Buying a home is a business interaction – and business interactions involve dealing with different business cultures. So just as business people need to find the most appropriate way to interact with people of different cultures, so too do home buyers have to find the right way to deal with selling agents.

There is an overall culture among selling agents and there are many sub-cultures within different agencies, just as there are within cities, football clubs, even families. Understanding, and working with, these sub-cultures usually yields better results than fighting against them.

A first step to gaining an insight into agent culture is to consider the overall big picture: that agents represent sellers first and foremost (and, despite the bad press agents sometimes get, most of the good agents do really do this).

Taking this one step further, some selling agents have a culture of win-loss: the seller can only win if the buyer loses.

The next helpful hint is to understand that you are on their turf. In footy terms, when you begin negotiations you are playing an away game. Be mindful therefore that the wind may blow in a direction that the agent knew but wasn’t obvious to you.

In inner Melbourne, one of the first agent “cultures” that new buyers have to learn quickly is the concept of “quote  ’em low and watch  ’em go.” It’s endemic and not likely to change in a hurry because unfortunately it often works against the inexperienced. But this is not an article about that.

Once you have done twenty or so deals with a particular agency you will start to get a handle on the overall agent culture(s), and you will also start to develop insights into individual agency “clan” cultures.

To reiterate: better negotiations generally come from better understandings. And while you may not agree with the way the game is played, you can often achieve a better result if you understand the players and the game you are in.

For example, here are some of the sub-cultures we see in some of the Melbourne real estate agencies we deal with regularly:

Jellis Craig: Under the leadership of Scott Patterson, Richard Earle and Richard James, Jellis Craig’s sub-culture has changed in recent times to a more professional consultative culture.

RT Edgar: Led by Jeremy Fox in the toughest game in town – vs Kay and Burton. The sub-culture of this company is one of approaching every day with the view of ”what deal can be done?”

Kay and Burton: The five pillars, as we call them  – Ross Savas, Peter Kudelka, Jason Scillio, Mike Gibson and Gerald Delany  – have a sub-culture based around considered planning, preparation and professional presentation. A deal can’t be rushed.

Marshall White: Led by James Connell and John Bongiorno, this company is also highly structured. They have a competitive and very professional sub-culture.

Biggin and Scott : Local flavour is very much part of their sub-culture.

Noel Jones, Benmac, Buxton, Hodges, Barry Plant, Nelson Alexander and so on all have very different sub-cultures.

I’m sure you have run into agents who treat you like dirt (although this is a lot less widespread than ten years ago). And you may find that you visit home after home where these agents are from the same company. It’s all about culture and leadership from the top. If the company’s leadership has tight commissions, poor training and low ethical standards which encourage a “dog eat dog” attitude among its sales staff, that can manifest itself in poor interactions between buyers and agents. But rather than reject that and rule out a number of homes because of the agent, you can recognise the culture, understand why it is happening, not take it personally and then use it to your advantage in structuring an offer. In many cases, agents with a chip on their shoulder can be a smart buyer’s friend.

Of course, the reverse is also true and in any one of the above companies you will find the majority (if not all) agents operating in a professional culture where you will be treated in a manner that may lead to a result that made you feel good during the process but …

Understanding culture is very different from understanding buying or selling techniques. For example, if your pre-auction offer is shown to everyone else for 24 hours before it is accepted or rejected, that is a procedure. To be told by an agent that there is another offer even if there isn’t, is a technique or a strategy, not cultural. But to think that all buyers are liars – that is a culture.

There are problems when buyers want to, or become focused on, changing agents’ culture. I would like to see some changes to make private sales a more open process and legislation to make post-auction negotiations a more level playing field. However, while that is a wish, it is not my primary aim when involved in deals day to day. My primary aim is to get the right deal for my client. Any of my cultural change agendas are best served through REIV committee work, agent lunches and other forums. But when the deal light is flashing, I, for one, am not thinking about cultural change.

Besides that, changing cultures in countries, in clubs and within real estate agencies, is not an easy or instantaneous thing.

And, of course, it won’t have slipped past quality selling agents that our company individually, and we as buyer agents collectively, also have cultures – and a number of quality selling agents understand that and deal with us accordingly.

Overall, you may have noticed, in general, that buyer agents’ culture with regards to selling agents is moving from animosity towards understanding, and vice versa.

Selling agents, agencies and auctioneers are all different. There are cultures you may not like, but, in the context of a six-month search and buy, you need to ask yourself whether your priority is to resist or fight to try and change a culture, or whether you should simply ignore homes whose agent culture you don’t care for. You may find that your needs are best served by understanding and finding ways to operate within an agent’s clan culture.

John "The Boss" Morrisby (Marshall White) can sense a sale in the air. 11 Evandale Rd, Malvern, bought after for an undisclosed amount over $1,550,000. Two bidders.

Key Points:

• Only two from the nine we attended were bought under the hammer, however five from the nine were bought after auction
• Big improvement on Clearance Rates on reasonable number of monitored auctions (21 $M+)

$3m+ sales this week:

• 1 Myamyn Street, Armadale – Andrew Macmillan of Bennison Mackinnon ($3,215,000)
• 6 Bonview Road, Malvern - Peter Bennison of Marshall White (0ver $3,600,000)
• 1 Hopetoun Road, Toorak – Justin Long of Marshall White (over $5,500,000)
• 15a Sorrett Avenue, Malvern (Passed In from several weeks ago) – Andrew Hayne of Marshall White (over $3,200,000)
• 19 Acland Street, South Yarra – Warwick Anderson and Greg Herman of RT Edgar ($3,600,000)
• 1a Como Ave, South Yarra – Michael Ebeling and Jeremy Fox of RT Edgar (over 6,o00,000)

A funny thing happened at an auction:
1 Hopetoun Rd, Toorak, John Bongiorno, Marshall White, Bought after, undisclosed amount:
Those that were there for the Hopetoun Road auction and left quickly would say “Hey Jack – nice suit, reasonable spiel – dud auction”. Those that hung around would say, when they heard it was bought and at a price believed to be well in excess of the vendor bid, would go “Hey Jack – nice suit, impressive post-auction manner, great result”. John Bongiorno and Justin Long, Marshall White.” (Mal James)

Agent Question: How are you finding the market?

Peter Kudelka, Kay & Burton: “People are sitting on their hands. If I hear one more time `I’ll wait and see’, then I think I’ll go mad! What are people waiting for? (Editor note: this was said with Peter’s typical dry sense of humour but it was an honest reflection – we like those that don’t spin) Buyers are out there and will make an offer, but not with the sense of desperation as per earlier in the year, and they feel if they don’t get it, then there will be another because the market is not really advancing. It has plateaued. Upper end apartments are still slow, except under a million. Investment stock is selling well. Apartment buying goes in waves and it is always interesting to see when the next wave is. The election has given people an excuse not to make decisions.”

Bidderbuzz Auction of the Day:
19 Acland St, South Yarra, Warwick Anderson, RT Edgar, 4 bidders: “After a day of pass ins and relatively low attendances, it was nice to attend an auction with multiple bidders all looking to secure a fine property in a much sort after area. Four keen bidders kept auctioneer Warwick Anderson’s attention as they showed their interest early, bidding strongly and quickly looking for that knock-out blow. It came fifteen minutes later for a price of $3,600,000.” (Guy Angwin)

Clearance Rates & Monitor Table:

We Only Buy Homes

John "Jack" Bongiorno (Marshall White) braves the wind and the rain at 6 Bonview Rd, Malvern. 3 bidders, bought after for an undisclosed amount in excess of $3,600,000.

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:

We Only Buy Homes

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.

Hampton 10 Ocean: When it's a goodie they still come to watch. Jenny Dwyer of Hocking Stuart manages 3 bidders to an undisclosed bought after result in excess of $2,400,000.

What we saw today?

Of the 10 properties we covered in Bayside this weekend, 7 were pass-ins and 3 were bought.

The total number of bidders for the 10 properties was 14, putting our demand indicator Bidderman at 1.4.  However, 6 of the 7 pass-ins had no bidders at all!

Two different cases today with bidders were 10 Ocean Street, Hampton with Jenny Dwyer & Stephen Tickell of Hocking Stuart and 10 Cairnes Crescent, Brighton with Jonathan Dixon of JP Dixon.   Ocean Street, an iconic Hampton property, had 3 bidders. Bidding opened at $2,150,000 and the property was passed in at $2,390,000, selling after in the mid $2,400,000s.  10 Cairnes Crescent had 2 bidders, the property also passing in for $2,075,000 – however, this property remains unsold.

A few properties did sell well  under the hammer this weekend.  The large land sale at 31-33 Crisp Street, Hampton is one example.  It had a fantastic position, with 1745 sqm of land and a north rear garden.  John Speers of JP Dixon watched 3 bidders fight it out in front of a crowd  of about 90 – the property finally being bought for $2,860,000.  That’s $1638 per sqm.

Leigh Hallimore of Buxtons auctioned 6 Mayrose Crescent, Brighton East for $1,420,000 with 6 bidders.  That’s right –  6 bidders!  That means that of the 14 bidders across the 10 properties we covered, 6 of them (almost half) were at 6 Mayrose Crescent (and the other half were at Ocean Street and Crisp Street).

According to Miriam Carraro of Hodges Real Estate: “The property market has levelled out, but it hasn’t dropped. However, some properties are staying on the market longer”.  She thought strong prices were still being achieved.  In terms of the choice of methods of sale for properties at the moment, she thought that was subject to the type of property and the vendor’s wishes.

