May M2 Market starts with more volcanoes than ducks
Mal James
Buy Sell Agent
0408 107 988
mal@james.net.au
By every metric it has started stronger than it finished in the opening market in Feb/March.
It started stronger than expected.
Boroondara and Bayside was above expectations in terms of bidder numbers and clearance. Stonnington had very auctions over $2m.
It has for two years been rare that you had had more volcanoes than ducks ……. But we did today and ducks were very low at only 4 from 29 auctions.
Opening Market 2024 M1 Week 3
Bidderman
1.5
Stock
Average
Clearance
72%
Auctions Attended
29
Volcanoes
14%
Ducks
21%
May Market 2024 M2 Week 1 Today
Bidderman
2.0
Stock
Average
Clearance
76%
Auctions Attended
29
Volcanoes
17%
Ducks
14%
HAMPTON CLASSIC HOME FOR SALE NOW
4 Bedrooms, 3 Bathrooms, 2 Car Spaces
Close to Beach, Private Schools, Ready to move-in, Nothing to do + Pool
Flexible Settlement. Contracts available. Private 1 on 1 viewings
Shelter By The Bay: Simone Clarke (0400 304 111) Zali Reynolds (0422 576 049) Mal James (0408 107 988)
'Round the Auction Grounds This Week
2024M1 BAYSIDE
Bidderman
1.7
Stock
Average
Clearance
77%
2024M1 BOROONDARA
Bidderman
2.3
Stock
Average
Clearance
83%
2024M1 STONNINGTON
Bidderman
2
Stock
Average
Clearance
50%
Lets hear from our reporters on the ground today
Out and about in Port Phillip and Stonnington today, the auctions were a bit like the autumn weather—blowing hot and cold. My three auctions featured move-in-ready family homes, yet only one sold under the hammer. Large crowds gathered at each auction; however, most were there just to watch, with only one auction raising the heart rate. This was at the modern home located at 15 Mountfield Street, Malvern East. Three bidders, with bids ranging from $1,000 to $150,000, raced and then crawled to the final bid. There was a round of applause from the crowd and tears from the under-bidders as the hammer fell.
Today's snapshot of Boroondara had a bit of everything. I attended three completely different auctions: a "volcano" with a crowd atmosphere more akin to a boxing match than a property sale, a "duck" where a lonely tumbleweed wouldn't have been out of place, and a "squeaker" with a slow burn. While it would have made for an easy write-up if things had all gone one way or the other today, the market had other ideas. The hot and cold auras between auctions kept me guessing at the results, but the buzz before the "volcano" hinted at the upcoming fireworks.
Today, two auctions in Melbourne showcased starkly different atmospheres and outcomes. The first, at 21 Valentine Grove, Armadale, drew a crowd of 40, mostly curious neighbors. The atmosphere was subdued; after an initial vendor bid, the auctioneer, Joseph Ben-Danan, tried to energize the silent crowd, but only one bid was made before the property was passed in. Conversations among the crowd quietly resumed. In contrast, the auction at 74C Burke Road, Malvern East had a smaller but more intense crowd of 30. Auctioneer Walter Summons highlighted the local amenities and lifestyle, energizing the attendees. This resulted in vigorous bidding among the potential buyers, with small but fierce bids, and the competition palpable. Ultimately, one bidder prevailed, leaving two couples disappointed. This reflected a rare vibrancy in Melbourne's real estate scene.
Today didn't echo the rallying cry of markets past when 10 people might clamor for a block of land and $100,000 bids on family homes were a regular occurrence. With the summer vibe behind us, the feeling at the start of each auction, while not one of exuberance, was that buyers were present, at least at the auctions I attended. Bidders didn’t appear urgent. They weren’t apprehensive; "steady and measured" would be a fair description. They reached their limit and stopped. There were no hard-fought tussles. Bidding was comfortable up to the reserves and a bit beyond, and that was it. Auctioneers were happy not to linger.
State of the market, is it a butterfly or is it a bee? There’s bidders on the ground, it felt good to pick out the buyers from the crowd. The houses are there, and they are being bought - but the buzz is lacking. It feels like the bottom of the market; there’s “one bid” buyers watching to see if they can pick up something cheap. I thought the houses sold today went on the low side of my price expectations. And while cheap is never “cheap” in bayside, I mean, cheaper than in a frothy market. Maybe people are tired of life, a little jaded and uncertain? The market to me on first blush looked like pep but didn’t feel like it had any step behind it.
