Two properties that we visited and rated this week are 14 Greville Street Prahran & 11 Keats Street Sandringham.

These homes are located in two very different parts of Melbourne, but both properties are renovated period homes with a great feel, well suited to the area demographics (Prahran is mainly singles and professional couples, while Sandringham is mainly families) and we really feel they will have many admirers.

The one big difference with these properties is the orientation of their rear yard: 11 Keats had a north-facing rear yard, while 14 Greville’s was south-facing.

Rear light is an important consideration as part of our James Home Ratings system and rightly so. In Melbourne, we live in a temperate climate and it does get cold in winter (as we are again finding out!) Natural daylight streaming into our backyards and informal living spaces is really important, and these areas ideally are located at the rear of the property where it is private. But it is not just light that is important;  the warmth (or passive solar gain) from the sun is equally beneficial.

With energy efficiency design standards becoming more and more regulated (ie, in addition to all new homes, some renovated houses now need to comply with government 5-star requirements), a modern house with a north-facing rear will generally score better than the same house with a southern orientation.

In a recent book by American architect Matthew Frederick, which discussed the effect of natural light on buildings, he stated  “The altitude, angle and colour of day lighting varies with compass orientation and time of day.” His views include (please note that I’ve paraphrased and changed his directions to accommodate our southern hemisphere here):

• daylight from the NORTH-facing windows is dominant from mid-morning to mid-afternoon. It tends to render colours accurately and cast strong, crisp shadows.
• daylight from the EAST is strongest in the morning. It tends to be of low altitude with soft, long shadows, and grey-yellow in colour.
• daylight from the SOUTH tends to shadowless, diffuse and neutral or slightly greyish most of the day and year.
• daylight from the WEST is strongest in the late afternoon and early evening and has a rich gold-orange cast. It can penetrate deeply into buildings and occasionally be overbearing.

Even though we liked our two house examples (and I am sure a lot of people will too), the rating scores vary considerably, and one reason for this is the rear orientation. It is easy to fall in love with a house with a great feel and presentation, but you do need to understand the impacts and effects of direct natural light. In short, natural light can really change your mood.  When inside, how many of us gravitate towards the windows when sun is streaming into the house on a cool day?  While south light is consistent and suits working areas well (most factories and studios have south-facing windows), it is shadowless and – well – boring. If you’re looking at a two-storey house with a south-facing backyard, be aware that most of the shadows cast by the house will fall into your backyard – who wants a pool that rarely has access to natural light? If considering a second-storey renovation to a single-level house with a south-facing backyard, be aware that shadowing can often impact on the neighbour’s amenity, so it is a real planning issue to be aware of.

A counter argument to the south-facing rear yard issue is that in summer we often don’t want too much natural sun, as it can be overbearing and overheat the house. But effective screening and eave design can easily address this. If there is a wonderful view to the south, then of course we will want to include that view and locate our living areas to take advantage of this – there is always an exception to any rule – but, generally, a north-facing rear will be much more preferable to a south-facing one.

14 Greville Street Prahran is listed by Mark Harris of Bennison Mackinnon and it is scheduled to auction at 10.30am on 13 June. We rated this property 617/1000 and currently it is quoted at $1.2m+.

11 Keats Street Sandringham is listed by Kate Smith of Hocking Stuart and it is scheduled to auction at 11.30am on 13 June. We rated this property 845/1000 and currently it is quoted at $2.5m+.

Design Smart.

Mark Dayman looking for bidders at the Alfred St Kew auction. He found six of them.

The million-dollar-plus market is the strongest in Boroondara on low stock levels, and is being driven by overseas buyers.

61-63 Alfred St Kew was obviously the big one last Saturday and there was strong bidding from overseas buyers, as well as locals, with six bidders in total. Not sure if it’s a renovator or a bulldozerer or maybe a landbanker who bought it. Good campaign, as usual, by James Tostevin from Marshall White. Another James Market News favourite, John Bongiorno, conducted proceedings.

Auctioneer Scott Patterson from Jellis Craig is setting the benchmarks on what an auction crowd wants:

• Start on time.
• Short, sharp and comforting preamble.
• Get the bidding going through the crowd or vendor bid.
• Be polite but firm with bidders, and
• then pass it in or sell it.
• No long half-time breaks, drawn-out last gasps, and
• did we mention he starts on time and has a short punchy preamble?

You can see why he is the leader of the Melbourne pack at present. And this is not one person’s opinion. All of us at James feel this and you can see the crowds do as well.

A couple of Camberwell Junction land blocks sold on the weekend:

1 Peppin Street, Camberwell on 627 sq metres sold for land value at $1.522 million, or $2427 per sq metre, and thank you to Peter Dixon of Jellis Craig who we rang mid-week to ask whether we should submit to a client. He nominated the estimated price within 2 per cent of the actual price.

16B Waterloo St Camberwell on 1031 metres and sold for $1.45 million. The photos on the web were a lot better than the home and, before you start thinking selling agent Tom May of Jellis Craig let it go cheaply, take a look at the block. It was a battleaxe block and probably equivalent to about a 600 sqm building block, or around $2400 per sq metre, for Camberwell Junction.

Speaking of land sales, here is one to watch at the June 13th auction. Talking with Campbell Ward of Jellis Craig at the 55 Alexandra Avenue Canterbury open, he said the level of interest is so strong from Asian people on this home that they may have to lift the quote a third time, having already moved it from $1.35 to $1.5 million to from $1.4 to $1.6 million. The big attraction to this very plain home on an average-sized Canterbury block according to Campbell is:

• proximity to Mont Albert Road.
• 60 foot frontage.
• west rear orientation.
• you can bulldoze it.

Boroondara new homes: is $4 million too much in Kew?

• 21 Ross St Kew.
• 31 Rockingham Street Kew.
• 17 Grange Road Kew.

All are really good homes – our opinions are in the ratings and we don’t think $4 million-plus is overcapitalising for a good home - but, to date, no sale on these.

$3 million-plus seems no problem if the home is right, as Karen Gornalle sold one just over $3 million in Mont Albert Road, as did Richard James in the Sackville precinct, and both sales occurred this month.

19 Oak Hawthorn is being re-auctioned this month with new agents Steve Burke and Al Craig of Jellis Craig. Perhaps the reported offer of high $3s should have been taken and that seems a long way from the current quote in the low $3s. This is a high-quality home on good land in Hawthorn. However, 27 Oak just down the street sold well once the price moved in line with the market.

Yes, we are saying the Boroondara market is on the up, but it is still price sensitive.

These are very good period homes but they need work and are awaiting a buyer:

54 Mary Street Hawthorn – Ross Savas, Kay and Burton.

53 Kinkora Road Hawthorn – Nick Elmore, Jellis Craig.

Madeline is a cool customer in a tough male environment. She is particularly strong in organising buyers for $1-2 million period homes in Malvern, Armadale and Caulfield North. Always polite and accurate in pricing discussions with us, we find Madeline is one of the strengths in Stonnington real estate. A good smile and a kind word goes a long way when combined with tough business nous, and Madeline has got all of these in spades.

Mal: Family status and where do you live?
Madeline: I’m living in Prahran. It’s a great little spot.

How long have you been in real estate and what is the company you work for?
I’ve worked for 10 years in real estate sales and I’ve been at Marshall White for six years.

Where do you mainly work (area) and what types of homes do you specialise in?
In Prahran, Armadale and Malvern and I specialise in single-fronted and double-fronted period homes.

What makes a good investment?
Proximity to facilities.

What makes a good family home?
Proportions, floorplan and natural light.

What makes a good buying decision?
One that feels right for the individual person.

Best investment decision you made?
Property!

Worst investment decision you made?
Speculative shares!

