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Market Force or Market Fraud

One of our favourite gasbaggers – Patrick Dennis at 20 Black Street, Mont Albert, Under the hammer $2,200,000, 3 Bidders.

Start of the 3-week, 100 Auction Test – Spring

We reported on 29 auctions today in our start of the Spring 3-week Auction Test. By September 14th, we will have covered 100 randomly selected high-end auctions in Boroondara, Stonnington and Bayside. This sample size has proven to be sufficient to be conclusive; to reflect the trends in Melbourne’s Million Dollar market.

These statistics will tell us many things and ultimately we will get an indication as to the general sentiment and then, where prices may trend.

Bidderman on more solid stock levels, was not as flash today as it was in the last few weeks. It was 1.3 bidders per auction.

The Clearance Rate was 69% today. We consider this consistent with the last few weeks if you allow for increased stock compared to the last two months, and also the lower quality stock compared to what buyers can see coming up.

Compare the Pair

Widespread Underquoting?

  1. A lot of talk in the media (TV and papers) this week about underquoting.
  2. Really do you think that? What is going on in the market(s) right now?
  3. What we feel you are seeing is actually a market force, more so than market fraud.

  4. The Law (as we understand it). Underquoting is when the advertised quote of a home is below what an agent thinks/can justify with comparables is the likely value and /or what the seller has stated is their minimum expectation (but they can change their mind anytime) and/or below any credible written offer received.
  5. Some Buyers, some Sellers, some Agents, some Media and some Politicians still don’t seem to understand the law and/or CAV’s interpretation of the law.
  6. Generally, many people get definitions of Price, Quote and Value mixed up or intertwine them in a confusing manner. The Underquoting law is about agent quoting, not the end buyer price. Selling agent quotes to buyers are based on historical comparables, but we may now be in a moving rising market. They are also based on an inexact legal description and the strange CAV interpretation of what a seller reserve in relation to an agent quote is (as highlighted in the TV show THE BLOCK see our articles).
  7. Some buyers still refuse to get professional assistance from a qualified buyer agent/valuer/property advisor and they continue to repeat the same mistakes, making the same complaints and getting the same results (no home). Sorry, harsh but true and please don’t be rude in your emails as I will delete. I will respond to the polite ones, as I do – I appreciate constructive differences (and I get plenty, haha) and feedback.

Some generic answers to save a lot of emails;

Yes, I know we (buyer agents) cost say 1% – 2%, but if the market price of your target home goes up 10-20%, between now and you buying a home then you do the math. It costs a buyer between 10% and 100% of the purchase price in stamps and lost capital growth for a mistake, versus 1-2% for a good buyer agent or property advisor when you get it right.

I know the selling agent wasn’t that helpful to you but under the Estate Agents legislation, he or she is not on your side, he/she is not working for you, he/she is working for and paid by the seller.

I know you are a young person and the market has gone past you – that we totally get and we are incredibly sympathetic (I have 3 young homebuying children of my own)  but that’s not all about agents and underquoting, that’s more about demand and supply and (lack of) government policies.

Key points right now in September 2019 about Underquoting:

1. Underquoting was endemic in our industry before the legislation and court cases of a few years ago. Underquoting is wrong (read our years of campaigning against in previous marketnews reports) and it could come back again very quickly HOWEVER, as a buyer or seller maybe you should consider not be distracted by the underquote noise – understand the law, do your research, get the right professional help and then focus on buying or selling for your best outcome. Read our THE BLOCK APOLOGY ARTICLES HERE

2. Specifically as a seller – the CAV (and overall they are doing a good job on this issue – see Channel 7 report 31.8.19 @ 23 minute mark re fines) has clearly stated that you can change your mind at any time (eg, in an instant). We are not encouraging illegality or immorality, in fact, the opposite (read our tens of articles on underquoting), but GOOD QUOTING is not necessarily UNDERQUOTING. See our Quoting video below.

