did the right thing?

Each and every agency you deal with has a different private sale process and in fact a number of agents within the different agencies use different private sale practices.

Which brings us to the final issue of agents – who do you actually speak to? In some companies you could be involved with a number of agents during the buying process – but only two of them can actually help you. In private sales in Melbourne’s Top End it is a club, it works well for buyers and sellers and a lot of real estate is exchanged, however you need to know who’s who within the club if you want to get the result you want.

When you go to your next open for inspection, for instance, does that well dressed agent you spoke to actually know what is going on? Are they the listing agent, who has the ear and trust of the vendor – or are they someone so far removed from the process that you probably know more about the home and what it takes to buy it?

So welcome Melbourne, welcome to the winter of wonderment and the intensely interesting Private Sale process.

Printed each week in The Weekly Review – Melbourne’s Million Dollar Plus Magazine

With the autumn property season over and the end of the headlines about record prices and huge crowds, the winter property season brings a new set of challenges for buyers and sellers. Yes, it’s a more subdued time but winter can still throw up some surprises – and some opportunities. Even in winter people still need to sell their homes. And plenty of people are still out there looking for homes to live in.

In fact on good homes the interest can actually intensify due to lack of supply, and prices can go up on certain offerings. We’ve noticed in the past couple of chilly weeks, our demand indicator Bidderman has risen to an average of 1.5 bidders per auction – up from just over 1 bidder per auction in early May.

So, the buyers are still out there, but they may be a different crowd than the ones you’ve been bidding against during the spring and autumn property seasons.

You won’t see much of the WOW buyers, for instance, the ones who like the glitz and glam and were ‘sort of looking’ but not that hard. The footy is on, it’s too cold. They can’t be bothered. So you won’t have to worry about competing against this lot.

The Desperate Buyers are still there though, the ones that really need a home now because the wife is threatening divorce, the kids are whinging, and they’re sick of trawling through the internet listings every week.

The Measured Buyers never went away. These are the ones who don’t care whether it’s summer or winter, a buyers’ or a sellers’ market, freezing cold, roasting hot. They are out there even now looking for a quality family home that has good land content and represents good value close to schools for their kids. Their finances are in place and they see the depths of winter as good a time as any if the right home presents itself.

Measured Buyers are the ones who accept that it may be a little tougher to sell their existing home, and realise they may need to discount their asking price a little for safety – but also that they’ll probably be able to buy something bigger and better at a better price. These are the ones who are only buying if the three Ps line up: Property, Position and of course Price.

Then there are the Opportune Buyers or Investors. A bit of frost on the local oval isn’t going to stop them looking.  They’ve got their eye on the pass-ins on a Monday. In fact they’ve probably been keeping records of pass-ins for the last few months, and eventually a phone call will unearth a good home that didn’t sell for one reason: it was overpriced. And that after one or two price drops may well be ripe for a cheeky offer.

So which one are you and how can you best play this market? Winter brings out the wet trackers in horse racing – the show ponies have a spell and the old reliable you have seen for many years becomes a lot more visible. So it is in real estate. You will see a number of auctioneers take extended breaks, returning on the occasional weekend when a group of auction homes have been bunched together. In the meantime the quality sales agent are playing a far greater role within the company.

But it’s also worth realising that while a few auctions are still around, over the next few months more homes will be sold over the phone or in a coffee shop than on the pavement. When you’re buying via private sale, expression of interest or off market that requires different skills. It’s not just about turning up at an auction, watching to see what others do and then putting your hand up. For all the issues connected with auctions they are still far more transparent than the most common types of deals you will see (or rather, not see) between now and the footy finals.

So this winter, like any market, has opportunities for the buyer. Especially for the Measured and Opportune Buyer. Maybe not so much for the WOW buyer. And there are some traps for the Inexperienced or Desperate Buyer – but nothing a cool head can’t avoid.

Printed each week in The Weekly Review – Melbourne’s Million Dollar Plus Magazine

As we pointed out last week, even in a buyers’ market it is still possible to buy badly. You can buy the wrong home for your family, or you can commit the lesser but still significant sin of paying too much for a home.

Why is paying too much a sin?  Because it not only lessens your capital growth going forward but it also puts more of your disposable income towards your mortgage.

What if I promised you a free family holiday in Europe each year for the next 20 years or agreed to pay for you children’s school fees until they have left Carey or Firbank or MLC or Scotch?