The Big One (see auction video)

At the auction of 6 Head Street, Brighton, which passed in on a vendor bid of $7,000,000,  auctioneer Jeremy Fox of RT Edgar mentioned that, “if properties were quoted in the right price range, they were all selling”. I think the case of 6 Head Street is an exception to that comment.  Below is Mal’s comment from his 822/1000 James rating:

“This is 838sqm of absolute beachfront on Brighton’s prestigious Golden Mile.  This should sell; it’s just a matter of time and the right buyer.

6 Head Brighton: Passed In $7,000,000

“It really doesn’t get much better than this if you want views, waterfront, space and a rare block. The house may or may not be your cup of tea but STCA, that is your call. What’s on offer is Absolute Golden Mile Beachfront. The last auction of this size and calibre I attended was the famous “late or not late” bid auction at 2 Cole St which was in many ways an almost identical offering. It sold for $7.3 million under strong competition last year. The market has changed dramatically since then; it’s been well up pre Christmas and more recently been down – but the Bay, the land and the view hasn’t. The quote is $7.5m+ and, if that relates to the reserve, then it is a fair quote and the final result – be it before, during or post auction – will be a fascinating one. Our experience is that the Golden Mile is transacting, having bought there for 2 clients within the last 3 months. Such are the vagaries of this market in June 2010 that this timeless. classic, exclusive Brighton waterfront address could get $8million and more in a heartbeat. However, it could also struggle well below that.”

Clearance Rates

32 monitored – 14 bought – 44% clearance rate (last week 40% / week before that  46%)

Apartments

We are monitoring two Golden Mile apartments at present: one for Private Sale and one for Expressions of Interest

3/9 Glyndon Avenue Brighton with Ian Jackson and Alex Schiavo of Kay and Burton. James Home Rating 812/1000 “If Jon Friedrich has built a bad apartment I haven’t seen it. He is one of Melbourne’s top apartment designers and architects and this one in Glyndon is no exception. Top level for security and light (north), lifts for the “getting olders”, underground car park for the car lovers (3) and three big bedrooms all with quality ensuites for the owners and their sleepover guests.

5/23 St Ninians Road Brighton with Sturt Hinton of Kay and Burton. James Home Rating 649/1000. “Position is not in question if you want water views – if you want coffee shops, rail and cinema on your doorstep then as with most of the Golden Mile you are on the edge of walking distance. Not that getting into and out of your car is a problem. Space security and lifts give you everything you would expect with a $5m price tag. The apartment itself lacks a little excitement as the spaces and flows are faultless but unimaginative. In the end it’s about the view and this is exceptional.”

Both ratings can be viewed at www.james.net.au and click on home ratings.

Plenty to think about in this changing market.

Why not click onto Ladies in Red and hear Bayside agents Jenny Dwyer and Barb Gregory discussing male to female real estate issues.

Happy Wife Happy Life

Hampton 31-33 Crisp: John Speer of JP Dixon put 3 bidders through their paces to get a result of $2,860,000 in front of a big crowd.

St Kilda 35 Vale St: Today with the rain, it's indoors, up close and personal. Matthew Young of Buxton firing up two bidders on the way to a bought price of $1,192,000.

At 6pm Saturday the James Million-Dollar-Plus Clearance Rate on the 35 auctions we attended was 51%. Our Demand Indicator, Bidderman, was up at 1.7 – still hanging in there.

PRICE CORRECTION
There is no doubt the market has eased, “corrected” – call it what you like. One easy word to understand  is “dropped”. On a few properties it has dropped by 10% since Anzac Day.  Some homes – mostly the higher quality ones – haven’t missed a beat. But for the majority, what seems to have occurred are minor falls – although that’s hard to prove specifically.

The statements from the selling agents seem to be leaning strongly towards a “supply based correction”. At this stage we agree. If we keep seeing large amounts of stock come onto the market in June then it’s logical that prices will continue to fall, until some balance returns.

SUMMARY CLEARANCE RATES
Overall the clearance rate was 50% for 124 auctions we monitored in Port Phillip, Boroondara, Bayside and Stonnington. That’s in line with our James Million-Dollar-Plus Clearance rates – confirming it again as an accurate measure of Million-Dollar-Plus Melbourne.

• Bayside – 35 monitored – 14 bought – 40% clearance rate (last week 46%)
• Boroondara – 46 monitored – 24 bought – 52% clearance rate (last week 70% )
• Glen Eira – 9 monitored – 5 bought –  55% clearance rate (last week 55%)
• Port Phillip – 11 monitored – 6 bought – 54% clearance rate (last week 32%)
• Stonnington – 23 monitored – 15 bought – 65% clearance rate (last week 69%)

Highlights

• While 8% were not reported, indicating a reasonably high degree of accuracy for clearance rates, the numbers of unreporteds are increasing.
• Stonnington sellers seem to have made the price adjustments that some Boroondara owners (“wannabe” sellers) have not.
• Some ripper auctions included 50 Hawthorn Grove Hawthorn (Paul Keane of Jellis Craig), 23 Ferncroft Ave Malvern East and 2 Carmyle Avenue Toorak, both with Jeremy Fox of RT Edgar. These auctions saw four or five genuine bidders (well above the 1.7 Bidderman average)
• Selling in Million-Dollar-Plus Melbourne seemed a coin toss – you had as high a chance of your property passing in, as selling on the day – the first time since 2008.

SUPPLY OVERHANG BUILDS
First some stats. Last Saturday’s (May 29) Auction results showed strong evidence of “auction overhang” in Port Phillip where the clearance rate was 32% clearance rate on the 22 auctions we monitored.

Seven days later the reported clearance rate had lifted from 32% to 45%, with only three of the pass-ins and unreporteds reported as having been bought. On this evidence, it seems a stretch to say that in Port Phillip Million-Dollar-Plus homes are being bought soon after auction. There is overhang elsewhere in $Million Melbourne but not as much as Port Phillip. Which suggests the chance of bargains there.

What Supply Overhang means to you, the buyer
1. More choice, given that new stock has to compete not only with other new stock, but with old stock which hasn’t sold yet.
2.  Better pricing on all homes as there is real competition for the first time in a long while – providing of course you understand the negotiating game and know how to play it.

UNREPORTEDS
Practically all last week’s unreporteds were still for sale on Friday – suggesting that the REIV view that 50% of unreporteds are in fact sold does not seems to apply to the Million-Dollar-Plus  market.

ARE METHODS OF SALE CHANGING?
Perhaps in Bayside but not yet in other areas. Look at the latest 50 homes advertised for sale on the website www.realestateview.com.au

THE SEARCH & NEGOTIATE GAME HAS CHANGED
We feel there are at least four things all buyers should be considering:

1. Most importantly – home buying is still about best meeting your needs and taking a 5-10 year longer term view
2. You need to sharpen your methods on checking all homes – especially pass- ins
3. You need to monitor stales (old unsold homes)
4. You need to reconsider offer techniques

Let’s look at point 4 in more detail:

RECONSIDER OFFER TECHNIQUES
Let’s look at a real life example in detail: one particular property we bought today was 27 Eddys Grove, Bentleigh with Chris Hassall from Buxton. It had a quote range of $975,000 to $1,050,000. We thank our client for his permission to publish these exact figures.

From the top:

1. On pre-auction Friday we were told the property was on the market at $1,150,000 and that it would be sold that day (Friday).
2. We checked the website on Friday and saw that it still had a quote of $975,000 to $1,050,000. We asked: Would we buy it if we paid $1,150,000? We were told that we could if no better bid came in.
3. We hadn’t made a bid – so we were trying to work out how it was on the market at $1,150,000.  

First Offer Technique considerations (pre auction). What would have happened if you had bid then based on that information?

Anyway it didn’t sell, and come auction day the quote on the website and in the paper remained at $975,000 to $1,050,000. At the auction there was an opening bid of $1,000,000. Another bidder joined in and so did we – making a bid for $1,040,000. From $1,100,000 onwards we asked auctioneer Craig Williamson if the property was on the market. We were told “No” – despite the fact that each time we asked we were $50,000, $60,000 and then $70,000 above the top end of the quote. (Please note we make no claim this is out of the ordinary or an illegal practice as the REIV and CAV state this behavior is fair enough).

Second Offer Technique considerations (during auction). What happens if you had not bid, bid differently, or put in a killer bid?

Eventually the property was passed in to us at $1,120,000. We stood there in the sprinkling rain for five minutes before a Buxton salesperson came to us – they were too busy talking to the underbidders and other interested parties. My client, through us, was the last person Buxton spoke to. We are sure there is a perfectly acceptable explanation for this curious behavior. But versions of this happen at many auctions.

(Let’s point out at this point that we have good relations with Buxton Brighton and less than a fortnight ago we bought another $1m+ home through the Bentleigh office and were treated well by Ivan Blow and Craig Williamson.)

This story is not about Buxton or Chris Hassall (whom we think is a solid agent) – after all they got a good price and did nothing that many on the selling side considers untoward.  No – this story is about whether you as buyers have the right offer technique and strategies to best manage your options in this changing market. It shows the importance of good offer technique pre-auction, during the auction and post auction.

Back to 27 Eddys Grove: we were eventually given the reserve of $1,150,000 – with the additional strong advice that if we did not take it, then the underbidders would immediately be given a chance to submit their offers, and that the highest offer would win. While that would have been intimidating to the uninitiated, for us it was no problem. Technically we were being given first right of refusal.

After consulting with our client, we accepted. We felt the reserve was reasonable, we felt we needed to separate ourselves from the other bidders and our client really wanted this beautiful home. It was not a time for bravado but a time for cool heads, was our recommendation.

Third Offer Technique considerations (post auction). What happens if you decline or the stated reserve is a lot higher?

