Prahran, 4 Grandview, Jeremy Fox, Under the hammer, $4,570,000. 3 bidders

Saturday March 31st: Solid finish to the month – partly as a result of vendors lowering their expectations as they feel the market may get worse before it gets better, partly due to some good stock and partly because buyers can’t really see anything of note on the market after Easter.

But to keep some perspective if you read our archived $3m+ reports of previous years you will see the same buoyant activity leading into Easter -  its after Easter that gets interesting.

Big Day at Auctions for the Top End

• Prahran, 4 Grandview, Jeremy Fox,  under the hammer $4,570,000, 3 bidders. This was a Super Saturday sizzler! Three determined bidders contested for this breathtaking property after auctioneer Jeremy Fox kicked things off with an opening vendor bid of $4,000,000. It was a little slow at first but the action heated up as the third bidder chimed in. He eventually secured the property for $4,570,000 and that sparked applause from the 130 onlookers.
  James Home Rating 865/1000 “I found it hard to find fault with this home – its WOW all over – the flow works brilliantly, locale for Prahran is in THE street and garaging, kitchen, laundry set up is efficient and classy – the north light is brought in nicely into living areas. The bedroom set up works and the reflection pools aren’t twee they are classy. Do I sound over the top on this? This home will fly and I mean fly unless the RT boys cook the quote or the vendor is dreaming. Best guide is 51 Murray St Prahran in May 2010 (See our rating and auction report, over $3,700,000) and the recent sale of similar land size without the same WOW by same company a couple of weeks ago at 22 Murray St (north of $3,400,000). Our suggested strategy to buy – dig deep on the day or go hard and early now!  ” Mal James

• Armadale, 3/50 Hampden, John Bongiorno, under the hammer, $3,360,000. 2 bidders.  Last sold for just over $2,500,000 in 2005.
• Toorak, 27 Selborne, Jeremy Fox, after auction,  $3,300,000, 1 bidder

Pass-Ins

• Toorak 49 Irving, Passed In on a vendor bid at $4,500,000
• Camberwell, 12a Royal, Passed In on a vendor bid at $4,100,000

February Top End Pass-Ins still really struggling a month later!

But it’s not all good news at this level if you don’t get the price right. A month ago we reported on ten auctions over $2.5 million. Two sold on the day and eight passed in. Since then only a further two have sold and both were below the pass-in price. Although the stat is on a small sample it says at this level 40% clearance rate after a month.

Friday March 30th: 2a Chelsea St Brighton with Sturt Hinton of Kay and Burton got away after an eternity on the market for an extremely healthy result of $3,600,000 (according to another agent).

Thursday March 29th: Expressions of Interest still working with Michael Armstrong moving 11 Moralla Road Kooyong – over $5million.

There has definitely been a resurgence in Bayside in the last few weeks at the top level and one new company that is giving the big boys a run for their money is Nick Johnstone of Nick Johnstone real estate – as you know we have a fair bit of time for him, as he actually gets off his back side and shows you homes, suggest alternatives, tells you asking prices (which a number of others for some stupid reason think should be a complete mystery) and follows you up. Good real estate at the Top End is not for rocket scientists – we know because we aren’t. Turning up with a sprinkling of facts and treating people with a certain level of decency is ¾ of the job. Anyway let’s look at Nic’s circa $3m sales this month alone in Brighton

• 1 Norwood – North facing land one back from the beach
• 20 Birdwood – James Home Rating of 714/1000
• 13 Halifax – ripper property see our James Home Rating 661/1000
• 19 St Ninians – heart of the Golden Mile see our James Home Rating 588/1000

And while on the subject of smaller boutique companies we have always liked the work of Paul Richards who sold 53 Barnard Kew for we believe over $6,000,000 earlier this month and we were amazed to see another company claiming the deal – anyway Bekdon Richards with Evan Lykourinos is a young company who also speaks reasonably accurately, gets out of bed early and pushes through some big deals quietly over the line.

And one for the big boys – Justin Long of Marshall White moved 8 Harvey St Malvern on Monday for we think over $4million – went through it late last year and thought it may take some time to shift – a credit to his persistence and if achieved anything over $4m in this market it would have been a good result for both parties.

Another one quietly gone in the Gascoigne (Kay and Burton) at circa $3m price level and the big one in Boroondara should emerge soon to give some small confidence at the Top of the Top End. Not trying to be tricky but we do respect privacy when asked.

Mortgagee Auction: 8 St Ninians Brighton, David Hart, Under the Hammer, $4,900,000, 3 bidders

Saturday 24th March: It is neck and neck for the strongest areas in the $3 million segment for March: so far Brighton has sold 7, Hawthorn, Kew and Canterbury also 7 and Toorak 6 for the month so far – daylight the rest.

• Brighton, 8 St Ninians, David Hart, $4,900,000, 3 bidders.
• East Melbourne, 125 Gipps St, the newly married Nathan Waterson should pay for the wedding with a private sale at slightly below $4,000,000. A great terrace home and a good result, but below initial ask and took a fair while for the vendors to come into line. Next door’s ask now seems even more courageous than when I first heard it. But I have had the taste of humble pie once or twice this month so will wait and see.
• Kew, 5 Tregarron Avenue, Sam Wilkinson – Expressions of Interest in the mid $3 millions. Now with Sam who has deservedly a good reputation at this level on these homes. Is he not the spitting image of young Brains on Thunderbirds!
• Hawthorn East a quiet one away for Nicholas Franzmann and hopalong Walter Dodich in the over $3m category. New home build – good result in the end.
• McKinnon, 41 Rose St – yep its not a misprint – McKinnon – Adam Joske and Phillip Kingston under the hammer at $70,000 short of $3,000,000. 3 bidders and a crowd of over 200.

Top  Pass Ins

• Brighton, 11 Alverna Grove,  passed in, $3,000,000, no bidders
  A big crowd turned out to have a look at this impressive 7 year old home overlooking parkland at the end of a dead end street….(See more in Auction Reports)
• Balwyn, 26 Metung, passed in, $3,000,000

The New Way to do Business at the Top End - An Abercrombys Private Auction - 11 Bates St Malvern East selling over $6 million – Jeff Gole and Tim Derham

Thursday 22nd March: The Abercromby Private Auction – possibly the new Expressions of Interest. Private Auctions are where a home is advertised usually for a mid week auction and only those who register interest are allowed to attend.

11 Bates St Malvern East was a great example of how it works. A number of pre arranged private inspections are organised during the course of an advertised auction campaign. A few days before the Private Auction (Thursday), all potential buyers register interest and are required to indicate a starting bid. In this case the written starting bid was $5.9 million (I’m not sure what that proves, but anyway).

They are by invitation only (and I saw some people being  turned away at the door). At 11 Bates three parties turned up. Two bid – well I think it was two – the spiel was given by Tim Derham and he declared that there were two pre recorded bids. One bidder asked to see them and she was duly shown the written bids. What surprised me was that she accepted them without asking Tim to point out who the actual written bid was from. But we move on. Anyway this feisty lady tried in all manner of ways to lower the bids (and good on her) until a $50,000 bid was accepted after Tim had cheekily asked for a $200,000 rise (well he tried hey!). The property was eventually passed in to the lady. A deal was done behind closed doors over the magic $6 million mark, post auction. Surprisingly despite the written bid, no-one else bid, including the writer of the bid. Mmmm!

Digressing slightly, this was in our opinion about the right money for this very rare and truly great home, given we figured it was worth $3m for the land and $3m for the home and the rest was going to be emotion. Read our James Home Rating if you wish.

But back to the Private Auction. Not only is it a civil way to conduct proceedings at the Top End but it also probably circumvents the new cooling off period laws – if an auction by invitation only still constitutes a public auction. That’s one for the legal boys.

This is the third of its type we’ve been to over $3m in recent times and all have worked (for the seller). As a buyer the normal rules apply as at a public auction – do your homework on value, have representation to protect your privacy and manage the bidding; and of course have a suitable post auction strategy to prevent the irresistible force of “Slapper” in full voice running you up the flag pole above fair and reasonable.