That’s what you’d be  losing if you paid $3,200,000 for a home that you could have bought at $2,900,000. Over the life of a 20 year loan you would need to pay back approximately $580,000 or $29,000 per year (after tax) assuming an average 7.5% interest rate. That’s an overseas holiday or fees for two kids at private school.

Paying too much upfront means your capital growth will be lower too. Our investment division has the constant challenge of explaining to first time investors that the price tag of a home is not always the start point for capital growth –  the market value is.

Take the example of paying $2,100,000 for a home that you could have negotiated down to $1,800,000 in this buyers market. If you sold the property in seven  years time for, say, $3,600,000, your capital growth would be 100% if you’d originally paid $1,800,000, but only 72% if you’d paid $2,100,000. Do that a couple of times and the smart buyer gets to keep a free home and the not so smart buyer gets to keep a big mortgage.

Want some more evidence that this is a buyers’ market in which you should be able to negotiate a better price?  Here are three big stats that show the May 2011 million dollar plus market is a buyers market:

Clearance Rates – these have dropped into the 40% and 50% levels at auctions. That means that around half the homes currently up for sale can’t find anybody to agree with the seller on price.

The Weekly Review Bidderman – This stat is derived from the 30 auctions we attend each week. It’s a simple count of all the bidders who bid, divided by the number of auctions, giving a measurement of underlying demand for what is on offer. With Bidderman currently around 1, i.e. an average of just one bidder  per auction, you can see that there aint a lot of leftover bidders for the next home.

Lone Ranger Auctions – Single bidder auctions are currently the most common type of auction, at 1 in 3 auctions. This is why buyers need to be on firm foundations in terms of price.

What those three stats tell us is that there is little group consensus on price right now, which makes it all too possible to overpay.  It also makes it all too possible to miss a bargain. Sellers sometimes get prices too low as well.

Even professionals can get it wrong as this personal story shows: I sold one of my own investment properties during the GFC. I’d bought a ripper little investment in Brighton, but it had put me out of my comfort zone and I decided to get rid of another investment home I’d owned for around 10 years at 13 Durrant St Brighton. It failed to sell at auction (I wanted too much), I got the squeeze and despite everything I knew, because I was emotionally involved I let it go in the $800,000s a couple of months later. If I’d sold a year either side of that, either 2007 and 2009, it would have gone for over $1 million. Shows how much easier and better it is to deal with others than your own.

The point is that this market is a great market to buy in if you have a longer term view, have found the right home and you have a good plan, good strategies and good execution. But you can pay too much for a home in this market and for most of us that doesn’t makes sense.

Printed each week in The Weekly Review – Melbourne’s Million Dollar Plus Magazine

A few smiles were found on Saturday and here was one of them. David Hart (Buxton) with friend at 48 Regent St, Brighton East. Passed in $1,275,000, 1 bidder

At 6pm on Saturday, the James Clearance Rate for $M+ properties in Melbourne was 55% on the 29 auctions we attended. We covered around half the $M+ auctions this weekend. May is looking very lean for auctions and today was almost a non event auction wise

The Weekly Review Bidderman, our demand indicator, was 1.2 bidders per auction. Considering the low numbers on offer at auction this was not a good sign for sellers going forward.

The Perils of Emotional Bidding
The big auction issue for me this weekend was how bidders were bidding. I went to three auctions with a total of  nine bidders and saw some very surprising and costly bidding.

One example was the auction at 48 Emo Road, Malvern East. This is a lovely little single fronted in one of my favourite family and investment areas, the Ardrie Park precinct in Malvern East. Middle of the road quality, not bad for those just starting out in the home ownership stakes – plenty of space inside and outside and good flow. Good feel.

Anyway the auction is about to start and a nice healthy crowd of around 100 has gathered to hear the pearls from a not-so-old stager who rarely auctions these days – Peter Bennison.

Peter calls for an opening bid, to which one very enthusiastic bidder responds with a strong and emotional bid of $950,000. With repeated calls for further $10,000 rises unsuccessful, Peter takes a strategic half time break. On returning, he unsurprisingly declares that the property will be passed-in to the lone bidder if no further bidding. After a second bidder pipes in offering that elusive $10,000 rise, the original bidder responds emotionally and strongly with a crowd hushing $1,000,000. Perhaps the bidder should have asked the “Is it on the market?” question – because this was well above the original quote of $890,000 to $950,000.