The case of Eddys Grove, like many others, begs the question of why the agent wouldn’t just quote the home at the fair reserve level of $1,150,000? That’s another story and a never ending battle with many agents. But we digress – our focus is Buyer Strategy and Offer Technique.

During any auction campaign you have three very distinct offer times: Pre, During and Post. As the going gets a little tougher for sellers so it will for buyers. So, as the stakes get higher, you will need to sharpen your offer technique before you count your chickens.

OFFER TECHNIQUE – THE CLAYTONS RESERVE  (The false reserve)

1)      What happens if you don’t know how to play the pre and post auction games? Do you join in and just keep bidding against yourself in this market; given you are possibly the only bidder – or do you miss out if there really is another bidder?

2)      What is there to stop the auctioneer at a pass-in telling you the reserve is $400,000 above the quote or their real reserve - and that if you don’t pay it they will offer it to the others? What can you do to defend yourself against a Clayton’s Reserve when you are the highest bidder playing by the stated rules? What strategies do you have?

3)      If, as a buyer you are offered a property with a Clayton’s Reserve and you refuse – does that mean the auctioneer can offer the property at a different reserve to somebody else? Or do the others have to be given the same Clayton’s reserve?  Do they come back to you? How do you as the highest bidder manage this?

For now, in the interests of our clients and to discourage this illegal behavior (The Clayton’s Reserve), in cases where we have won the right to hear the reserve and we consider we have been given a Clayton’s Reserve we will now publish (if we get our client’s permission) the agent’s name and the Clayton’s reserve given to us, We will also send a note of complaint to the REIV and ACCC. If any of our behaviour is as inappropriate as the Clayton’s Reserve, then by all means return our return serve back to any of our advocates.

We have a good many excellent selling agent relationships. They are important to us personally and professionally. We are shown many courtesies and keep many confidences (as we should and will continue to do so). However we are giving fair warning to selling agents, who, by way of example, quote $2 million and then tell us, when we have won the highest bidder right at auction, that the reserve is $2.4 million.

Agents, we would much prefer to deal fairly with you. Why abuse the auction system? If you want to do that why not use Expressions of Interest or some other method of sale?

Our offer technique management, in this instance, is to return the serve right back at you as hard as we can. We will still negotiate, but our relationship on the home in question will continue beyond the buyers and sellers signatures. If you think we are bluffing a Clayton’s Reserve from you will find us both out.

Apologies if this seems a tad emotive or self serving but the Clayton Reserves are continuing and we represent buyers and think these kinds of “Reserves” are legally and morally wrong. Simple as that.

Let’s move on.

Congratulations to Andrew McCann of Bennison Mackinnon on 115 Stanhope Grove Malvern, whose company to our knowledge is still the only publicly declared Melbourne based real estate company with reserves in their quote range. We videoed their auction today – it should be up tomorrow. Their quote was $2,100,000 to $2,300,000. The property passed in at $2,150,000 and with some negotiations was bought post auction for $2,255,000 by the buyer it passed into. That seems solid agent work. Fair buyer quoting; stated reserves.

Now let’s really move on – did you hear the joke about the leprechaun …

Buy Happy

Mal

PS  No Market News next week as its Queens Birthday Weekend and Council Wraps up tomorrow (Sunday)

Toorak 2 Carmyle: Looking like an almost drowned rat - Jeremy Fox from RT Edgar firing 3 bidders up with his banter and a smile. Bought under the hammer for $3,375,000.

Sorry did you say 5 bidders! This is June not April. A great Jeremy Fox RT Edgar auction took place at this home 23 Ferncroft Avenue Malvern East. Bought under the hammer for $3,560,000

Stonnington seems to have got itself back into the game with a second “OK, sort of – almost normal” auction week in the 60’s clearance rate wise. We monitored 23 homes of which 15 were bought; that’s a 65% clearance rate (last week 69%). Of the auctions we  attended 7 of the 10 were bought.

What’s happening? Price reduction is happening. The buyers are there!  Buyers got hit early May with a lot of stock and could see a lot more coming and they paused. That meant things didn’t sell as easily as April, pass-ins occurred and prices dropped. Stonnington sellers have had two more weeks than those in Boroondara to face the “new order” and they have used those two weeks to price adjust and things are now beginning to move again at auction. Welcome back sellers – lets see what happens from here.

High Noon for K&B

It was a case of Toorak High Noon for Kay and Burton today with 3 substantial properties for sale around midday. One sold before (3 Cleeve with Andrew Baines) and two failed to attract any auction bidding interest (9 Kenley and 10 Moonga). The thing of interest is Kay and Burton’s new style of auctioning.

1)      Run the campaign and gather intelligence but give little way

2)      Tell everybody the ball park figure on Auction Day via a Vendor Bid and then shut it down quickly.

3)      Deal with the brave and inquisitive under pressure afterwards.

For the most part we thought this was not working early May – early June I’ve become a believer for now. It’s a well thought strategy. Early July let’s see …… Kay and Burton is a very strategic company; they run campaigns in waves – feeding off each other, regrouping and then going again. It was no coincidence that May was a stellar of stellar months for their vendors and themselves - they had obviously been planning it since Christmas. K&B appeared to lose their way for a short time when they focused on others; but the generals have pulled hard and the well oiled Millionaire Machine is back in full swing.

EOI

They are back and moving along. We have just assessed a really interesting home at 3 Avalon Road Armadale (Ross Savas of Kay and Burton). We have a rating on it and price thoughts. If we can help you through the EOI maze please give us a call.

Andrew McCann of Bennison Mackinnon’s thoughts on EOI to the question, “do you think EOI are increasing and working at the Top End”?

We don’t deal in a lot of EOI campaigns and as a company we don’t think they work as well as the Auction method so they are rarely suggested. Buyers tend to find them confusing and prefer to either know an asking price for a Private Sale or bid in a transparent and open environment which an Auction allows for. They do have a place at the “very top end” of the market and for some “unique” properties however from the more recent EOI campaigns we have seen they don’t seem to be working.

Twoday.com.au

Marshall White – the ever innovative have launched a new under a million, new age, internet savvy, younger persons company (I think I got that right). The main aim is to give a focus to this very important market while still allowing Marshall White to keep its exclusive high end identity. Darren Saunderson heads it up and while it is not our market, we will watch with interest. Good Luck with the new venture. 

Its not million dollar news but intersestingly South Yarra produced 18 results for a 78% clearance rate today however not one of  the sales was over $1million. Below are the results around and over a $million.

Make Good Decisions

Looking good Lachie! One of our favourites Lachlan Fraser-Smith ably assisted by Simon Dale gets four bidders zinging to an "under the hammer price" of $1,672,000. Prahran 1 York Place.

The studying face of RT Edgar’s Richard Hornidge and the Svengali like hands of Warwick Anderson. South Yarra: 281 Williams: Passed In with 3 bidders for $3,680,000.

We were scheduled to cover 36 auctions in many suburbs this weekend and 5 properties were bought before auction. The number of pre-sales has been slowly increasing recently and may reflect an emerging group of vendors who have become concerned/ realistic about the price to be obtained at the auction.

The price obtained with a pre-auction sale will not necessarily be less than that obtained at an auction but it will certainly lower the tension of not receiving a bid at the auction and then negotiating with a single buyer. An example of such a sale was 23 Fawkner  St South Yarra. This was a spectacular renovation of a cottage in an indifferent street with an indicative quote of $3,000,000 – $ 4,000,000. Three bidders were interested at over $3,500,000 and it sold for over $3,600,000. A good result for Ross Savas, and his Kay & Burton team.

The second type of Vendor could be the person who likes the spectacle of the auction but is willing to listen to his agent and set a realistic reserve. A sale will often occur and all parties walk away with contented smiles on their faces. An example of such a sale today was 9 Glen Road, Toorak. Although the property was passed in after a vendor bid of $3,100,00 and a genuine bid of $3,125,000, subsequent negotiations with Andrew Hayne of Marshall White allowed a buyer to purchase at $3,300,000. This property was a well renovated art deco house, with some issues – but one with a polished renovation.

The third type of vendor could be the person who loves the theatre of the auction, but who believes he knows the market better than the market. The auction may or may not produce a bid – but it will always be less  than satisfactory to the vendor. Recently there have been more auctions of this type and a number of sales agents are increasingly talking about vendors getting ahead of themselves and the sales agent is spending an increasing time in managing expectations (downwards).

We saw some good results in Stonnington today on homes we covered: 23 Fawkner Street( as detailed above), 45 Bruce Street, Toorak was bought through Rae Tomlinson of Marshall White for $3,100,000 ( essentially land value at $4354 psm) and a Glen Eagles town house at 68 A Nicholson South Yarra bought through Dean Gilbert of Marshall White for $1,205,000. Another good result was the purchase of  a terrace on Inverness Street Armadale through Anthony Grimwade and Jeremy Fox of R.T. Edgar which was bought for a strong price at a  shade over $1,660,000.

However below gives a representation of 29% reported bought on 17 scheduled auctions.

With the majority passed in on a Vendor Bid we estimate Bidderman across South Yarra and Toorak auctions was 0.5. One of the lowest on record (including 2008)

Luxury apartment sales should see some activity in the coming weeks with three – four good properties being recently listed. They include 1/23 Washington Street, Toorak ( Tim Wilson of R. T. Edgar); 2/9 Heyington Place Toorak ( Warwick Anderson of R. T. Edgar and Geoffrey Wilson of Geoffrey Wilson) and 2/ 45 A St Georges Road Toorak (  Gary Ormrod of Kay & Burton and Carla Fetter of BenMac). These properties are generally purchased on a $ price per square metre – which is likely to be in the range of $10,000 – $15,000 – depending on location, convenience and quality of construction plus of course emotion.

