oc | Monday 20th January

11 bidders – 9 still wounded at $7m for big land in the Inner East

Christian Hegarty works his crowd and 2 bidders nicely at 28 Abbott Street Sandringham, under the hammer $1,772,500

Christian Hegarty works his crowd and 2 bidders nicely at 28 Abbott Street, , under the hammer $1,772,500.

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Bidderman (bidders per auction) has definitely shifted in the market overall. Bidderman has been firmly in the low 2’s for a few weeks, down from the 3 bidders per auction seen earlier in the year. The urgency has gone out of the market, but not the heat – read our headline above. There has been a distinct easing on some home types.

The market has moved from the hottest of hot markets we have ever seen, to a very strong market. The spring market has lost around a third of the bidders per home from the early 2015 markets.

However don’t for one second think the market has lost its firepower on the A graders.

1 in 4 auctions today were still Volcanoes, that is 4 or more bidders.

Clearance Rates remain the same as earlier in the year eg hovering around 80% – which on historical averages is still in the stratosphere. However, behind those clearance rate numbers, is less depth when compared to May of this year. It’s still pretty deep though – don’t think we are in any overall market shallows just yet.

We repeat, this lack of depth is not occurring on the A graders at any price level. Look at Park Lane in Kew and Kintore in Camberwell – 9 wounded underbidders at $7 million – 11 bidders on our Top 3 auctions last week – there is depth.

The reduction in depth is manifesting itself at the “Duck Pass-Ins”, particularly the C graders. A home can be a C grader on Position or Property type or it can be a C grader on Price. The three P’s of property.

And that is the real news of the market this spring – the incredible strength still remains on A graders, however a small market change has occurred on C graders. Yes, you can really overpay on some homes (even in this market) and that is not that smart.

The market is moving from a blanket to a crochet rug (some small holes); but as we hit the middle spring market, nobody here at James is saying the market is weak. It’s not, its still very hot.

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15 Park Lane Kew with Scott Patterson - Just a casual 4 bidders and a lazy near $7 million for some land. But that wasn't enough to be the highest under the hammer auction sale today. That went to 27 Kintore Camberwell  below with Doug McLauchlan which hit $7.7m and had 7 bidders . Yeah no worries the market is easing with only 9 proven wounded underbidders each with circa $7million in their pocket. NOT!

15 Park Lane, Kew with Scott Patterson – Just a casual 4 bidders and a lazy near $7 million for some land. But that wasn’t enough to be the highest under the hammer auction sale today. That went to 27-29 Kintore, Camberwell below with Doug McLauchlan which hit $7.7m and had 7 bidders. Yeah, no worries the market is easing with only 9 proven wounded underbidders, each with $7 million in their pocket, still circling good land in the East. Yeah, easing …… NOT!

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27-29 Kintore Street, Camberwell (Doug McLauchlan, Marshall White), $7,700,000, under hammer, 7 bidders

15 Park Lane, Kew (Scott Patterson, Kay & Burton), undisclosed price (bought range: $6,578,320-7,331,510), under hammer, 4 bidders

15 Cole Street, Brighton (Robin Parker, Marshall White), $4,425,000, after auction, 4 bidders

For all 30 James Auction Reports click here

Doctors

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33 Service Street, Hampton (Robin Parker, Marshall White), $3,900,000, under hammer, 4 bidders

16 Orchard Street, Brighton (Andrew Hayne, Marshall White), $3,761,000, under hammer, 4 bidders

8 Irymple Avenue, Glen Iris (Iain Carmichael, Jellis Craig), $2,730,000, under hammer, 4 bidders

For all 30 James Auction Reports click here

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But not everything runs away. 31 Gordon Street Hampton sold in 2010 for almost exactly the same amount as the only bid, a vendor bid today. So at this stage the only proven opinion of value is what the vendor thought in 2010 and what the vendor thought in 2015.

But not everything runs away. 31 Gordon Street, Hampton sold in 2010 for almost exactly the same amount as the only bid, a vendor bid today. So at this stage, the only proven opinion of value is what the vendor thought in 2010 and what the vendor thinks in 2015.

31 Gordon Street, Hampton $4,600,000, passed in, 0 bidders

21 Mathoura Road, Toorak $2,950,000, passed in, 0 bidders

14 McEvoy Street, Kew $2,600,000, passed in, 0 bidders

For all 30 James Auction Reports click here

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Fact One: Our James Auction Success Rate earlier last year was reported in our Market News at 84% – we were probably boasting – although trying to disguise it as a fact. Nonetheless it was 84% – that means for many periods of time, earlier last year, we were buying between 8 and 9 of the 10 homes we would go after. Most would be at auctions, which for us, then, was the best game in town.

If you are unclear on how many homes, we at James Buyer Advocates buy, then CLICK HERE for a sample – you can see addresses and pictures – there are hundreds, mainly in that $2m to $6m range – just click on the pointers on the map.

Fact Two: Fast forward to this week. These are our transactional involvements (Sept 12-19): The average purchase price was $3,000,000.

