$4m to $65m Buy Sell
Global Shelter: When your home needs an international reach and deserves an international strategy
18 Kintore Camberwell: Hammer @ $6,180,000 Bidderman 2
Quote: $5,300,000 to $5,800,000.
Auctioneer: Mark Josem of Jellis Craig. Crowd: 66.
Opening Bid: $5,300,000 vendor bid. On the Market: $6,010,000. Under the Hammer: $6,180,000
Two bidders revealed themselves from the get-go. They battled strongly until a vendor referral was called just shy of an on market call. Exchanges in $10,000 rises at the restart saw the property announced on the market as the two bidders pushed on until the very last. Report and Photo: Randall
Last Sold 2014 - Bidderman 7
$2,685,000
Today 2024 - Bidderman 2
$6,180,000
From Auction Brochure: In Camberwell’s highly prized Tara Estate, exquisite “Talarno” has been architect-renovated to provide a family home of quintessential luxury and complete convenience. Set amongst beautifully landscaped gardens on a large 803sqm parcel, its original proportions retain the ornate detail of the Federation Queen Anne design.
2014 floor plan
2024 floor plan
Capital Growth Rate Naked Eye
8%
Capital Growth Rate with Reno
3-4%
Today, we were out and about, collecting intel on a number of auctions for our buy-sell clients, including the most significant one at 18 Kintore Street Camberwell.
We thought it would be interesting to compare the market conditions when it last sold (in 2014) to now. We were at both the 2014 and 2024 under the hammer auctions.
In 2014, the market was starting to heat up following a difficult period, largely due to the Australian dollar parity in 2012. Whereas in 2024 at the Top End, we have been in a slow decline since Cup Day 2021.
Consider the differences in the clearance rate, Bidderman, and volcano rate.
What has happened to 18 Kintore over the last decade in terms of capital growth?
At first glance, capital growth appears to be 8% compounded per annum. However, if we account for the renovation, which seems to have cost between $1M and $2M, the actual capital growth rate is half that, between 3 and 4% annually.
With next week’s M3 2024 Spring market and our 100-auction test, we thought it would be helpful to recap the key elements of the price sandwich we’ve focused on over the last few weeks.
To illustrate this practically, we’ve chosen a real-life story, though we could have chosen many others. We met these clients in 2013/2014 at a $4M home in Hawthorn and ended up managing a buy-sell transaction worth over $60M, involving four agents in both Melbourne and Sydney less than a decade later.
In the buy-sell business, you learn a lot from people who are much smarter than you regarding money. Here’s what we’ve learned from this very smart couple.
What we learnt in a decade from Marie and Peter: $4m to $65m
- Prep is Key: We knew them for their meticulous approach, Marie and Peter (not their real names) always ensured thorough market research and property evaluations were conducted. This level of preparation was crucial in making informed decisions.
- Pivot: They had an ability to make quick adjustments based on evolving market conditions and they could act decisively – but they never rushed and did a lot of “sleep tests”.
In Melbourne’s Top End, being able to pivot strategies to respond to unexpected developments or shifts in buyer and seller behaviour is a real plus.
- Maximise Strengths: They consistently played to their strengths. This ability to read and understand the nuances of the market was brilliant. I learnt a lot from them on timing.
- Situational Awareness: Their sharp sense of timing in the dynamic Melbourne market, proved to be a critical advantage. Bought before market lift. Sold at height of market strength.
Capital Growth Rate on main home was double what it would have been if they bought 2 years later (2016) and sold 2 years later (2024).
- Focus on Fundamentals – A-Graders: The properties they selected were always strong in the core fundamentals—Price, Property Type, and Position (PPP). This focus ensured that their investments were sound and positioned for success. Toorak, limited reno, market price when buying and ditto when selling.
- Discipline and Consistency: Their approach was marked by discipline and consistency, ensuring that every step they took in the real estate process contributed to their overall success. As we said, they talked a lot to each other, consulted with us regularly and were never rushed.
- Value Every Role: Recognising the importance of every contributor, they valued the roles of all team members, from agents to contractors. We found Marie and Peter had really good manners, considering their wealth, and we think they got the best treatment as a result. They both expected us to perform above average. We were always well paid and received bonuses, which were appreciated.
- Long-Term Thinking: Always planning with the future in mind, they made decisions that would benefit them in the long run.
- Continuous Improvement: By constantly refining their strategies and staying informed about market shifts, they ensured they stayed ahead in Melbourne’s competitive real estate market and that was the same when they moved to Sydney.
We still talk, they are a solid family.
Consider the price you pay or are paid for a home as a sandwich:
Understanding this ‘price sandwich’ helps clarify that when things are down you get mostly zero from the market and therefore your upside depends on the quality of the transaction’s execution and what you are buying or selling.
Bottom Layer (Market Conditions): For buyers, it’s the foundation—like a soft, spongy sourdough, plenty of stock and opportunity. Currently, for sellers, it might be less appealing, akin to stale supermarket white bread with more goodness in the wrapper than the contents. It can present as a premium from -10% to +10% of your price. On $5,000,000 that’s a range of $1,000,000.
Middle Filling (Property Features): This is the core of your property’s value, the PPP’s (position, property, price) and is approximately 80% of your price (give or take). On $10 million your home is at least $8 million on its fundamentals.
Top Layer (Transaction Factors): Comprising, amongst other things, the agent’s expertise, sales, and pricing strategies, and the element of luck—all similar to the icing on a cake, and is also about -10% to +10% on your price. $600,000 range on $3 million.
Buy and sell a $10 million home to a $5 million one or vice-versa and the range between good and bad, outside the fundamentals, could be $3 million in the bank.