Make Good Decisions

Andrew Hayne in a good mood as 3 bidders fought out South Yarra: 68A Nicholson for $1,205,000.

Toorak 21 Evelina: Bought $1,515,000 under the hammer. Our favourite Lachie Fraser-Smith aka “Uncle F....” bursting another "foofer" valve on the way to his strong result.

I remember when I was at university, one of my text books was “ How to Lie with Statistics”. Well if you read this morning’s press you will have seen that house prices in Toorak were reported  to have dropped by just over 7% in the first quarter of this year. However, it’s hard to understand such a stat, when, in our view, prices ( the whole Toorak market without the focus on big trophy properties) have been somewhat increasing throughout the year – a trend which has continued this week. We acknowledge that Toorak has been weaker than say Armadale or Malvern in its rises; but it doesn’t appear to us as though it has been falling. Anyway no big deal it’s only a stat and mine only one opinion.

Consider for example the sale of 176 Kooyong Road by Clive Nettlefold and Gerald Delany of Kay & Burton. It was on the market for less than a week and sold in a boardroom auction on Sunday morning for a reported $6,500,000, some 10% above the indicative quote of $6,000,000. The neighbours at 172 Kooyong Road seem to be encouraged by such an outcome and have put their house back on the market, with Jeremy Fox of RT Edgar, with an asking price of $8,000,000 after its sale about 12 months ago.

Another strong sale was registered by Jeremy  at 26 Monaro Road Kooyong for the pre-auction offered amount just under $6m. The quote was $5,000,000 – $5,500,000.

At the other end of the spectrum two blocks of land on Trawalla Ave, each of 1160 square metres, sold under the hammer today for $5,300,000 and $5,150,000.That’s a total sale of some $10,450,000 and equates to approx $4500 per square metre – that’s hardly a weak price for Rodney Morley of TBM and Mike Gibson of Kay and Burton.

Other informative land sales were 963 square metres at 13 Fraser Street Malvern ( with permits for three town houses) which sold for $2,800,000 or $3093 per square metre – Mark Wridgway of RT Edgar; and then 1 Ellerslie Place, Toorak with Elliott Gill of Benmac where 518 square metres sold pre-auction for $2,100,000 or $4055 per square metre. Strong.

Sales of smaller properties were also quite strong with 21 Evelina Road, Toorak a well renovated cottage selling for $1,515,000 through Lachlan Fraser – Smith of Benmac – comfortably above the quoted range of $1,250,000 – $1,450,000. Secondly a smaller Robert Mills designed townhouse on Meredith Street in Malvern sold through Andrew Baines of Kay & Burton for $1,720,000 against a quote of $1,500,000.

So, if you are a buyer, after having been an underbidder at x auctions so far this year with these results; do you think prices are dropping?

Looking at the charts below, courtesy of the REIV, from a big picture point of view it shows the market began to turn upwards around mid last year (we think a bit before) and is continuing on into this year right up till now. The Armadale roller coaster shows the folly of looking a very small number of sales in very tight timelines. It’s the trend that’s important and Stonnington prices are up.

Make good decisions

Balwyn North: 60 Tuxen Street; Toby Parker of Hocking Stuart trying to see all the bids from a crowd of over 300. The story of the day. Huge crowds. Very strong Bidderman. Bought for $4,300,000

It is 6pm Saturday and the James Million Dollar-Plus Clearance rate for the 39 Auctions we attended today was 77 per cent and we have no late REIV results so could be higher.

Bidderman was well up at 3 bidders per auction and any talk from us of the last two weeks looking a bit soft has been well and truly proven as wishful thinking. 

The market of today is showing no signs of any weakness as proven by Bidderman and the $m+ clearance rate.

As a buying group we had nine auctions/buys on today and in my opinion we had an element of luck to buy the five that we did. 

Market Mood

The market according to Gerald Delany from Kay and Burton was astounding today. Rock solid says John Bongiorno from Marshall White. Scott Patterson from Jellis Craig expanded even further with these facts and comments

Strongest day he has ever seen in his 20 years of real estate with 62 of Jellis Craig’s scheduled 75 auctions selling under the hammer or shortly after. Easily their biggest day in real estate dollar wise – ever. In fact at Jellis Craig 88 million dollars of real estate exchanged hands during the past week including around $7 million for Paterson St Hawthorn (Nick Elmore/Tom Aylward) and 5 Moore St Hawthorn (Paul Keane/Alastair Craig) was bought under the hammer for $6,435,000 with 6 bidders. This is 2007 bidder strength.  I think Scott made another salient point when he said it was local not overseas buying strength today.

We mentioned that the last two weeks were down in terms of Bidderman and that it may have been a turn or it maybe due to stock quality. Today seems to have proved it was stock quality. Today was as strong as the other 2010 Super Saturday (February 27 th), as strong as late last year and as strong as the December 2007 peak. It was all about quality and buyer depth and local not overseas buyers.

For every buyer there were two who missed out. Best evidenced by our  trips in the last fortnight to The Boulevard Aberfeldie for no result. 110 The Boulevard,  on the Maribynong river, was sold last week for $1.77m on a $1.2m+ quote with no recent sales to give any guidance. This week a similar knockdown 118 The Boulevard (Fabian Rosin of Nelson Alexander) which may have sold for a tad less actually had 4 bidders over $2 million to eventually  be bought by a most determined bidder for $2,189,500. 4 bidders over $2 million and 20% or $400,000 more than last week’s benchmark. It re-emphasizes the incredible power and momentum of the market on properties that are considered quality.

Stonnington the same – 16 Mercer Road Armadale (John Bongiorno Marshall White). $6,240,000. 4 bidders.

Bayside and Port Phillip was no different. Buy after buy. $2mllion, $3 million. 3 or 4 bidders.

Easter Reflections: You’re young and you maybe panicking. Please don’t give up!

Now that the Easter break is upon us, and the temporary madness of two Super Saturdays (wedged between Australia Day and Good Friday) is abating, it it a good time to have a quiet moment and reflect where you, as a buyer, are at. Even the most balanced and resolute buyers can be thrown off-track by the highs and lows of this year’s property market: it’s overwhelming (when lots of new stock comes onto the market); it’s intense (Super Saturday auctions on February 27 and March 27); and it’s emotional (especially the let-down feeling if you miss out at auction).

This piece aims to (to use the word of the moment) “recalibrate” your thinking back to where, for many, it perhaps should be. In particular I have focused on the young.

I want a home with solar heating – I want a home with no renos – I want a home with a courtyard – I want a home with a nice kitchen and pine floorboards. I want a home next to my latte shop. Fair enough.

But if I can shake your thoughts up a bit, that’s small beer and perhaps overly focused on a narrow set that may lead to a short-term fix but a longer-term problem or it may, in fact, lead to nothing at all – meaning, in this current market, you don’t buy.

Our question to our clients is the same on each property. It’s the same at the start of the process and it doesn’t change as we work through every one of our  pre-auction  and private sale meetings. That question is: what will make you and your family truly happy now and also truly happy in the longer term? What financial and emotional outcomes do you want to achieve when buying a home?

Since Christmas, we have had at least 10 families come and see us to help their kids get a leg into the housing market. Housing is the new private school fees; the new club membership that you introduce your child to. For many, if you don’t help your child into home ownership, then they ain’t getting into it anything short of Bairnsdale East and 2025. And please don’t sit there and say “I did it, why can’t they?” The current state of your wealth – most of it in your home – is one of the reasons you are wealthy but it’s also the main reason your children can’t easily get into the housing market without help.  But I digress. 

Buying any home at any level is PPP: Price, Property and Position. They are the three choice levers you, as a buyer, have some control over. How much, type of home and where? Price, Property, Position. 

You buy a home for emotional and financial happiness. Whether you think through it consciously or not, all your outcomes relate back to financial or emotional happiness. 

What should you buy? What makes you truly happy. It’s the Christian, Buddha, Muslim home philosophy all rolled into one. What really makes you truly happy now and in the future?

When buying a home, two things make you truly happy: good decisions and land.

Good decisions come from luck and goals (financially and emotionally). Bad decisions come from the same places: luck (lack of) and goals (or lack of).

You’re in your late 20′s and early 30′s and you need a home. Relationship pressures are usually the spur – your parents may be helping a bit and you have a good job.

Your name is Freddy and you are sitting down for a coffee with me, because your dad told you to.  

Freddy: I’ve got $500,000 and I want to buy a home in Hawthorn.

Mal: Nice meeting you, Freddy. Waiter. Bill, please.

Freddy: What are you doing?

Mal: I’m leaving because I can’t help you.

Freddy: I could buy an apartment

Mal: But you are getting married and said you wanted some kids. Space, Freddy, space!

Freddy: OK, what about going further out?

Mal: What to Officer or Coolaroo or Tecoma? Freddy, you don’t even know how to use your sat nav.

Freddy: You’re a snob and a very rude man, Mal. My father was right.

Mal: Freddy, homebuying is not about me, it’s about you. Today in 2010 you need to find $900,000. Sell your car; get your wife to get a second job; hold back on the kids and get that big-noting dad of yours to throw in a few bucks and show me the money. Freddy, your life is in Hawthorn or inner Melbourne; your friends are here, you’re happy here and, if you move out to Pakenham, then I’m afraid you may never come back. And I’m also afraid that is not where you want to be. Freddy, I’m telling you what you need to do. You need to fight, scrounge, cajole, weasel and push, push, push with all your might and you need to get as much money as you can manage together and you need to do it now.

Freddy: You’re an old fart, Mal. I don’t want those pressures. I don’t want to encroach on my lifestyle. I would rather be among the trees and without the pressures of an all-consuming mortgage.