The more we see the Abercromby guys in action, the more impressed we are with how they do business at the Top End. Yes Tim Derham can hit you between the eyes when you least expect it and Jock can chew your ear off on why a home is worth such and such without necessarily dropping a fact into the conversation (he gets some very big deals over the line); but when you look at their line-up, which includes Rob Vickers Willis and Andrew Harlock, this Top End boutique agency is truly the hired gunslingers (with some morality) who are knocking the Top End around a bit right now. No we don’t get anything from them, but we at James like the way they are doing business right now with the Private Auctions (it’s innovative and its working) – has a relative degree of transparency about it (although you do need pre auction preparation and post auction pass-in skills if you are to give as good as you get – they are working for the vendor not you the buyer) and they are actually pleasant guys (not working for you but pleasant). Jeff Gole is a solid, ethical and experienced addition to the Abercromby family. Liking your work right now boys.

35 Stonnington Off Market - Over $6m

Off Market: 35 Stonnington Place Toorak also Jeff Gole and Tim Derham (they’ve had a good week these old blokes). Went through this off market home about a month ago. Pretty well the Toorak new build formula – big, thoughts of pretension, all the features but lacked a little soul when you lined it up against the calibre of 11 Bates St above. Was around the $6m mark the right money? I feel so and that represents a 25% rise on its last buy price during the GFC. Yes we may be in a market that may fall some more but we also may be in a market that has corrected and will begin to rise again. If you know for sure where we are in the cycle can you let us know please – we agents out here are waiting for that sign from God!

Tuesday 20th March: Another half dozen buys at the $3m+ level this week, with Bayside showing the most consistent activity

• 55 Sussex St Brighton (Jonathan Dixon) finally gets way after beginning its sale campaign with another agent in the stratosphere and selling at what now deemed to be market value.
• 27 Chelsea St (Danielle Martin of Barleys) organises the ink after a long but ultimately successful campaign on a solid block with a home that needed some work.
• 29 Seymour Avenue (Ian Jackson) forever the consummate professional brings two parties together, no not at the initial courageous $5m+ ask; but at the still pretty impressive mid $4 million mark. With land being bought in the early $2m’s a few years ago; holding costs and a pretty solid build ( lift, basement and other features) the buy, build and sell quick is not proving to be the absolute goldmine it once was – but nobody’s saying this was not an acceptable result – just tight.

Monday 19th March: Reprinted from The Weekly Review – “The market can be so fickle at the top end”

So you’ve heard there’s a bit of life at the Top of the Top End – that is the $3 million price bracket. Is it true? Well, yes and no.

After taking forever to get out of the blocks in 2012, the starting gun finally seems to have fired for the $3 million plus market. But the big question in this Olympic year is whether this is a false start or the beginning of some sustained running.

The thing is, that at this price level markets are very fickle and rise and fall quite dramatically within short periods of time. Its sub markets, such as land only or trophy homes or new builds, go up and down with even more elasticity, as demand for these is far more variable than for say a median priced inner suburban home.

Even so, the Top End can have some oomph even while operating a lower price level. It’s a bit like a footy team that is outside the top eight and then gets it act together to make a run at the eight, even if it may not be operating at the levels of the top four.

So where are we now in Mid March 2012 in the Bayside and Inner East Market above $3million?

The current market does have some oomph but it is nothing like the halcyon high turnover days of 2007 and 2010. While there is some good stock on offer, there is also plenty of rubbish. Also worth remembering is that we saw signs of life like this at around the same time in 2011, only to then see momentum die away after Easter. The market did come up for some air in September but then it sank again for the rest of 2011 (except for one or two notable exceptions).

Last year was a classic stalemate market – with many vendors barking orders down to their agents and many buyers looking up at the prize, offering a limp handshake and then walking away unsatisfied when it wasn’t taken up.

So far this year things seem a bit more lively. When pushed some buyers are putting in a second effort, helping to push some prices up. Sellers seem more prepared to meet the market rather than sticking stubbornly to their asking prices as they did last year. However, this does not add up to uniformly increasing prices. In fact a number of homes have transacted at lower prices than the previous peaks or when they last sold.

Let’s get specific

What has been selling?

• Hawthorn East, 2 Buley St, Jason Scillio (Kay & Burton), Sold after auction above $3,700,000, 2 bidders:
• Sandringham, 47-49 Victoria St (Julian Augustini) – Big parcel of land, on the market since late last year and sold in the mid $3 millions – a solid result.
• Camberwell, 19 Waterloo, (Rob Vickers-Willis, Greg Toogood) Bought under the hammer in front of a crowd of 80 people. Bidding opened at $2,700,000. On market at $3 million. 4 Bidders

What has been selling, but at lower than previous levels?

• Hawthorn, 33 Kooyongkoot Road (Tim Picken and Scott Patterson) – A huge block (2800sqm) in THE street on the crest of Scotch Hill. Sold for around the quote price of $8 million, lower than it sold for in the 2007 peak. This was a good sale just at lower levels.
• Malvern, 9 Woodmason St, (Jeremy Fox), Sold after auction, above $3,530,000, with 3 bidders. This was only bought a few years ago and we believe at a higher price. This was a good sale just at lower levels.
• Brighton, 47 Champion St (Ian Jackson) – Had been on the market (with another agent) for an eternity, considering its quality, with an asking price initially over $3.5m – Bought mid week for we believe just under $3m. This was a good sale just at lower levels.

What has not sold at auction?

• East Melbourne, 125 Gipps St – passed-in $3,850,000
• Williamstown, 27 The Strand – passed-in $3,000,000
• Toorak, 24 Heyington – passed-in $2,900,000

And there are plenty more of these out there, as you’ll notice if you do a search on homes over $2.5 million on any real estate portal. Last time we did that, up came 250 homes, which should tell you that despite a dozen or so buys/sells in the last week there are still many “wannabe” sellers out there who may not have got their pricing correct.

19 Waterloo Camberwell hits $3,045,000 in a Rob Vickers-Willis mid week auction

Thursday March 8th – Camberwell, 19 Waterloo, (Rob Vickers-Willis, Greg Toogood) Bought under the hammer in front of a crowd of 80 people. Bidding opened at $2,700,000. On market at $3,000,000. 4 Bidders (Architect Adam Auction Report)

James Home Rating 810/1000: 19 Waterloo is a very good property, and one that which should defy any  negative market conditions  as  it is a unique offering . We see this type of property only about six times a year and,  if vendor expectations are reasonable and the agent manages the campaign well, then a strong result generally comes about….. (see James Home Rating for full details)

Wednesday March 7th – Hawthorn, 33 Kooyongkoot Road (Tim Picken and Scott Patterson) – the big one on Scotch Hill – 2800sqm in THE street on the crest of the hill was bought today for we believe around the quote price of $8,000,000. This shows their is a market for sensibly priced Top End homes – meaning it had a lower quote than what it was last bought for in the 2007 peak. James Home Rating 752/1000 – see rating for full details.

64 Sutherland Road Armadale – (Jock Langley) – Inner city larger terrace home was bought in a private negotiation and 16 Monomeath Avenue Canterbury (Doug McLauchlan) which passed in on Saturday for $4,700,000 was cleaned up in post auction negotiations for an undisclosed amount – the quote was $5,000,000 plus.

Biggest Sale of 2012 so far 33 Kooyongkoot

Tuesday March 6th – Kay and Burton Trifecta

• Toorak, 46 Canberra Road, Michael Armstrong and Ross Savas – bought before auction around $4 million.
• Camberwell, 69 Broadway, Michael Armstrong and Ross Savas – was quoted between $6,000,000 and $7,000,000 and had been on the market since last year with another agent and we believe was sold in the last day or two for an undisclosed amount.
• Portsea, 3831 Point Nepean Road – Liz Jensen, Kay and Burton, $3,200,000 – bought before auction.

