oc | Thursday 20th February

Price Uncertainty is the New Black

67 Northcote Road Armadale - Justin Long

67 Northcote Road, Armadale – Justin Long. Sold after auction, undisclosed.


Price has become such an interesting concept in this market.

There feels to be an overall lack of trust and comfort with regards to what price to pay – so whilst many things are different between the market of now (eg still some volcano auctions, 6 bidders sub $2m at 18 Barkly St, , Alex Schiavo)  –  and the down market of 2008 (the last big market drop and almost no volcano auctions); one thing is still the same.


Uncertainty in many things – but reflected in one;


Price Uncertainty.

None of us seem as certain on price anymore.

Truth is none of us ever had certainty on every price – we just thought we did.

So why are we more uncertain?

Price is more VoLaTiLe!

Why is price more volatile?

Bidder numbers.

When bidder numbers are lower, prices are more volatile – harder to predict.

Scenario one early last year: There are 6 bidders at an auction and the low quote is $4,000,000 to $4,400,000, we all know that $4,700,000 to almost $5,000,000 is probably the outcome and we watch the auction and the top bidder is at $5,000,000 but the underbidder stops at $4,750,000 and the top bidder buys at $4,800,000 under the hammer. It’s sold as expected.

Scenario two today: There is only one bidder and they stop at $4,300,000 because they are not pushed and the home passes in because the seller remembers the above sale last year.

Multiply that by 10, 20 or 100 auctions and all of the sudden the market begins to get nervous.

Yes, there are some homes still selling to one or a couple of bidders at $5,000,000 – so this means buyers don’t know whether they need $4,000,000 or $5,000,000.

Many struggle to operate in environments of “uncertainty” and so choose inaction – trying to avoid a mistake, rather than taking action (buying a home and risk in their minds overpaying for it).

This builds a snowball of negativity compounding to our current market point, where between 50% and 60% of auctioned homes have one or zero bidders.

The herd instinct took hold in May, with buyers no longer seeing other buyers confirming their price views and soon more buyers were sitting back uncertain what they should offer.

And so in August uncertainty has compounded uncertainty.

How do a skilled seller and a skilled agent get or set a price in this market?

How does a skilled seller get closer to $5,000,000 than $4,000,000 in this market, even with one bidder?

Last week we talked about two types of sellers;

Price Sellers – they want a price ahead of a result, first and foremost.

Result Sellers – they want a sale first and foremost, ahead of any specific price.

In this market, there is a third type of seller and one we recommend to be, at least in the initial stages;

A Process seller.

They go through a process to test price.

A failed auction with no bidders is not a test process – that is a mistake.

We all make mistakes at times – myself included – it’s just in this market we try and avoid the obvious ones – like running a C grader to auction or even an overpriced B grader.

Good process and a good toolkit – with the right marketing agents at the helm whom you can trust – get the best price or close to it most of the time – bad marketing agents don’t unless their seller is lucky.

Here is one part of an agent’s toolkit – Good questioning;

Ross Savas – Mal, this is what my client wants!

James Redfern – Mal, what is it your client wants?

Richard Earle – Mal, this is where our clients could meet, what do you think?

All three are slightly different in the questions/statements they present but are similar in the information they elicit.

And all three are skilled in price determination for a certain type of – there was probably no mention of specific numbers by them and maybe no mention of a specific number in return – but the process has started on their question or statement, a twitch from you, noticed by the agent and the next hypothesis to test is being conjured up.

Good agents go through this many times with many different questions, testing and re-testing, depending on circumstances.

At what price will it end?

A good agent shouldn’t “know for sure” at the start – eg an idea yes, but basically still an open mind.

In this market, there is a process that when operated with skill, the best price will be determined to the benefit of one over the other or if both buyer and seller are skilled, then the benefit of both.


The market has changed and so have we at James Advocates.

Whilst buyer advocacy is still the major part of our business, our roles in selling advocacy and architectural advocacy have increased as clients and other sellers interested in a more managed process, begin to look for more professional strategic advice, rather than just a glossy submission with a standard response.

Historically buyer advocacy – we have always bought homes for mainly Top End Homebuyers and to lesser extent, for family investors and children of clients – over a 1000 fact.

Our buyer services are offered in 3 levels; DIY, BESPOKE such as negotiation only or FULL SERVICE: find, price and either on or off-market.

Until this current market downturn, our selling advocacy had been a low-key simple “add-on” service of agent selection, where we helped our buying clients select the right marketing agent to manage the sale of their home. Unremarkably, we call that a BUY/SELL service and around half our clients buy and sell with an agent through this service. This agent selection service was effectively a free service, as the winning agent would pay a fee from their commission to be donated on their behalf to a charity such as Launch Housing or Plaster House – over $500,000 has gone to charity via this service since 2006 – but that is another story at www.11climbers.org if you’re interested.

