oc | Friday 24th January

Everybody has got their finger in the air – testing for blow direction

Can the Candyman Can? Steve Burke doing the shimmy shake but to no avail. 4 Great Valley Road Glen Iris passed in to a lone bidder at $1,290,000

Can the Candyman do it? Steve Burke doing the shimmy shake but to no avail. 4 Great Valley Road, passed in to a lone bidder at $1,290,000.

Contrast to the auction above - 5 bidders fought for 13 Yarra St Hawthorn to  $2,6250,000 - James Tostevin

Contrast to the auction above – 5 bidders fought for 13 Yarra Street, Hawthorn to $2,625,000 – James Tostevin.

mi_james_market_sumry_02

The Melbourne market is right now an area of uncertainty. No, that’s not code for the market is going down; it’s 50/50 that it actually may go up. Nobody really knows where we are going right now.

Today is James Market News lite and a small sample as some of the dust comes off the gavels, deodorant goes into the armpits of nervous buyers and the croaky voices of both sides begin to splutter.

Buyers and other buyers; auctioneers and advocates, sellers and their relatives begin the face-offs, the stress, the absolute joy and the despair that are Melbourne auctions.

What were normal streets last week, now turn into battlefields more famous to those involved than Waterloo.

Christmas and summer holidays have been forgotten; the previous lazy Saturday mornings of coffee and chatter (about the market of course) are a memory and the trip to Bunnings delayed ‘till tomorrow as you, I and more spectators than there are at an MCG game, trundle on down to the ubiquitous Inner Melbourne street auction.

So what happened today – what was your take on things? Got an opinion – of course you have.

Today at James Buyers Agents and Advocates we covered 9 auctions out of a possible 30 or so that were worth looking at in Inner Melbourne. Last spring the market was over 100 auctions every week and some weeks 200 – just to give numerical perspective.

So please, that is a very small sample today and the stats don’t count – although 8 of the 9 sold and Bidderman was 2.6.

But the real action is coming next week (20th), the week after (27th) and the week after that on March 5th and it’s big (over 100 auctions per weekend in Inner Melbourne) – so we will get our first glimpse of the market mood.

What will happen? Who cares? Well you’re reading this aren’t you!

I have now been to over 50 open for inspections in the last 3 weeks and for me there are three key points:

1. No respected agent or advocate has any real sense of what the market will do – except few foresee any significant drops before Easter, due to limited quality stock, thus keeping Bidderman per home solid or perhaps even artificially high. We will really only know for sure of any sustained market change in 2016 in late April/ early May – unless something very dramatic happens.

2. There really is “bugger all” (it’s a technical property term used by us sophisticated agents) quality stock on offer right now.

3. OFI’s have had strong numbers through – this is significant in that this must happen for the market to be good, however it is February and every February there is always a pep in the step from many buyers.

Why don’t the experts know what the market will do?

Because Chinese nationals, to quote Elvis – have left the building – well their wallets have for left for now.

And with this change from Chinese nationals, with them missing in action (bidding wise – still solid numbers at OFI’s) we no longer have a driver at the front of the Melbourne market bus.

Sure the stock market and interest rates used to mean things to our markets and they may well mean things again in the future; but since 2008 they have not meant anything like the Chinese nationals have meant to our markets.

Also with the buyer uncertainty of late last year, comes the seller uncertainty of early this year; as many sellers adopt a wait and see approach. This has resulted in less stock into our early 2016 markets and this in turn almost assures that the markets will have some buoyancy at least until Easter.

Also 5 bidders at 13 Stanley St Kew with Michael Wood -sold under the hammer for $2,217,500 - almost exactly the same price as the neighbour sold for mid last year (almost mirror image of land and building)

Also 5 bidders at 13 Stanley Street, Kew with Michael Wood – bought under the hammer for $2,217,500 – almost exactly the same price as the neighbour sold for mid last year (almost a mirror image of land and building).

Underquoting

I make no judgment on the agency in the news. My dealings with some of those involved have been positive and helpful. My comments are not about them, my comments are about Consumer Affairs and underquoting across the board.

Good to the see Consumer Affairs in the news – bloody good.

Agent underquoting is still a cancerous agent mindset, a joke and seriously lets what is an exciting industry down.

Please make no mistake – it is there, it is deliberate and if selling agents who systemically do it won’t stop; then charge them with fraud and throw the book at them – because that is what underquoting is – fraud.

Having said that, there is still a big difference between fraudulent underquoting and professional step quoting. There is still a big difference between fraudulent underquoting and market anomalies.

Underquoting – When an agent lies to a buyer – knowing that the price the seller wants or a price they could reasonably expect to get is well above what they are telling the buyers. It’s a deliberate fraud.

Step Quoting – It’s a practice that to be honest I’m 50/50 on. If it’s done professionally and ethically then I can accept it. If step quoting is unprofessional then it’s underquoting – a fine line. If step quoting is going to be accepted by buyers, then there needs to be an education campaign by selling agents to buyers as to what step quoting is.