Hawthorn East, 2 Buley, Jason Scillio, Bought After, Over $3,700,000. 2 bidders

March 3rd: We had the first signs of life in the Inner East this weekend and it now seems the Bayside Top End may be dragging itself out of its Summer slumber. After last week’s Sandringham Top End action, we saw sales this week at:

• Brighton, 192 Church St (Ian Jackson) – On market for some time at over $4m – Bought mid week just shy of that
• Brighton, 47 Champion St (Ian Jackson) – On market (with another agent) for an eternity, considering its quality, with an asking initially over $3.5m – Bought mid week for just under $3m.

Biggest Auctions:

• Hawthorn East, 2 Buley St, Jason Scillio (Kay & Burton), after auction above $3,700,000, 2 bidders: Jason Scillio was our master of ceremonies here and he led the way strongly and professionally, politely refusing low increment bids and keeping the auction moving along smoothly and quickly…(see more in Auction Reports)
• Malvern, 9 Woodmason St, Jeremy Fox (RT Edgar), after auction, above $3,530,000, 3 bidders: Interested to see how this recently on the market and sold quality home goes at this indoor auction in front of crowd of around 40…(see more in Auction Reports)
• Toorak, 33 Evans Court, Gowan Stubbings, After Auction, around $3,400,000, 1 bidder: This beautifully presented property attracted a sizeable crowd on a gloomy day. An opening bid from the crowd of $3,260,000 was trumped by auctioneer Gowan Stubbings ..(see more in Auction Reports)
• Brighton, 3 Tennyson St, Leigh Hallamore (Buxton), under the hammer, $3,270,000, 3 bidders: Indoor auctions aren’t always that exciting, but this bucked the trend and was fast paced, entertaining and high energy all rolled in to one…(see more in Auction Reports)
• Brighton, 19 St Ninians Rd, Nick Johnstone (Nick Johnstone), after auction, $3,150,000, 1 bidder: The loud chatter of the crowd, with umbrellas in hand, who stood in a series of small huddles, made the weather seem much less dreary….(see more in Auction Reports)
• Fitzroy, 112 McKean St with Shayne Mooney of Nelson Alexander – just over $3million

Biggest Pass-Ins:

• Canterbury, 16 Monomeath Ave, Doug McLauchlan (Marshall White), $4,700,000, no bidders: Outside, and under a substantial porch, a crowd of 80 gathered. Doug McLauchlan opened with a vendor bid of $4,500,000, adding another at $4,600,000…(see more in Auction Reports)
• Albert Park, 79 Beaconsfield Parade, Geoff Cayzer, $3,300,000
• Elwood, 8 Dickens St, Marshall Rushford (Hocking Stuart), $2,950,000,  2 bidders: This great old dame attracted a lot of curious bystanders – even (I was told) a former owner of this amazing old mansion, who had come along to see just how much it was worth in today’s market…..(see more in Auction Reports

However, there is still a lot of property at this price level on the market in Bayside and the Inner East that is simply sitting there doing nothing.

Overall the $3M+ market is seen by optimists as treading water and by realists as still edging backwards.

Recently we gave a talk to more than a hundred high net worth individuals at the Sandringham Yacht Club for Peter Wilson of Godfrey Pembroke where we involved the participants in a hands-on exercise that introduced them to “valuing” high end homes.

There were three steps to the process. First we asked them to give their valuation of three 250sqm beachfront blocks in Sandringham that were up for sale. Then we informed them there was a conservative valuation of $5,400,000 from a reputable valuer, and asked them to revalue the blocks in the light of this information. Then, after telling them the asking price was $8,000,000 and there was possibly a winning consortium’s bid, we asked them to give a third and final valuation. Their final valuation had to be above the possible winning consortium’s bid – after all there is no point coming second if you want to buy something.

Three clear things came out of this exercise:

1. At the Top End people have a very wide opinion of values: In this exercise the estimates varied from $3,000,000 to $12,000,000 on the same offering. People were genuinely trying to estimate correctly – there was self interest involved.
2. The Power of Suggestion: While the value range remained wide for the second lot of “valuations” after the $5,400,000 value was tabled, not one participant’s valuation was now below $5,400,000. Once a credible suggestion had been given, it seems everyone put a floor under the price. Very interesting if you are the only taker on a home.
3. The Power of Step Quoting: Scenario Three produced a wide range of valuations but NOT ONE was below the valuation the respective participant had put in Scenario Two. In other words, for every one of the participants the price had gone up. This is again about the power of suggestion and the power of Step Quoting.

For buyers who believe that an asking price is an asking price and a valuation is a valuation – like rocks set in stone on which to build a platform of action – this scenario may seem a bit perplexing.

But the fact is that when you’re buying a property – especially at the Top End – opinions, suggestions and questioning are how a final sell price is established.

When agents are dealing with buyers – including us as buyers agents – they use suggestion firstly to frame an area of thought e.g. a price range and then to move you the buyer up the price ladder. Depending on the agent’s credibility you will either go with that suggestion or you won’t.

Agents also use questioning to work out if you are actually on the price ladder – and if so at what position. They do this to ascertain broad interest which they report back to the vendor, and to ascertain your interest so as they can decide on a plan to take you up to the next rung.

As buyer agents our role is to do the reverse.  Our job is not to establish a credible floor, but to establish a credible ceiling. We use the power of suggestion to indicate to the selling agent where a client may be on the price ladder. We use questioning to gain information and to see if those suggestions have been effective.

Remember that in home buying there are three opinions that really count when it comes to forming or framing your price thoughts. Firstly: the vendor’s sell price (not their asking price). Secondly: the highest other bidder’s buy price. (That is the only other buyer competition we are concerned about). And thirdly: your own thoughts on price. Which is actually the most important opinion on price.  Not the valuer, not the buying agent and not the selling agent, not Uncle Jim’s – but yours. If it is informed and considered then it is correct and more important than all others.

Some of you may view this all as a game and some may not want to be involved. But here in Melbourne, it’s the way homes are bought and sold (yes, even auctions). It’s called haggling or bargaining, and what that involves is a contest between seller and buyer. In many cases it’s unavoidable – and when it is, you might as well play the game as best you can.

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

A key focus for many buyers at the moment is to not pay too much. Fair enough -  it’s a healthy focus But if this is the only focus, then as a buyer of a good home or a good investment you may miss out on the main game – to BUY WELL.

Take a golfer who is totally pre-occupied with looking at the flag, until his partner points out the water hazard to the left. That’s good factual information and healthy to focus on if it makes  you change your aim a little to the right. But it’s an unhealthy focus if it becomes so encompassing that you end up duck hooking into the very hazard you are trying to avoid.

The hazard that all buyers, whether emotional home-buyers or first time investors, are trying to avoid is making bad decisions that don’t achieve their outcomes.

Let’s say your desired outcome is to buy a good home for your family, but also to make a good investment  purchase. In this market is that best serviced by a focus on buying a good home at a fair price or  by beating the agent and getting a discount? Of course both aims are worthy, but in my opinion the former is a more important focus than the latter.

Here’s a question: When are you more likely to be buying a good home? When the selling agent tells you a property is bargain? When you find yourself negotiating at 10% below the asking price? Or when you find you are competing against multiple bidders in an “on the market” auction?

The fact is that when there are multiple bidders for a property, it’s a clear signal that the property is likely to be a good future investment.  Multiple bidders signal consensus on price and that is good for capital growth; multiple bidders also signal that there is a high chance this is a good home.

Meanwhile, an obsessive focus on not paying too much is actually not a buying strategy and could even be counter-productive in a competitive auction situation.

Take this recent auction at 7 McClaughlin Sandringham.  This was a roughly 30 year old home on 1000 sqm plus, with an older-style facade, a bit dated but with a classy floor plan and internals. It was a good home and I was interested to see how it would sell.

Well after an opening bid of $1,500,000, a second bid came in at $1,550,000 and a third at $1,650,000. Another bid came in at $1,660,000, and then finally we were “on the market” at $1,710,000 – but by this point people seemed to be running out of money. Bidder number two was slow to bid while bidder three responded more authoritatively, nearly buying the home for $1,719,000. A fourth bidder then came in at $1,720,000, but didn’t look that strong and this seemed to allow the third bidder back in with a bid of $1,751,000. The final result: $1,752,000.