What are the top three precincts in your area, how big is an average block, what type/style of home, what is the dirt price and how much for a renovated home today?
I really love the blocks around Adelaide, Erskine and Huntingtower streets. These are really lovely tree-lined streets with lovely wide frontages and good quality period homes, which are highly protected within the heritage zone there. Then across Kooyong Rd, you’ve got Munro and Rose streets, which are lovely windy, tree-lined streets, beautiful little family areas that are well serviced by public transport, part of the school belt and close to the delights of High St Armadale.
I also really love Hawksburn, particularly the Chatsworth Rd area, which has little miners’ cottages that are really well renovated.
If you’re looking in the parts of Armadale that I mentioned, the average land size is 6000 to 7000 square feet and the land is tightly held, so it’s in very strong demand for families. You’re looking at up to $400 per square foot, so a house in original condition on 6000 square feet would be in the mid-$2 million range. This would give you a really great platform in terms of a renovation to create the ultimate family home. The land size in Hawksburn is smaller, so prices range from $800,000 up to $2 million.

Note: Madeline provides more detail in audio (see link).

What would you say to a young couple with $800,000 looking for a family home specifically in your area – eg (where, type and style, would they have to renovate)?
A single-fronted period home in Prahran or Armadale. Be prepared to renovate! In terms of period homes, don’t be afraid to buy something that has good bones but is in original or dated condition, as these offer so much potential in terms of room size and layout.

Note: Madeline provides more detail in audio.

What would you say to  a downsizing couple with $1.5m specifically in your area (where, type and style, would they have to renovate)?
A single-level period home, which may or may not need some cosmetic improvements, and is close to shops and transport.

Note: Madeline provides more detail in audio.

Buyer Agents yes or no?
YES!

Apartments or Houses?
Both options offer great lifestyle benefits and growth potential. You have to look at both on their individual merits.

Auction or Private Sale?
It depends on the property, the client and the market at the time. Right now, it’s hard to not recommend the auction system.

How can a seller maximise their value at sale?
Presentation, garden, great photography and the right agent!

What are the do’s and don’ts for buyers when dealing with selling agents?
Do find someone you like and trust and build a relationship.

What do you think are the opportunities now with us?
It’s a great time to upgrade. The price gap between the smaller property and the larger one has decreased.

Where is the market going in 2009 in your area?
So far this year, the affordable end – ie up to $1.2 million – has been particularly strong. This is due to increased demand and reduced supply. We need more volume to come onto the market. If we do see that, supply and demand suggests that prices will continue to stabilize. If supply isn’t increased, I can’t see anything other than prices rising.

Note: Madeline provides more detail in audio.

Who will win this year’s premiership and why?
The team that sticks together and believes that they can win!

If a potential seller would like an appraisal or wishes to sell their home, how is it best to contact you and what are your details? By phone 0411 873 913…thank you!

Next week: Sally Zelman from Gary Peer talks Caulfield.

When 7 Parslow Street Malvern first publicly listed for sale it caught my attention.

An original, free-standing white timber Edwardian house in need, I suspected, of some desperate TLC.

Buyers have two options here: demolish and build again or seriously renovate.

If renovating (which would be my preference), this could be done on a single or two-storey level. The real plus with this property is the charm of the original facade (if renovated/restored well, the value of this property will be underpinned) and also the generous setback width to the northern boundary that not only allows for car access down the side of the property but also maximises exposure into the house of much needed sunlight throughout the day.

My concept here is for a single-level extension to the rear comprising of four bedrooms / two bathrooms plus study at the front, with a large open-plan living area to the rear that would logically connect well to a private backyard. Style could be in keeping externally with the original house (ie painted weatherboards and a pitched iron roof) or it could be something totally modern. Irrespective of this, a modern interior would be the go, best suiting a modern family.

This street or area is really only average for Malvern and it does have a mix of housing styles, yet with strong recent sales of original period homes, renovating here certainly can work and it would be difficult to overcapitalise.

How much do you spend next Saturday?

Financially, you have a few things to consider:

• A fully renovated house at 1 Parslow sold with the same company in October of last year for $1.9 million – a strong result at the time. Do you add some for market improvements since then?
• No 7 is a better location than No 1?
• Work backwards from control price with estimated, planning, building and holding costs.

Emotionally, you also have a few things to consider

• Is this the right and best block for me? I mean, what about a different sort of project in a slightly better location eg 13 Bonview Road Malvern which should cost you considerably more on the day but …..
• Am I mentally up to the challenge of renovating or should I pay more and buy complete?

I personally think No 7 is worth some serious thought and effort. I like it.

We rated 7 Parlsow Street 661 / 1000. It is listed by Marcus Chimenello of Marshall White and goes up for auction 11.30am on May 30.

Design Smart.

Brighton, 36 Whyte Street: Auctioneer David Hart licking his lips as he conducts the classic auction in front of a large Bayside crowd. Sensible quote, set the tone, vendor bid, two bidders, pass-in and negotiate higher.

The James Clearance rate stands at 83 per cent on the 23 auctions of million-dollar-plus properties we attended today.

Please note James Market News is now translated into Chinese by Su who now works with us and can be viewed by clicking button to the right of this column.

This weekend, we thought you may be interested to read part of our initial draft for the James Million-Dollar-Plus Residential Homes Half-Year Report, due out at the end of June. Of course, things may change over the next month, but this is how we are reading things to date.

We feel the 2009 Melbourne million-dollar-plus market has risen by around 10 per cent this year. In context, that same market had fallen between 10 per cent and up to 40 per cent (in extreme cases) from its 2007 peaks by December 2008.

Good properties have risen in price since a turn in late January. Prices stabilised in February 2009 and gathered momentum, resulting in increases for high-quality homes, in the past six weeks (April to May 2009). It is also worthy of note that weaker properties have now become sellable, although, in many cases, still 10 to 25 per cent lower than the peak reached in Port Phillip and Bayside in late 2007, and the peaks reached in Stonnington and Boroondara in early 2008. The James Price Worm, showing our anecdotal thoughts on the market, is to the right of this article.

From what we have witnessed, million-dollar-plus Boroondara is the strongest area, then million-dollar-plus Stonnington and then the Bayside million-dollar-plus market.

Strong demand properties:

• Rectangle house blocks around 750 m2 and more.
• New homes with “wow” and good floor plans.
• Renovated period homes with good floor plans.

Weaker demand properties:

• Single-fronted period homes, especially in need of repair.
• Over-quoted or higher than market-priced homes.
• Difficult floor plan homes that require serious renovation.

Short-term factors driving current million-dollar-plus prices:

• Shortage of stock.
• Overseas demand from Asia with Foreign Investment Review Board rule changes.
• Locals have decided to get on with life. They understand the global financial crisis but have found that its just not affecting them as much as the papers are implying (for now anyway).

Short-term factors restricting current million-dollar-plus prices:

• Banks’ tighter lending policies.
• General nervousness among 20-35-year-olds, who do not have the asset base of older people. This has been played out in the significant drop in single-fronted period home prices and the weakening of the sub-million-dollar apartment market.

Key long-term demand drivers:

• Overseas people after schools for their children.
• Overseas people after political stability and safe money havens.
• Local population growth.

Key long-term supply drivers:

• They’re not making any more land in Inner Melbourne.
• The contracting of the development market in mid-to-late 2008, which will be felt even harder around late 2009 and early 2010. There will be a 12-to-18 month lag after developers re-enter the market.

Some key James statistical evidence:

15 November to 6 December 2008 (four auction weeks): James $1m+ clearance rate: 35% on 53 auctions. Average bidders per auction: 0.8.

April-May 2009 (last four auction weeks): James $1m+ clearance rate: 75% on 80 auctions. Average bidders per auction: 1.875.

James Auction Success rates (eg what we actually buy vs what we bid on):
In the peak of the market (2007), our auction clearance rates dropped as low as 20 per cent. It’s a bit hard to recommend that your clients go even crazier than the market. By late 2008, our auction clearance rate had moved to almost 100 per cent. We were, in many cases, the only bidder; granted we had very few completed jobs. By April 2009, our Auction Success Rate was declining again and was around 35 per cent, in other words, if we attended three auctions on a Saturday to buy, we bought one. We have since taken a more aggressive line pre-auction, as you can see below, and our Auction Success rate has now moved to more than 50 per cent.