Biggest Auction Sale Today
BY THE BAY - BAYSIDE & PORT PHILLIP
2024 M1 Opening Market
Bidderman
1.2
Stock
Average
Clearance
64%
2024 M2 May Market Today
Bidderman
1.7
Stock
Average
Clearance
77%
Bayside/ Port Phillip – 13 auctions
Clearance: 77%
Bidderman: 1.69
BRIGHTON, 15 Moffat Street
SOI: $3,500,000 – $3,800,000
Sales Agent: Simon Wheeler – Buxton
Before auction: $undisc
Bidders: 1
BRIGHTON, 3 Meek Street
SOI: $4,400,000 – $4,700,000
Sales Agent: Campbell Butterss – Marshall White
Before auction: $undisc
Bidders: 1
BRIGHTON, 5 Lynch Street
SOI: $3,400,000 – $3,550,000
Sales Agent: Kate Strickland – Marshall White
Before auction: $undisc
Bidders: 1
MIDDLE PARK, 59 Park Road
SOI: $6,000,000 – $6,600,000
Sales Agent: Ben Manolitsas – Marshall White
Before auction: $undisc
Bidders: 1
ALBERT PARK, 47 Merton Street
SOI: $3,300,000 – $3,600,000
Sales Agent: James Nicolaou – James Nicolaou
Before auction: $undisc
Bidders: 1
HAMPTON, 24 Villeroy Street
SOI: $2,800,000 – $2,900,000
Sales Agent: Jenny Dwyer – Belle Property
Crowd: 60
Opening Bid: $2,800,000
On market: $3,075,000
Under the hammer: $3,250,000
Bidders: 4
Steve Tickell from is on the stage at 24 Villeroy street Hampton, where four bidders take the genuine opening bid of $2,800,000 past the reserve of $3,075,000 and on to a sale of $3,250,000.
HAMPTON, 3 Teddington Road
SOI: $2,200,000 – $2,310,000
Sales Agent: Nick Johnstone – Nick Johnstone Real Estate
Crowd: 100
Opening Bid: $2,200,000 VB
On market: $2,250,000
Under the hammer: $2,460,000
Bidders: 3
Nick Johnstone doesn’t waste any time getting matters underway in the auction today, although three parties are determined to thwart his pacey repartee. Without delay he opens the bidding on behalf of the vendor at $2,200,000, two bidders take it past the reserve of $2,250,000 and the third bidder joins the mix to bring a sale of $2,460,000 with much celebration from the large extended family bolstering the audience of about 100 people lining the street.
HAMPTON, 30 Imbros Street
SOI: $2,600,000 – $2,750,000
Sales Agent: Jenny Dwyer – Belle Property
Crowd: 40
Opening Bid: $2,600,000
On market: $2,780,000
Under the hammer: $2,871,000
Bidders: 4
Families gathered in the leafy street to battle out for this home. After a silent starts, hands flew. It seemed like everyone wanted this home to be there. It ended up in $1,000 bids and eventually sold to bidder 3.
HAMPTON, 12 Earlsfield Road
SOI: $2,200,000 – $2,400,000
Sales Agent: Robin Parker – Marshall White
Crowd: 50
Opening Bid: $2,200,000 VB
Passed in: $2,325,000
After auction: $2,420,000
Bidders: 4
Four bidders are encouraged by Robin Parker at the auction of 12 Earlsfield road, Hampton, as he opens with a vendor bid of $2,200,000. However the home is passed in at $2,325,000, and the winning bidder ushered inside for further negotiations. Sold after.
BRIGHTON, 15 Rothesay Avenue
SOI: $5,500,000 – $5,800,000
Sales Agent: Matthew Pillios – Kay & Burton
Crowd: 40
Opening Bid: $5,650,000 VB
Passed in: $5,700,000
Bidders: 1
About 40 people gather in the cup de sac to see Matthew Pillios offer the home at 15 Rothesay avenue Brighton for competition. There’s just one bidder who tops the opening vendor bid of $5,650,000 with a $50,000 rise and the home is passed in to him for further negotiations.
MIDDLE PARK, 18 Fraser Street
SOI: $3,400,000 – $3,640,000
Sales Agent: Oliver Bruce – Marshall White
Crowd: 85
Opening Bid: $3,500,000 VB
Passed in: $3,700,000 VB
Bidders: 0
The property was passed in and the large, quiet crowd dispersed.