Not bad, and the under-bidders probably thought they’d given it their best shot, but my thought was that at least two of them looked weak and that was what let the winning bidder back in each time.  I can’t help thinking that there might have  been a different result if the other bidders had gone in with a different mindset.

It’s human instinct for others to battle on when they think the other party is injured and almost out of the race. If you’re the weak one, you may end up paying more or even worse missing out on the property,  when it is quite possible that the winning bidder would have stopped $10,000 below you if you had put in a stronger bid. The fact that you showed you were gone was what energised him for one last final effort.

So what are the real issues in this market?

1)     Get your main goal clear in your mind.

2)     Understand value before you start bidding. Why? Because uncertainty makes us all look weak.

3)     Sure don’t over pay – but don’t miss out either (as long as it’s worth it)

4)     Don’t assume you will have no competition

5)     Have multiple bidding strategies to deal with pass-ins, vendor bids etc but also have ones to deal with bullet bidding, strong competition, weak competition and so on.

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

BRIGHTON, 4 Iona Ave: A very dapper Peter Kennett (Hocking Stuart) basks in the autumn sun and sells the property under the hammer for $1,256,000, 2 bidders

Are we in for some Super Saturdays at the end of this month?

Jenny Dwyer, Hocking Stuart (Sandringham): “The market for the foreseeable future would suggest that a more balanced supply line is occurring at present – the days of “Super Saturday” may have come to an end until the Spring market appears for 2011 (unless we are in for an unexpected surprise!).  Stock levels are at a more sensible level with some owners considering private sale as a viable alternative hence lessening the likelihood of another 1000 plus auctions on the last Saturday of May.”

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Now back to the market – Future Stock:

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

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

Other agent comments:

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

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

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

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

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

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

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

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

A couple of strong results today:

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

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

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

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

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

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

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

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

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

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

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

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

HAMPTON, 56 Linacre Rd: Come on! Just one more! Mark Earle (Buxton) does his best to squeeze every last bid from the crowd. Bought under the hammer for $1,650,000, 2 bidders

Key Points:

• Clearance Rate for quality homes was stronger than our stats show today
• If you went to auction in Brighton, Brighton East or Hampton today you had a good chance of selling with clearance rates 81% (13 from 16). Further down the bay like Sandringham and Beaumaris really struggled.
• Hampton 7 Raynes Park Road with Stephen Wigley Hodges recorded a strong $2m plus result and a volcano (4 or more bidders) – a bit of a rarity for that neck of the woods – $2,204,000.
• Land Price Check with 29 Bay Street Brighton (Bert Stewart of Buxton) selling post auction over $3,550,000 and the final result put north facing (no view) Golden Mile land at over $3,200 per sq metre. That is a steady as she goes price similar to last year Golden mile (no view) buys. 7a Dawson with Nick Johnstone of JP Dixon confirmed this price by selling 762 sqm of irregular land for $2,500,000 at auction – almost identical psqm prices.
• And another $3m+ sale with a strange twist (all non bidders asked to leave) at 40 Drake Brighton (Ian Jackson).

Agent Q & A : How does current pricing compare with the same time last year?

Robin Parker, RT Edgar, Brighton: “The hot topic at the moment amongst many in the market is “what are prices doing”? Well, the short answer is it’s steady. Certainly the less attractive , or the inferior positioned properties, are finding it tough. However if you weigh up the prices of  desirable homes in desirable suburbs in desirable streets,compared to this time last year, then you start to realise it’s  “steady as she goes”. So if it feels right, if the times right, then go for it.”

Scott Hamilton, Buxton, Brighton: “Pretty similar.”

SANDRINGHAM, 12 Georgiana St: Concern is written all over Julian Augustini's (Hodges) face. Passed in $1,675,000, no bidders.

Key Points:

• Brighton is like Stonnington at the moment, if it’s good its selling. The market has eased, but unlike last year a number of vendors have responded. However nobody says things are moving upwards yet. What are stock levels going to be like Post Easter – will the significant overhang be taken up, removing oversupply, especially at the Top End? Let’s wait and see. I think Peter Kennett’s comment below is the best of the week.
• Over $2m seems a road to far for many at present as 10 of the Brighton dozen were under $2m and the other 2 were under $2.2m.
• Price check on small land – Were St Precinct. 36 Lynch St (Mark Healey Buxton) was bought  for $1,220,000 privately which equates to $2,687 per sqm.
  

Agent Q & A: Is it a buyer’s market and, if yes, what are the best opportunities for buyers?

Peter Kennett, Hocking Stuart, Brighton: “Yes.  Great opportunities (and) fair choice but the window won’t last long… (with) school holidays and winter coming means less stock available for buyers… (Therefore currently there is) the most stock available for buyers. The best opportunities for buyers are at the top end.  There are great negotiation opportunities at the top end.”

Julian Augustini, Hodges, Brighton: “No.  It is a fair market for both buyer and seller…. It is a neutral marker for both sides…. Current success rate for Bayside is 70% and most are selling and those that are passed in are selling within a reasonable time period.”

New Subscriber System: Over the next few weeks we will  introduce a free subscription model giving you greater access to our council-specific wraps, which include auction results, news, opinion and analysis on a micro level. This subscription model helps us improve your browsing experience as clients or general subscribers by delivering more relevant content to you on the site and in your email newsletter. Sign up by clicking Subscribe at the top right of the website. If you experience any problems as we are testing and implementing this new improved system please let us know at enquiry@james.net.au

BRIGHTON EAST, 77 Comer St: It looks like every man and his dog was at this Brighton East auction; but everybody came to just watch. Stewart Lopez (Kay & Burton) passed the property in, no bids and a crowd of 65.

Key Points:

• The level of market softness outside the heart of Brighton surprised most
• Brighton 29 St Ninians: Passed in on a vendor bid of $7,300,000.
• Brighton 18A Martin: Passed In for $3,300,000. 1 bidder.
• On a buying note the Golden Mile in Brighton is still alive and well with Regina Schmidt and Brian Devlin from Buxton getting 2 Shandford away post auction for an undisclosed amount over $7 million and in fact over Shandford other $7 million sale of a few weeks ago. This home had some positives and will possibly be retained but with two blocks totaling around 1400 sqm going for nearly $15,000,000 this shows that Melbourne absolute waterfront has some of the most sought after beach front in the world on a dollar per sq metre basis.
• Another quieter one in the Golden Mile just before the long weekend – 11 Kent Avenue (Stan Fisher of Biggin and Scott) was reported as bought again for an undisclosed amount having been sold only last year for a tick over $4 million. The rest of Melbourne maybe a little quiet but Golden Mile Brighton is relatively hot for land sales (compared to previous years).

Agent Q & A:“What is your take on the Economist’s article that Australian house prices are overvalued by 56%?”
Sam Paynter, Hodges, Brighton:”There is a great report by economist Paul Bloxham called “House prices are high but we shouldn’t fear a bubble” in which he says that yes, house prices are high, but for good reason. One is that the quality of the housing stock in this country is high. Secondly, well located dwellings are in limited supply, and thirdly public transport from outer suburbs in the country’s major cities is generally of low quality, limiting the distance people live from the city and lastly that there is a lack of affordable land at the fringes of the major cities, thus increasing demand for inner city properties. He goes on to say that with strong prospects for the Australian economy we can expect housing prices to continue to grow at a modest rate and that the risk of a sharp fall in housing prices was low. I think that says it all.”
Jenny Dwyer, Hocking Stuart, Sandringham:”The view of ‘The Economist’ that house prices are overvalued by 56% may be accurate in certain geographical locations across Australia, however it does not apply to the Melbourne residential market particularly in blue chip areas such as the bayside suburbs.  The consistent pressure being bought in bear in this city in terms of migration to Melbourne reflects a high level of interest to acquire real estate that is centered around transport hubs, schools, shops and in the case of the bayside suburbs an enviable lifestyle to match. As the saying goes “they’re not making any more land” and whilst we are seeing more stable market conditions across the market place we continue to see strong buying activity across all pricing spectrums and this shows no signs of abating in the forseeable future.”