We still provide that simple agent selection service, however, in response to this market we have added a full seller advocacy service for our clients.

Seller advocacy full service  – our role has expanded dramatically, to not only involve the agent selection service but also an ongoing advisory/management role during the marketing agent’s listing period.

Some of the selling advocacy management roles

as opposed to sales marketing that we have performed this year;

  1. Assessment of agents’ submissions – an assessment with an experienced eye.
  2. Fee negotiation – a lot more than the fee itself.
  3. Discussions of reserves in an effective manner.
  4. How to change marketing agents if appropriate and limit the downside – how to run two agents at once if also appropriate.
  5. What is a price seller v a home seller and the risks v rewards.
  6. How to look at price but also actually selling and what processes can be set up to minimize the risk.
  7. Marketing costs – especially if all the paid advertising is doing is telling people what you home is NOT WORTH.
  8. Holdings one’s nerve when the going gets a little rough. A little one on one coaching.
  9. What presentation efforts work and what don’t. Sometimes you do need to spend – but usually nothing like what you think it will cost.
  10. How you can negotiate with your agent and then in turn with your buyer, in an effective manner and NO, that doesn’t mean shouting louder.
  11. How to motivate your agent effectively and we don’t think commission incentives are at the top of the list.
  12. And more ……………like Agentspeak – when an agent says or does something, what on the balance of probabilities does that really mean?
  1. And leverage – this is such a misunderstood (or not even thought about) concept that effects a lot more sales than sellers think.
  2. And Strategy – What’s that, what’s a strategy?
  3. And NOT actually selling now – holding till a better time. Huh, never heard that one before.
  4. How to run a buyer shopper to test the OFI – not that we find you need to on the agents we suggest.*

*The agents we suggest are the ones we see day-in and day-out performing well in the marketplace and they are excellent marketers. However, in this market, we have found it’s also about management rather than just marketing alone and it’s increasingly about outcomes more so than just transacting.


A 60/90 days auction still has its place – but so does a 12/12 (months) private sale and settlement terms.


Marketing agents are still a key ingredient in your sale and we’ve always been a believer in the 80/20 – meaning 20% of agents do 80% of the good business however with 20% of the market gone … the good business is now almost 100% from that 20% of agents.

No Extra Charge

Our fees are by discussion and in many cases, depending on the level of service can be included in the agent’s total commission – and for many, are no extra charge.


We understand there is a conflict issue if we have a buyer, but that is handled very transparently and effectively in that situation. We act for the buyer and no fees from the seller go to us – it’s simple and in this market, a good buyer is a positive.

We understand this was an advertorial – but it’s an in-demand and increasing service to manage price, to manage stress, to manage the whole buy and sell process for those that see a benefit(s).

As well, we feel it has also strengthened the quality of our buyer advocacy work in the current on and off-market spheres.

If you’re interested in a chat about our selling, buying or even architectural advocacy services, please call.

Advocacy (management) and agency (marketing), as opposed to agency alone, is an alternative and new way to consider when buying, selling or renovating/building your next home in this new and challenging market.



The mood on a very small sample today, not as positive as last week is our call.

The James 100 Auction test begins August 25th – so next week (18th) a break from Marketnews and then we test the current market strength with 100 randomly sampled auctions over 3 weeks (Aug 25th, Sep 1st and 8th) – this will represent the Bidderman, Clearance and Price measurements of the early Spring Market. So see you on the 25th of August.

How we work


294 Williams Road Toorak passed in $4,800,000 0 bidders

294 Williams Road, Toorak passed in $4,800,000, 0 bidders.

James Auction Report – 67 Northcote Road, Armadale
Auctioneer: Justin Long ()
Crowd: 80
Open: $2,700,000 vendor bid
Pass in: $2,900,000
Bidders: 2

Kicking proceedings off with a vendor bid of $2,700,000, Auctioneer Justin Long was quickly met with $25,000. Welcoming Bidder 1, Mr Long tried to tempt any other buyers, with the rain beginning, Bidder 2 chimed in at $2,800,000. The 2 bidders up bid each other reaching $2,900,000 when it all stalled. The home was passed in.

James Auction Report –  294 Williams Road, Toorak
Auctioneer: Justin Long (Marshall White)
Crowd: 25
Open: $4,800,000 vendor bid
Pass in: $4,800,000
Bidders: 0

Starting with a vendor bid of $4,800,000 Justin Long called for a rise of $50,000. The small crowd that had gathered all stood still. Half time was called and with no forthcoming bids the home was passed in.