SANDRINGHAM, 25 Sandringham Road
SOI: $2,500,000 – $2,700,000
Sales Agent: Scott Hamilton – Buxton
Crowd: 25
Opening Bid: $2,500,000
Passed in: $2,610,000
After auction: $undisc
Bidders: 1
A small crowd gather around the home to see Christian Hegarty offer it for competition and bidder one offers an opening bid of $2,500,000. A vendor bid is placed above it of $2,600,000, and bidder one obliges with an additional $10,000 however the home is passed in to her at $2,610,000 and everyone retreats from the cold afternoon wind.
SOUTH MELBOURNE, 24 Tribe Street
SOI: $2,500,000 – $2,650,000
Sales Agent: Max Mecuri – Jellis Craig
Crowd: 15
Opening Bid: $2,300,000 VB
Passed in: $2,300,000 VB
Bidders: 0
Small crowd with no bidding. The property passed in, with no one wanting the exclusive right to treat with the vendors.
Introducing Shelter by the bay Buyer Bank
These are buyers who have come across our off markets we are selling at Shelter By The Bay AND we have not been able to satisfy their needs. If you have a home that may fit below, please contact our agent directly. We will respect your privacy and these buyers we know to be genuine. Thank you for helping our buyers and possibly yourselves.
HAMPTON GOLDEN TRIANGLE: Looking for family home, budget $8m to $9m, land over 1400 swm or room for a court.
BRIGHTON EAST: Local family loooking for a ready to move in bigger home with a budget of $5m - needs to be close to schools.
6 MENZIES AVENUE BRIGHTON
5 Bedrooms, 5 Bathrooms, 8 Car Spaces
CLOSE TO ALL PRIVATE SCHOOLS. Ready to move-in, nothing to do, big garage, great floor plan, wonderful living spaces.
Close to beach, train and schools. Flexible Settlement. Contracts available.
Private viewings only: Stefan Whiting (0411 473 153) and Kym Williams (0435 906 485)
SOI @ $11m its sold, @ $10.5m we can talk.
BOROONDARA
2024 M1 Opening Market
Bidderman
1.8
Stock
Average
Clearance
61%
2024 M2 May Market Today
Bidderman
2.3
Stock
Average
Clearance
83%
Boroondara – 12 auctions
Clearance: 83%
Bidderman: 2.25
KEW, 45 Belmont Avenue
SOI: $4,900,000 – $5,300,000
Sales Agent: Hamish Tostevin – Marshall White
Before auction: $undisc
Bidders: 1
CAMBERWELL, 10 Mabel Street
SOI: $3,000,000 – $3,300,000
Sales Agent: Desiree Wakim – Marshall White
Before auction: $3,885,000
Bidders: 1
HAWTHORN EAST, 15 Cole Street
SOI: $3,100,000 – $3,400,000
Sales Agent: Sam Christensen – Anton Zhouk
Crowd: 65
Opening Bid: $3,100,000 VB
On market: $3,420,000
Under the hammer: $3,460,000
Bidders: 3
1980s build sees bidders waiting for a pause before showing hands. Three in at the restart steadily build to an “on the market” call.
HAWTHORN, 14 Robinson Road
SOI: $2,650,000 – $2,850,000
Sales Agent: Nicholas Franzmann – Marshall White
Crowd: 40
Opening Bid: $2,600,000 VB
On market: $2,810,000
Under the hammer: $2,900,000
Bidders: 5
Auction started off quiet, prompting auctioneer Doug MacLauchlan to open with a $2,600,000 vendor bid, then bidder 1 jumped in with $2,620,000, followed by four more bidders. Rapid fire bidding took the price to $2,810,000 where it was declared on the market, before the eventual sale price of $2,900,000.
CANTERBURY, 88 Mont Albert Road
SOI: $4,600,000 – $5,060,000
Sales Agent: Sophie Su – Kay & Burton
Crowd: 100
Opening Bid: $4,600,000
On market: $5,120,000
Under the hammer: $5,900,000
Bidders: 5
The expectant buzz before the auction opened heralded a breakneck series of bids. Attempted knockouts did little to eliminate competition. On-the-market being a foregone conclusion, the bidding stopped at $5,900,000 and the property was sold.
