oc | Thursday 23rd January

The market is back and the signs point to strength

Phew it didn't rain - thank you - now how about a buyer for me as well or is that too much to ask? Jeremy Desmier looks to the heavens at 11 Hood Street, Balwyn North. Bought after auction for an undisclosed amount above $1,800,000. Big crowd of 100

At 6.00 pm on  Saturday, the James Clearance Rate for Melbourne’s $M+ was 77% on the 26 auctions we covered. The , our bidders per auction measurement, was at 2.2.

This weekend’s first run of the high end auction market after a good spell in July saw a “strongish” start on limited auction stock offering. From the results from private sales and off-markets we are aware of as well as from the interest that appears to be at open for inspections, the market appears for now to be positive, with a leaning towards hotter rather than cooler.

But it’s early days and the weeks leading into September are a bit like those leading into February: after a break there are impatient buyers out there creating outbursts of price noise. We always sit on the fence a little by saying that early Spring supply has not really tested early Spring demand, and won’t do so for another few weeks.

Overall Summary of Melbourne’s Million Dollar Plus Auctions:

  • No bidders ($M+ auctions with no bidders) 13%
  • Lone Rangers ($M+ auctions with one bidder) 9%
  • Norms ($M+ auctions with 2 or 3 bidders) 57%
  • Volcanoes ($M+ auctions with 4 or more bidders at auction) 21%

Market Summary

Welcome back after the mid-year break. We now move into the business end of the year – the finals if you like – as we go into the major spring campaigns.

When we last spoke we were finishing what by any measure was another very strong first half. Most agents felt it was even stronger than the stellar first half of 2013.

That was confirmed by the holiday taken by the industry in July. Many agents were missing in action, presumed to be in Europe, Bali or Queensland, depending on their taste. You can always tell a good season when you ring key agents in July and nobody answers. In bad seasons we all take the call.

I won’t bore you with my July sojourn other than to say a month in a French Buddhist monastery with Vietnamese monks was about as far away as you can be from what is expected in real estate. There you “be” – here we do. The work of the monastery’s spiritual leader Thich Nhat Hanh is worth investigating – he’s a lot better marketer and salesman and wisdom provider than many of us.

But back to $M+ real estate, and the action has started already. To pick a suburb – this week we’ve been involved in two strong sales: a pre-auction offer, with a re-offer and deal in Radnor St (Michael Wood and Mark Sutherland), and a boardroom auction for a property on Broadway, with seven parties within 48 hours of being available (Brad Cooper). At the end of the tussle the whiteboard showed 39 bids from overseas, on the phone and in the room buyers (five bidders). Both these homes sold well in excess of their $2m early indicators.

So we are knee deep in off-markets and pre-markets. The auction biggies and goodies are just starting as our holidaying agents return to start their four, five or even six week planned auction and EOI campaigns.

Big crowds by the Bay: Geoff Cayzer (Cayzer) sells 61 Merton Street, Albert Park, under hammer, $3,235,000, 2 bidders and a big crowd of 100

Off-markets and the Duck Test

On the subject of off-markets, we buy a fair number – but we reject an awful lot more than we buy.

For the inexperienced buyer, many off-markets are not what they are cracked up to be (by the agents). A number of inexperienced buyers are lured by the romance of an off-market – you know that secret listing that only you know about? However, well down the track the inexperienced buyer can often find that the property was not really for sale.

In other words, an off-market home may look like a duck and you may be told that it is a duck, but it doesn’t always walk like a duck or quack like a duck. And if you can’t buy it, then it isn’t a duck.

How can that be? After all, the agent told you this off-market home was for sale and even took you there. That may be so, but he may be using you just to get a future listing. Or the seller may have told the agent that if he can get 50% more than market he may deal. In these two circumstances we consider the home is really not for sale.

To find out whether an off-market home is really for sale, you need to ask four questions.

Question number one: Does the agent have an authority to sell this home and what is written on the authority? If the agent can’t say yes then it’s not a duck. We recommend you are very careful in your dealings with that agent until they have an authority.

Question number two: Can I have access to the home? If the agent replies that the owner wants a really quiet sale and doesn’t want anybody going through the home or anyone else to know about it, that doesn’t sound like a duck. If you can’t get reasonable access for valuers, for buyer agents or for pest and building inspectors or architects, then it isn’t a duck. The off-market is not really for sale, as any reasonable seller would give you reasonable and timely access.

Question number three: Ask to see the contracts. If you want to put in a reasonable offer and the seller won’t prepare a basic contract (which takes no more than 72 hours and less than $1500 on most normal homes), then this deal is not walking like a duck and quite possibly it’s not really for sale. I wouldn’t make my final offer until I had contracts, no matter how time compelling everything seems to be.

Question number four: Is there an asking price? If the agents answers something like: “Well, she wants $3,000,000 I think. She is being very cagey. Why don’t you just put an offer in and we can go from there?”; and then if you put an offer in and the response is: “It’s not enough”, and then you ask the agent: “okay how much is enough, what does the seller want”, and no clear answer comes from the agent, heaps of excuses, but nothing in writing – guess what, it’s not a duck! It’s not really for sale, so move on – you are wasting your time for now.

We do not pursue off-market homes if we have made good offers and nothing concrete comes back to us. The home is not for sale now – the seller may be just bored an looking for entertainment, wanting to get a “free val” or trying to appease the agent who is pressuring him or her.

You can tell whether off-market home is for sale if:

  1. The agent has a written authority to sell
  2. You can get good access
  3. There are or will soon be contracts if negotiations get going
  4. It has a price

Even though off-markets may appear very attractive because they are “secret”, if you are a real buyer, it’s important that you only spend your emotional efforts on off-market homes that are really for sale. While you are looking to the left at an off-market that is not really for sale, you may be missing out on an on-market that is drifting down your right side.