Real life anecdotes: in the past week, we have bought before auction:

• Boroondara home, agent quote $1.5m+
• Stonnington home, agent quote $2m+
• Boroondara home, agent quote $1.5m+
• Malvern East home, agent quote $800,000+

In the past month, we have missed at auction:

• Hawthorn home, more than $1.5m (3 bidders)
• Boroondara home, more than $1.4m (3 bidders)
• Kew home, private boardroom auction, more than $3m (3 bidders)
• Prahran townhouse, more than $2m (4 bidders)
• Brighton land, more than $1.4m (8 bidders)
• As well, we have seen Expression of Interest campaigns not go our way.

If the market changes next week, we will write that up as well.

Finally, we have had conversations at opens and over coffee with Al Craig of Jellis Craig, James Redfern of Marshall White, Jock Langley of Abercromby’s, Ian Jackson from JP Dixon, David Gillham from Noel Jones, John Bongiorno from Marshall White, Andrew McCann of Bennison Mackinnon, Barb Gregory of Hocking Stuart and Peter Kudelka from Kay and Burton, to name a few, and (accepting that selling agents’ views have some self-interest bias, as do ours, on wanting the market to be good), there is no denying that a significant majority of selling agents genuinely think the Melbourne million-dollar-plus market is improving (price-wise).

How long will it last? We’re sticking our neck out here and saying that it will last at least until next week! After that, we will have to wait and see.

Buy Well

Mal

This week, we would like to thank Madeline Kennedy of Marshall White for her efforts in the Another Point of View article.

We have had strong positive feedback from our Video Before the Auctions Segment (live every Tuesday) and a number of suggestions – thank you!

And Architect Adam shows us how we can improve 7 Parslow St Malvern, due for auction next weekend.

Agent Quoting is covered in a Million Dollar Melbourne Article below.

Sam Gamon is one of the most enthusiastic young auctioneers we have met. Noisy, alive and full of corny jokes (really corny). But he does get the job done.  Chisholm and Gamon have a bit of a stranglehold on Elwood and, if you are dealing in property in this area, then Sam will, in all likelihood, be one person in the mix. As a younger person, Sam understands very clearly the power of relationships in doing a deal – a pleasant surprise.

Mal: Family status and where do you live?
Sam: In a relationship. Art Deco apartment on Elwood’s Golden Mile.

Mal: How long have you been in real estate and what is the company you work for
Sam: Eight years, Chisholm & Gamon (the entire time).

Where do you mainly work (area) and what types of homes do you specialise in?
Elwood & surrounding Bayside suburbs, period homes & apartments.

What makes a good investment?
A compromise between location, space, size and close to transport. It should be a property that is readily tenantable and offers capital growth potential because it’s close to all the main attractions, in a desirable location & street, close to transport and ticks all the boxes (ie parking, outdoor area, light, aspect, block position, layout, size, laundry facilities, potential).

What makes a good family home?
Space, space, space. Land, land land! North-facing rear garden, floor plan, flexible living zones, more than one bathroom, open-plan living area that allows parents to watch their kids while they play outside, parking, 3+ bedrooms, privacy, desirable street, quiet location, close to parks & schools.

What makes a good buying decision?
You’ve done your homework on the home, reviewed comparable sales, had a building/pest inspection, researched prices in the area, checked to see how far away the public transport is, been to other auctions to see what happens, checked council to see if the neighbouring properties are planning any works, had a solicitor review the section 32, and ticked off a checklist to see if it meets  your requirements in the next 3-5 years.

Best investment decision you made?
Buying a run-down Edwardian home in a blue-chip street.

Worst investment decision you made?
All the properties I should have bought if I’d had a crystal ball.

What are the top 3 precincts in your area, how big is an average block, what type/style of home, what is the dirt price and how much for a renovated home today?

1. Elwood’s Golden Mile (between Ormond Esplanade & Ormond Rd),
2. The streets between Broadway & the beach,
3. Properties facing the St Kilda Botanical Gardens.
   The average block would be 200-400m2 (blocks above 500m2 are hard to find & highly sought after), $2000-$3000 per square metre depending on the street and size of the block. We just sold a renovated home in Dryden St, Elwood, for $1.93 million. Renovated family homes range from around $1 million to $3 million plus.

3 underrated streets in your area for family home buying (where, price, type and style, would they have to renovate)?

1. Wave St,
2. Austin Ave,
3. Kendall St -
   These streets are already being improved rapidly but renovation opportunities still exist. You’ll probably find un-renovated ’20s homes & prices range from $950-$1.5 million.

What would you say to a young couple with $800,000 looking for a family home specifically in your area – eg (where, type and style, would they have to renovate)?
Keep an open mind because it’s very difficult to find a home big enough to accommodate a family with a budget of 800k in the bayside area. Sometimes opportunities will present themselves and you find an un-renovated home on approx 250-300m2. There are only a handful of three-bedroom homes available around 800k and you will most likely have to compromise on location, orientation, street scape, bedroom proportions or general condition. I would suggest these couples consider suburbs on the fringe or on the other side of Nepean Highway. It’s possible to find a semi-detached home, a renovator’s delight, if you’re prepared to spend 350k on an extension. Remember 800k may not buy your dream home but it will fund your stepping-stone property.

What would you say to  a downsizing couple with $1.5 million specifically in your area (where, type and style, would they have to renovate)?
$1.5 million is a healthy budget for a downsizer wanting a period home with two bathrooms and plenty of polish. Beach streets are the pick; choose between period homes or contemporary townhouses, with the majority of the homes already renovated. Homes in this range may offer limited outdoor space, which is perfect for downsizers who want low-maintenance inner-city living.

Buyer Agents: yes or no?
Depends on the buyer agent! A good buyer agent team is perfect for assisting time-poor buyers who don’t like negotiating for themselves for various reasons (confidence, experience). A buyer agent offers an excellent value-add for those who lack the confidence to bid at auctions. Buyer agents can also have long-standing relationship with estate agents and the tenacious are good at sniffing out quiet deals and come across properties that do not get advertised in the open market.

Apartments or Houses?
Houses! Land on its own title appreciates and is a rare commodity in the inner suburbs. Land title doesn’t come with the inherent difficulties associated with owner’s corporations and you can be the master of your own destiny. Homes often have potential to improve and capitalise. Conversely, older style apartments make great investments for their capital growth. An apartment can be a great investment if it’s in the right location and has plenty of attractive features or points of difference (size, period features, a good floor plan).

Auction or Private Sale?
Each property should be assessed on its own merits, as different methods of sale suit different properties. If it’s a highly sought-after property, then I’d pick auction as the favoured method, especially as it doesn’t set a ceiling on price. Some properties are better suited to private sale. The method of sale should be carefully considered and the vendor’s preference may come into play as well.

How can a seller maximise their value at sale?
Start by choosing an agent who will invest time & effort to maximise price! Maximising value starts with selecting an agent who offers the right combination of sales, marketing and negotiation ability, whilst also having care for the property, the client and the outcome. Passion, integrity, honesty and rapport are not to be underestimated. A good marketing campaign is critical and presentation is vital, as this is the first impression and connection the buyer has with the property. Ask your agent for presentation advice and seek extra guidance from a presentation or hire furniture company. In some cases, a planning permit or renovation may increase value.

What are the do’s and don’ts for buyers when dealing with agents? (Sam here chose to talk about buyer agents – fair enough).
The Do’s – pick a buyer agent who has a proven track record and good references. You need one who is prepared to do the leg work and help you understand the buying process, justify their advice and give you supporting evidence. Find an agent who knows they’re working for you and not themselves. It also helps to have an agent who knows the area & location.
The Don’ts – avoid a buyer agent who has a “buy-at-all-costs” mentality. Some buyer agents are only interested in quick transactions and want to get paid at any cost. They will let their clients buy average properties instead of working hard to secure the client something that should perform well in future years.  Make sure you find a buyer agent who does their homework and presents a powerful case.

What do you think are the opportunities now with us?
Now is a great time to buy. In fact, it’s the best time to buy since 2001. October/November last year saw some dramatic changes in price and low turnover. The First Home Buyers Grant and low interest rates have already started to stimulate the market again and competition is returning. While the prices in some cases are still a long way off 2007 levels and interest rates are at an all-time low, it’s time to take the plunge and reap the rewards. The arguments for buying are too compelling now and in the future.