  • Alphington (Nic West)
  • Kew (Dave Oster)
  • Canterbury (James Tostevin)
  • Hawthorn (Scott Patterson)
  • Hampton (Nick Johnstone)
  • Canterbury (Philippe Batters)
  • Brighton (David Hart)
  • Richmond (Elliot Gill)
  • Hampton (Robin Parker)
  • Toorak (Maddy Kennedy/James Redfern)
  • Brighton (Robin Parker)

The number of homes bought (above) under the hammer by James Buyer Advocates was 1 – yep uno, un, einer, yi – that’s right, one. In other words our auction under the hammer success rate early last year in a manageable market was 84% – this last week in a red hot one it was almost 9%.

  • STOP PRESS Hawthorn East (Tim Derham) bought Monday and no not under the hammer.

Fact Three: However we still bought 54% of the above 11 homes. That is right in the last 8 days we have bought 7 of the 12 homes (above) that our clients went after, but we bought them off market, at pass-ins, pre-auction and so on.

The ones we didn’t buy – why?

  • Alphington – Record Price for area;
  • Kew – $5 million neighbour was not going to stop;
  • Hawthorn – Crossakiel – the price paid was near on double the $2 million paid 3 years ago – we were $700,000 short of that on our recommended stop figure.
  • Richmond – sadly we were a tad short, it was simply a lack of money, it was a good buy to the other party;
  • Hampton – record price and I was wrong. I genuinely thought circa $3.5 million – it went for $3.9 million. We had profiled no Chinese bidding, we had bought a similar one up the road last year for just under $2.8 million and I didn’t think there would be 4 other bidders with us over $3.5 million. That one, I simply got wrong.

Fact Four: We are negotiating on more homes right now than a year ago and that is by a considerable margin. Why? Well partly we have more clients – but to be frank, we are going to have more misses in a market like this and why shouldn’t we?

In late 2015 at James, we are buying homes in a very different way to early 2014. And it’s not all about money.

If you are a good buyer agent/advocate, you need to be able advise your client when to go; but you also need to advise when to perhaps stop.

In quieter markets where homes represent good value, we are on the horse with the whip out; however right now, in some of the strongest markets ever witnessed, we need to advise when to get off the horse and put that whip away.

Putting the whip away is not just about a specific home – it is also about current alternatives and options for the individual client. Putting the whip away is also not about spitting the dummy and giving up or waiting for the market to cool – that is simply not smart.

Putting the whip away is not about inaction. It is about critical thinking.

Putting the whip away today, is so you can bring it out tomorrow on something better.

Buying a home well is not about the buyer agent or selling agent’s ego – we are catalysts and conduits – not decision makers. Our clients are the decision makers. Yes its a fight and yes we are pumped – but it’s not a fight at all costs.

Buying a home well in Melbourne (including right now) is about:

  1. Understanding the 20% Premium Chinese Phenomenon,
  2. Understanding your alternatives on and off market
  3. Good thoughtful negotiation strategies
  4. Finally, its about remembering the fundamentals – you know things like land value – long term floor plans – where the kids will go to school and so on.

In this market, as in any market, there are good buys and there are really dumb, bad buys. Unfortunately for many buyers they won’t find out a bad buy, until they go to sell at some time in the future.

In markets such as what we are in now, your ethical buyer agent needs to be explaining to you five things.

  1. Where the other buyers are at
  2. Where the seller is at
  3. How and why that is very different from what the agent is ‘framing’ you at
  4. What are the risks v rewards of various offer pitches and
  5. Alternatives and options to the home you are in love with at any cost.

4 and 5 in our opinion are the critical thinking advice points you need to look for from your buyer advocate.

 

It is the critical thinking advice that you should engage a good advocate for.

 

So this is how the James good buying process manifests itself in this current spectacular market.

  • Step one – Is it a home you like emotionally and works for you? Is it your best alternative now and in ten years? What are your on and off-market options?
  • Step two – Is it a good rating home, eg after we have completed around 100 due diligence points.
  • Step three – Where may value lie for you and what are your alternatives? Will Chinese nationals be bidding on it – do you want to pay the 20% premium they often pay?
  • Step four – Negotiating within sensible price parameters and to your advantage. There are still good buying points. Yeah, the agent says there is Chinese bidding – but is there? Good buying strategies still work?

At James for all home buying clients, at all price levels, we have prepared two special face to face presentations.

  • How to spend a million dollars less on a $3m to $4m home and buy well.
  • How to buy outside the auction system. It’s not always cheaper, but it may be your best bet.

If you would like to arrange a face to face appointment to hear them, then please call our office on 98043133 today.

21 Mathoura Road Toorak  is another side of Auction Bidding. at $2,950,000 there were none. Passed In

21 Mathoura Road, Toorak is another side of auction bidding. at $2,950,000 there were none. Passed In

James Market News: No James Market News for the next two weeks as it’s the Grand Final and the industry shuts down after next Saturday’s Super Saturday for 10 days or so.  I’m off on Sunday 27th to Japan (back on the 7th). Our office is still open, and see you for our next full James Market News on October 10th. Good buying.

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