Grinners are winners: Sam Paynter (Hodges) sells 10 Menzies Ave, Brighton after auction for $2,600,000, 1 bidder

Highlights:

• Hampton’s Golden Triangle continues to perform very strongly with 3 Lorraine Hampton (Nick Johnstone of JP Dixon) over $3,000,000; 23 The Avenue Hampton (David Hart of Buxton) $2,350,000 and fringe there but actually Brighton Beach – 10 Menzies Brighton (Sam Paynter of Hodges) $2,600,000. These, the three buys at this level we reported a few weeks ago plus others says that this is the or close to the hottest “estate” in $M Melbourne right here and now.
• Clearance Rates steady at 1 selling out of 2, or 50%
• Sandringham continues to underperform the area with little action
• 11 sales reported over $1 million in Brighton and Brighton East in the last week – mostly small

Agent Q & A: In terms of real estate, what has happened this year and what do you expect to happen next year?
Scott Hamilton, Buxton, Sandringham:”This year started with a bang. Buyers were bidding furiously at auctions and prices were increasing steadily. Most Bayside properties were selling well ahead of their reserves. Late May to early June buyers started to back off a little bit after a few rate increases in a row. Most good agents recognised this but a number of vendors were still riding the wave from earlier in the year. It is quite evident now that some normality has returned to the market and no matter what an agent or vendor may think, buyers are deciding where they believe the value of a property ought to be. Good agents can direct a buyer’s thinking to a degree and negotiate as hard as we like, but without competition many vendors are failing to meet the market. I would like to think that if interest rates remain as they are, the new selling season will see buyers competing hard at auctions again. People will always want bigger or smaller homes, they will always want to improve their position or their financial situation and they often make the decision to change their circumstances at Christmas. I’m sure we will begin the new year with a bang.”

Price Check:

• Brighton East 11 Clive with Craig Williamson of Buxton.  Bought for $1,350,000 or $1450 per sq metre for land in the Hawthorn Road Tram Terminus area.
• Brighton 52 Carpenter with John Clarkson of Hocking Stuart. Bought for $1,360,000 or $2,810 per sq metre of land in central Brighton. This time last year we had a number of land sales in Central Brighton in Carpenter St and you can see the big holes of development next to the old police station. We reported land, also a corner site, as going for $2437 per sq metre

Brighton, 4/9 Glyndon Ave, Leigh Hallamore (Buxton); Passed in $3,100,000, 2 bidders.

Key Points: We saw a steady clearance rate of 53% on the 17 auctions reported above $1-million dollars. Like the rest of Inner Melbourne, activity before and after auction was prevalent, as we only saw 1 property sell under the hammer out of the 6 we monitored. Next weekend will be a mini test with nearly double the amount of auctioned properties on offer.

While the value you place on a property is ultimately the most important factor in influencing what you are prepared to pay, you also want to know its market value. But how do you know what that is? Is there some secret market value formula?

No there is no single definitive “sticker price” market value figure when it comes to residential homes. Unlike BHP shares where it is possible to know the market value at any given moment just by looking at the list of bid and ask prices that indicate what other sellers and buyers are prepared to accept or pay for a share exactly the same as yours.

With homes there are two major differences from shares – systems for viewing other opinions of market value are often not as transparent and rarely are two offers exactly the same on either the buying or selling side.

In Melbourne the closest we come to the sharemarket market value system is an auction with multiple bidders and it is a great system when not affected by price- distorting practices.

In order then to have something like an accurate opinion of a property’s market value before an auction or private sale, we could build our own “Collective of Opinions” along the lines of a sharemarket’s Bid and Offer, Open and Close, High and Low Boards.

Agents have to do something like this when they come up with an estimate of what a property is likely to sell for. It’s only ever going to be an estimate, points out Tim Fletcher of Fletchers Canterbury, because the only way to truly value a home is to ‘put it on the market and find out”. But there are some some important indicators of what the market might be willing to pay for a particular home, he says. First, look at what the home sold for last. Two look at trends in the overall market – is it a buoyant booming market, or is it looking a bit sluggish? Then it’s a matter of comparing recent sales in the street, suburb  and area/municipality.

One of the biggest pitfalls for vendors, says John Haley of Barry Plant Eltham, is to base market value on one “hot” sale of a property in their own street. He believes the most important indicator of a property’s likely value are comparable sales that have occurred in the last few weeks as well as comparable properties currently on the market. “Like shopping for most things, buyers are comparing prices, so there must be some relativity there, otherwise buyers are unlikely to inspect your home!”

Jenny Dwyer Hocking Stuart Sandringham, says that she looks at a number of factors in valuing a property: its location and its closeness to beach, shops, schools and transport, the land size itself, the streetscape and the surrounding properties, the age and condition of the home and comparable sales achieved within the suburb over recent months.  But, she adds, “there is always the ‘x’ factor where some homes have an intangible extra about them where logic often plays no part and market forces will clearly determine the outcome.”

Meanwhile David Hart of Buxton says that the agency arrives at an estimate assessing the value of the land, and add the value of improvements, combined with an analysis of recent comparable sales evidence. However, he adds, agents also go by gut feel for what buyers will pay for a property, based on many years experience, “which interestingly enough, often ends up the most accurate.”

A home’s market value is often more a concept than a figure – but we live in a modern world and that requires a figure. So while there are many differences in market valuing homes there are some across the board consistencies – criteria and method. 3 main criteria are valued – land plus building plus the X factor or emotion and the main method in determining value of each is comparing what others have paid for similar criteria.

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

Brighton, 8 Windermere: A lot of people turned up to do nothing. Passed In on a vendor bid.

Key Points:

• We monitored six auctions across Bayside, with only one selling under the hammer.
• A massive six bidders at 34 Regent St, Brighton East – but no bidders at any of the other auctions we attended.
• Off Market at 19 Victoria, Brighton was bought quietly during the week through Julian Augustini of Hodges for just under $3,000,000
• Counterpoint was again the low stock quality on offer this weekend
  

BidderBuzz Auction of the Day: Brighton East, 39 Regent St, Stewart Lopez, Kay & Burton, Bought Under the Hammer, undisclosed, 6 bidders
“It was cold and the crowd was small – but the action was hot. Six bidders jumped in for this classy block of land and auctioneer Stewart Lopez was rubbing his hands as much in anticipation of the final result as to keep warm. There were still five bidders above $1,800,000 so the final number was market. Well done to the buyer – a good block with a classy shell. Five more bidders still looking for another in Brighton East.” (Kristen Hatt)

Private sales above $3m

• 7 Maysbury Ave, Brighton, David Wilson, JP Dixon, undisclosed

Agent Q & A:

What advice would you give a buyer wanting to purchase a property between now and Melbourne Cup Weekend?
David Hart, Buxton, Brighton:“From a stock point of view in Brighton, buyers will probably have their largest selection of property over the next few weekends. The weekend of the 23rd/24th October in particular, will be a huge auction weekend. I would advise buyers to have a good go at what is out there now, as long as the property suits most of their requirements. The majority of vendors selling now are doing so for genuine reasons, and we don’t expect the traditional late surge of property coming on post Melbourne Cup.”
Sam Paynter, Hodges, Brighton:”The Spring rush from Grand Final to Melbourne Cup is a great time to be in the market. It’s currently a good commercial environment where vendors in general are being pragmatic about price and want to meet the market and sell. With higher volumes of property available it always pays to attend as many auctions as possible for properties that are in your range. Be ready to get involved! Do your home work, have a limit and bid! If you buy a house the hard work will have paid off! Don’t lose heart if the price goes too high! If the property passes in and the price is in your range be prepared to negotiate.”
Robin Parker, RT Edgar, Brighton:”Buying a home to live in, as opposed to an investment, is a huge decision. The endless searching and often the disappointment can shatter even the hardest of characters. Often you will meet buyers  who say ‘’we have just started looking, so we want to look a bit longer before we buy’’…However, “Time and Tide waits for no Man.” [or Woman] If it feels right, do it.”