3. Specifically as a buyer – If you understand quoting and how it works and you do your research and/or you engage a professional buyer agent (who is paid by and works for you) then UNDERQUOTING actually works in your favour. Endemic underquoting gives sellers weaker offers/prices and confuses much of your real competition – no, not the agents, the other buyers are your real competition.

HAPPY FATHERS DAY DAD

So let’s talk about QUOTING. Here are 3 of the on-market homes we were specifically involved in this week; we bought 2 and we managed the sale of 1.

Please note, we may not be aware of all information – comments and opinions are based on our own first-hand experiences in each case and we are not qualified to or giving legal opinions here.

3 Glenmore Bundoora, Michael Egan and David Moxon, Under the Hammer, 5 bidders.

3 Glenmore Bundoora (we bought)

Not my usual patch, but it was a special request and when people ask politely and engage me, then I am happy to go if times can work. We were contacted 3 days before and our fee was 1%+GST if successful.

Agent quote was $1,250,000 to $1,350,000 and it sold for over $1,500,000.

So did the agent underquote?

In my opinion, no.

  1. Agent had an offer of $1,390,000 prior to the auction, but didn’t accept it or change the quote. Isn’t that an underquote? No – the offer wasn’t in writing.
  2. But at auction, the agent didn’t put it on the market until $1,425,000. Yes, a few people asked the auctioneer if it was on the market (meaning at reserve) below that, but one query was from a non-bidder and when pushed by an actual bidder, the auctioneer did refer to the seller (who makes the decisions as to reserve) and came out and announced it was on the market.
  3. But the end price was over $200,000 beyond the quote. This home was single level (rare), in the top few sales in Bundoora ever (where are easy comparables?) and when this first hit the net, we all thought the market was still tanking (meaning seller expectations).

We felt the agents, David and Michael, were professional (result and dealings) and on the face of what we experienced, they appeared legal, based on justifiable last 6-month comparables, seller’s reserve and no written offers.

Bought Before Auction, Rebecca Edwards – Kay & Burton, 3 bidders.

We bought

We had clients who were overseas and wanted to go before the auction, as clients had travelling issues and also didn’t like to make quick decisions, We were contacted 7 days before and our fee was 1%+GST if successful.

Agent quote was $1,650,000 to $1,800,000 and it sold above $1,900,000.

So did the agent underquote?

In my opinion, no.

  1. We offered on Wednesday before auction $1,810,000 (on a contract) and it was put on the market – meaning the seller stated we had met the reserve and would sell if no better offer.
  2. We competed against two other bidders via a rigorous offer process run by Rebecca Edwards and our client was successful the next day above $1,900,000.

We felt the agent Rebecca was professional (result and dealings) and on the face of what we experienced appeared legal, based on justifiable last 6-month comparables (how many townhouses like this in Hawthorn East?), seller’s reserve and on the market when a written offer was received above the quote.

21 Sylvander St, Balwyn North, Jeremy Desmier, Under the Hammer, 5 bidders.

21 Sylvander St, Balwyn North (we managed the sale)

We were contacted several months ago by the overseas owner to manage the sales process (interview agents through to auction day). No extra charge to client. Our fee is part of the agent’s commission – in this case, $5,000+GST and it will go as a donation to Launch Housing for the Homeless. Our fee varies on selling management work requested.

Agent quote was $1,350,000 to $1,485,000 and it sold for $1,630,000.

So did the agent underquote?

In my opinion, no.

  1. We had a discussion with selling client and agent about the market (not great two months ago), comparables sales, issues on this home and the seller (client) was comfortable with the quote reflecting their possible reserve. Here are the comparables in the SOI.
  2. Discussed with the client the reserve during the campaign and she said she would sell within the range. The reserve was set at auction at $1,400,000, as the main goal was to sell.
  3. Jeremy announced it on the market at $1,415,000 without being asked. Two key bidders took it from around there to $1,630,000. Excellent auctioneering.