HAWTHORN, 7 Carrington Street
SOI: $2,700,000 – $2,900,000
Sales Agent: Hugo Rouffignac – Marshall White
Crowd: 70
Opening Bid: $2,700,000 VB
On market: $2,930,000
Under the hammer: $3,066,000
Bidders: 3
Auctioneer Andrew Gibbons opened with a vendor bid of $2,700,000; this encouraged three bidders to come forward with their offers. A frenzied bidding war brought the hammer down at $3,066,000.
ASHBURTON, 7 Maxwell Street
SOI: $2,700,000 – $2,970,000
Sales Agent: Jesse Matthews – Marshall White
Crowd: 50
Opening Bid: $2,700,000 VB
On market: $3,100,000
Under the hammer: $3,125,000
Bidders: 2
It took a while for two bidders to warm to the task. Once they did get going rises moved quickly to $3,000,000 and beyond. Wrapped up swiftly by the auctioneer when bidding reached $3,125,000
HAWTHORN EAST, 30 Leura Grove
SOI: $3,800,000 – $4,100,000
Sales Agent: Richard Winneke – Jellis Craig
Crowd: 40
Opening Bid: $3,450,000
On market: $3,760,000
Under the hammer: $4,060,000
Bidders: 3
After a slow start, two bidders emerged to bring the property on the market. A late third entrant snatched the keys.
CAMBERWELL, 4 St Andries Street
SOI: $4,100,000 – $4,500,000
Sales Agent: Mark Read – Jellis Craig
Crowd: 50
Opening Bid: $4,100,000 VB
Passed in: $4,200,000
After auction: $undisc
Bidders: 0
Open and closed on vendor bids with potential bidders waiting until after the auction. Sold after.
SURREY HILLS, 17 Kingston Road
SOI: $2,100,000 – $2,300,000
Sales Agent: James Tostevin – Marshall White
Crowd: 50
Opening Bid: $2,150,000 VB
Passed in: $2,150,000 VB
Bidders: 0
Auctioneer James Tostevin opened with a $2,150,000 vendor bid but was met with silence. After an interval, he returned to further encourage activity from the 50-strong crowd, but without success, causing the property to be passed in.
SURREY HILLS, 51 Broughton Road
SOI: $2,200,000 – $2,400,000
Sales Agent: Tim Heavyside – Heavyside
Crowd: 40
Opening Bid: $2,200,000
Passed in: $2,250,000 VB
Bidders: 1
An opening bid followed by a vendor bid at “two and a quarter” and then all falls quiet. Passed in.
CAMBERWELL, 15 Fairholm Grove
SOI: $2,800,000 – $3,000,000
Sales Agent: Jonathon O’Donoghue – Jellis Craig
Crowd: 50
Opening Bid: $2,400,000
Passed in: $2,660,000
After auction: $2,755,000
Bidders: 3
Straight out of the gate, Bidder 1 opened with $2,400,000 but a lull in activity then lead to an interval. Two more bidders entered the fray, however, their combined activity wasn’t enough to meet the reserve, therefore the property was passed in. Sold after.
9 EVANS ROAD KEW
STONNINGTON
2024 M1 Opening Market
Bidderman
1.3
Stock
Average
Clearance
64%
2024 M2 May Market Today
Bidderman
2
Stock
Average
Clearance
50%
Stonnington – 4 auctions
Clearance: 50%
Bidderman: 2
MALVERN EAST, 74C Burke Road
SOI: $2,450,000 – $2,650,000
Sales Agent: Walter Summons – Belle
Crowd: 30
Opening Bid: $2,450,000
On market: $2,750,000
Under the hammer: $2,801,000
Bidders: 3
Auctioneer Walter Summons had barely finished his introduction when an opening bid was placed for $2,450,000. Two more bidders joined the race resulting in a final bidding war of $1000 bids before the property sold to Bidder Three for $2,801,000.
MALVERN EAST, 15 Mountfield Avenue
SOI: $3,300,000 – $3,600,000
Sales Agent: Ash Howarth – Marshall White
Crowd: 85
Opening Bid: $3,300,000 VB
On market: $3,800,000
Under the hammer: $4,100,000
Bidders: 3
After an initial quiet start, three bidders raised their hands at 15 Mountfield Avenue today. Bidder two was tenacious and after bids ranging from $1000 to $150,000, secured the keys to a round of applause.