Where is the market going in 2009 in your area?
Our market seems to be bouncing back rapidly and we’ve had strong competition at our auctions. I expect prices will remain relatively stable and we’ll start to see an upward shift in some property segments from the prices achieved late last year.

Who will win this year’s premiership and why?
Too early to tell but if I had my way … St Kilda, because my mum’s been waiting since 1966 and I believe in miracles.

Sam’s contact details – he is good value to talk to.
0425 702 574 sam@chisholmgamon.com.au

EXECUTIVE SUMMARY
Nothing fazes Hamish (well, he doesn’t show it). We’ve never seen him lose his cool under pressure. If you need to know something in his specific Boroondara area, then ring Hamish, as he almost always knows the answer. A conservative buyer quoter of homes and a big seller, Hamish is pleasant, friendly and accommodating for inspections such as pest and building and revisits out of hours. Now a director at Marshall White and deservedly so, as he’s a good bloke and a good agent.

Mal: Family status and where do you live?
Hamish: Married with two girls, and living in Moama Road, Malvern East.

Mal: How long have you been in real estate and what is the company you work for?
Hamish: 10 years – Marshall White Hawthorn

Where do you mainly work (area) and what types of homes do you specialise in?
City of Boroondara – and I tend to handle all sorts of homes; however, a client of  mine did say to me the other day that he always flicks open the Melbourne Weekly to see what is coming through and he always sees my name on pretty single-fronted and double-fronted Victorian and Edwardian homes!

What makes a good investment?
A good balance of both return and capital appreciation – but if you can secure a property that you can add some cosmetic improvements – this will only help this.

What makes a good family home?
A decent-sized family room – and a good rear garden for entertaining family/friends.

What makes a good buying decision?
Keeping to a budget and doing the appropriate homework on values.

Best investment decision you made?
Bought my first house in Prahran at the age of 23.

Worst investment decision you made?
Buying into a share of a racehorse!!

What are the top 3 precincts in your area, how big is an average block, what type/style of home, what is the dirt price and how much for a renovated home today?

1. Hawthorn /Grace Park – period homes predominately, 700-800sqm blocks, 800sqm worth $1.8-$2mill for the land, a good renovated home could be worth $3-$3.5mill.
2. Camberwell/Tara Estate – period homes predominately, 700-800sqm blocks, same pricing as the Grace Park.
3. Kew/Sackville Ward – mix of period/modern, 800sqm blocks, worth $1.7-1.8mill for the land, a good renovated home could be worth $2.5-$3mill.

Three underrated streets in your area for family home buying (where, price, type and style, would they have to renovate)?

1. Empress Road, Surrey Hills for its convenience.
2. Ropley Avenue Balwyn for its parkland back-drop.
3. College Street, Hawthorn for its location  parks/city/village.

What would you say to a young couple with $800,000 looking for a family home specifically in your area – eg (where, type and style, would they have to renovate)?
Camberwell/Surrey Hills are ideal – follow train lines for CBD access, buy a period home, even if it looks a bit daggy, get as much land as you can – lock in and give it a good paint job inside and out, carpet, change lighting, door handles etc and it is amazing how it can change the feel of a home!!!

What would you say to  a downsizing couple with $1.5m specifically in your area (where, type and style, would they have to renovate)?
Limited selection of good quality town residences – I would still aim at Hawthorn or Hawthorn East/Kew, single level hard to find, try and get one that is side by side, rather than in larger development.

Buyer Agents yes or no?
Yes – very good people to deal with.

Apartments or Houses?
Houses definitely.

Auction or Private Sale?
Auction – sets the deadline for the buyers to perform.

How can a seller maximise their value at sale?
Definitely getting an Interior Decorator to improve the presentation, really work hard to make sure the home has a great feel.

What are the do’s and don’ts for buyers when dealing with selling agents?
Ask them lots of questions – some agents are very helpful in providing good comparables, still allow for some flexibility on their quote prices, and make sure you get them to keep you posted if you are interested in the home.

What do you think are the opportunities now with us?
People must make the most of the market being slightly down – this is a great time to purchase!!

Where is the market going in 2009 in your area?
In my view, it will be steady for the first six months and may get tougher in the second half of the year, dependent on the volume of property on  the market.

Who will win this year’s premiership and why?
Geelong – will be even more determined after last year’s Grand Final effort.

If a potential seller would like an appraisal or wishes to sell their home, how is it best to contact you and what are your details!
My mobile – always available!! 0408 004 766  hamish.tostevin@marshallwhite.com.au

10 Murchison Street St Kilda East. I rated the home at 598/1000. About 30 people attended the auction on Sunday afternoon in a leafy St Kilda East location. The renovated Californian bungalow, sitting proudly on the street, attracted four bidders (multiple bidders a bit of a rarity in today’s market).

Auctioneer John Carter from Hocking Stuart in St Kilda opened the bidding on a vendor bid of $935,000, stating that they had received an offer on the property at that level. Don’t mind that type of openness to begin the auction.

Next bid was 950,000 and with no half time break, the property sold for $1,120,000 after seventeen bids from the crowd.

Not a surprising result considering 4 Murchison Street sold last month for $1,005,000 on similar sized land. 10 Murchison had an additional floor with master bedroom, ensuite and study/parents retreat.

This week’s Home Ratings.

Two very different, but very stunning homes I saw during the week.

6 Anderson Street, Malvern East.
A new home, but rated very strongly due to the floor plan, location and land. No downstairs bedroom is a limitation, may not suit an older couple, but high quality living spaces for a larger family (or even a smaller family who like LOTS of space!). I rated the home at 831/1000.

21 Malakoff Street, Caulfield North.

A very good looking period home that again rated strongly due to its floor plan, great location and stunning period features. A significant number of the higher priced sales in Caulfield North are for newer homes with lots of WOW, so this home will be tested by a diverse buyer profile in that area. Street is full of period homes and is rated as one of the area’s best. I rated the home at 841/1000.

The market seems to be stabilising at this stage although it’s a little too early to call as there are still many results that don’t fit into the expected boxes.

In general from a price point of view this is what we are seeing.

Around $1million – we are seeing some sales and a large number of pass-ins if the property is a low James Home Rating that is unattractive to buyers. However if the property is a high rating and no major negatives then it is almost at all times hotly contested. Two good examples this week are 37 Eglinton in Moonee Ponds which had 7 bidders and eventually sold for $880,000 and 17 Allison St Richmond which had 10 bidders selling for $1.32million.

Why is this happening? Even though the market has dropped and people are nervous at this level they still have to find a home – there is nothing discretionary about their needs – they need a roof over their head for their family. They have to buy.

Between $1.5 and $3.5 million – this has been the dollar segment hardest hit in terms of non sales and other trading difficulties. Evidenced by – look at our rated properties section at www.james.net.au or check the newspaper results each weekend. Poor properties are not getting any interest whatsoever and price becomes the only bargaining tool; however some good properties are also being passed over for what we see as reasons relating to the buyers not the home for sale.

Why is this happening? At this level, a number of homebuyers are affected by the interest rates and the concerns about selling their current home as they try and trade up or find a new home maybe in need of a renovation. However, unlike many first home buyers in the under $1m segment they have choices. They can simply do nothing, that is, stay where they are – delay – and many are.

$4million and over – this market is not really affected by interest rates – the main reason this segment has eased in 2008 has been the number of buyers willing to compete. There are less buyers owing to our recent stock market drop. However the buyers that are still competing are still doing so with some strength as properties of quality at this price level are rare and will forever and a day attract interest from those that can afford them without borrowing money (interest rates).

AUCTIONS ATTENDED THIS WEEKEND

Our opinion of the market at present is volatile but possibly stabilising.

Three auctions this weekend of some note – no photos this week as auctions were held inside (rain) and we respect privacy in those situations.

