oc | Friday 24th January

The Million dollar plus market still has some very strong results; but we are seeing a slight easing of demand continuing on the overpriced or less than perfect.

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

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

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

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

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

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

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

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

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

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

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

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

Strong results but a falling Bidderman.

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

1)       Is priced above the market view

2)      Has Issues

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

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

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

Quoting to Buyers

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Buy well

Mal

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