oc | Wednesday 13th November

Big Duck or Volcano? $Millions on the line for buyers and sellers.

We live in Volatile times!

And that means right now $Millions are on the line for buyers and sellers on 5 key auction specific strategies.

Volatility doesn’t just happen on the way down – it also happens on the way up!

When a market is changing, by logic it is volatile, as it’s moving from one phase to another.

Things happen that are unexpected – pass-ins on good homes, huge prices on others….. with some buyers and some sellers missing out completely….. that’s what volatile means – a significant increase in the unexpected – and that is where the 2019 pre-Christmas market is now.

PROVE THINGS ARE VOLATILE MAL!

All auctions this weekend

  • A whopping 62% had one or fewer bidders or were sold before eg not “normal” street auctions and
  • A significant 24% were Volcanoes – meaning four or more bidders with results well above quote and reserve, exceeding $500,000 in several cases – eg not “normal” pricing expectations.
  • Therefore 86% of all auctions required expertise or luck and would have benefited from good professional stategies on both the buying and selling side – as they were not “normal” 2 and 3 bidder auctions.

Auction strategies are important – there is significant money to be made or lost on VOLATILITY through good and bad decision making and you can also miss out (buying or selling).

Clearly the current market is moving from a downwards phase to an upwards phase – so by its very nature it’s volatile, but volatility (the unexpected) is not bad news for all. For some volatility is a positive thing, not a scary thing IF and only if, you have a good negotiation strategy and of course a good agent.

Here are 2 of the 5 key auction strategies we are seeing right now.

Strategy Number 1 – Quoting in Volatile times

Camberwell – No Bids – Passed-In well below Initial Agent Quote. Photo of the week: Phoebe James

’s . 7 Barina Road . $650,000 above the initial quote. 5 bidders

Summerhill Road Beaumaris. Passed in. No Bids at the Agent Quote. 

Marshall White’s . 104 Caroline St. . $800,000 above the initial quote, 4 Bidders. Coincidentally Justin’s other auction at 12 Central Park Road Malvern East was also exactly $800,000 above the initial agent quote, 3 bidders.

Berrima Road Malvern East. Passed-In. No Bids at the Agent Quote

Marshall White’s James Tostevin. 4 Clive Road East, $400,000 over initial $2m quote range. 5 bidders.

The above big ducks and volcanoes prove volatility (when the market is dead there are very few volcanoes and when the market is flying there are fewer ducks as everything at least has some interest).

Market volatility (the unexpected) will be exacerbated as we enter the late Spring /pre-Christmas market, where traditionally there is more stock and that will now bring out more variances in individual buy and sell results.

So to the Quoting Strategy to deal with the Auction Volatilities. 

With the 7 volcanoes or 25% of the 29 auctions we covered today as part of our pre-Christmas 3 week 100 Auction test, it could be hard to say/prove that any of the initial agent quoting was underquoting on what we know.

The quoting by some agencies appears to be……. simply strategic quoting…… a quoting strategy of get it as low as you can.

However, perhaps time is running out for this kind of  “strategic quote” strategy, as the market has been 6 months on the up and up and it will/has become harder and harder to argue/find/justify/bulltish that prices on A-graders are anywhere near where they were 6 months ago.

Strategic Quoting for some agents is a balance between being commercial and not getting caught/court.

For other agents quoting is not strategic, it is simply being ethical/legal and either right or not so right in their communications to buyers.

More power to the agents who see quoting as being ethical/legal.

For some it’s quote ‘m low, watch ‘m go – did that apply to any below?

Glen Iris, 7 Barina Road. Daniel Wheeler (Marshall White) Under the Hammer $3,050,000 5 Bidders – Quote: $2,200,000 – $2,400,000

Hawthorn East, 4 Clive Road. James Tostevin (Marshall White) Under the Hammer $2,501,000 5 Bidders – Quote: $1,900,000 – $2,090,000

South Yarra, 104 Caroline Street. Justin Long (Marshall White) Under the Hammer $6,300,000 4 Bidders – Quote: $5,000,000 – $5,500,000

Hawthorn, 58 Mary Street. (Kay & Burton) Under the Hammer $4,545,000 4 Bidders – Quote: $4,200,000 – $4,500,000 – this one is arguably the most professionally quoted.

Surrey Hills, 14 Wandsworth Road. Ross Stryker (Jellis Craig) Under the Hammer $2,630,000 4 Bidders – Quote: $2,000,000 – $2,200,000

St Kilda West, 1&2/25 Park Street. Kaine Lanyon (Marshall White) Under the Hammer $2,515,000 4 Bidders – Quote: $2,000,000 – $2,200,000

South Yarra, 23 Howitt Street. John Bongiorno (Marshall White) Under the Hammer $2,325,000 4 Bidders – Quote: $1,900,000 – $2,090,000

 

For some it can be quote ‘m high, watch ‘m die – did that apply to any below?

Beaumaris, 9 Summerhill Road. Passed in $2,500,000 0 Bidders – Quote (ISP): $2,500,000 – $2,700,000

, 739 Hampton Street. Passed in $2,100,000 0 Bidders – Quote (ISP): $2,200,000 – $2,350,000

Malvern East, 1 Berrima Avenue. Passed in $2,050,000 0 Bidders – Quote (ISP): $2,000,000 – $2,200,000

Camberwell, 4 Ruyton Street. Passed in $4,200,000 0 Bidders – Quote (ISP): $4,200,000 – $4,600,000

Canterbury, 2a Marlowe Street. Passed in $2,950,000 0 Bidders – Quote (ISP): $2,900,000 – $3,100,000

Balwyn, 2 Kinsale Crescent. Passed in $2,300,000 0 Bidders – Quote (ISP): $2,300,000 – $2,500,000

Read all 29 James auction reports here


I read or heard a comment this week that it will take about 3 years for the market to get back to its previous peak.