Moonee Ponds – 37 Eglinton St. This was a home we rated 728 out of 1000. It did have some negatives in that it was south facing and the floor plan had some issues. However it was a house with a great vibe – a real warm and welcoming feeling and its location was sensational being within walking distance of Union Road and Puckle St shops. The area is simply stunning with regards to period homes. Finally the views were panoramic, sensational and not easily built out. The quoting was always accidental at high 600’s to low 700’s. The campaign was well conducted by David Hutchinson of Nelson Alexander and the auction held  inside by Milo Rasinac was strong and well conducted. Property opened with a vendor bid at $680,000 –was on the market in the high 700’s and there was a fury of bidding from 7 bidders until it sold at $880,000. There were still 3 bidders at $870,000. We don’t think this sets new standards for all single fronted homes in the area but it does send a message to many that Moonee Ponds has some great properties. Many of the bidders we believe would have been ones from outside the area such was the pull of this home.

As we said the result was expected and continues along the strong,  sub million theme for good quality period homes that we evidenced at 9 Malakoff St St Kilda East last week.

Hampton – 19 Hoyt Street. This was one of the highest rating homes we have looked at and despite not being everybody’s cup of tea it was from a practical point of view and therefore our rating a great family home. We rated it 936 out of 1000. The auction was held inside and conducted by Phillip Kingston of Gary Peer who is one of the best auctioneers going around in terms of getting bidders into rhythmical bidding patterns. There were only 25 people being the shocker of the day that it is was, but 3 of the 25 were bidders. Opened at $1.6million with a real bid and with the three bidders this was one of the longest auctions of the day rising in $5000 increments with an eternity between bids to sell at $1,905,000, Sally Zelman conducted the campaign with her usual efficiency with a good result for all parties.

Camberwell -  2 Lorne Grove – We rated this 702 out of a 1000 with its main negatives being closeness to railway line and volume of renovation required. We estimated renovations in excess of $1million dollars. However it was a home with magnificent potential- a grand lady in need of some work, but the buyer who nurtures this home with love and care (and money) will be rewarded. Lorne Grove is a Camberwell Top 10 street with a recent $3m plus sale and even after $1million or more is added to the sale price (in excess of $2.6 million -we were asked for it to be undisclosed) we don’t think you will be in any way over capitalising. The campaign was run by Helga Fialides of Noel Jones and the auction was well conducted by Geoff Hall. 80 people present Lorne opened at 2mil then was followed by a vendor bid of $2.2m. Two bidders fought this out to sell for (undisclosed) and it was on the market at $2.4million.

Congratulations to Bayside agents, Buxton who this weekend sold the unsaleable!

The auction of a  Californian Bungalow at 8 Hastings Street Hampton was hotly contested with a sale price of $835,000. A fantastic result for a property, that we would not recommend a client to buy.

Buying the wrong property (particularly if it is your first), will set you on a course for financial hardship that will affect you long term.

8 Hastings Street Hampton gave subtle and not so subtle clues in determining whether it was a good or not so good property. The nearness to a railway line was a huge negative for the home. It was positioned one home back from the Sandringham line.

The home may have been walking distance to the beach however it had a run-down property next to it and a mismatch of other styles of properties in the street. These being period homes and units.

Car access and off street parking was another issue. The front garden of the property gave you room to park, but you lost your garden in doing so.

The size, shape and orientation of the block was also a concern. The size of the block was approximately 485sqm, it was of irregular shape due to the railway line and was west facing. There was also a two storey home looking into the rear yard. Of which there was approximately one tree.

The condition of the home internally and externally gave us the biggest clue- the home had an extension that was approximately 20 years old. Why hadn’t there been a more recent renovation? The answer is simple OVERCAPITILISATION.

The spring market has proved what we have been saying all year. The inner city, high quality, perfect home market is firing as strong as it ever has. Good quality family homes on good quality blocks are in a boom at present. It is also, in our opinion, not too great a claim to say that this market has risen 20-25% this year. However in outer areas of Melbourne, in the townhouse and in the apartment market the news is mixed. This market’s growth has been a lot lower and many properties are simply not selling. Interest rates have affected these markets but not the top end.

What will happen as we move through Christmas and into 2007? As usual our answer is who knows? We don’t. All we can say is the market is subject to rises and falls, however over the long term, good quality property has always risen and we see no reason for this to change.

What lessons can we learn from the current market? If you are buying to live in or invest, try not to go for cash flow charts/seminars, newer areas a long way from the CBD, or flashy builds on small blocks with small rooms and no land. Why not stick with the winners? Good area – established suburbs with a mosaic (our new favourite word) of cultures and styles; good position – near what people have liked for centuries – transport, coffee, food, schools; good land – orientation for light, street frontage, good back yard and good building – nice flow, rooms in the right places, good size, good light, good space.

In Love with Linda – Hawthorn (Grace Park Estate)

Whilst the market can still be fickle, here are some practical examples showing how hot the market is.

All these blocks had good period homes on them. Some needed renovations and some didn’t. People have privacy requirements so we have not been too specific deliberately. The point is to show you just how hot this area is at present.

1. Mid Year 2006
Linda Cres. – 10,000sq ft block, needs $300k renovation – north orientation – high $1 million.

2. One month later
Linda Cres. – same as above – low $2 million.

3. A couple of months later
Hawthorn Grove – smaller block, better home – well over $3 million.

4. A few weeks ago
Linda Cres. – big block – south facing – good house – high $2 million.

5. Last week
Christobel St. – good block, bigger home – did not sell at auction.

Some of What We Have Bought Since Our Last Newsletter (September)

• Caulfield North – Arthur St – Double fronted Edwardian (See Picture Below)
  
• Berwick – Miller St – front townhouse – owner occupier (See Picture Below)
  
• Fitzroy North – Newry St – blank canvas Victorian – owner occupier (See Picture Below)
  
• Brighton – New St – Individual standing townhouse (See Picture Below)
  
• Brighton – Were St – Edwardian on good land with a pool
• Langwarrin – Warrandyte Road – Large acreage – owner occupier (See Picture Below)
  
• Heathmont – Anne St – owner occupier – architecturally designed (See Picture Below)
  
• St. Kilda East – Brunning Street – Edwardian – owner occupier
• Hampton – Crisp St – Bungalow home on big land with pool and north orientation. This buy was particularly pleasing as it sold for more a few weeks earlier, and our client achieved a strong rental agreement for the next 1 to 3 years.  (See Picture Below)
• Prahran – Perth St – award winning home – see further pictures at end of report (See Picture Below)
  
• Williamstown – Rifle Range – townhouse close to the beach – owner occupier
• Hampton – David St – town residence – owner occupier – great location (See Picture Below)
  
• Kew – St. Anthonys Place – town residence within a larger group – great location and beautiful gardens (See Picture Below)
  
• Brighton – Warleigh Grove – Art deco style duplex with a great location

Vendor’s Statements

One of the major conveyancing franchises in Victoria puts a very specific clause into both the contract of sale and the vendor’s statement. If there is a problem at settlement and this specific clause has not been removed in both the vendors statement and the contract of sale (prior to signing), you will be at a very distinct disadvantage with regard to any negotiations to remedy the dispute.

This advice has now come from three different legal practitioners and all have said that they would counsel their clients not to sign a contract with this specific clause in it.

Many people we act for do not understand what the vendor’s statement is, nor do they understand its significance. We do not give legal advice, however we strongly advise our clients to receive legal advice at all times.

Karma

“Karma” – dictionary meaning – the good or bad flow felt to be generated by someone or something.

How much is a home worth?

. Peace, tranquility, a place to reflect away from the rest of the world.
. Vibrancy, amenity, and comfort.
. Satisfaction, accomplishment, a statement of where you are now.
. Future options, a wealth count of good decisions over a lifetime or part of.
. Security – fort and temple.
. Family, you, friendships, a place of positive isolation where human interaction can be clear, clean and without compromise.

A good home is a place of this and much, much more.

All great homes are different and the one consistent difference is not price or style or distance from the CBD or water. The one consistent difference is the owner. Beauty is in the eye of the beholder and has no greater variance outside human relationships than in home ownership. For the home to be a great dream, irrespective of its physical make up, it really does need to be a reflection, a happy expression of the people in it.

Some homes have all the bells and whistles required for significant buyer interest, but they struggle or they are sold for a lesser amount than something down the road that to an engineer’s eye would be regarded as the same or inferior.