What it also means is that the auction will now be completed behind closed doors with some argy bargy instead of cleanly in the street and under the hammer, which a good question could have allowed. The final result of $1,150,000 is decided inside a few minutes later. Wow! I know the buyer saved the fee of getting professional help and normally I am against such flexible post auction reserves but really if a  buyer wants to pay then they should be allowed to – it’s a free country. For the very experienced Mr Bennison this bidder was a gift, and he knew exactly how to work this  situation to the benefit of his client, the vendor (low quality agents may not have recognized the opportunity presented).

There are a couple of things that come from this as lessons to first home buyers and DIYers:

1) As a bidder, by all means look strong to ward off other nervous buyers. But it doesn’t help to look emotional – an experienced agent will pick up on that and it will cost you money

2) In this market you have to test every step of the way. Ask questions. There was nothing wrong with the opening bid but the winning bidder’s second bid could and in fact should have been presented in a very different way. Because it wasn’t, the post auction problems snowballed from this one decision.

3) In this market, on a $890,000 to $950,000 quote, and with no proven competition above $960,000 why would you be rushing up the pole to an incredible $1,150,000? If you have to pay it then at least take a few hours of testing to get there.

There’s no doubt that it’s a good home and I certainly would have recommended buying it. And maybe the result would have been no different if a professional was managing the buying side. But I think a number of safety procedures could have been implemented prior to agreeing to that amount.

There were further interesting results along these lines at the auctions at 13 Maskell St Brighton (Peter Kennett) and 7 McClaughlin Sandringham (Mark Earle). Please see today’s auction reports for more details.

Now back to the market – Future Stock:

Auctions – May is going to be very quiet compared to May 2010, when we witnessed well in excess of 1000 $M+ sales across Melbourne. Melbourne’s Inner East and Bayside represent a majority of  Melbourne’s Million Dollar Plus sales, and predicted auction numbers in these areas for the four weeks in May are as follows: this past weekend 45, next week 43, and the last two weeks in May, 105 and 106. Even though there were five Saturdays in May 2010, there would need to be an incredible number of private sales this year to get the final numbers of solds anywhere near last year, and that is not likely to happen with the current market mood.

Off Markets – According to agents there is a strong trend towards private and off-market sales. Nick Johnstone, of JP Dixon (Brighton) says: “We are seeing a definite swing towards private and off market sales which shows a transitional phase in the market.” 

Other agent comments:

David Oster, Jellis Craig (Ivanhoe): “The 28^th May will be a Strong Saturday. It is the last clear Saturday before School holidays.”

Richard Winneke, Jellis Craig (Hawthorn): “May 21, May 28 & June 4 are 3 bigger Saturdays and then many owners will hold off selling until August.”

Melbourne Wide April Wash Up :
Volume -  Has a lot changed in Million Dollar Melbourne between April 2010 and April 2011? Well, yes and no. April 2010 had around the same number of REIV reported $1m+ sales (there may be a 10% variance with the chance of late reported April 2011 sales to bring the April 2010 and April 2011 numbers closer together) but on a count of over 500 buy/sells, not much has changed in terms of volume.

However, even though the last market turned in April 2010, May 2010 was a boom month with well over 1000 REIV reported $m+ sales throughout greater Melbourne. Therefore May 2011 will be watched to see if it can get anywhere near those sorts of numbers, however we don’t think that will happen. We are still seeing a $M+ home bought every ninety (90) minutes somewhere in Melbourne and that was with Easter taking up a fair bit of the month.

Let’s look at a couple of suburbs which we randomly selected to give a spread of Greater Melbourne $M+ reported sales for the month of April 2011 compared to April 2010.

Price – In our opinion, backed up by REIV Median price results, we feel prices are definitely flat or falling and have been for the most part of this year and a lot of last year. When we say flat or falling we don’t mean plummeting – we mean a drop by as much as 10% over the last 12 months. However we are still seeing plenty of instances of the old property truism: If it is well located and has some WOW and the right price to attract multiple bidders then it is still possible for the ultimate buyer to be paying more than you would have expected last year.

Winter is upon us and buyers and sellers alike appear in a less enthusiastic mood than even a few weeks ago. Even so, we have bought more $1M+ homes this year to date than this time last year at the same time.  And why wouldn’t you buy now, unless you know something we don’t? Price and choices have been considerably better than last year.