We felt the agent Jeremy was professional (result and dealings) and on the face of what we experienced appeared legal, based on justifiable last 6-month comparables (above), seller’s reserve and no written offers prior to the auction.

Of course, things may change quickly and of course, there may be individual cases of illegality currently, but right now what we feel you are seeing across the board is market force, more so than market fraud.

Volcano – 20 Brinsley Road, – David Smith, Under the Hammer $2,410,000, 6 Bidders.

Camberwell, 20 Brinsley Road. David Smith (Marshall White) Under the hammer $2,410,000 6 Bidders

Camberwell, 20 Laxdale Road. Campbell Ward (Jellis Craig) After auction $2,250,000 2 Bidders

Mont Albert, 20 Black Street. Patrick Dennis (Jellis Craig) Under the hammer $2,200,000 3 Bidders

Glen Iris, 3 Hilltop Avenue. Daniel Wheeler (Marshall White) Under the hammer $1,780,000 2 Bidders

Kew, 46 Kent Street. Walter Dodich (Kay & Burton) After auction $undisclosed 1 Bidder

Hawthorn East, 72 Leura Grove. Lachie Fraser-Smith (Jellis Craig) After auction $undisclosed 1 Bidder

Hawthorn East, 5 Campbell Grove. Bought before – Kay & Burton

Glen Iris, 26 Vears Road. Bought before – Hocking Stuart

Camberwell, 33 Fairfield Avenue. Bought before – Marshall White

Hawthorn, 13 Percy Street. Passed in $1,750,000, 2 Bidders

Read all 29 auction reports

Hey I’m here! 25 Manning Road, East – John Bongiorno, Under the Hammer $3,855,000, 3 Bidders.

, 68 Central Park Road. Iain Carmichael (Jellis Craig) Under the hammer $4,670,000, 3 Bidders

Malvern, 25 Manning Road. John Bongiorno (Marshall White) Under the hammer $3,855,000, 3 Bidders

Malvern, 16 Valetta Street. Andrew McCann (Jellis Craig) Under the hammer $2,850,000, 2 Bidders

Armadale, 22 Bailey Avenue. Justin Long (Marshall White) After auction $undisclosed, 3 Bidders

Armadale, 3 Northcote Road. Passed in $1,725,000, 0 Bidders

Prahran, 6 Wynnstay Road. Passed in $2,700,000, 0 Bidders

Malvern East, 33 Allenby Avenue. Passed in $1,900,000, 0 Bidders

Armadale, 25 Inverness Avenue. Passed in $2,800,000, 0 Bidders

Read all 29 auction reports

Give it the ol’ heave-ho. 19 Addison Street, – Josh Stirling, After Auction $1,775,000, 1 Bidder.

Beaumaris, 93 Pellatt Street. Matthew Pillios (Marshall White) After auction $2,680,000, 1 Bidder

Hampton, 18 Ocean Street. Stephen Tickell (Hocking Stuart) Under the hammer $2,050,000, 2 Bidders

Brighton East, 3 Primrose Crescent. Craig Williamson (Buxton) Under the hammer $1,957,000, 3 Bidders

Elwood, 19 Addison Street. Josh Stirling (McGrath Real Estate) After auction $1,775,000, 1 Bidder

Hampton, 1 St Kilian Street. Bought before – Marshall White

Hampton, 38 Villeroy Street. Bought before – Buxton

Port Melbourne, 97 Stokes Street. Passed in $2,250,000, 0 Bidders

Elsternwick, 8 Denver Crescent. Passed in $2,010,000, 3 Bidders

Elsternwick, 11 Charles Street. Passed in $1,750,000, 0 Bidders

Brighton East, 16 Arnold Road. Passed in $1,550,000, 0 Bidders

Sandringham, 18 Miller Street. Passed in $1,300,000, 0 Bidders

Read all 29 auction reports

We have launched offmarket.com.au 

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No open for inspections, no revealing of details in the press, no huge advertising expenses.

The properties and results you see here you will not see on realestate.com.au or domain.com.au or on the internet at the time of printing.

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