Mal: Then, Freddy, that’s fine. If that is truly what you want, then, as Nick Renna says at all his auctions: I respect that and good for you.

Freddy: Who’s Nick Renna?

Mal: Don’t worry. Hey, Freddy. Does your wife Christine want to live in Upper Ferntree Gully among the trees? It’s a beautiful place.

Freddy: No, she wants to live in the inner city and she is applying the pressure to me big time. She wants kids, she wants culture and she wants Hawthorn. The only thing I’m not sure she wants is me! I hate this pressure.

Mal: This is good.

Freddy: Good? – are you a sadist as well, Mal?

Mal: It’s good because it shows you are getting some clarity on what you want and what your family wants. Now we need to be smart. Do you really want to live in Outer Melbourne?

Freddy: Not really and not because I don’t like the areas. It’s just it’s a long way out from work and it’s away from my friends and family and it’s not where Christine feels comfortable.

Mal: OK, well, we have one P worked out and that is Position (sort of). Only I think it’s not going to be Hawthorn, initially,  because we agree an apartment is not a goer with kids on the horizon and we don’t have the cash for land and a home there. What is important for now and your future is that we look for as much land in an area we can afford.

Freddy: What, like a knockdown?

Mal: Well, not really, because quite often that can be overcapitalising financially. Have a look at this diagram – you should have bought either of the renovated ones for a little bit more.

Freddy: So we go for big land?

Mal: No, it’s quality land – size isn’t everything, Freddy. See good land in Albert Park can be 180 sqm and conversely bad land in Swan Hill can be 1500 sqm. Quality land is about the combination of position and size.

Freddy: But in Hawthorn a good block costs $1.6 million and I’ve only got $500,000.

Mal: Actually, right now it is more but, in time, if Hawthorn, Grace Park, the Urquhart Estate or Scotch Hill is what you want then you will be able to get it, but you need to start right. Let’s look at Alphington – only 10 minutes from Hawthorn (outside peak); you said Christine’s favourite sister lives there; it has a really good cosmopolitan feel and has a number of period homes that have that good land content. 

Freddy: I get what you said about land quality but not land content. What do you mean by land content?

Mal: See this chart. All three of these homes have land but only the period home on the right has good land content. Land (the capital growth driver) is a lot less in new homes than older homes and even less in apartments – this example assumes you buy at market value all at the same price of say $900,000. But it’s also true at $2,000,000 even $5,000,000.

Freddy: And as you keep saying, they don’t fight wars over homes, they fight wars over land.

Mal: True. Land goes up and buildings go down.  It’s all about demand and supply. That is where growth comes from and another real pointer to show where demand is, is the Chinese.

Freddy: The Chinese!

Mal: When the FIRB rules restricted overseas buyers to new apartments, they bought new apartments as they had no choice. Now last year with the FIRB rules changing and Chinese nationals having choices as to what they can buy in Australia, many are choosing land over apartments and that is evidenced by apartment prices remaining lackluster and land prices, especially in your Hawthorn area, going through the roof. The price increases must surely be giving many people a message. Quality Land is a world language.

Freddy: So I’m getting the second P (Property) worked out. Type of home? Should have as much land content as possible.  What about the final P? Price. I’ve only got $500,000. That’s all the banks will lend and you reckon I need a million.

Mal: Freddy. You can do it. Make the lifestyle changes; get Dad and Mum to lend you some. Talk to the bank about a restructure and let’s see if we can’t find something a bit under a million and you put some sweat into the property – not a major reno but you fix it up a bit. I do think you can make $900,000 work if you want to.

Freddy: It’s a big ask. I want to go on holidays and my new Merc and ……..

Mal: You have choices. The choices you make now are what sets you up in your life. A new car and a holiday and its Frankston South or Aspendale and granite benchtops or none of these; hard yards and Alphington. One of these two has proven financial growth and for you emotional happiness, which you need for choices going forward eg better home, near better schools, a culture you prefer and seem comfortable with and the ol chestnut a happy wife = a happy life – the other has a two strikes policy.

Freddy: Two strikes?

Mal: If you are young and you buy a McMansion as home 1 and then home 2 in an  outer area new estate, then we feel that is where you will live for the rest of your life. Home 1 and Home 2 has to be on the ladder upwards if where you want to get to is where you are dreaming of now.

Freddy: I still think you’re rude and prejudiced but how will I convince the wife of this land content stuff?

Mal: Don’t worry, Freddy, my fourth wife said I was an expert on women and relationships. You start by telling them this …………………

Next market news in 3 weeks (school holidays and Easter)

Buy Well

Mal

Malvern: 39 Horace: Sold under the hammer for $1,670,000. Bidderman 5. Andrew Hayne asking the bidders to speak up over the crowd noise. Solid Result.

I want YOU to buy! Jeremy Fox (RT Edgar) pointing bidders in the right direction at 18 Northcote Rd, Armadale.

The doom-sayers will be quiet for a while after some very good results in the area this week. Of the 10 auctions we attended this Saturday, 8 sold under the hammer while 2 were passed in.

The outstanding results were 16 Mercer Rd Armadale ( where some additional capital will be required to renovate) which saw 4 bidders and the mighty duo of Heather Elder and Rae Tomlinson from Marshall White execute a sale at $6,240,000 against an indicative quote of $5,000,000 – close to a 25% premium. Secondly 5 bidders were attracted to 5 Pine Grove in Malvern with Joanna  Nairn, again of Marshall White, selling for $2,310,000 against an indicative quote of $1,750,000 – $2,000,000 – a 15% premium. Jeremy Fox (RT Edgar) was successful in selling a renovated, period home with a Zeus look alike in the pool area  at 18 Northcote Rd, close to a 15% premium to the indicative price range of $2,250,000 -$2,500,000. His company also gave us an idea of land value in Toorak down near Kooyong Tennis Courts with 10 Toorak Avenue selling north of $3,000,000 around $3,500 per sq metre if you considered the home a knockdown.

The demand was also strong for smaller properties, with a well renovated 2 bedroom mansion apartment on Domain Street, South Yarra selling for $1,160,000 through Peter Perrignon and Nick Gatacre of Hocking Stuart. Five bidders (with the opening bid of $850,000 putting the apartment on the market) pushed the price well over the indicative range  of $800,000 – $880,000, close to a 32% premium. If you on the bright side of 30 and trying to establish a beachhead in the Melbourne real estate market – this would be depressing news.

Of the pass-ins 17 Hawksburn Road, South Yarra attracted one genuine bid at $1,820,000 but it was not enough to buy a well renovated terrace. Terraces do not seem to have the seductive appeal they once had – witness Kensington Road last week and another terrace just down Hawksburn Road in the last quarter of last year. The other pass-ins at 22 Epping Street Malvern East at $2,200,000 and 28 Claremont at $2,050,000 to us, were a bit of a surprise as well.

1 Robinson Street (Ross Savas) sold before auction reputedly for north of $3,500,000 which for it was, was a triumph of presentation and 17 Ascot St Malvern (Michael Gibson) which is a bessa brick special with some class but not the greatest of floor plans got a strong $3,415,000 under the hammer. You can’t deny these were both very solid results, even allowing for the market. By the way compare 17 Ascot to 13 Bonview, a similar type of home on slightly smaller land and only one storey but wow – $1.4 million cheaper this time last year. That’s the market today.

It’s not just auctions either; Tim Derham and Robert Vickers-Willis of Abercromby’s sold 65 Finch St street north of $3,000,000 virtually off market- after an unsuccessful campaign last year and another unsuccessful one last year at 15 Glenview Malvern was also sold by Tim and Robert for a whisker under $2,000,000.

This weekend buyers are again stepping up to the market and buying aggressively. It is about quality.

Make good decisions

OOOOhhh I will take that bid says Gerald Delany and Nicole Gleeson of Kay and Burton. South Yarra: 29 Davis Avenue: Bought under the hammer for $2,152,000. Bidderman 3.

Malvern East, 20-22 Ferncroft Avenue: Majestic setting!!! Four very keen bidders. Iain Carmicheal continues his good form.

Around 15 $m+ properties sold at auction today, with the highest reported sale price at 18 Winifred Cres Toorak which sold for $4.21 million. Gerald Delany and Clive Nettlefold of Kay and Burton. Good job, considering most others at this level failed to sell today.

Although stronger this week, sellers didn’t have it all their own way, with four pass-ins in that $2.5m to $3.5m mark: 113 Kooyong, 27 Washington, 1002 Malvern and 19 Lambert.

Private Sales

An apartment at 52 Bruce St Toorak (Jock Langley of Abercromby’s) sold privately during the week for a tick over $1.4 million.

The biggest quiet sale of the week was 10 Struan St in Toorak on around 20,000 sq ft which, if the figure is correct, at a bit over $7 million, would represent $3000 a sqm for land (assuming $1m+ for home) and a close to doubling since it was bought last in 2005. Jeremy Fox of RT Edgar.

Auctions we attended today:

MALVERN EAST, 25 Epping St Bought – two bidders.
Two confident bidders fought it out after an opening vendor bid of $2 million. The property sold under the hammer for $2.39 million. Iain Carmichael was auctioneer.

ARMADALE, 6 Elgin Ave Bought – two bidders.
Seventy people attended this auction, which saw bidding from two people in a relaxed atmosphere in the backyard of the home. The property went on the market at $2.68 million and sold at that price. Auctioneer Warwick Anderson.

TOORAK, 18 Winifred Cres - Bought - three bidders.
Around 60 people braved the heat to watch this auction. Proceedings initially slow after a genuine opening bid of $3.7 million, but became quick and exciting when two more bidders joined the action. Sold under the hammer for $4.21 million. Gerald Delaney auctioneer.