$3M+ Market Report:
Back from a week or two off, this market now, has a fairly clear run till Christmas, with a only brief breaks for a couple of holiday weekends.

A couple of strong results today:

• Elwood 18 Normanby (Paul Sutherland) – Bought for $3,375,000, 4 bidders – see our video auction
• Camberwell 26 Alma (Alastair Craig) – Bought After – $Over $3,000,000 at asking – no bidders – there is that strange bidding thing again

Over the next four to six weeks we should see more choice and some reasonable activity (although not expected anywhere near the levels of last year), as the May market is a traditional agent preferred selling time. Why? Well there is a good stretch of time until Queens Birthday weekend to run an uninterrupted campaign. Stock Quality is the unknown.

Come July things will be relatively quiet as there is a general sellers’ feeling (rightly or wrongly) that good homes do not look their best at this time of the year and accordingly a number of high end selling agents take winter holidays in Europe and therefore do not program campaigns to be run in their absence.

In the post Easter week or so there have been ten or more high end sales including the representative  half dozen below

• 15 St Ninians in Brighton for between $8m and $9m – perhaps not a lot more than what is was sold for less than 2 years ago (need to look up sale time to be absolutely sure of date) – Justin Follett of Kay and Burton
• 255 New Brighton for between $5.5m and $6m – Regina Schmidt and Brian Devlin of Buxton
• 50 Hotham St East Melbourne which had been on the market for at least 6 months for $7million – Paul Richards of Hocking Stuart – on the market for a fair bit of last year and also a failed auction. Nonetheless a reasonable price – not everything the sellers wanted – but more than had been offered at times in the past by buyers. A good result for both parties.
• 150 Clarendon East Melbourne – the Salta apartments saw Anton Wongtrakun deliver another big sale at $5,200,000 for Unit No 4
• Out to the paddocks of Lower Plenty with a Marketnews favourite Rocco Montanaro of Morrison Kleemand who achieved close to $3m on an Expressions of Interest Campaign for a good home on 7 acres at 75 Cleveland.
• And we round up our selection of high end Easter Sales with a $6M+ sale at Mount Eliza 15 Freemans Road – Michelle Skoglund of Aqua

In summary over Easter the market at this level has not been dead, but definitely subdued – there is increasingly a dampening mood in terms of both buyer and seller confidence. Time will tell if this is a short or longer term phenomenon. Price will play a important part going forward as we seemingly move into more uncertain market conditions – i.e. ones that are not as clear as they have been in the past 2 years since we awoke from the GFC. Overall the market now and in fact all of 2011 has not been strong at the $3m+ level – but there are still enough transactions (especially in Bayside) of sufficient value to avoid holding a wake just yet.

With winter approaching and a fair amount of stock available we think it is a buyers’ market and the future is best described as – “uncertain times”.

Finishing on a positive note our James Investment Division has seen some solid interest with investors coming back into the market (rentals are improving) and one current flavor of the times is blocks of flats. Some examples of what we are talking about.

The Big Issue: Klarity Kris and Architect Adam discuss the big issue of the week – does this market, with prices currently dropping, have elevated risks for buyers ? See what the two have to say by clicking on the live action.

Auction Video: This week Cafe Guy heads to Elwood on what was a big auction day for the Port Phillip area. Watch  the auction video of  18 Normandy Rd (Sutherland Farrelly) by clicking on the live action.

Buyer Masterclass: Double-fronter or two storey, single-fronted cottage? Architect Adam explores this dilemma in this week’s Buyer Masterclass. It’s a great article check it out!

We Only Buy Homes and Happy Mothers Day Mum and in fact to all Mums – we love you all!

This lovely and fully renovated Victorian home was auctioned by Adrian Butera. In front of a quiet crowd of 55 people, the auction started with a vendor bid of $2,000,000 - a bid slowly followed by the first prospective buyer. Only 2 bidders for this property despite the proximity of the beach and the quality of the renovations. The property was passed in at $2,050,000.

Volume: Has a lot changed in Million Dollar Melbourne between April 2010 and April 2011? Well, yes and no. April 2010 had around the same number of REIV reported $1m+ sales (maybe a 10% variance with the chance of late reported April 2011 sales to bring the April 2010 and April 2011 numbers closer together) but on a count of over 500 buy/sells, not much has changed in terms of volume.