Must be a different market to the one I’m in, as it has taken 3 months and the market has already, for a number of A-graders in the $2m to $5m range, got back to its previous peak.

Quoting is seen as a major strategic part in some agent armories right now – do you understand how to counter it?

VOLATILITY Strategy Number 2 – Offers Before

Buying or selling before (auction day) is all about risk v reward for both the buyer and the seller. It’s also in many cases about smart selling agent work.

We at James Buy Sell were involved in 3 “Befores” this week (two on the buying with Duane Woloweic and Campbell Ward and one on the selling management side with Kate Strickland. These are three high-quality agents and they all considered and acted in their client’s interests on befores.

The alternative was to run on agent auto-pilot to auction.

Why do it, why buy before and why sell before the auction?

It’s not all about money (securing is important), but actually, in the end, it is a fair bit about money – this week we paid above the agent quote on the two buys and on the sell management job, sold at the top end of the quote.

You buy before and pay above a duck’s price hoping to avoid a volcano and you would sell before below a volcano’s price, hoping to avoid a big duck or a lesser offer on auction day.

It’s a balancing act between higher or lower, selling or not, buying and missing…….risk v reward.

You sell before in volatile times because the agent says

  • your best buyer is head and shoulders above the rest or
  • you only have one buyer and to go to auction would be harmful transparency or
  • a buyer has given you a good offer and your focus is to sell, the offer is good, so why not…. bird in the hand.

You buy before in volatile times when

  • your budget is limited and you are prepared to pay a premium on the duck auction, knowing you can’t afford a volcano auction.
  • when you don’t believe the agent quote (by a mile) and you need to move on
  • when you have two alternatives

Check out the 29 auction results we covered today – this “before” strategy is worth millions of dollars each week – meaning we buy a lot of homes at auction and we may well have paid more if we had a been asked the question – do you want to buy before?

Auctions for all their plusses, by logic, still, only get a bit above the second-best price.

Auctions often don’t get the best price of the winner. Sometimes a bought before the auction is the best volatile price strategy.

Your agent and before auction offers.

Comments below are from the buy and sell point of view – our clients buy and our clients sell before the auction if it makes sense.

So when an agent says they are not accepting offers beforehand and they say this even before you as a buyer mention a figure – or they say buyers have to go through a very inflexible process when making an offer –  I would be encouraging you as a seller to consider another agent – your agent’s actions could be encouraging a duck auction, by removing buyers. Your agent could well be a turkey, presiding over your duck.

If your agent is shocked when nobody bids at your auction and has given you as a seller no warning, then it may be a duck auction run by a turkey. Did your agent have the hard talks with you, did your agent try and sell before?

A number of “high performing” sell agents put lots of effort into a listing (signing you the seller up) and then no work into finishing (signing good buyers up). You’ve got a turkey Mr and Mrs Seller.

Why would some selling agents not want offers before?

Some sell agents don’t want good offers before, as its more work for them to sell before, than to go to auction – meaning they actually have to think and work to get you a better price. They have to work on your job after they have listed it. Gobble, gobble, not great for you the seller if they think like that.

About this time the selling agent says “oh don’t listen to Mal he works for buyers and he is trying to get an advantage.”

True we work for buyers, we also work for many sellers (never both on the one transaction) and to sellers, we would counter the don’t consider selling before arguments with today’s auction and pass-in statistics.

A whopping 62% had one or fewer bidders or were sold before

This week and many other weeks, we have bought AND sold before auction.

Befores can work for both buyer and seller on the one transaction.

Good agents sell before when its right to do so and they run to auction when its right to do so.

Good agents do the work during a campaign by talking to buyers, so as they can advise a seller to go now or wait till auction.

Poor agents do not – they do not explore buyer offers, they just let an auction run and keep their focus on getting another listing!

Finally and yes true, there is a good argument to say you will get your (buyer or seller) best price at auction – BUT there is also an equally valid argument (proven time and again this weekend in the stats) that you (buyer or seller) can also get your worst price at auction.

 

Brighton, 53 Were Street. Quote Andrew Campbell (Marshall White) Bought before auction, $ undisclosed – Quote (ISP): $3,400,000 – $3,600,000

Brighton, 123 Cole Street. Kate Strickland (Marshall White) Bought before auction, $ undisclosed – Quote (ISP): $3,300,000 – $3,500,000

Black Rock, 3 Stevens Parade. Kate Strickland (Marshall White) Bought before auction, $ undisclosed – Quote (ISP): $2,350,000 – $2,500,000

Glen Iris (Stonnington), 64 Aintree Road. John Chartes (Thomson) Bought before auction, $ undisclosed – Quote (ISP): $2,100,000 – $2,310,000

Malvern East, 24 Nott Street. Fiona Ansell-Jones (Marshall White) Bought before auction, $ undisclosed – Quote (ISP): $2,250,000 – $2,450,000

Malvern East, 93 Brunel Street. John Manton (Marshall White) Bought before auction, $ undisclosed – Quote (ISP): $2,750,000 – $3,000,000

Read all 29 James auction reports here

Buy/Sell Before is seen as a major strategic part in agents armories right now – is it in yours?

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