MALVERN EAST, 24-26 Finch St - Bought after.
A slow start, but auction gradually gathered momentum. An opening bid of $2.65 million and four bidders, but the house failed to sell after bidding reached $3.020 million. Crowd of 80 people. Justin Long was the auctioneer. The property sold later for an undisclosed amount.

MALVERN EAST, 20-22 Ferncroft Ave Bought – four bidders.
In a magical rainforest-like setting, 60 people saw strong bidding from four people to reach a sale price of $3.33 million. Iain Carmichael was auctioneer.

ARMADALE, 26 Barkly Ave Bought – three bidders.
Exciting, rapid-fire bidding, starting with a genuine bid of $1.55 million. Auctioneer Elliott Gill kept things moving quickly and the property sold for an undisclosed figure in the high $1 millions. Three bidders and a crowd of 130 people.

MALVERN, 33 Valetta St - Bought – five bidders.
A good crowd of around 100 attended this auction. Five bidders and good steady bidding for a home in good proximity to Glenferrie Rd. A late, first-up bid clinched the deal at $1.527 million. Auctioneer James Tostevin for Marshall White.

Make good decisions

Canterbury, 19 Rubens: Would you believe it? Missed by that much. Actually Richard James of Jellis Craig does not miss all that often. Four bidders. Bought for $3.301 million. Good result for agent Daniel Bradd as well.

It is 6pm Saturday and the James Auction Clearance Rate on the 32 $1m+ properties we attended and reported on today was 72 per cent.

The REIV’s clearance rate was declared at 82 per cent but they are missing around 200 auction results and our guess is the clearance rate has dropped below 80 per cent for the first time in a long time.

But, hey, there were 1000 auctions – it’s the Grand Final, the Melbourne Cup and the Masters of 2009 all rolled into one for selling agents. This is it – the big one; and things went pretty well for sellers and not so good for buyers who didn’t buy and were hoping for a little sign of decline.

What’s Hot x 2

• Family Homes in Boroondara and Stonnington in $1m to $3m range.
• 166 Mont Albert Road Canterbury - seven bidders – $4.01 million.
  James Auction Report: James Tostevin started slowly, taking a $2.95 million opening bid in front of a big crowd of around 80, all nicely spaced out around the tennis court. Seven bidders later, in what seemed like an eternity on the last few bids, saw the hammer come down a bit gingerly at $10,000 over $4 million.
• 20 Callantina Road Hawthorn- five bidders – $6.125 million.
  James Auction Report: About 130 people saw this auction open with a genuine bid of $4.9 million. There were five bidders and the property was on the market at $5.65 million. The eventual buyer was a determined bidder who stayed strong throughout the auction process and bought the property for $6.125 million.

What’s Not Hot

• This weekend: surprisingly, Malvern East’s Gasgoine Estate was dead as a doornail today, with three pass-ins from three homes (0 per cent clearance); as was Toorak, with only one from five selling, or 20 per cent clearance rate, but everywhere else in Stonnington was very strong.
• Bayside was definitely weaker than Stonnington or Boroondara. In Bayside, six out of 11 $1 million-plus auctions we attended sold, or 54 per cent clearance rate. In Stonnington and Boroondara, it was 16 out of 20, or 80 per cent for $1 million-plus homes.
• There are still some cheaper homes in Bayside. Hampton is cheap compared to Kew and Hawthorn.
• PPP (Price, Property, Position) ADVICE from our AUCTION REPORTERS
  If you hate the beach, love traffic and have got plenty of money, stay looking for your double-fronteds in Armadale and Hawthorn. The only trouble is the coffee shops are full in between open times with fellow depressed non-buyers; oh and Maserati dealers looking for selling agents (that was unfair). No, no, no, young men go south and take your woman with you – show her a good time at the Brown Cow at Hampton and, while you are gazing into her eyes nodding that, yes, you really do get “Happy Wife – Happy Life”, drift off into the clouds and dream about your mortgage lender’s expression when he realises you’re not going near your borrowing limit to buy your dream home.

De Ja Vu – Not Really – 2008 and 2009

19 Chatsworth Avenue Brighton auctioned pre-Melbourne Cup Weekend 2008 and then again today.

James Auction Report 2008: “Energetic comments from Leigh Hallimore didn’t draw any bids, despite his offer to take any bids prior to his opening and closing vendor bids.” Quote was $3,2 million. Sold sometime later for around $2.5 million.
James Auction Report 2009: Two bidders joined in on top of the opening vendor bid of $2.6 million from Jason Gill of Hodges. Passed in at $2.89 million and sold after at $2.95 million. Almost a $500,000 improvement on when it sold late last year.

As this is the big one for 2009, we have focused this edition on results, results, results. What is really happening out there in the trenches? From that, you should be able to work out what will happen in the run-up to Christmas. Here are our auction reporter summaries and these are their stories.

Gina – Bayside (attended auctions in Prahran, Albert Park and South Melbourne)

• Very quiet and quite flat atmosphere at auctions.
• None of these auctions sold and there were few bids (one bidder made one bid at Prahran, none at Albert Park and one bidder made one bid at South Melbourne).
• Most of the crowd at all three auctions seemed to be neighbours – most came on foot and didn’t hang around to see auction results.
• No Chinese bidders at any of these auctions.

Annette (four auctions – Hawthorn, Malvern, Malvern and St Kilda West)

• Good crowds – 70, 80, 100, 130.
• Good numbers of bidders – 6, 5, 5 (but just one bidder and one bid at St Kilda West).
• One Asian bidder at Claremont (but wasn’t the buyer). Largest presence of Asian people at these auctions was at Callantina but they were not involved in the bidding.
• Crowd at Park St, St Kilda West was a “younger crowd” but it also had least atmosphere – quite sombre, people were keeping hands in pockets.
• Crowd chatty and strong bidding and crowd interest at Claremont and Stanhope. Also big crowd interest at Callantina but it did sell for $6 million.

Jenny (two auctions – Beaumaris and Sandringham)

• Mixed atmosphere and results. Beaumaris had a chatty crowd but no bids. Lovely setting – held around the pool, people in crowd commented that they thought sunny weather and lovely setting would put people in the mood but it didn’t appear to. Passed in on the vendor bid.
• Sandringham – first time this house had been offered in 50 years, so generated a lot of interest. Crowd seemed buzzy and genuinely happy when family bought the house. Two bidders.

David (Bayside – Brighton and Hampton)

• Five auctions, plus one sold before.
• Four passed in.
• Small crowds.
• Flat overall.

Julia (five auctions – Hawthorn East x 2, Canterbury, Malvern East, Malvern)

• Big crowds – 125, 60, 100+, 130, 200.
• Not huge numbers of bidders - one at Victoria Rd, four at Rubens Grove, three at Finch St, none at Central Park Rd and one at Deanlea Court.
• Of the four bidders at Rubens Grove, two were Asian and they were the final two bidders after the other two dropped out. The bidding got quite aggressive between these two and one bidder (who was eventual buyer) was very keen to buy it.
• With the other auctions, all felt buzzy at the start and like they would build into something big but then never did. There were four pass-ins and only Rubens Grove sold under the hammer.

Adam (three auctions – Balwyn North x 2, Hawthorn)

• Big crowds – 80 at each.
• Bidders – not many but they were quick-fire auctions. There were probably more bidders there than bid but they didn’t get a chance to get their hands up.
• Didn’t see any Asian bidders
• An anecdote: because it was such a big auction day today, all of the Marshall White crew and team working were supplied with bottles of water and snack packs to keep their energy up throughout the day.

Tom (two auctions – Toorak and Elsternwick – a tale of two cities)

• No real interest at Toorak but seven bidders at Elsternwick.
• Summary from Tom: “On Saturdays, I do auction reporting to get out in the fresh air and see the buzz of different parts of Melbourne, the people, the houses, the streets. I have always had an interest in houses and have a special interest in Californian Bungalows and 1930s Art Deco. Since March, the property market has been on fire with prices that defy my bookkeeper’s conservatism. The market seems to be back where it was in the last half of 2007 and I am surprised at how competitive it is at auctions these days. Well located family homes in the inner suburbs under $2 million is a very strong market – they never seem to go out of fashion.”

MORE ADVICE from our AUCTION REPORTERS
17 Regent St Elsternwick Renovator - great spot and great bones.
http://www.domain.com.au/Public/PropertyDetails.aspx?adid=2008025585
James Auction Report: In front of 80 people, an optimistic bid of $800,000 started this auction. Lots of bidding and lots of entertainment here – seven bidders and the property sold for $1.39 million. In Hawthorn, this would have pushed $1.8 to $1.9 million.

HISTORY LESSON – rewind one year to same pre-Melbourne Cup weekend 2008

James Market Insight, 25 October 2008:
At 5pm Saturday, just two of the 13 auctions we attended today have sold under the hammer, with another two or three expected to be sold overnight.

Here are three quality home auctions from 25 October 2008 – they would have all sold well today.

85 St Vincent Place Albert Park:
James Auction Report 25 Oct 2008: Biggest crowd I’ve seen this year to hear auctioneer Andrew Macmillan put on his first-rate routine: he starts quietly, forcing the crowd across the road to move to him, and he made some very humorous comments. So I, as usual, enjoyed the show, as did everybody else, except, at time of leaving, the owner. Class property, class auctioneer – no result yet.

28 Thanet St Malvern
James Auction Report 25 Oct 25th: “The opening bid from the crowd was well below the quote. Another bidder made one bid and then another offered a smaller increase, which wasn’t accepted. The property was passed in to the highest bidder – not sure this will sell unless there is major movement from either buyer or seller.”