Land Value
A couple of land value sites in North Brighton – Male and Asling Streets – failed to attract attention at auction. Unlike the Regent, Brighton East sale which puts quality wide and north facing land around $2,000 per square metre

Some of our buyer prayers have been answered

Market: Even with significantly reduced auction numbers this weekend (owing to a more important event which finally delivered a result that proved there was justice in the world), we still saw a pretty healthy market result for sellers – with a 74% Clearance Rate on the 55 $Million+ auctions we monitored. Of those 55 auctions, 9 results were not reported. But even that is not unreasonable under the circumstances of the GF Replay.

There seems little doubt that the market is on the rise. The big interest now is how the market will absorb the stock surge that will culminate in Spring/Summer’s first Super Saturday on October 23rd.

And it really is Super Saturday - with a massive 81 $M+ auctions booked for Boroondara alone, and around 200 $M+ auctions booked in our key focus $M+ areas – Bayside and Inner East. Check out the size of the Weekly Review this week (it’s as big as a phone book). By comparison this weekend saw only one quarter of that number of auctions. So if you were at an auction this weekend, those four bidders you competed against may well be spread across four homes in a couple of weeks. Well that’s the “buyer-hope” theory anyway.

This Week’s Highlights:

• Two land sales showing vastly differing land values
  a) Land at 101 River Avenue Plenty (39,500 sqm), which can be subdivided, was auctioned  by Rob Stefanovski of LJ Hooker Greensborough and  bought for $3,830,000 or $96 per sq metre
  b) A large land parcel (1,813 sqm) at 3-5 Heath St Sandringham sold after a failed auction by Bill Jowett of Buxton for $2,800,000 or $1,544 per sq metre
• The major stock inflows that took place on Monday, Tuesday and Wednesday when agents began their marketing campaigns for the next Super Saturday – October 23rd.
• The continued improvement of the $3M+ market – two examples below
  a) Off market in Black St Brighton (Peter Bourbaud and Barb Gregory) – bought for around $4 million
  b) 27 Moorhouse Armadale with Gowan Stubbings of Kay and Burton – bought after an Expression of Interest campaign for more than $5 million
• The Pies Forward Line pressure (whoops, sorry – I got distracted)

Auction Snapshot from this weekend: 133 Rathmines Fairfield: Michael Fry and Grant Leonard of Nelson Alexander. Bought under the hammer for $1,116,000. 5 bidders.
There was a buzz about this well located timber period home, which had had its quote lifted to $930,000 during the campaign. It was a surprising development given Grant’s comment that the property failed to attract any interest in the high $800s a few months ago with a quiet sale campaign. It was on the market with the first bid at $900,000. Second bid $950,000. Third bid $970,000. Fourth bid-  bang $1,000,000. Three more bidders joined in before the action stopped at $1,116,000. It was a well run auction campaign. I always enjoy a Michael Fry auction. He has a sophisticated grace about him incongruent with the fact that he is yanking the dollars from buyers’ pockets. Enjoyable to watch unless you’re an underbidder – which unfortunately this time we were.

Bumper Market Insight: We have an information packed Market Insight this week; even though there are no Market Wraps, Bidderman, reports or videos.  The footy replay threw this auction weekend into a bit of chaos, with a few auctions even changing days. But it was a very low stock weekend anyway, so no major damage. All $M results are at the end of this Market Insight. But the big news now is the next three weekends that will lead full bore into the Melbourne Cup Long Weekend.

Stock Levels and Price Assessment:
The big question the market will be asking now is: What will happen to prices on October 23rd? With this big stock influx, how is the price game of snakes and ladders going to pan out? Are we going to see the slippery snake and big price slide of May 2010 or will the market just take this in its stride, as it did this time last year, with prices climbing further up the ladder? Time will tell. Importantly as buyers you need to get yourself organised – and don’t count your chickens before they’ve hatched.

With this apparent largess of choice, perhaps you don’t need brilliant home-seeking skills right at this moment. But you will need first class assessment procedures (e.g. sorting the goodies from the baddies in terms of capital growth prospects, and working out which one is best from a “happy wife = happy life” point of view). You will also need good negotiation strategies – because while you may have more choice, you will also have competition. Remember, our bidders per auction indicator Bidderman was strong on lower numbers in September, especially on good homes. On the flipside, some sellers expectations may be disappointed, so planning good negotiation strategies will improve your chances of grabbing a bargain when it presents.

Have a look at our Forward Auction Booking graphs below to get an idea of what is ahead of you: (click on a graph to enlarge)

There are also some exciting trophy homes on offer through private sale and off market – especially in the $3m+ segment.

Have a look at the New Stock Graph at the top of Market Insight – which compares the last week in September to the last week in June, (private sale and auction weekly new stock numbers are combined).

Special Report on the $3m Market

The $3m+ is back, after the self induced May hiccup that led to a very quiet winter.

There have been over 50 buys in the month of September at this level, with buyers coming from all quarters. Let’s pick one of the segments – around $4million. We have bought 3 homes at this specific level in the last few weeks. All were classic period homes with land of over 1000 square metres. Two were bought post auction (eg after a pass-in) and one was off market (Black St Brighton). However, the interesting thing were the buyer profiles. One buyer was a change of life family, one was a growing family that needed more space, and one was an expat family returning from overseas. This is a fairly accurate representation of the range of people we look for homes for. Of the last case – expats returning from overseas -Brighton high end agent Peter Bourbaud believes “this group will push the market along for the next few years, after a couple of very quiet years from the expat community”. We concur. Last year we conducted very little in business terms last year for expats. However in 2010 there has been a distinct pick up in action from expats returning home.

The James September $3m+ Report with all reported $3m+ boughts and solds can be viewed from the Home Page (next to Market Insight and below Buyer Masterclass) or click here

If you are new to the $3m market you may find the charts below (using 2007 to 2010 Valuer General, REIV and our own James Databases) of some value, as they help to show how the overall $3m+ market works. Note particularly that:

• The two powerhouse $3m+ suburbs are Brighton and Toorak (see 2009 results graphed below). However these two suburbs behave quiet differently from each other (see median graph). More on that another time.
• More $3m+ is bought later in the year than early. (2009 graphed below)
• There are some real name streets around and there are some falsies (where if you pay top dollar you will stand out like a beacon)
• Less than a quarter (25%) of $3m+ homes sell under the hammer at auction (click on September Graph below)
• A lot more activity is off market (not advertised) at this $3m+ level than any other price point, e.g. sub $3m.

Click on any of the graphs below to bring them up to full size

Agent Comments on the current $3m+ market

• “Prior to the school holiday period there was some renewed strength in $3m+ market due to things stabilising after the election and to the shortage of good quality homes. With the spring market in full swing it will be very interesting to see what happens with the increase of volume. But if the enquiry rates are anything to go by, October will be a strong month of sales.” Andrew Hayne of Marshall White Malvern
• “The $3 million plus market is strong, and we are expecting a big finish to spring in this market for good family homes.” Nick Johnstone of JP Dixon Brighton
  
• “There seems to have been a resurgence of buyer enquiry for the upper end properties recently.  It will be interesting to see if this follows through once we see increased stock levels after the school holidays and round 2 of the Grand Final.” Julian Augustini of Hodges Brighton
• Andrew Baynes from Kay and Burton South Yarra “Last Monday was the busiest auction sign up day for me in 10 years.”

Media Monitor: Domain – The Age 2/10/10. Headlined: “Hands up if you don’t have a clue” by Josh Jennings. Basically a solid article – but Josh, how many homes has Dr Damien Eldridge, Economics Lecturer from La Trobe University, bought using his quoted bidding advice this year? Would it have been 5 or 10 or 50? Going by his auction comments we were unclear as to whether you were holding him out as an expert – or simply providing supporting evidence to your headline.

We are not all brickbats here for the mainstream press. Congratulations to Chris Vedelago from The Age who this year has been consistently reporting the market as it really is and who actually seems to get out of the ivory tower (that so many property reporters are stuck in) and goes to auctions and talks to agents. We mightn’t always agree with you Chris, but we respect your work. Keep it up and keep getting out into the market.