Why is that? Price? Maybe, but another issue is karma. The positive karma of a home has significant worth. It’s just that few try to quantify it, however it can be a critical ingredient in any great dream home.

In our detailed Property Reports, which we prepare before proceeding with any purchase, we focus on the other four other critical ingredients: Area, Position, Land and Building. But you should also think about the “karma” issues connected with a purchase.

Perth St Prahran had some great photos to help explain what we mean. The clients that bought this bought it the right way and for the right reasons.

We hope you and your family have good karma over Xmas.

Why would you pay money to us to help you buy?

• All properties are not the same. Think of a few houses in similar areas with similar characteristics and ponder what they were worth 10 years ago. What they are worth now? Will they have increased or decreased in value at the same rate? Not necessarily. We can show you inner city properties within a few hundred metres of each other that 10 years ago were each worth $400,000. Today, one is worth over $2,000,000 and the other $600,000. If you had been purchasing either of those properties, which one would you prefer to own now? We know the difference.
• Strategies. How to buy, how to minimise cost, what to buy, where. How do I make an offer? What do I really want and how do I get it? Where do I want to be financially in the next decade? Why do some people own multiple properties without a mortgage and others have one property and are struggling? Strategy.
• Saving money. This is the number one reason why most people think about advocates in the first instance, and in many, many cases we do just that. Whilst this is of primary importance in all business negotiations it’s interesting to note that clients we survey after the buying process, rate savings as the number 3 benefit in using James Buyer Advocates. Buying property well is as much about MAKING money as it is about SAVING money. Happy to explain in detail at our first meeting.
• Property value. If you think saving money is about getting an agent to take a few dollars off the “asking price” or finding a cheap place “below valuation” then please lets talk some more. In many cases if you are not crystal clear on property values then you will be negotiating at a level that will not buy the dream home you wanted and may well leave you with a compromised property in the long run. Another of the most expensive and distressing mistakes a buyer can make is too pay way too much. Under these circumstances selling agents are very pleasant and helpful as they laugh all the way to the bank.
• Stress & Emotion. Buying a home is about as bad as it gets. It’s emotional, exhausting and sometimes terribly discouraging. You only need to miss that perfect property, drive for miles to find the picture on the brochure didn’t nearly match your expectations (or what you’d been told), have agents leave you hanging or be gazumped in the negotiation stage. It hurts. Careful planning is paramount. It takes exactly the same time to buy a home well as it does badly. We find them, evaluate according to your needs, budget and what the property represents as a long term investment. Most people might only ever negotiate the most important financial decision they will ever make once in their lives. We do this all the time. We love it.
• Expertise. If you were selling a home would you hire an expert? If you had to go to court on an important matter, would you hire a solicitor? Why is this? Because no matter the level of intensity an amateur operates at, an experienced professional understanding your issues and distanced from your emotions will give a better result with less risk 99 times out of 100.
• ALL your options. There are hundreds of places out there you may never get to see. Quiet sales, private transactions, sales without boards. There are places out there you will not be given the opportunity to inspect because they are not advertised. We deal with agents every day, we find the ‘hidden’ houses as agents and vendors approach us quietly all the time.
• Agents and Auctions. We actually like and respect many selling agents, but this is a minefield and gaining experience can cost you dearly. There are some pretty average but also some very good agents out there. They work exclusively for the vendor. If they are excellent and some are outstanding, then they are committed to gaining the highest possible price for their vendors – it’s the law. To understand more about how agents work, please view our critically acclaimed DVD “HOW AGENTS WORK”. You can view it online at www.jpp.com.au/video_audio.html or alternatively, if you prefer, we can send you the DVD.
• Privacy. You may wish to keep yourself private as a bidder. You may have tried and failed to buy a particular property or maybe your business is really just that – your business. In any event, we represent you in complete confidentiality and until such time as the deal is successful, you can remain anonymous if you wish.

Some Client Thoughts

A recent email from a past client. Scott paid a little over $600,000 for his 3 bedroom Edwardian.

Mal and Antony

How are you? Hope business is going gang busters for you. I just thought I would drop you an email since it is one year since signing of the contracts on Repton Road. Am I having any sleepless nights? NO. Am I on a sure thing? YES. Have I purchased the right property? YES. Have I improved my golf swing? Definitely NO. Price movement alone speaks for itself and shows that I have purchased wisely. I am definitely in front of where I was 12 months ago. Thanks once again Mal and Antony.

Also I wish you and your family a safe and happy Christmas.

Thanks
Scott

Dear Ian and Sam,

First of all, we would like to thank you for turning the stressful task of purchasing our first home into such a stress-free and wonderful experience! Having just migrated to Melbourne and not knowing much about buying the ‘right’ property, we decided early on that it was best to get professional help. And that was exactly what we found in James Buyer’s Advocate.

Throughout the whole process you were generous in sharing your knowledge and always reassuring when we had doubts. You were also honest with your opinions and never tried to steer us towards making an early purchase. Basically we were always assured that you had our interests in mind the whole time. In fact the whole process did not feel like a rigid, business transaction but more like a friendship. For this we will always be grateful that we found you.

What a fruitful exercise it has been. We are now just days away from moving into our very own home in Berwick. Plus with the arrival of our newborn son, Renji, we are very excited that we will finally have a place to call home in Melbourne. A new chapter in our lives is now unfolding. Thank you!

Best regards,
Eddie and Miki (and Renji)

Ian,

It’s only a week now before settlement and I would like to take this opportunity to thank you and your team for their professionalism and support over the last six months. You made the journey enjoyable and stress free and I learned many valuable lessons along the way.

Purchasing an investment property has been a goal of mine for many years, and with the abundance of properties available on the market I didn’t know where to start. You provided a methodology that was simple and well researched and this ultimately gave me the confidence to complete my first purchase – the first of many I hope.

What impressed me the most was your level of honesty and integrity. Your amicable and open style made the whole experience ajoy and I was never pressured to purchase any of The properties presented to me (including Rosslyn Avenue).

Thank-you so much for your support and I hope I can touch base with you occasionally to get your thoughts on the market – maybe over that cup of coffee you promised me in the early days.

Regards.
Michael Trigila

A short note/testimonial to thank Mal for assisting us with the purchase of Embling Road:

Finally we have been able to buy a property! After several months of searching and “trying” to buy from local Malvern agents, we met with Mal and immediately felt that we may be able to buy something.
When the right property did arrive, Mal “conditioned” us regarding the price to pay for the position & quality of the property.
The negotiations and finalising the sale documents was impressive and we really needed Antony, Kelly and Mal’s expertise here to get us over the line.
The knowledge, expertise & contacts that Mal can draw upon in his communications made us feel very comfortable with our new Townhouse purchase.
We are now relieved that we did not buy any of the properties that we were vying for prior to meeting Mal, Antony and Kelly. Shirl also says that Mal buys much better flowers than I do! So he’s good at that too!

Best regards,

Alec, Shirl & Anthony Arnot.

Dear Ian

The dust has settled and we are now waiting out the settlement time before getting into Bonnyview Street! I’m making use of your Aftersale Information in preparation for moving – thanks for this – another useful product from James Buyer Advocates.

Alan and I have reflected on the ‘journey’ that we undertook buying our first family home and we both agree that your input along the way proved to be extremely valuable. We have learnt much about real estate from you and found your manner and knowledge to be very enlightening and helpful. There is no doubt in our minds that your input reduced our stress and worry significantly – after all, once we’d found the property (and you had okayed It), all we had to do was decide how much to pay (taking into consideration your valuation of course) and let you go to work.

We know you worked hard and fast with the negotiations, and in the end it was quite painless for us – we kept on with our usual tasks while you kept us in the loop on the phone about the progression of the deal, Again, there is no doubt In our minds that your input made a significant difference to our ability to secure Bonnyview Street. I especially appreciated you accompanying me throughout the contract and cheque signing!

Given our family circumstances, we didn’t ever get to have the many café discussions that your information mentions – I look forward to being able to do that next time! Never-the-less, your flexibility to fit in around our schedules was great and much appreciated.