1 Fairlie Court South Yarra
James Auction Report 25 Oct 2008: “Auctioneer Jeremy Fox started by saying this home was worth $5 million and then called out a $4.5 million opening vendor bid. There was no response from the crowd.”

Lots more detail below on each auction in our Market Wraps and NO MARKET NEWS NEXT WEEK on the Melbourne Cup Long Weekend. We return the week after for the run to Christmas.

Buy Well

Mal

Thank you for a huge effort today from many people:

A big thank you to all our auction reporters and auction and sale coordinators Melinda Brown and Simone Clarke – it is not easy dealing with grumpy advocates each week and getting a wide coverage of million-dollar-plus auctions up in a timely manner on a Saturday night. But you do it and do it well. Thank you.

Thank you also for the continuing support we receive from selling agents Marshall White, Benmac, Kay and Burton, RT Edgar, Hocking Stuart, Noel Jones, Biggin and Scott, JP Dixon, Jellis Craig to name a few. We published a strong article last week, which we 100 per cent stand by and we were challenged on a number of points during the week,. It was robust but polite discussion and no agent pressured us to stop writing opinion pieces and no agent stopped us reporting their results (good or bad) today. Thank you.

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

Middle Park, 51 Mcgregor: three bidders: Bought: $2.27 million. Auctioneer Andrew Stuart, Mr Albert Park, is like a classic rock star, passionately belting out another number for the crowd.

It is 6pm Saturday and the James Clearance Rate for million-dollar-plus auctions is 74 per cent on the 19 auctions we attended and reported on today.

What effect did the interest rates have this weekend? Nil. The only thing we noticed was a few more bought befores, maybe meaning a couple of nervous vendors.

We saw 51 bidders for the 19 auctions. Bidderman is at 2.3 bidders per auction, which it has been steady at all through September. Two auctions had six bidders or more; both in the $1 million price bracket. We saw a Rosanna home sell for more than $1.4 million. Suburbs such as Caulfield South, Carnegie, Bentleigh (mortgage belt testers), which were $1 million ghost towns during 2008, are now back into $1 million-plus deals fairly regularly. So, in summary, we saw no real change from September today and right here and now the market is still hot. Most of pass-ins from today were because of vendor price, not lack of demand at a level.

The Chinese times are a-changing

We have talked ad nauseum recently about the Chinese factor. Why? Because it has been the single most dominant reason as to why the market has done what it has done for $1 million-plus homes in 2009. You can have limited supply but you still need demand to buy that limited supply. And that demand and our recovery was led by Chinese homebuyers.

The FIRB rule changes did not bar people from Iceland or America from also buying, but they were not. Up until recently, 25 per cent of homes in Boroondara were being bought by Chinese people and it was a huge factor to manage around as buyer agents.

However, will the China-led recovery continue? What happens if Chinese nationals move out of the $1 million-plus market? We have definitely felt a drop-off at the higher level in Chinese interest and this recently has allowed us to buy some properties that we thought we would miss (and, in fact, a few months ago we would have missed them).

Why is that and why is it important? Well, first, if Chinese interest is, or has, dropped off, then it is very important – to use a new buzzword – to recalibrate our thoughts on land prices and, even more importantly, to not overestimate the nature of our competition in pre- and post-auction negotiations.

Are you still really surrounded by competitors at a pre-auction best offer in sale?

Maybe the fear generated by a selling agent saying We have Chinese interest in this home will be not quite as frequent (or even believable) when you look at the sums one of our clients supplied to us. And please note that Chinese fear is only money-related. Chinese, American, Norwegian – bring their skills in – we are a multicultural society and far better for being so.

But things are changing – we thank our client, Adrian, for supplying these notes to us for Market News.

Mal, some numbers to demonstrate what I think will happen with the Chinese effect on Sackville Ward Kew and other Melbourne prestige properties:

April 2009: $4 million house purchased costs Chinese buyer US$2.75 million (AUD$1 = US$0.65-0.70).

October 2009: Identical house next door sells for $4.65 million as market moved upwards and costs Chinese buyer US$4.25 million (AUD$1 = US$0.91, up 30 per cent), as the dollar has also moved upwards.

Many of us would struggle to accept a US$1.5 million increase in six months.

Also, the buyer of the house in April is:

• happy, because he has a paper profit of US$1.5 million; or
• thinking of trousering the US$1.5 million.

Chinese buyers of land are now also facing building cost issues.

The buyer of a block in Sackville Ward such as Ross St and Mountain Grove may be thinking twice about their earlier actions.  Many Chinese buyers have been buying land in the Sackville Ward and a block-buyer who paid $1.5 million for the land may have also signed on for a AUD$2.5 million build in April thinking it was going to cost him or her US$1.65 million. Not having paid anything to the builder yet, it is now up to US$2.25 million and he or she has not even enjoyed the variations stage of building. The build costs may run US$1-1.5 million over expected costs.

The rise of the AU$ will dampen some Chinese demand, just like the fall from US$0.98 to US$0.64 fuelled that demand when the FIRB opened the gates.  At AUD$1 = US$0.91, the new Chinese interest will suffer as, in US$ terms, our property market is now expensive.

My thoughts only, but, in my business, I deal with a lot of Chinese people and they, like us all, dislike price hikes!

Alternatively, if the pull to buying a home near a childrens school is not quite as strong as April, especially with the rising building cost scenario, then maybe we will see homes coming back onto the market as a canny or lucky Chinese buyer sees a 30 per cent profit in US dollars in six months.

No, markets never stay the same.

Negotiation 101

Here are some thoughts and tactics of some people:

• Hey you! Take this offer or stick it up your jumper.
• Na, it is my final offer. I have got no more, now get lost.
• You are a slimeball and I have not got any time for you. Do not ring me.

These are three brilliant negotiation lines to use with those bastard selling agents – not.

Pricing – look, do not worry about other sales or due diligence. Some people find the best way to work out value is to get the agents true price – you know, the one they only whisper to you, and then take off $25,000 or add 18 per cent or something.

Rapport – who needs rapport? He or she is just an agent. Why bother wasting your time getting to know them, why listen to what he or she has to say? After all, they are just there to sell the home. I have got a stack of other things to do, like look on the internet.

No, just go straight in on your first million-dollar deal and offer a strong amount, say $150,000 over the ask (you have read the market is hot on all properties and Uncle John told you that as well), and see if that rattles the bones of a Rae Tomlinson of Marshall White or Ross Savas of Kay and Burton. You know; see if that scares them. And save your $7 and 30 minutes of your time by buying Damian Davis from Jellis Craig a coffee: just shout your $2.275 million offer down the phone to Jeremy Fox of RT Edgar when you ring up without any warning.

Better still, demand to buy it beforehand and scare Geoff Hall from Noel Jones with a two-hour deadline threat! He will never have heard that one before.

You have got be tough with these pricks, some books and news articles say. Show em who is boss, eg try that with John Holdsworth from Hocking Stuart or Justin Long from Marshall White and, while you know they have done this for years and sold to many people, how hard can it be? Anybody can pull off a deal. It is like … like cooking – we have all got abilities to make a meal. Anybody can be a masterchef!

Here is some more Negotiation 101 good advice: I think the biggest thing to remember when dealing with people is that these selling guys are not like real people and that personally as a buyer agent I am always happy to go that extra yard for the guy that not only hates my guts but tells me that as well – so I am sure this strategy would also work for selling agents. I am sure that would be a real winner with James or Hamish Tostevin – not.

We do not understand why some people take this approach with good quality agents like Bert Stewart of Buxton or Jenny Dwyer of Hocking Stuart – it just does not work. Agents are people and should be treated with respect, just as buyers are people and should be treated with respect by agents. Sure, some agents do not get it, just like some buyers do not; but have you ever noticed that many of the $1 million-plus homes that are high quality and  sensibly priced - you know, good homes that you want to buy - seem to be listed with mainly one or two key agents in each precinct? Hmmmm – better get to know them, maybe even listen to them.

If you have just told an agent you hate agents and then ask for their help in buying a property, why would they go out of their way? Many quality agents actually still do, but not because you have scared them. They do it because they are professional, work for the vendor and feel you sound like a wood-duck (overpayer, poor people skills or bad decision-maker). However, it must get harder each time you profess your complete disdain for them.

Selling agents have been in this game a lot longer than many buyers, so it is pretty difficult to put one over them, despite what some people might think. Do you really think you are going to outsmart Gerald Delany of Kay and Burton or Peter Bennison from JP Dixon.

But, sure, keep trying to win instead of buying. Eventually, you will win but probably not on the home you should have bought. Footy trade week is a classic – there are clubs there trying to only WIN on the trades; even to the point of missing out on a player that they really needed. Many homebuyers are like that.

If you think buying homes is at all times mutually exclusive from personal relationships then ………actually we wont waste our time.

We still truly believe that most dealmaking happens through:

• a personal connection,
• some level of truth, and
• some form of win-win

but maybe we are naïve – maybe we have fallen into their cunning trap.

Buy well

Mal

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

Toorak, 78 Clendon Road: $4.35 million. Paul Castran as the buyer would see him!

It’s 7pm on Saturday and our James Clearance Rate is 82 per cent on the 22 auctions we attended and reported on. Need we say any more – the market continues its strength and subsequent price rising, despite being in an increasing stock level environment.

Flashback: our report from 22 November 2008: Today, only two of the 13 auctions we attended sold under the hammer. The weakest market is the $1 million to $4 million market. What a difference a year makes. In September 2009, the strongest segment at present is this same $1 million to $4 million market.

Summary of today’s Market Insight:

1. The James Connell State of the Market Interview.
2. Repeating 2007 and The Chinese Influence.
3. Buyer Stress.
4. Re-think rather than Give Up.
5. Control Price – Neighboring Properties Discount.