Click to Enlarge

However, even though the last market turned in April 2010, May 2010 was a boom month with well over 1000 REIV reported $m+ sales throughout greater Melbourne. Therefore May 2011 will be watched to see if it can get anywhere near those sorts of numbers, however we don’t think that will happen. We are still seeing a $M+ home bought every ninety (90) minutes somewhere in Melbourne and that was with Easter taking up a fair bit of the month.

Lets look at a couple of suburbs which we randomly selected to give a spread of Greater Melbourne REIV $M+ reported sales for the month of April 2011 compared to April 2010.

Price: In our opinion and backed up by REIV Median price results we feel prices are definitely flat or falling and have been for the most part of this year and a lot of last year. When we say flat or falling we don’t mean plummeting – we mean possibly as much as 10% over the last 12 months. However there is more than one isolated buy that shows an old property truism if its well located and has some WOW and the right price to attract multiple bidders then it is still possible for the ultimate buyer to be paying more than you would have expected last year.

Winter is upon us: Buyers and sellers alike appear in a less enthusiastic mood than even a few weeks ago. For us we have still bought more $1M+ homes this year to date than this time last year at the same time, albeit the number of homes we have purchased in the $3m+ range is less.  And why wouldn’t you buy now, unless you know something we don’t – price and choices are considerably better than this time last year.

Aaron Silluzio, Barry Plant (Ivanhoe): “Although the market has seen a correction over recent months, many vendors in the current market understand the scenario of meeting the market. Most vendors are prepared to sell their properties at a slightly reduced rate with the expectation of purchasing their next property at reduced rate as well.”

ST KILDA, 2 Marine Pde: On what was a bit of a rollercoaster day auction-wise, it was apt that the backdrop of this Claudio Perruzza (Biggin Scott) auction was the Scenic Railway at Luna Park. Passed in $1,850,000, no bidders

St Kilda, 367 Beaconsfield, a ripper property, finally sold with Andrew Macmillan for about half the initial very ambitious asking price after a long time on the market, with a number of different campaigns and agents.

Albert Park, 62 Barrett St (Peter Simmons) a  three bedroom Victorian single fronted with parking, showed that if the quality is there and the price is right, $1,575,000, then the bidders will come. There were 4 bidders at this auction. See report below.

St Kilda West, 10 Loch St with John Holdsworth sold for $3,650,000 at Private Sale after auction.

Damian O’Sullivan, Marshall White, Albert Park: “Post Easter, both buyers and sellers should expect to see greater sales activity. This has historically been the case over the years when the market briefly pauses for Easter and school holidays. The weekend of April 30 and beyond will see greater auction volume as a direct result. Typically, this will be the case until winter really sets in, but prospective sellers should see winter as an opportune time to contemplate selling as fewer properties will be offered for sale.”

Lets hope that with the interruptions of the past month behind us, we will see a bit more stock coming onto the market, post Easter. Traditionally that tends not to happen until Spring. But we can always hope.

Have a safe Easter – Guy.

ELWOOD, 107 Mitford St: Small crowd and only a vendor bid at this Rob Watson (Century 21 Wilson) auction. Passed in, $1,300,000

Last week we pointed out that valuing a home is a bit like different vegetable soup recipes. Everybody has a different way of doing it. However, in the end the most important opinion of value is yours.

But that doesn’t mean you should ignore what the rest of the market (the majority of other informed buyers and sellers) thinks the home you are after is worth.

Because while your opinion on value is the most important, it is possible to pay too much for a property. You can pay more than you needed to win the home and/or more than the market thought was reasonable.

When buying a home, most of us are looking at maximising our financial and emotional outcomes on the purchase. Correctly understanding the market value can help you do this because if you pay more for the home than the market thinks reasonable you are affecting four key elements relating to the financial and emotional outcomes of your purchase.

Let’s take a situation where you buy a home after it has been passed-in, or sold through a private sale or an Expression of Interest campaign. You really want this home and end up paying $3,300,000 for it, taking no notice of the fact that no-one else has been prepared to pay more than $2,800,000 for the property.

The first key element your decision will affect is Capital Growth.  Let’s say in five years time you sell the home for $5,000,000, making your capital growth over that time just 52%. However, if you’d paid the market value for the property, your capital growth would have been more like 79%. Taking that one step further, if you’d managed to buy the property really well, at say $2,500,000, your capital growth would have been 100%.  What that means is that, in the long term, if you buy two or three homes well compared to market valuation, in effect what you get is a free home.

