oc | Thursday 23rd January

What is going on at some Inner Melbourne Auctions?

A $525,000 UP BID after it was on the market. , 25 Huntingtower, , sold under the hammer $2,350,000, 5 bidders. WOW!

At 6pm on Saturday, the James $M+ Clearance Rate was 62% across the 26 auctions we attended. The was 1.5 bidders per auction. Given the small sample this weekend (50 or so auctions at $m+) and the ‘iffy’ quality of some of the stock, we are not forming any real opinion on the basis of these stats.

Last week’s results excited us about a possible slight turn up in the market. Next week we will be anticipating  our first 100+ auction weekend for some time. How will the market respond to this first Spring test?

With this week’s lull in proceedings, sort of like a bye round in the football, we thought it a good time to examine in depth some of the oddities that seem to be creeping into auctions in at the . Please enjoy our auction oddity examination after today’s highlights, and read our latest edition of Buyer Masterclass for an indepth report – Sold Under the Hammer. No it’s not, even when you think it is.

But first, some of today’s highlights.

Biggest Sales:

  • Armadale, 25 Huntingtower Rd, Justin Long (Marshall White), under hammer, $2,350,000, 5 bidders
    Justin Long was our master of ceremonies…(See Auction Report below)
  • Kew, 118 Sackville St, Toby Parker (Hocking Stuart), after auction, $1,800,000, 1 bidder
    The rain came and went at this Toby Parker auction and the crowd of 40 tried their best to shelter themselves from the rain…(See More in Auction Reports)
  • Toorak, 23 May Rd, Gowan Stubbings (Kay & Burton), after auction, undisclosed above $1,575,000, 1 bidder
    The rain started just as auctioneer Gowan Stubbings opened the auction with a vendor bid of $1,550,000

Bidderbuzz Auctions:

  • Brighton, 24 Berwick St, Leigh Hallamore (Buxton), under hammer, $1,032,500, 4 bidders
    Auctioneer Leigh Hallamore wasted no time involving the 40 onlookers who had gathered in this quiet street for the sale of a much loved weatherboard family home…(See More in Auction Reports)
  • Elwood, 108A Addison St, Matthew Morley (Morleys), under hammer, $1,430,000, 4 bidders
    Despite the cold miserable weather, this was a really hot auction with four bidders all playing serious hard ball…(See More in Auction Reports)
  • Camberwell, 7 Tyne St, Walter Dodich (Marshall White), under hammer, $1,240,000, 3 bidders
    One of the first auctions of the day, and a rugged-up crowd of around 70 were in attendance…(See More in Auction Reports)

Biggest Pass Ins:

  • Brighton East, 1 Regent St, passed in, $1,910,000, no bidders
    Close to 100 people filled the street to see what would happen at the auction of this modern home in Brighton East…(See More in Auction Reports)
  • Albert Park, 45 Reed St, passed in, $1,900,000, no bidders
    Auctioneer Geoff Cayzer generally likes to give some statistical information during his preamble and today was no exception…(See More in Auction Reports)
  • Camberwell, 5 Remon Ave, passed in, $1,700,000, no bidders
    A whirlwind auction which was over in just under 10 minutes…(See More in Auction Reports)

Solid crowd of 100 people at 44 Hortense St, Glen Iris. Karl Fitch (Noel Jones), under hammer, $1,130,000, 2 bidders

Three Very Odd Inner Melbourne Auctions.

Auction Oddity No 1: The $525,000 Up Bid

25 Huntingtower Road, Armadale

Big crowd, Big bids and Big controversy.

25 Huntingtower Road is one of those rare, brilliantly-located single level townhouses. Rare because, as auctioneer Justin Long says: “with the cost of land, it’s hard for developers to make the numbers stack up for new build, single-levels in Armadale any more.”