Best wishes
Colleen Young

Dear Mal, Kelly and Antony

It is with great pleasure that we write to express our heartfelt appreciation for your assistance in acting as our advocate on the purchase of our new home. We are now the proud owners of 3/43 New Street, Brighton and we honestly feel we couldn’t have done it without you. We thank you most sincerely.

As you are aware, in the last 10 months we embarked upon two very special journeys – both daunting and emotionally charged, but at the same time extremely significant in our lives. The one involved our relocation to Melbourne, the other, the process of buying our first home and putting down roots in this beautiful city. As with all life-altering events, we experienced both the agony and the ecstasy of these experiences. We are truly thankful to have had you as our trusted companion and watchful guide in the latter journey.

In July we felt relieved to have discovered the concept of engaging a ‘Buyer’s Advocate’, as the prospect of buying a house was proving to be a big challenge for us. From the start you put us at ease with your open, direct and friendly manner and very soon we had summed you up as a professional with a witty sense of humour: perceptive, knowledgeable and experienced in the property game.
Throughout the process you steered us in a logical, unruffled and unemotional manner. Every time we lost direction and focus, you firmly led our strayed thinking back to the criteria we were striving to meet. You anchored our thoughts and aspirations. May I also add that the whole time you were astute enough to understand that we, ourselves, had to realise the extent to which we could meet our expectations.

‘When the going got tough, the tough got going’ – Mal, you proved your excellent negotiating skills when you engaged in ‘tough’ dialogue with another agent and secured an extension on our current lease agreement, thus gaining us the time we needed to continue our property search. Between July and October, constant communication and numerous coffee, cake and lunch meetings cemented our sound working relationship. Being the good listener that you are, very soon you began to realise what these ‘fussy’ South Africans wanted.

3/43 New Street came along whilst we were seriously investigating two other equally exciting properties. At first you argued both the pros and cons of buying it, but when finally convinced that this was the property we really wanted and that it was a good buy, you sprang into action. Within a few days you had obtained the necessary background information, put together a detailed property report, concluded building and pest inspections and worked out a strategy for putting in an offer.

Although Friday the 13th was not a particularly auspicious day to be putting in an offer, we felt secure in the knowledge that we were going into it armed with your wise counsel and wealth of experience. As a result, the offer we made was perfectly pitched to secure the property (only by a whisker over someone else’s offer). The perfect ending to an experience that was extremely interesting, to say the least!

Without a doubt we will be contacting you when next buying property and have already recommended your services to our friends and relatives.
Many thanks for the beautiful flowers and champagne. They really added a special touch.
It’s been a real pleasure getting to know and trust you.
We look forward to enjoying many happy years in our new home.

Kind regards

Anthos, Martha and Costas
Yannakou

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Christmas Closings

Our office will be closed for the Christmas/New Year holiday break from December 23 to January 1, inclusive. We will re-open on January 2, 2007.

In addition, we are all taking a few hard earned days off during January on a rostered basis; please contact the office if you need to speak with a specific member of the team.

With the festive season again upon us, we thought it timely to include a wonderful Christmas recipe from Eileen James (Mal and Ian’s mum).

Dutch Ginger Cake

• 1 ¾ Cups Plain Flour
• ¼ Teaspoon Salt
• 125g Preserved Ginger
• 1 Egg
• 185g Butter
• 1 Cup Castor Sugar
• 60g Whole Blanched Almonds
• Hand full of glazed cherries

Sift flour & salt, add castor sugar and chopped ginger.
Melt butter over gentle heat. Allow to cool slightly.
Mix in beaten egg, reserving one teaspoon of egg for glazing.
Add butter to flour mixture, and mix well.
Press mixture into a Greased 20cm round tin.
Brush top with the remaining egg, and arrange almonds & Cherries decoratively on top.
Bake in moderate oven 180degC for 45 mins., or until cake is golden and firm to touch.
Allow to cool in tin, turn out, cut into wedges to serve.

Yummy!

Overall the market for good quality family homes is currently in a spike – this spike is similar to the “good quality home” spike just after the last federal election. By spike we mean sale or purchase results well above the existing upward trend line.

Balance this with our opinion that the outer Melbourne market is now and has been at normal transaction mode (since spring 2003), which would be regarded as slower than the inner city market. The Peninsula markets (since early 2003) are now and have been almost dead except for high quality offerings and some surprise results.

So what does this mean to the buyer of homes in the inner Melbourne market?

At the moment, you will have to pay more to purchase your “dream home” than you did say, just before Christmas. How much more? Nobody knows for sure but maybe 10% and maybe a bit more in some circumstances if your home is in the ‘over a million’ category. Maybe 5% more if you targeted home is around $500,000. The figure of 10% is our opinion only and very hard to substantiate. It comes from purchasing about 20 properties since we last sent our newsletter, probably missing an equal number for a variety of reasons.

In December 2005, the market was transacting strongly. We purchased 7 properties in 8 days:

•  Townhouse in Clarendon St Armadale

•  Family house in Sunset St Jan Juc

•  Family house for overseas client in Balmoral St Sandringham

•  Family house in Regent St East Brighton

•  Townhouse in Grey St Clifton Hill

•  Development house in Park St St Kilda

•  Family house in Glenora Drv Vermont South.

The last couple of weekends have been the biggest auction days for this year and during this time we have bought 5 properties:

•  Investment house in Rae St Fitzroy North

•  Family house in Milton St Canterbury

•  Townhouse in Ross St Toorak

•  Townhouse in Paxton St Malvern

•  Townhouse in Bendigo St Richmond

Only two of those were bought at auction (see Auctions article in the newsletter).

Extreme example of spiking – 20 and 22 Church St Malvern.
Both properties are quality timber period homes, out the back of the Malvern Hotel and on good pieces of land (about 8000 sq feet). One sold late last year pre auction for about $1.8 million, which we thought was around the right money. It’s almost twin sold at auction a week or so ago for $2.5 million!

The combination factors that are causing this current spiking are:
1. Stock market gains mean buyers at the upper end have money; and
2. Big shortage of quality housing stock means buyers have little choice.

The market is in favour of the sellers at present for good quality family homes and in fact , despite what you may read, the market did not falter in 2003, did not miss a beat in 2004, continued up strongly in 2005 and has burst out of the blocks in 2006. Here, we do agree with what selling agents are saying.

Solution? Our suggestions have always been to secure the right property when you can. If you currently are not able to, then you have to be patient and search diligently. It will happen if you don’t give up. Last year we purchased just under a 100 properties and a few of those took a while to not only find, but also purchase. The alternative would be to opt from the market and wait until it drops. We do not agree. Some people have been waiting since 1998 for the market to drop.

Even if you buy with a long term view, you may see some dropping in prices in the short term. Then again, you may not. You may need to have a buffer (eg additional line of credit or savings) for any interest rate increases (not obvious to us but who knows).

It’s an interesting time for buyers. Another recent example, 80 & 84 Linacre Road Hampton .
Both were thought to be worth about the same say, two years ago. In fact, 80 Linacre Rd was sold about 2 years ago for $860,000. It sold in February 2006 for $1,330,000 (we were an underbidder). No changes had been made to the property since it was last purchased. It was a great house. Two doors up was up for auction at the same time and didn’t get a bid at $850,000 (we were not interested either, although it was a reasonably presented Californian Bungalow). It is now on the market for private sale.

Everything we have said above applies to homes with WOW. You need to know if others share your WOW rating before you dive in and purchase. O therwise, you may be spending $150,000 unnecessarily.

Auctions

We would get on average 2 calls a week to go and put our hand up at auction on behalf of the caller. We ask the callers a number of questions:

• have they received pest and building inspection reports?
• have they completed some sort of property valuation or detailed Property Report
• have they checked or had the Section 32′s and contracts checked by a solicitor?

By this stage the callers are usually getting a little short with us. All they want is someone to go to the auction and bid for them. We make two strong statements on this matter:

1. We have only bought two properties on auction day this year (one was at post auction negotiations) and last year, of the hundred or so we purchased, less than a handful were at a Saturday auction. Why is this? A re we scared of auctions? No, we love the theatre. There are very good reasons for buyers to avoid auctions in these markets if they can .
2. Hiring an advocate to put their hand in the air completely unprepared is like getting a lawyer to act for you at sentencing only. You have already stuffed up the research and pre-trial negotiations, failed at trial and been found guilty and now you want someone to keep your jail time to a minimum. Hey, we know it’s not that serious, but allow us a bit of colour when making this point.