Paying too much for your property will also affect the second key element Cashflow. By paying $3,300,000 instead of $2,800,000 you’ve got an extra mortgage of $500,000 to service. That’s an extra $3000 in monthly mortgage repayments (presuming interest rates don’t go up too much), or $36,000 a year, an amount that could have gone a long way to paying the family’s school fees.

Then there’s the third key element of Risk. Should your life not turn out as planned, which is what risk is all about, paying significantly over the odds greatly increases your financial risks in market downturns, job displacement, family crises and so on. Why? Because you simply have less discretionary money to ride through the tougher than expected times.

Finally we come to the fourth key element, the Emotional Outcome. The fact is that none of us like to find that we have paid too much for something (without realising). The homebuying experience sours and the joy of the floorplan quickly dissipates when you figure out you have paid $500,000 more than you really needed to.

So who is to blame if you pay too much? You may be inclined to blame the selling agent, but if you as a homebuyer end up paying more than you need to because you don’t do the necessary research or find a professional to do it for you, you can’t blame the selling agent for rubbing his hands in glee – after all his job is to get the best price he or she can for the vendor.

Remember then, that while your opinion of value is the most important it needs to be well researched. And part of that research is understanding what the market really thinks.

Printed each week in The Weekly Review – Melbourne’s Million Dollar Plus Magazine

70 people turned up to 31 Lambeth Avenue Armadale - did nothing and went home again. A typical Stonnington auction.

Key Points: We covered 7 auctions across Stonnington today. Four had 3 bidders or more and 3 had none. This is a true reflection of Stonnington now: good stuff gets support but there is precious little of it on offer.

Analysis: Our view is that demand is there – and this is supported by our buyer agent enquiry stats covering the $2 million to $6 million price range. The clearance rates and auction action or lack thereof is, in our opinion, a direct reflection of nervous sellers who are not putting quality homes onto the market. The market data in Stonnington is not reflective of an underlying, unsatisfied, stronger-than-indicated $M+ market. We refer to our key auction photo above - plenty of people but no action. If you look at our James Home Rating of the home in question you’ll notice it has a 501/1000 rating, i.e. borderline quality. If it was a goodie it would be attracting bids.

Bidderbuzz Auction: 31 Hawksburn South Yarra – Tom McCarthy – 5 bidders – Bought $1,957,000
Are there signs that the winter hibernation is over? That might well be the case judging by this auction where five bidders fought hammer and tongs to secure this two storey Victorian Terrace with the unusual luxury of rear off-street parking. Auctioneer Tom McCarthy managed the bidders with skill, keeping them all in the game. But alas there was only one winner with the eventual purchase price of $1,957,000.

A personal observation: The only reason we tend to focus on the big agencies is because they have the most homes on offer (ok, plus we like them). However, there is a niche double act making some noise at the moment: Tom McCarthy and his partner Philip Moore both of Biggin and Scott are producing very consistent multiple bidder auctions. I like their style and I think right now they are giving both buyers and sellers a fair shake. Well done. Between $1m and $2m in the Prahran to South Yarra precinct they are one of the hotter games in town, if you want a fair dinkum result.

Agent Comments:

Andrew McCann, Benmac, Armadale : “Not much juicy stock (although) we are seeing more mid-range than high-end. Big homes are affected by footy finals and holidays.  I don’t think the election is a factor.  Any volumes look like being in October rather than the next six weeks.”

Jeremy Fox, RT Edgar, Toorak: “There is a little bit of indecision at the moment because of the election. There are a lot of people out there who are frustrated as they are all ready to buy, but there are not a lot of good, quality properties out there. Hopefully the uncertainty about the election will soon pass and stock levels will change.” Jeremy we 100% agree with you – there’s a first!

Clearance Rates & Monitor Table:

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Rainy day but good result for Iain Carmichael (BenMac) at 12 Albert St, Malvern East. Bought under the hammer, with four bidders and crowd of 60.

Most market watchers were anticipating that once the election was over we would return to a normal, albeit somewhat lean, September.

However if in the aftermath of the election we see more buyers and sellers adopting a “wait and see” approach, it will mean an even quieter early Spring.

A large number of buyers and sellers are conservative and big decisions – like buying or selling a house – tend to be put off if there is an excuse.  So it is probable that with the ongoing election uncertainty they will move into their own form of “caretaker” mode i.e. Let’s wait and see. Meaning: Let’s do nothing.