25 Huntingtower Road also turned out to be one very memorable auction!

There we were, a huge crowd (close on 100 people ) crammed five-deep inside the main living areas of this townhouse. This was one of the biggest indoor auctions I’ve been to and these crowd numbers show what the market is crying out for.

It was also a cauldron of pressure and, as you will see, some people crack under this kind of pressure.

So here we go, starting with a really good spiel from Justin – it has good tempo and some good substance.

Justin calls for bids. Bidder 1 at $1,500,000 gets us away. $100,000 rises are called for and Bidder 2 obliges. Bidder 1 is straight back at $1,650,000. Bidder 2 is back at $1,700,000.

Bidder 1, a lady with spunk and style, breaks Justin down to $25,000s.  Justin accepts with good humor and smarts – it keeps the auction moving along and there is no point beating up the lady this early in the piece.

Soon we are at $1,825,000 and still moving up in $25,000s. Others are trying to get in, and finally Bidder 3 enters the fray above $1,825,000.

To me, Bidder 3 looks extremely nervous and his bid timing is poor – but we’ll come back to him shortly…

Anyway, we are at $1,900,000 with a fourth bidder, when some smart cookie asks: “Is it on the market?”. Yay – well done. Personally, I reckon there are a dozen potential bidders here. As I often say, “ You can smell them.”

Justin returns from his half time interlude and says “Yes – it’s on the market”. Well done old boy, none of this, “We are almost there” rubbish.

This action of fair play – that is, putting it on the market at the indicated quote, is well received by the crowd.

And from here, the auction goes ballistic!

Bidder 5 joins the party with some firm aggression, taking on all comers with a series of up-bids: $2.0m, $2.05m, $2.1m, $2.2m and so on.

Meanwhile Bidder 3 is responding, but he looks way out of his depth.

When Bidder 5 gets to $2,275,000, Bidder 3 confirms his complete state of panic, by offering $2,800,000!

What the….!? He’s upped the bid by $525,000, when it’s on the market!!!

Justin confirms Bidder 3’s huge bid twice as a hush comes over the crowd. What else can Justin do? This bidder has gotten himself way out of his depth and he is now frozen with fear.

Things are very uncomfortable in the home as Justin slowly begins, what appears to be a death roll, and is about to slam the hammer down, when – God bless her – the lady with chutzpah, Bidder 1, chimes in: “Excuse me Mr Auctioneer, does this man know he has bid $2,800,000?”

Hooray – you’ve saved everybody’s bacon. Bidder 3, released from his paralysis of fear by this comment, now asks to withdraw his bid. (Mmmm I wonder if Bidder 1 knew Bidder 3?)

Justin accepts the withdrawal, although the rules say he shouldn’t be able to, don’t they? Anyway, sanity prevails and we return to the last undisputed bid of $2,275,000.

Surprisingly, we see a few more bids from Bidder 3 before he emotionally gives up and it is sold under the hammer to Bidder 5 for $2,350,000.

What this incident demonstrates, is that there is a lot more pressure at an auction than people think.

Bidder 3 caused a major problem simply because, when under enormous pressure, he froze and almost destroyed the auction by making a huge blunder.

At the risk of sounding self-serving, such a situation does beg the question of why you would risk hundreds of thousands of dollars by not hiring a professional?

This is not as uncommon a scenario as you may think. Why feel sorry for bidder 3? He stopped the flow of the auction and could have ultimately cost the seller a considerable amount of money.

Auction Oddity No 2: The Clayton’s Reserve

8 Rose St Armadale.

Quoting: $1,500,000

Vendor Bid: $1,500,000

Passed-In to Bidder One: $1,510,000

Vendor Reserve given to Bidder One: $2,050,000

The vendor has every right to ask any price they want, but how can the law allow a vendor to authorise their agents to quote $1,500,000 and then tell a bidder, who took up the offer to treat at $1,510,000 after auction, that the reserve is $2,050,000? What are we missing here? How can a vendor be allowed to give such a Clayton’s Reserve?