53 Canterbury Road Middle Park. Sam Paynter, sold after auction undisclosed

53 Road, Middle Park. Sam Paynter, sold after auction, undisclosed.

James Auction Report – 53 Canterbury Road, Middle Park
Auctioneer: Sam Paynter (Greg Hocking Holdsworth)
Crowd: 50
Open: $3,400,000
Pass in: $3,510,000
Sold after: Undisclosed amount
Bidders: 1

Auctioneer Sam Paynter did not need to wait or work the crowd to get this auction started, with a quick opening bid of $3,400,000 from Bidder 1.  With no further bidding from the crowd of approximately 45 people, Mr Paynter put forward a vendor bid of $3,500,000 and asked for rises of $20,000. After a quick visit inside to refer to the vendor, Mr Paynter encouraged the crowd to bid to have an opportunity to negotiate. Bidder 1 offered a second bid of $10,000 and, with no further bidding, secured the right to step inside to negotiate.

James Auction Report – 87 Male Street, Brighton
Auctioneer: Jack Johnstone (Marshall White)
Crowd: 70
Open: $2,100,000 vendor bid
Pass in: $2,100,000 vendor bid
Bidders: 0

An exuberant Jack Johnstone was unable to garner any bidders at 87 Male Street today.  It seems the good-sized crowd of almost 75 people today had come to watch, not to bid. The property was passed in to a vendor bid of $2,100,000.


11 Ross Street Kew, sold after auction $4,888,000 after passing in at $4,500,000 with 0 bidders. Richard Earle Jellis Craig

11 Ross Street, Kew, sold after auction undisclosed above $4.8 million, after passing in at $4,500,000 with 0 bidders. Richard Earle (Jellis Craig).

James Auction Report – 11 Ross Street, Kew
Auctioneer: Richard Earle (Jellis Craig)
Crowd: 100
Open: $4,450,000 vendor bid
Pass in: $4,500,000 vendor bid
Sold after: Above $4,800,000
Bidders: 0

Some enthused about the home – a big crowd probably had them holding expectations for action, it wasn’t to be. Richard Earle opened on a vendor bid, then dropped two more before passing the Sackville property in without a crowd participant.

James Auction Report – 12 Bell Street,
Auctioneer: Andrew Gibbons (Marshall White)
Crowd: 50
Open: $1,850,000 vendor bid
Pass in: $1,850,000 vendor bid
Bidders: 0

A middling sort of a sized crowd gather in front of number 12, a home that saw plenty of bidders in a competitive auction last time it came to market. Andrew Gibbons, man about Hawthorn, opens and closes on a vendor bid of $1,850,000. This time around nobody ventures a raise of the hand.

MelbourneFHPEconomics for the Young

Our pollies, the Reserve Bank and Apra have done a really good job in curbing the Top End housing boom through bank tightenings and yes, there is also sensible talk of immigration pauses, whilst we get our infrastructure house in order. Good stuff.

When we have our house in order, then let’s ease the immigration pause and reconsider immigration and the many benefits it offers us – such as keeping our overall population young and vibrant (Philip Lowe Reserve Bank Governor – August 8th). Reading his article (lots of graphs and logic) he makes, in my opinion, very valid arguments in economic terms but lacks comment on the human cost of these policies on young Australians already here. Whilst immigration and negative gearing and infrastructure policies are great for us baby-boomers –  they are displacing the young from their community or leaving them with only a long-term rent option, due to a complete lack of good policy and affordable housing AND our economic policies appear to be applying competitive pressure (stress) when bringing in younger people to compete against those already here.

Any chance of a community focus on younger people (already here) making their way in life and becoming homebuyers, rather than tenants or more to the point something other than economic generators for the capital and investments of us oldies.

Have our leaders heard of compassion and society fabric and long-term thinking? When all our young move 100km away to find housing – we, the old will have big bank accounts, but no young people here, other than a servant class!

I am not sure what is the right thing to do, but young people need to enter our thinking, then our conversations and finally our government policies.

Also, not saying below is right for Australia, but at least we should be investigating options for improving the lives of young people and the homeless and near homeless families, under immense housing pressures, due to limited fault of their own, mainly due to our society’s housing or lack of housing policies for the young.


Tenancy Laws

The issue that young people are under housing pressures is not just the issue for them. It is our issue as well if we are sincere in wanting a just and fair society for all Australians.

Not sure this is a particularly balanced press release on proposed tenancy law reform, from my own REIV and there feels to be a fair bit of “attitude” in the way it is written.

Yes, investors need protection from bad tenants, but good tenants also need protection from good and bad investors.

Housing has to also be about young people and others under housing pressures – not just investors.

As long-term tenancies become a bigger issue for the young, due to our lack of affordable housing policies, we need to consider reforms, so as investors can have protections AND tenants can have a sense of place.

Tenancy is a two-way street.


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