This coming weekend is an auction biggie and with sellers already partially committed – in that they can choose not to accept an offer but they can’t stop the auction - the big question is what will buyers do?

Nobody could say the Melbourne Spring market has been boring in recent times. In fact 2006 was the last “normal” Spring market. Since then we have had the 2007 Gangbusters Spring Market; the 2008 GFC Spring Market; and the 2009 Recovery Spring Market.

Spring 2010 may well provide us with yet another Spring Market Scenario – perhaps we could call it the “Hung Market”.

A Hung Market could be one that is indecisive in terms of stock level or demand and therefore ultimately inconsistent in terms of price.

What that means for you as a buyer is that you are going to have opportunities and issues.

Some opportunities

• If you are negotiating on a house that you think meets your needs but you’re not desperate to buy, you may be able to work the price better.
• Given the reduced competition at auctions, vendors may be more ready to do a deal before going to auction.
• There may be more off-market sales – and you may be able to negotiate better prices if you know where to look because some sellers may be more keen to sell in a “Hung Market” than in normal Spring markets.

Some issues

• Methods of sale will most likely change and there will be an increase in pre-solds and post-auction negotiations – so you need to have strategies and expertise to deal with this.
• There may not be as many good properties coming onto the market because a number of discretionary vendors might not even go to market. Therefore if you see a good home you will need to consider a couple of different strategies: one to secure the property and one to pay a fair price.

In our opinion bidder numbers (which are already low according to our Demand Indicator Bidderman) will be the key indicator as to the “election effect”. So with the election uncertainty the talk will quickly move from Spring Stock levels (supply) to Bidder numbers (demand).

Who said property is boring? Stay Tuned!

We Only Buy Homes

Negotiation styles.

Some say negotiation is as much about style as substance. There might be some truth in this. But when it comes to buying high level homes I believe it may be more about substance than style – even if a good story from a smart agent still gets me and a client over the line at times.

As agents we are used to seeing the following styles from inexperienced buyers and sellers:

1. Hit and hope
2. Damage Limiter
3. Begging

Yes the above really are styles – not ones we would recommend on a regular basis but they are all some buyers know. The plus side of them is that they don’t require any preparation work and they don’t require any expertise. The downside is they often cause stress, either during the sale – or post sale, especially when you have missed out or gotten stung. You can read more about them below and why they mostly don’t work.*

Two other common and somewhat more successful styles we see are:

1. Carrot and Stick:  aka the “pleasure and pain” or adversarial style
2. The win-win or diplomatic/compromise style

Carrot and stick is used by many selling agents

When a selling agent gives you an offer to buy a home,  the carrot and stick approach works like this:

• If you pay this price you will get a Carrot (buy the home)
• If you don’t pay this price you will get a Stick (miss out)

The carrot is pleasure (reduced stress) and the stick is pain (fear of loss)

Sometimes agents use this carrot and stick approach a number of times to work buyers up a price ladder. They may also use bait or lowball quoting to get you into the game and then when you have some emotional attachment apply the carrot and stick technique.

The most obvious carrot and stick or pain v pleasure negotiation is the Auction. It is an adversarial situation and for some it can be brutal.

If you’re an experienced buyer you can apply or return fire with a carrot and stick approach by telling the agent: “here is the offer (carrot to remove stress) and here is the deadline” (stick with fear of loss attached). But the offer needs to be correctly structured or else there is no carrot to the seller and if there is no carrot, then there is also no stick.

When one party is in a stronger position than the other a carrot and stick approach can be very effective. I am a big believer in it as long as it is used ethically.

The win-win or diplomatic/compromise style

An alternative negotiation style is the art of compromise or skilled win-win negotiation. It is not our only or even preferred style, but it is the style we most commonly apply outside auctions.

Win-win is about finding common ground by considering the other side’s needs and seeing if they can be accommodated – and in return having your needs considered.

It’s a collaboration between buyer and seller, and at the highest levels when you have a savvy buyer agent and a savvy selling agent it can be the most effective way to get a deal done.

That does not mean that there are no potential ‘pain and pleasure’ outcomes, it’s just that there is a little more decorum and some genuine mutual benefit (for the clients first and foremost) involved.

Unfortunately some inexperienced homebuyers try to negotiate using a win-win attitude while they are in fact being beaten over the head with a stick – with no hope of getting the carrot.