MALVERN EAST, 57 Ardrie Road
SOI: $4,000,000 – $4,400,000
Sales Agent: Daniel Wheeler – Marshall White
Crowd: 90
Opening Bid: $4,000,000 VB
Passed in: $4,025,000
Bidders: 1
The rustling of leaves was the only sound when Auctioneer Daniel Wheeler called for bids. After a quick break and another call for bids, the property was passed into the sole bidder.
ARMADALE, 21 Valentine Grove
SOI: $2,000,000 – $2,200,000
Sales Agent: David Volpato – Marshall White
Crowd: 40
Opening Bid: $2,000,000
Passed in: $2,025,000
Bidders: 1
Auctioneer Joseph Ben-Danan welcomed a crowd of 40 to the auction of 21 Valentine Grove Armadale. Mr Ben-Danan opened the bidding placing a vendor bid of $2,000,000. The property was passed in to the sole bidder for $2,025 000.
Definitions & Data Points
NEW TO JAMES BUY SELL? WELCOME – THE JARGON OF 4 SEASONS and 100 AUCTION TESTS: 100 Auction Test is where we randomly select Top End homes before they go to auction and then we turn up and report on all results, so as you can get a true picture of the current Inner Melbourne Top End Market. We do it 4 times a year in the major markets.
Opening Market M1 usually sets a direction till Easter (sometimes the whole year)
May Market M2 post Easter leading into Winter trends – capricious market usually.
Spring Market M3 is Footy Finals and Pre-Cup – a major buy sell season. Can see a market turnaround either way, coming out of winter.
Christmas Market M4 is from November till Santa comes. Often the hardest market to sell in, due to oversupply relative to unsatisfied demand.
Demand – Bidderman. How many bidders per auction? A very accurate measurement of market depth when taken over a wide sample. Number of Bidders / Number of Auctions.
1 bidder average – Falling Market. 2 bidders – Rising Market. 3 bidder average – On Fire
Supply – Stock Levels. It’s a nuanced opinion measurement, more so than scientific, as there can be a flood of unrenovated homes, but the market wants ready to move in.
Clearance Price % – Many data points give exaggerated readings as agents choose to leave out the bad news (unsolds). We choose the sample before auction and track down every result. The higher the clearance rate, the more agreement between buyer and seller on price and if Bidderman is also strong this shows prices are rising.
Measurements: Under 60% falling. 60-70% some stability but easing if below 65% consistently. 70%-80% rising. 80%+ On fire.
GLOSSARY
PPP’s – All homes and all buyers have 3 characteristics. A good deal for a buyer is when their PPP’s match the homes PPP’s.
Position (land location) + Property (building) + Price = 3P’s. A buyer can adjust all three to get what they really, really want and to meet the market.
Whilst a home has 3 P’s, a seller has only 1 P they can adjust – Price. Although a good seller and agent can, prior to the sale, affect the P of Property through Presentation.
Overall there are 3P’s and Position is most often, the most important.
A-Graders – If the home’s PPP’s are desirable to many in the market we call that an A-Grader. However, it’s all the 3P’s that need to be desirable. You can have a great location, great building and be overpriced in which case you have only 2 desirable P’s – we call that a B-Grader. C-Graders have 1 or no desirable PPP’s and the only usual desirable P is Price – a weak one – this is why C-Graders are poor investments.
Volcanoes – When the market is hot you see increasing numbers of 4 or more bidders on homes. We call that a volcano. 1 or no bidders we call a duck.
Wounded Underbidders – Buyers who miss, go harder (more money) next time to avoid the hurt of missing out again. When there are multiple unhappy buyers, who have missed multiple times (wounded underbidders), the market rises quickly.
Cautious Buyers – Non-Bidders – Potential buyers who see lots of pass-ins, tend to not want to bid because their fear of overpaying is greater than their desire to buy and get out of the market.
Stales – Number and length of time a property remains unsold. The older the stale, the weaker the price (as a general rule). The more stales, the weaker the market as they clog up the market creating an oversupply.
Off-market – Homes that are for sale but are not advertised in the mainstream media like realestate.com.au. Over say $5 million there are considerably more homes off market than on market. More than ½ the homes we buy and sell are off-market.
Pre-market – Homes that some agents say are Off-market. Pre-market homes are homes coming to market but are not yet advertised and are often not really for sale at the moment.
On-market – usually refers to homes sold with major advertising say on Domain or realestate.com.au
Not for sale (and the 4 ducks) – there are many homes that are also said to be Off-market or Pre-market homes that are not really for sale. Why? Seller is testing the market. Agent is testing the market. Agent has no work. Seller wants a free valuation or some company.