So remember the four rule duck test for off-markets and quack, quack, welcome back – let the early spring season bloom for all .

East: Steven Abbott (Jellis Craig) sells 1A Wiseman Street under hammer, $2,156,000, 5 bidders and a big crowd of 120

What’s Out There On Market

Personally I feel there are a lot of interesting $2m to $4m homes out there on the market right now.

Here are some of the more interesting, ready-to-move-into family homes I’ve been to this week and their ratings. (Agent quote, not my price thoughts in brackets)

Hawthorn 589 Riversdale Road ($2.4m+ Nick Franzmann) James Rating 620/1000 (click here)

Kew 20 Raven Street ($2.4m+ Chris Ewart)  James Rating 616/1000 (click here)

Elsternwick 13 Gladstone Parade ($2.8m to $3m Gerald Delany) James Rating   802/1000 (click here)

Black Rock 18 Arranmore Avenue ($2.4m+ Jenny Dwyer)  James Rating 692/1000 (click here)

Toorak 37a Lansell Road ($3.5m+ Darren Lewenburg)  James Rating  664/1000 (click here)

And above $4m

Malvern East 17 Manning Road ($4m+ Hugh Hardy)  James Rating  800/1000 (click here)

Hawthorn 16 Isabella Grove ($10m Paul Pfeiffer) James Rating 661/1000 (click here)

Ivanhoe East: 1 Rotherwood Road passes in at $2,375,000, 1 bidder (Arch Staver, Nelson Alexander)

Biggest Auctions:

  • Albert Park, 61 Merton Street, Geoff Cayzer (Cayzer), under hammer, $3,235,000, 2 bidders
    There may have been an interruption to the real estate action over the recent holiday period, but at 61 Merton Street, in glorious winter sunshine…(see more in Auction Reports)
  • Kew, 24 Laver Street, Arch Staver (Nelson Alexander), after auction, $2,210,000, 2 bidders
    Laver Street did not need much of an introduction from auctioneer Arch Staver, the picturesque street spoke for itself…(see more in Auction Reports)
  • Hawthorn East, 1A Wiseman Street, Steven Abbott (Jellis Craig), under hammer, $2,156,000, 5 bidders
    A strong crowd of well over 100 gathers in the expansive front lawn, spilling out onto the footpath and kerb of Wiseman Street…(see more in Auction Reports)

Bidderbuzz:

  • Balwyn, 40 Sevenoaks Street, Duncan McPherson (Nelson Alexander), under hammer, $1,733,000, 5 bidders
    At least 120 had gathered to witness this ‘ sale’ in Balwyn. Auctioneer Duncan McPherson burst out onto the street…(see more in Auction Reports)
  • Canterbury, 25 Scott Street, Mark Fletcher (Fletchers Hawthorn), under hammer, $1,870,000, 5 bidders
    Steady as she goes – that best describes this auction. I along with about 70 others gathered in sunshine…(see more in Auction Reports)
  • Balwyn, 20 Kenilworth Street, John Taylor (Fletchers), under hammer, $1,270,000, 4 bidders
    Auctioneer John Taylor welcomed the crowd of around 50, and described what was on offer…(see more in Auction Reports)

Biggest Pass Ins:

  • Ivanhoe East, 1 Rotherwood Road, passed in, $2,375,000, 1 bidder
    ‘Welcome everyone… the caterers will be here soon’ quipped auctioneer Arch Staver…(see more in Auction Reports)
  • Hampton, 25 Littlewood Street, passed in, $2,060,000, 2 bidders
    How refreshing to see curves at a time when straight lines are the order of the day…(see more in Auction Reports)
  • Black Rock, 262 Beach Road, passed in, $2,050,000, no bidders
    Opposite the beach and on over 1000sqm of land, the opportunities here seemed endless…(see more in Auction Reports)

Agent  Survey: “How is the coming month looking in terms of stock and sales?”

Peter Kennett (Hocking Stuart, Brighton): “Inquiry is very strong given the current lack of stock and we have sold 3 properties in July before auction for this reason. Our future vendors have taken our advice and decided  to auction before the October over supply.”

Paul Pfeiffer (, Toorak): “Most agents are smiling again, making good money and most have just landed back in Tullamarine from vast European holidays during the winter and school holiday periods. This has meant that stock level has had a somewhat controlled release into the market over the past 6 weeks and the quieter buying period has held up well, with auction maintaining the average 70%, due to less supply. So the BMW’s are sparkling, a few new suits from the David Jones clearance sales are coming out of the wrappers and the agents are back on the chase!  There is some real premium quality stock in the market at the moment and the success of those campaigns will encourage or discourage the fence sitters. The reality is, the market has merely caught up to 2010 heights and whilst a few articles have surfaced about the buoyancy of the Sydney and Melbourne markets, I personally feel that we are not in a boom, with the market being sensitive to any overpriced property and quickly turning its back on the over-excited  vendors. (We) have just gone through a record breaking July, so our excitement is high and we are quickly filling the dates in August and September. Whilst I am not getting too excited, I might just pencil in an overseas holiday for December.”

Richard Winneke (Jellis Craig, Hawthorn): “August is up approximately 10% on last year in volume. The  quality homes (period & modern), with a good floorplan in the better streets & close to schools, will still be very popular throughout spring 2014.”

Damian O’Sullivan (Marshall White, Albert Park): “Volume for August is looking particularly healthy. This comes as no surprise as July has been a dormant month in many areas. A number of vendors have also brought their plans forward in terms of selling in order to beat the Spring rush and take advantage of the increased volume that will inevitably be on offer in the latter stages of the year.”

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