Market News TV: On Tuesday of this week we ask the question: Is the ACCC or CAV the right watchdog for the real estate industry? Check out our Agent Opinion Videos.

Buyer Masterclass: We conclude our Negotiation Masterclass series with an article on Backward Bidding. From next week until Christmas we will be looking at “Pricing and Values” in Million Dollar Melbourne

Reported Results:

David Hart saying "Ok I give up - for the moment" 42 Clinton Brighton East - Passed In with No bidders. Bought soon afterwards over $1,700,000.

Key Points:

• Two big sales during the week: 282 New St Brighton with Regina Schmidt and Brian Devlin of Buxton around $9,000,000, and 21 Moule Ave Brighton with Stewart Lopez of Kay and Burton (off market) reportedly in the high $6 millions
• 15 sold over $1 million in the last week – including four in Beaumaris
• Clearance rates trending upwards quickly – Saturday was a big improvement on previous weeks
• We covered 8 auctions in Bayside on Saturday and there was a 100% strike rate with three selling before auction, three selling after auction and two selling under the hammer.
• Bayside Bidderman is still low, with only two auctions attracting multiple bidders.

Video Auction this week at 24 Susan St Sandringham – and a cracker it was!

Agent Q & A: Who will win the AFL Premiership and why?

David Hart, Buxton, Brighton: “Geelong will win because when it comes to the crunch they’ve got the class and the players – and I don’t like Collingwood!”

Mark Bury,  Kay & Burton, Brighton: ” St Kilda because we’ve got to support the locals and because Ian (Jackson) will kill me if I don’t say St Kilda!”

Jason Gill,  Hodges, Brighton: “Collingwood because they have had a fantastic year and everyone hates them.”

Gerry Gordon,  Hocking Stuart, Brighton:” Collingwood – because they have to!”

Nick Johnstone of JP Dixon: “Collingwood by a mile”

Rowan Dent,  Hocking Stuart, Sandringham: “Collingwood – based on this year’s performance record.”

Steve Tickell, Hocking Stuart, Sandringham: “The Saints of course! History will repeat itself and the Saints will win by a point, on the siren like they did in ’66.”

Bill Jowett, Buxton, Sandringham: “I’m sorry to say it’s Collingwood”

Stock Comments

Steve Tickell, Hocking Stuart, Sandringham: “Stock is slowly building. There seem to be a lot more inquiries from people, and I would say it has been more positive in the past week – more like 2007 than 2009. In Bayside, villa units and good family homes continue to attract a lot of interest.”

Bill Jowett, Buxton, Sandringham: “End of October is looking strong, top end a little tougher and a bit of strife with development sites due to banks only lending at 60%”

Nick Johnstone of JP Dixon: “Stock levels are OK – compared to last year on par. Shortages in $2m range for family homes that are comfortable.”

Land Sale Price Pointer:
46 Bay Brighton – Vacant Land in precinct between New St and St Kilda St – 800 sqm in size was bought for $2,225,000 or $2781 per sqm Nick Johnstone JP Dixon

Bidderbuzz Auction of the Day: 24 Susan St, Sandringham, Mark Earle, Buxton, Under the Hammer, $1,220,000, 5 bidders.
“Spring was certainly in the air at the ‘Sandy’ auction. The sun shone, birds chirped and 70 people swarmed to the property like bees to a hive. The atmosphere was chatty and cheerful as auctioneer Mark Earle stepped out. A crowd bid of $960,000 got things started and bids soon came in from every angle. One resilient bidder made herself known early with some courageous bidding. She continued to power through despite being “attacked from every side,” past the selling price at $1,110,000, to buy the property under the hammer at $1,220,000 to the delight of her supportive cheer squad.” (Julia Atkinson)

Clearance Rates & Monitor Table:

Forward Auction Stock:

We Only Buy Homes

Marcus Peters (Biggin & Scott) led a brisk, successful auction at 5 Bright St, Brighton East. Bought under the hammer, $1,420,000, four bidders and a crowd of 60.

Bill Jowett (Buxton) basks in the sunshine and the successful sale of 4 Susan St, Sandringham. Three bidders, bought under the hammer for $1,400,000.

Key Points:

• We attended nine auctions across Bayside this weekend. Of those, only two were bought under the hammer.
• While Brighton was very average at auction today, it was the stellar performer for stales (long term unsolds) over $3m+ this week. Behind closed doors at Kay and Burton, there was plenty of action.
• We have a special report for you on Monday on $3m+ homes. The upshot is that we should see more new stock coming onto the market over $3m, while new sellers of homes around $2m are becoming less inclined to dip their toe in the water
• Three apartments/townhouses in the Golden Mile were sold by Kay and Burton over $3,000,000 each - Justin Follett of Kay and Burton
• Both the Wellington St, Brighton properties that had been on the market for a long time, recently sold for over $3,000,000 – Ian Jackson and Stewart Lopez of Kay and Burton
• Knox House in North Road was bought – Stewart Lopez of Kay and Burton
• Gordon St Hampton was the hot street in town with Nick Johnstone of JP Dixon selling No. 34 through an Expression of Interest for around $3,400,000 and David Hart selling No. 23 post auction today for a bit over the pass-in figure of $2,725,000.
• 94 Dendy St Brighton defied the trend, selling for an undisclosed amount under the hammer of around $1,400,000. That was a $250,000 increase on its last sale in December,  placing land at $2300 per sq metre. Miriam Carraro of Hodges

Campbell Cooney of Hodges motivates 2 bidders from within a small crowd to pay over $1,470,000. 94 Dendy St Brighton.

Analysis: Why is this happening? Because buyers are there at the $3m+ level.

Why now? Our best guess is that buyers never left, but that we needed some vendor price adjustments and that they are now being made. If this is the case then this may simply be a statistical coincidence as opposed to a market change. But it may also bring on additional quality stock which may or may not give the market a more sustained lift.

September is going to be quiet due to Election interference – so October will be the telling month to see if this market is trending back or remaining flat.

Why is it not happening at the $2m level? There is simply too much stock and no vendor adjustments.

Agent Comments:

Nick Johnstone, JP Dixon, Brighton: “We are seeing a cross-section of stock at the moment.  I’m finding the strong demand is for homes under $1m at the moment.  The biggest shortage for Middle Brighton is the $2-3m family home. My feeling is the election has made a slight impact , it is a bit like being in a church at a wedding and everyone is just waiting for the bride to arrive. Once we have a resolution we are away.”

Jenny Dwyer, Hocking Stuart, Sandringham: “I think we’ll find we will have a late spring market with school holidays, election, football finals etc. In terms of the election, we found there were still a lot of people out and about on election day and the open houses were well attended….I think the fence-sitting we saw during the (election) campaign will continue whilst there is no outcome.”

Bidderbizz Auction – 4 Susan Sandringham – Bill Jowett Buxton – Bought $1,400,000 -  3 bidders
A warm buzz was evident in the 70 strong crowd as they awaited the commencement of the auction and it did not disappoint. Auctioneer Bill Jowett of Buxton was in fine form as he took the opening bid of $1,000,000 quickly followed by a vendor bid of $1,200,000. Three bidders were determined in their approach and seemed very familiar with the auction process. Mr Jowett announced the property on the market at $1,300,000 and it was bought soon after for $1,400,000. The successful bidder punched the air with his fist in victory as the crowd applauded. (Sue Agnoleto)

Check out the Auction Video of 42 Foote St Brighton with JP Dixon.

Clearance Rates & Monitor Table:

We Only Buy Homes

John Clarkson (Hocking Stuart) throws himself into the auction of 100 Were St, Brighton. Unfortunately, none of the 30 or so spectators took his lead and the property passed in for $1,950,000. One bidder.

Canterbury 23 Chaucer: James Tostevin of Marshall White: Great atmosphere with three bidders over $3,800,000 - a strong result. Bought after; undisclosed price.

At 6pm on Saturday the James Million-Dollar-Plus clearance rate was 50% for the 38 auctions we attended. Of note is the fact that only 1 in 4 sold under the hammer.