At the moment, auctions favour the seller if they are being run by skilled agents. We believe that avoiding them is better than participating (if you can).

Case Studies – Due Diligence Completed in 48 Hours

We receive a number calls from people who are wanting to purchase a property but are not quite sure how to handle the negotiations. On most occasions, time is of the essence due to a forthcoming auction or the agent has rung them to say that the property that they are interested in has an offer on it.

This particular client called us on Tuesday. Here’s a snapshot of what happened:
Tuesday – first meeting with client.
Wednesday – went through target property, had paperwork checked by a solicitor and completed a full detailed Property Report . Second meeting Wednesday night to discuss Property Report .
Thursday – building inspection was already completed. Third and final strategy meeting on Thursday morning to discuss our recommendations and by Thursday lunchtime, we were sitting in the agent’s office when the deal was concluded.

We unfortunately didn’t purchase the property but our due diligence was completed within 48 hours and our client had a sound foundation for their decision not to purchase above a particular amount. The property was in Anderson Street South Melbourne .

Another example.

A client contacted us on a Tuesday to help him buy a property that had failed at auction.
Wednesday – we viewed the property, completed a Property Report and received the legal paperwork
Thursday – we discussed the Property Report with our client, looked at all possible negotiation strategies and received a legal opinion on the paperwork.
Friday – after agreeing on a strategy, we instigated it. After multiple calls with the agent we ended up in the estate agents office at 5.00pm with the vendors in another room. By 7.00pm we had completed a successful negotiation with our client leaving with a duly signed contract of sale. The property was in Paxton Street East Malvern.

Co-incidentally, both of the above happened last week.

Skilled Agents

The government is considering relaxing the rules on who can be an agent. Bring it on. Why? Because that would mean even more properties would not have a skilled and experienced selling agents selling them.

It would be great to get rid of those pesky selling agents who are skilled at their job because they DO make a huge difference to the end price. By all means, please encourage the unskilled, inexperienced and unqualified to sell as it makes it (for us) so much easier to buy.

Here are two recent examples of how the skilled make a difference. In the last few days, we have bought from Jeff Gole of Gole Peden (Paxton St Malvern East) and Scott Patterson of Jellis Craig ( Milton St Canterbury ). If we had been buying off unprofessional agents, a good result for both parties would probably not have been achieved.

How Do You Value a View?

There are views (eg view of the surf) and false views (eg glimpse of the water). When pricing a view, these are the things we consider:

•  Immediate foreground (eg nature or roofs of houses)
•  Middle or hinterland – do we see surf, beach or just large expanses of water
•  Background
•  Distance from say, geographical feature , water or valley
•  Distance from shops, transport etc
•  Supply restrictions – it might a good view but are there hundreds of similar views (eg Docklands , Queensland )
•  Land prices in immediate vicinity without the view
•  Possibility of being built out.

Views are “priceable”. We have just finished a 5 week post auction negotiation in Queenscliff where the view and the issues connected with the view were the main points of discussion. Here is another example of a property not being bought at auction (it was passed into us) and a price result vastly different from the vendor’s initial expectations. But it took 5 weeks.

Is Timber Making a Resurgence?

We don’t think it ever left us. It’s just that in Australia , for many, many years, timber has been regarded as the poor cousin to brick.

We have been involved with a number of timber properties recently including:

•  a $2 million spectacular timber home in Canterbury
•  a timber property in Linacre Road Hampton , which sold in excess of $1.3 million
•  a single fronted weatherboard which sold for $1.43 million in Prahran
•  a $1.75 million timber home late last year.

Here are a few reasons why we personally love timber:

1.  It does last – look at the single fronted Victorians that have survived and been revived throughout Melbourne .
2.  More prone to termites? There is plenty of timber in brick homes.
3.  More maintenance? Maybe a fraction more (eg painting) but brick cracks and is susceptible to rising damp.
4.  There is usually more light in timber houses because there is less support required for larger windows than for brick.
5. They are easier to renovate.
6. The jury is out on the insulation arguments. We can’t find any evidence that really shows that timber is not as good when well insulated.

Timber. It’s back – but maybe it never left us.

Buying For Your Children

We are getting more and more of these types of jobs from parents. We believe a good property to buy your children is a single fronted period home. Why?

1.  It can be rented out until your children leave home (or should we say, if they ever leave).
2.  They are usually cheaper than most bigger blocks with homes than aren’t much fun to live in.
3.  They are ideal for students.
4.  They can have a second storey put on when a family comes along (if a family does in fact come along – if it doesn’t, then unlike a big home, there is no extra unused space).
5.  Later in life, the property is not too big for a retiring couple.
6.  Make sure you are near shops, transport and parks.

Buying for clients’ children is an increasing market. Why shouldn’t it be?. It’s all very well for the many of us who have moved from say, outer areas to Bayside areas, but is it fair that our children have to move from Bayside areas to some new development on the outer edges of Melbourne ? Or worse still, rent all their lives? Think about it. Our children of course need love and an education, but they may also need a hand in housing as it has become unaffordable for most without assistance.

The Great Pool Debate

In many cases, pools can reduce the value of a home, especially if they dominate the backyard or are , let’s say “unclassy”. However pools with WOW, water features, gazebo’s, green space and privacy can add significant value to a property. They can even disguise some other faults of the property.

A classic example is 70 Rosedale Road Glen Iris (located in the real Glen Iris not Malvern/Glen Iris or Burwood/Glen Iris) which sold two weeks ago. It eventually sold at auction for over $1.4 million and in our opinion, the classy pool, gazebo, fencing and landscaping (which would have cost $100,000 +) covered up some design issues connected with the house.

Commercial Property

We have noted that a few financial planners are starting to push hard for clients to consider investing in commercial property. While we personally love commercial property (in particular, buying your own business premises) there are some ground rules. Here are 5 really important points:

1. Commercial properties ARE more risky purchases than residential properties and you should buy at a discount, NOT at a premium for the RISK involved. Up until a few years ago when there was not much super fund money around, commercial properties were bought on an 8-12% return. Now they can go as low as 4% return.
2. If you are getting 4% return and there is not a logical additional reason to purchase commercial, then why not buy the residential house down the street. Lower risk for the same return and maybe higher growth expectations.
3. A tax advantage is a plus, not a reason to invest. Growth is the reason to invest . If it isn’t going to grow, don’t buy it or understand you are making a lifestyle decision.
4. Growth in commercial property relates to rental amounts, quality of tenant, term of lease etc.
5. Renting commercial properties have completely different legislative requirements attached to them.

We buy commercial property. But not a lot. Good commercial is harder to find than good residential.

Investment & Competition

We got a glazed look from a new investment client recently when we said we love to see other bidders at what we want to buy.

Many “investors” think that buying a property investment is all about buying at a “discount” or buying off the plan for tax savings or other things. Many first time investors also think buying an investment property is buying a “special or different property”. This is NOT TRUE.

Property investment is all about paying $1 now and getting $2 or $5 in the future. It is about buying something that more people will want in the future (demand) and that there will be less of (supply). That means price will go UP.

A really good indicator of the future is what is happening now. If you don’t want to live in the property now, why would a tenant want to live in it now or the future? If you don’t like the property now and you are a normal person, then why would lots of other normal people (ie buyers) like it in the future?

If you are seeing developers advertising really cheap deals on units in say St Kilda Road or Queensland , then why are they so cheap now? Because the developer is running a charity ? Because there has been such incredible growth in the past? No, because they are hard to sell at a higher price now and they will be hard to sell in the future at a higher price.

So if you are normal and other normal people are bidding now, that should make you feel good that in the future, others may well be bidding. It’s a simplistic way of making our point. Don’t be scared off by real and sensible competition when you are buying an investment property.

And also remember buy what you like, understand and have researched. A boring house, in a boring a suburb, next to a boring train line and boring shops with a boring agent and maybe two other boring bidders would be a good start.