In the high-end market in which we at James Buyers Agents and Advocates operate, I can see a place for step quoting. A seller wants the best price, an agent is engaged to do that; but in the initial stages of a campaign it is hard for anybody (buyer or seller) to know for sure what that price will be. Buyers at this level are sophisticated.

As long as the agent is quoting and communicating in a way to buyers, that is not below any clearly stated seller price, then I can see a case for say $3,000,000(ish) in the first week; $3,000,000 to $3,200,000 mid campaign and $3,200,000 to $3,400,000 in the last week in a rising or uncertain market.

If we buyers want AGENTS TO ACT HONESTLY then we have to give them the tools to be flexible to meet the sellers’ best interests.

If you’re not sure what STEP QUOTING is – please read our article, click here ….. https://marketnews.com.au/2014/05/step-quoting-black-or-noble-art/

Market Anomalies – Don’t know about you, but I am not the God of Price. With my best efforts I can estimate an auction result within 10% between 80 and 90 times out of a 100 (except pre-Easter last year when I reckon I was 50/50; it was that difficult). Also that is why you need good negotiation strategies to mitigate as much of the price risk/error as you can and still buy it, if that is your desired outcome.

My point on market anomalies and underquoting is sometimes no matter how hard you try, no matter how high your ethical and professional standards are, you can still get it wrong. So we cannot expect selling agents to get it right every time and it is especially harder in moving and uncertain markets.

As well, if a selling agent quotes a price, no matter how low it is – BUT puts it on the market at the price they quote and the result skyrockets past the quote, then I can see no offence, providing he or she has communicated to buyers that the sellers wants ‘x’, but it could be a lot more AND he or she has not tricked the seller into agreeing to a very low reserve in a fraudulent way.

It is the systemic lying, that is underquoting, that Consumer Affairs must come down heavy on and we at James totally support the stamping out of agent quote fraud.

Underquoting is still all about an industry bereft of ethical leadership with regards to quoting. If the key agency principals in the Inner East, with the support of Consumer Affairs and The Age got together and said NO MORE, then it would be greatly reduced.

Then things would change.

In closing, it’s a industry myth that buyers can’t handle the truth – that buyers won’t pay the best price unless they are tricked into a low “price” on day one.

Come close and I will tell you a secret, don’t tell anyone, but we at James buy as many homes as we do, by being upfront with our buying clients and telling them realistic prices and then guess what…?  When we buy, we pay more than the other bloke.

The stare worked. Sam Gamon sells 375 Barkly Afterwards to a lone bidder for $1,825,000 after it was passed in on a vendor bid of $1,750,000

The stare worked. Sam Gamon sells 375 Barkly, Elwood afterwards to a lone bidder for $1,825,000 after it was passed in on a vendor bid of $1,750,000.

words experts graphicAgent pic_Feb-13-2016

A) How did Jan/early Feb start in 2016 compared to 2015 in real numbers?

Sales activity through January has been almost a mirror image of 2015.  A number of properties were privately transacted through the month of January – as far as February appears on the surface, buyers have come out in full force with strong numbers through open for inspections, however the same cannot be said for vendors, with the number of auctions, by comparison to this time last year, down by about 15%. John Bongiorno

January is always very quiet and I think this was exceptionally so, due mainly to the high clearance rates leading in to the Xmas break. Peter Kennett

In real numbers, January was the same as 2015, which meant not big numbers, but a handful of strong sales. A couple of left over properties from late last year were snapped up, and also some handy off markets. Our Feb auction numbers are up 25% on last year.  David Hart

B) Do you think the Feb opening to the Easter market will strengthen, ease further, or remain about the same (stabilise) compared to the late Spring easing market of 2015?

All of this being said, real estate prices are determined by supply and demand and at the moment, looking toward the Easter period, given the low volume of property on the market, it appears that the market will remain strong with demand clearly outstripping supply.  John Bongiorno

Generally I feel April will be the busier month this year, given the huge interruptions in March, Long Weekend, followed by Grand Prix, followed by Easter. Therefore I feel that the market will be very strong and exciting, at least until a surge of properties comes on line, leading into Winter.

Our OFI’s are getting excellent traffic and we are also experiencing very strong internet enquiry over all price ranges.  Peter Kennett

Judging by the apparent pent up demand, I anticipate an active first quarter. The March quarter is traditionally strong, and with current demand for good family homes, and modest supply, I have continued confidence our market will remain very healthy through to Easter and beyond.  David Hart

AAA13

Subscribe to our Market News Newsletter


Tags:

Be with James

Would you like to talk to us about finding or negotiating on your next home?
We buy 100 homes for our clients every year.
We buy Inner East and Bayside over $2m.
View more MasterClass Articles

Inside James Market News