On Sunday the post-auction clearance rate rose to 66% on all 61 monitored properties. That tells us that the market is right on the brink, but still limping over the line. We’ve been seeing these kinds of significant differences between “under the hammer” and “post auction” clearance rates for a few weeks now (see last week as well), a very different situation from earlier this year. As buyer agents, and for you as buyers, that tells us a number of things about post auction and private sale negotiations.

Bidderman, our Demand Indicator, has dropped significantly to only 1.2 bidders per auction. Almost 1 in 3 auctions had no bidders at all. This was our most significant stat of the weekend and a key indicator  going forward – let’s see if it bounces back in two weeks.

Market: The REIV clearance rates might not show it – but the market was soft this weekend. Many agents and reporters described a real hesitancy amongst buyers and the $M+ Clearance Rate and Bidderman confirms that. Now is possibly the start of another downward price trend, especially with stock numbers on the rise. Possibly it’s an election slowdown or maybe buyers are seeing more choice coming into Spring and are acting accordingly with reservation and only when it makes sense. Wow! September has more excitement on offer than just Collingwood.

But conditions are varying widely across the different council areas. If you are in Bayside, for instance you may be thinking that very few buyers bid at auction any more. You would also be seeing plenty of stock around, some which has been there for a long time (especially over $2m). So with plenty of new homes coming on, you are probably thinking prices are likely to be weak in Spring in Bayside.

If you are in Boroondara you are probably seeing some heat building up in the market, with good stock attracting good competition and most things selling on the day or soon after. You can see more stock coming on but you know you are probably in for a fight. But you can also remember May and you know if too much comes on it could well be a buyers market in Boroondara this Spring.

If you are a buyer in Port Phillip you may be thinking that the market is still a bit sleepy and hasn’t started any sort of Spring run – either in auction numbers or new stock.

Finally, those of you in Stonnington are probably a bit confused – some things are selling that shouldn’t and some aren’t that should. You are likely aware that the market is very price sensitive but you haven’t as yet seen the Spring stock surge start and like all of us you are not sure if and when it will.

Agent Opinions: This week we followed up on the $3m+ market asking agents: “Where is it?” Their full answers are in the Market wraps, but here is a sample of what agents are saying:

Richard Winneke, Jellis Craig: “Three auctions this weekend all over $3m – that will be a true indicator  – if only one or two sell then sellers will be cautious putting property on the market. Buyers out there at that level, but they are also cautious. Market at lower level is very different. Not seeing a great amount coming on in the higher level – 8 properties over $2m in September for Jellis Craig which is not huge, at least a third down in terms of numbers compared to last year.”

Activity and Stock Levels – The graph below shows New Stock ($million+) in Boroondara, Stonnington, Bayside and Port Phillip. To note:

• Consistent big stock levels until end of May
• Big drop in mid June stock levels
• Steady build from mid July

Highlights and Lowlights

• No bidders in Sandringham today at the three auctions we attended. At one of them Steve Tickell, of Hocking Stuart, curiously said he was testing the market by not offering an opening bid, or any vendor bids…and passed the property in without announcing any amount at all… Stephen, what did we all learn here?
• The biggest result was at 23 Chaucer Canterbury with Marshall White’s James Tostevin firing up 3 bidders to reach over $3,800,000.
• Check out the video auction of John Bongiorno at 10 Walerna Glen Iris in the Auction Reviews Section.
• Credit where credit is due: Auctioneer Kaine Lanyon of Bennison Mackinnon deserves mention today for achieving a great result for his clients while keeping the crowd well entertained at 76 Spring Street, Port Melbourne. He did so with a combination of wit, charm and humor that only a skilled auctioneer can execute. In my opinion he did affect the outcome and I am sure many people left the auction convinced he single-handedly pushed at least one of the parties over and above what they intended to spend – Author David McMillan.

BidderBuzz Auction of the Day

64 Maud St Balwyn North – Julian Tonkin, Jellis Craig – 4 bidders, sold under the hammer – $2,015,000 Maybe it was auctioneer Richard Earle’s comprehensive preamble, or maybe it was the comfort of an indoor auction. Whatever it was, this auction got off to a flying start with a genuine opening bid of $1,800,000 from the 60 people present. Two more bidders joined in, resulting in an intense three horse race. When it seemed to all that the property was going to be bought at $2,000,000, a fourth bidder jumped in out of nowhere to be the successful buyer at $2,015,000. A strong result.

The wind was up, their tails were up and so was the price. David Lack gets a solid result post auction - over $2,250,000. 2 bidders. Port Melbourne, 2 Swallow.

Are Special Conditions costing sellers BIG MONEY?

Sellers may be costing themselves big dollars all in the name of legal “protections” they would never agree to if the buying shoe was on the other foot.

One prominent conveyancing company claims to be protecting their selling clients with a list of clauses in their selling contracts – but in fact their efforts and attitudes are causing buyers to walk away from deals. In this market that is not a good step for sellers.

If you watched the two latest episodes of Channel 7’s “ Under the Hammer”, particularly the one about the Yarraville auction which featured one of our buyers, you’d be interested to know that the real drama wasn’t what you saw on TV but what happened behind the scenes with the 20 or more phone calls and emails between auctioneer Adrian Butera and our company just to get our buyer to the starting line. It was all about this conveyancer’s Special Conditions.

In Victoria when we buy or sell a home the paperwork we are required to agree to is made up of a number of sections. These include the particulars of sale price, settlement arrangements and chattels; normal contractual conditions governed by the REIV and the Law Institute; and Special Contractual Conditions.

With regards to the Special Conditions sections the conveyancing firm we are referring to is putting in clauses or conditions that are interpreted by our clients’ buying solicitors as meaning that:

• If the home burnt down, the buyer would still have the pay the seller the purchase price in full.
• If the seller couldn’t provide title (we thought that is what you were buying) – they would still have to pay all the money to the seller. (We’re sure the banks would love that idea – NOT!)
• Some of these special conditions may affect the buyer’s ability to insure the home they buy.
• If the buyer had a dispute with the seller, they would still have to pay the seller in full and only after could they dispute.

Back to the Yarraville auction: it took three days and all those phone calls and emails, but the sellers finally agreed to strike out the special conditions.

Even though things have been quiet, we still managed to get 5 $M+ homes over the line this last week in Malvern East(post auction), Balwyn North (off market), Malvern East (under the hammer), Port Melbourne (pre campaign) and Canterbury at auction. One of them (Port Melbourne) could have been very, very different as our client had to walk away from an acceptable deal; owing to this conveyancer’s special conditions. It was only when the seller ignored the conveyancer and crossed out these additional onerous special conditions that the deal was revisited and consummated.

We think sellers need to know about this practice because buyers’ lawyers are increasingly refusing to accept these special conditions, which means that $M+ investors are simply having to walk away from a deal – even on good properties. It’s a practice that could be costing them tens of thousands of dollars.

To illustrate, see our chart below where in Identical Auction One Bidder 3 was able to have the Special Conditions removed but in Identical Auction Two Bidder 3 was not. He did not bid, which reduced the purchase price significantly.

We are hoping to name the conveyancing company, pending legal approval.

Sellers who read this need to be made aware of these issues so they can decide whether they have hired the right conveyancer.

And buyers be aware of what you are signing up for if you come across these kinds of contracts. Make sure you get good professional advice, or you could be up for something more (or less) than you bargained for.

James Buyer Opinion: This week our James Buyer Opinion is on “Carrot and The Stick and Other Negotiation Styles.” Next week in Buyer Opinion we have a special Buyer Agent Conversation – Getting Info to Make an Offer.

Also next week, Election Saturday, we will have a reduced coverage; but there will be a Market Insight – just no wraps - owing to significantly reduced auction numbers.

We Only Buy Homes

Mal

Took this photo at an open at 59 Studley Road Ivanhoe - Liz Walker Jellis Craig - all laid out on the kitchen table. Just want buyers want - fair dinkum information. Sellers - Liz Walker and Jellis Craig Ivanhoe provide what buyers want - reasonably accurate information.