More in Today’s Auction Report: 8 Rose St Armadale.

Auction Oddity No 3: Sold Under the Hammer. No it’s not, even when you think it is.

8 Davis St South Yarra

Two weeks ago at 8 Davis Avenue, South Yarra, we bought a home for our clients that had originally been sold under the hammer at $1,990,000 to another party less than one hour before. Our clients purchased the home for less than the “sold under the hammer” figure.

How could this happen in Victoria? How could the ‘buyer’ at an auction pull out of the sale after being the winning bidder at an auction?

In Victoria, if either the buyer or seller chooses not to sign the contracts on a knocked-down, under-the-hammer auction, there is no legally enforceable agreement. Most buyers know the auctioneer is not allowed to take bids after it has been sold to the winning bidder (a directive that comes from the Estate Agents Act), but the deal between the buyer and seller is not covered by the Estate Agents Act. Instead, it’s covered by a piece of legislation called the Instruments Act 1958. It stipulates that in Victoria, there is no binding deal to buy real estate until it is written down and both parties sign.

The legislation’s origins lie in a law made by the English Parliament in 1677 known as the ‘Statute of Frauds.’ In those distant times most people couldn’t read or write and fraudulent behavior was commonplace. The law aimed to reduce fraud by requiring contracts for the sale of real estate to be in writing and signed, in order to be enforceable. However, this is 2012, when most people can read and write and as you will see in this week’s Buyer Masterclass when we revisit the scene of the “crime”, this ancient law is causing pain and anguish to sellers and buyers alike.

We thank our clients for giving us permission to publish this story in the public interest. Read the full story in this weekend’s Buyer Masterclass – Sold Under the Hammer. No it’s not, even when you think it is.

There you go, a typical day in Auction Paradise. It really is more exciting than the footy. (Go Pies).

Agent Survey: What are September and October stock levels looking like compared to last year?

Campbell Cooney, Hodges (Brighton): “Stock levels are different to previous years. There are certainly less auctions (prospective vendors are a little more wary) and motivated sellers are fewer. More grafting is required and definitely more focus on price education for owners is needed. Activity (actual sales results) will be less over Spring.”

Gerald Delany, Kay & Burton (South Yarra): September and October stock levels are at a lesser level than the same time last year, following the pattern that has been developing over the course of the year. The result of this is a shortage in supply which is reflected in the current higher clearance rate being experienced and the very satisfactory sales results being achieved.”

Jeremy Desmier, Fletchers (Balwyn North): “Overall, stock levels appear slightly down on last year. Having said that, our average time on market is significantly less than the same time last year. New listings are coming through at a similar volume to last year. With less stock ‘sitting’ on the market and less carrying through from previous months, the rate of sales seems equal to or better than last year, and we are seeing a few signs of buyer confidence increasing. This reflects a much more aligned market this year between buyers and sellers expectations, and presents excellent opportunities to change-over, whether up sizing or downsizing.”

Au Revoir Andrew Stuart – Legend

A significant development on the Port Phillip selling agent front is Andrew Stuart – the doyen of the Port Phillip property market – calling it stumps. Andrew began his career at AV Jennings back in the 70s, and started his real estate career in Port Phillip in 1985, co-founding Hocking Stuart Real Estate.

His plans are to help out at Hocking Stuart with the odd weekend auction, and develop his Vendor Advocacy business during the week.

Personally I will miss Andrew at auctions. He has a great sense of humour, gives you as truthful opinion as he can when representing his client, and knows how to run a pressure auction with his eyes closed. My favourite times watching or competing with Andrew are when some ‘know-all’ would ask some ridiculous question and Andrew would feign concern, turn away and give somebody he knew a wink and then return his attention to the troublemaker, put them back in their box effectively and politely and get on with another well-run auction. Andrew will be missed at Port Phillip auctions – he is a true Auctioneer legend!

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