James Connell, Managing Director of Marshall White, one of the two dominant selling agencies in Boroondara and Stonnington, talks to Market Insight this week. James has 30 years in real estate (a slow learner) and has co-owned Marshall White, with John Bongiorno, since 1993. The water-cooler talk within our industry is that he has respect among his troops and his support is very hands-on, even when it was a bit tough. He has given our company solid helpful advice over the years and, while buying off Marshall White is never overly easy, we have always found their salesman quality runs to the bottom and this must ultimately be a reflection, in part, of his leadership.

Mal: Where is the Boroondara/Stonnington market going?

James Connell: Under $1 million, I think the market has peaked. The $1 to $4 million market, I think, hasn’t peaked and there is some steam left. Over $4 million, the air is pretty thin and still minimal activity.

Mal: Anything else?

James Connell: Most secondary properties, eg main roads, next to commercial, have, up till recently, taken a pounding; however, they are now gaining momentum again, along with the rest of the market.

What are you saying?

There are times to buy secondary properties – that time has passed. Buy quality – you will need to wait for the next downturn to again buy most secondary properties well.

Anything else?

Period homes in that $1 to $4 million market (which, in your past Market News’ articles, Mal, you have correctly identified as slow last year and hot this year) are very, very strong and, in a natural cyclic movement, we are finding Armadale is going better than Malvern.

What do you expect until the end of the year?

No change in the current strength of the market. Our company’s auctions are 20 per cent down on the 2007 peak (120 to 100) but, looking positively, we are 20 per cent up on last year.

What about bidding? What are you seeing?

Most of the same ol’ same ol’. People who don’t normally do it are taking advice from people who did it once 10 years ago. Giving your company a plug, Mal, and other professional buyer advocates – I really don’t know why people don’t pay your fee and hire some expertise. It is not as easy as people think and, under pressure, people make mistakes. However, the auction system, when run well, is still the most transparent and fair way to buy/sell a home.

What should buyers do if they are going to do it themselves?

Pre-determined figure. Actually bid and then buy it or walk away at a pre-determined figure (or maybe a little bit more).

Both laugh.

What about quoting: I have always thought you guys were wimps not putting some sort of figures out there.

It is not in the vendor’s best interests to do so, Mal. We think quoting puts artificial ceilings on homes. Also, as you well know with your Control Prices, you don’t get it right all the time and, in fact, in this market, we have media lag times for advertising of at least 14 days and things can change a lot during that period.

But you say at the door what the price may be?

That is buyer interest and we can change it and explain it.

Aren’t you alienating some buyers who simply won’t bother if they can’t work out price?

I firmly believe in this market that we are not missing any serious buyer enquiry.

Chinese buyers?

Major, major effect on our market. 25 per cent of our sales in Boroondara and 12 per cent in Stonnington. And I think Chinese money is here to stay. Chinese buyers are not scared to pay what they need to and, with government changes, it looks like this solid migration will continue. Mal, Chinese people have effectively kick-started our economy and underpinned all our housing values in inner Melbourne. We have a lot to be thankful for and I believe their influence on price has been around 10 per cent. Chinese people are buying $1 to $4 million homes, well positioned and good land and, with the FIRB changes, they have moved from buying apartments (which is very quiet – nowhere near 2007) to land.

And what else have you seen in the market?

The complete collapse, due to lack of success,  of Expressions of Interest Campaigns.

Why?

No standard rules, in fact no rules, and agents are just as confused as the public. That is our fault. Also, it’s human nature for people to only offer what they want to, not what they have to.

Please expand.

An expression of interest or auction is only a conduit, not a solution. The solution is good agent work. However, as a conduit, Expressions of Interest is not working and not allowing a good agent solution. Buyers don’t understand it (as many agents don’t) and buyers certainly don’t trust it.

What makes a good auctioneer?

Empathy with crowd – one with the crowd – can settle buyers and raise their excitement at appropriate times.

Premiership?

My team is your team – the Pies and Dane Swan for Brownlow.

Thank you, James.

My pleasure and good luck tomorrow.

(This interview was on Friday)

Continuing on with James Market Insight – Repeating the Past of 2007:

Flashback: October 2007 James Market Insight: …These large increases as per most of the rest of the world are largely confined to inner suburban quality properties. Land itself, meaning land where homes can be pulled down, is particularly well sought after in all Melbourne Bayside and inner eastern suburbs. What is driving the market? It is being driven by overseas buyers, stock market wealthy buyers, buyers who have seen large increases in their own properties and buyers who are confident in their future.

Back to now in September 2009:

The question I get asked the most. Why is our market so strong? It was initiated by demand from Chinese buyers. It started as a trickle in April and now the floodgates are opening, as evidenced by such comments as those from Pat Dennis of Jellis Craig, who, when we were on the phone, said his last 13 sales in Balwyn and Kew had been to Asian/Chinese buyers. Both Jellis Craig and Marshall White – the two dominant Boroondara agents – state that around 25 per cent of all their sales are to Chinese/Asian buyers. The market stock levels are reducing further, as most Chinese buyers do not have homes to sell – or do not wish to put other homes back into the market for sale.

I’m not saying this is a concern; I’m simply saying that this is a fact. It is government policy that is encouraging Chinese people to buy up large amounts of land here. Good on them – in many ways, while there may be some concerns now and in the future re price increases and stock tightening, if it wasn’t for Chinese money earlier this year, we may now be in a far worst state economically than what we seem to be.

However, we are a micro society compared to the wealth of China and maybe some thought needs to be given to the long-term effects of such amounts of money coming into the local housing economy.

Boroondara’s activity has placed price pressures on the nearby Stonnington suburbs of Malvern, Armadale, Toorak and South Yarra and prices have continued a steady rise, as more Chinese buyers buy more properties.

Bayside suburbs have not yet experienced the Chinese influence to the same extent and, consequently, have not had as sharp an increase in housing prices.

The biggest issue out there at the moment is increasing BUYER STRESS or panic or feeling of hopelessness.

If the market continues like this, then you the buyer have PPP adjustments to make or else you will not meet the market on Price, Property or Position.

While we encourage the buying of quality properties only, we don’t encourage paying more and more and more. There comes a time where you can either stop, (we have never found that a successful strategy, as most who stop are often too late restarting and miss the market again) or re-think. What we think works is a re-think. Adjust your Property or Position while still being a bit flexible on Price, but, if you can’t keep up with the market, then firmly focus on Position or Property adjustments. Rule of thumb; it is usually (but not always) preferable (long-term financially and emotionally) to adjust Property (land + building) rather than Position.

In September 2009, if you have $1.5 to $2.5 million in Hawthorn and you are looking for a family home, then prices like Urquhart Street say you have a lot of friends also looking for a home but little to choose from. If you can’t afford the $600,000 jump, then why not consider Eaglemont or Kew or Glen Iris? If that Positional change does not excite you, then why not consider a 1980s home or a period home that is a bit dated rather than a new home now.

Your mortgage levels need to be considered. If interest rates are about to be increased, then bigger mortgages at higher rates will soon take the gloss off your new home joy. Buying rubbish is not a suggested solution either, as we have often talked about the GAP LAW – time does not heal bad buying decisions. And James Connell confirmed above that the time for smart rubbish buying may well have passed.

So, if you can’t stop or get bigger mortgages or buy rubbish and be happy, what can you do?

Why not consider smaller land size and a smaller home (if that is possible)? It still makes sense if you keep Land Content to Value Ratio in the 70-plus percent range - even on some smaller block sizes. Albert Park (block sizes around 150-200 sq metres) as a whole is testament to this. You do have choices rather than give up or kill yourself with a huge mortgage – you can rethink.

In summary, some “rethink” observations:

1. Stopping or panicking usually isn’t a long-term solution.
2. Be careful with major positional rethinks. For example, do you really want to live in that area or have you just found a house you can afford? We feel yes, connect with the PROPERTY, but you still need to connect with the POSITION.
3. In property, it is position first, then go for a home with good bones, even if you can’t afford the “skin” right now.
4. PRICE is important as to paying market and your ongoing affordability.
5. And if all else fails, you can always get a new spouse with more money!

Now, a word on our James Control Price performances. Got a few “right” today and also a few “wrong” Another “wrong” by a million today and this time the agent was right. Happy to politely bag Jeremy Fox at times, but this time he was spot on and I got it very wrong. I used the James Control Price to say land at 6 Kensington should be worth $4500 per sq metre, or around $4 million for the dirt and $1 million for the home = $5 million. Jeremy said I was “on drugs” with that price, as the adjoining flats were hurting this home. He was right. It sold around $4 million. No excuses – he was a lot more on the money than our Control Price.

This neighbouring property discount was further backed up by 78 Clendon Road Toorak, which also had an incredibly dominating block of flats as a neighbour (you can see it in the marketing picture). 1143 sq metres x $4500 per sq metre plus $600,000 for the home (it needed major refurbishment) equals $5.7 million. Today, under the hammer, it sold for $4.35 million. So is the land worth less or do we keep the land the same and apply a negative emotion discount? Either way, just like irregular blocks or main roads, neighbouring properties with serious issues can present significant discounts to the end result.

But, please, I am not saying every block of flats presents an issue. We recently bought a beautiful period home that was next to a block of flats but those flats did not present an overriding privacy issue that it seemed to in both of today’s examples.

Finally, on this matter, as we keep saying, the air is still thin at $5 million, despite the pumping along at $1 to $4 million. Here the buyers do have more choice and they demand “perfection” or they discount or don’t buy.

Lead Photo today was a brilliant one by photographer Tom Wilson.

Buy well and make good decisions

Mal