Win-win is hard to play but is not impossible in isolation. Carrot and stick can be played on friendly, respectful and ethical terms if either or both parties so choose. However in my opinion (which has changed over the years), the level of skill each side employs in using the style affects the result more than the style itself.

For me there is no one style or right style to negotiate. In fact while Mr Mandela or Mother Teresa were brilliant negotiators at their peak, they would not have been exclusively win-win dealers either – it’s more likely they would have been very polite users of the carrot and stick style.

Kay and Burton’s Jason Scillio, buyer advocate David Morrell and Jellis Craig’s Nick Elmore are fine players with the Carrot and Stick. Some of the best win-win dealers I can think of are Mike Gibson of Kay and Burton, James Connell of Marshall White and Jenny Dwyer of Hocking Stuart. And the above, I’m sure, are equally as good with a different style. That is not to say that there are not many other first rate negotiators out there, nor that you have to be an agent to negotiate effectively on a home (but in my opinion it’s certainly an advantage).

However for all the talk of technique, showmanship, bravado or charisma I would still place hard work, preparation and experience ahead of style issues when it comes to high level wheeling and dealing.

Tony Abbott is a classic in this sense – he doesn’t come across as a styled negotiator but makes up for it with substance, preparation and doggedness. (I’m a swinging voter by the way not a Lib.)

I have found the most effective “style” negotiators are the ones that have adaptability and therefore are not 100% predictable. I like and use win-win but for me the carrot and stick is just as effective. It’s about horses for courses.

*More On Three Other Commonly Used Buyer Techniques

Damage limiter style or technique: This is where dad or a relative comes in half way through a negotiation. They imply they are only here to help – but the vibe they give off is one of desperation. The simple fact that they are now involved gives the selling agent a very clear message, and an experienced agent can work this buyer technique a treat. Why? –  because if dad doesn’t get the prize the agent knows dad is in big trouble…

Hit and hope: This is a favourite amongst way too many lazy buyers. They can’t be bothered working out the price or a strategy correctly, and they don’t have a negotiation style or technique, so what they do is add 10% for auctions and deduct 10% for private sales off the agent’s quote – and they go in swinging. It’s like a windmill style. Occasionally you get lucky and it can work – especially if the agents just can’t get a read on what you are about. The downside is that this devil-may-care style operates on very poorly researched foundations.

Begging: Any of us blokes who have been married for a few years knows what the begging style is. In fact sometimes it’s the only one I’ve got. But with an agent who is working for the seller it’s a disaster style.

Toorak 58 Washington St: Mark Wridgway and Michael Ebeling: 2 bidders bought afterwards for $3,350,000.

Highlights:

• Everything sold that we were monitoring – 12 from 12. Hard to argue.
• Two five bidder auctions – both Tom McCarthy and Philip Moore of Biggin and Scott -  14 Green Prahran – $1,653,000 and 13 Hornby Street - $1,476,000.
• Prahran was hot because it also had the second highest sale at 41 Closeburn Prahran with Andrew Macmillan of Benmac – $2,586,000
• The top sale we witnessed this weekend was with Mark Wridgway and Michael Ebeling of RT Edgar at 58 Washington St Toorak. $3,350,000 post auction or for land buyers in the area $3900 per square metre.

Agent Comments - This week we asked if the election was affecting the market.

John Morrisby, Marshall White: “Nobody has really mentioned the election”.

John Manton, Marshall White: “Prices dropped and have now plateaued; Buyers – fewer than May but normal for this time of the year. Still the same number of listings for August 21 as if there was no election.”

Iain Carmichael, Benmac: “Elections used to make a difference to the real estate market but this is no longer the case. I have only been requested to shift one auction from the 21st. For buyers and sellers the election weekend represents a good opportunity to buy/sell as we move into a busier time in spring.”

Hugh Tomlinson, Marshall White: “People just wanted to know when the election was on. Once they knew they acted  – In fact one vendor actually booked in on election day.”

Jason Scillio, Kay and Burton:  “Major effect on $3m+ market. Sellers have stopped signing on till September. Will be a lot signed up in September for an October/ November campaign so a good buyer advocate should be able to get you through pre release homes in September. Consequently with new stock light on the ground right now I think buyer activity is quite minimal.”

Clearance Rates and Monitor Table

Buying Activity

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