For a home to be really for sale off-market, it needs to pass the 4 Duck Test.
- Agent Authority 2. Contract of Sale 3. Asking Price 4. Easy Access.
Good ól Boring Process – When you are cooking a cake – do you get your best results by making up the ingredients, the amounts and throwing them into together, hoping for the best? If you do great, but I’m not hungry. A good recipe is a good process. And in property a good recipe is 3 Questions starting with what do I really really want? If you can’t work that out, then engage a good agent. When you answer that question, you go to the 2nd and 3rd questions and make good decisions. Good decisions lead to good outcomes – for you.
Market Prices – Every price is supposedly a market price. It’s a lazy concept.
Market price is a living organism – lets imagine it’s like a human. The market is the blood, the circulatory system. The PPP’s are the bones, the skin, the main organs and we agents and agent marketing are the lipstick, perfume, clothes. All 3 – blood, bones and lipstick make up a price and its attractiveness, it’s not just the market.
Market Values – Values are opinions. All opinions have vested interests and biases. What the council, the bank, the agent, the buyer, the seller values a home at will all be different.
Last year two valuers came to a home I was looking to refinance – $4m home – 3 weeks apart the valuations were approx. $700,000 different – that’s qualified valuers – same criteria.
Market Value v Market Price – One is an opinion before the deal and one is the actual result after the deal.
Quote Range: It is thought to be an agent estimate of final price – it is not. See Quoting
Under the Hammer: is when a home is sold to a buyer under the auctioneer’s hammer that is on the street or in the home in front of crowd when we says sold – it can be just clapping his hands together – under the hammer refers to the old gavel now only sometimes used.
On the market: (different from on-market) is a colloquial term that an agent or auctioneer uses to state we are now at a level that it will be sold (now) even if there is no more bidding.
What affects markets?
Demand and Supply – yes sir re – that is what really affects markets.
Some Key Supply Variants
- Government restrictions
- Lag Times in supply of demand changes
- Builders and materials
Some Key Demand Variants
- Money – Bank credit and community wealth
- Overseas Buyers, Interstate Buyers, Migration
- Stock Markets and World Events
Predicting the Future
Economists, banking leaders and other market predictors are like horse race “experts” – entertaining but of little long-term value. In 2017, 2018, 2019, 2020 the pundits on where the market was going got it wrong, dead wrong 4 from 4. A coin toss should have got at least 2 from 4. The only pundit we listen to with respect, is the one that says they don’t really know.
Rising / Falling / Easing – Humans are herd animals.
When there are a number of pass-ins the market eases. When combined with increasing stock coming on and more stales, the market falls more sharply.
Increasing numbers of wounded underbidders and less stock the market edges up – when wounded underbidders combine with loose bank lending and tight stock and increasing migration, then market prices begin to run away.
A home can easily be 5% more or less in a week (1 bidder drops away) and parts of the market can change by 5% in a month. A property can change by 10% during the length of an auction campaign. It is very similar to the ASX in terms of its variability – it’s just not as transparent.
Individual property prices are very fluid, they are far from fixed as many think and claim.
Market Conundrum – often the best time to buy or sell is when everybody else doesn’t want to – eg counter to the markets.
Buy or sell timing maxims we live by? Assuming it’s an A-grader. If you really, really like it, buy now. If you really, really like it never sell.
Which brings us back to Doe. Doe is dear, a female deer. This is why 10,000 people read Marketnews.com.au. It’s the only property thing that makes no sense (smiley face).
Underquoting – is when an advertised price (an agent quote) is below one of
- Agent estimates of value or
- A written buyer offer or
- The Vendor reserve
An agent quote is not a valuation, it is not a fixed sticker price – a quote is seen by my industry as a vehicle to attract bees (buyers) to the honey (home) and that’s ok, if legal.
However underquoting is unethical but widespread. Underquoting has been endemic in the last week of an auction campaign in the markets of 2015, 2016, 2019, 2020 and 2021 – a new falling market may be different.
Underquoting is a badge of honour for some selling agents – for god sake there is cheering from the rafters with every $1,000,000 over reserve. It’s celebrated not put into balance or condemned in the media. Please note sometimes genuine market forces create $1,000,000 over reserve when it’s not an underquote (celebrate then) – but when it is happening week in and week out and to the same people and same companies, then they must be very unlucky or incompetent agents or they are serial underquoters.
Underquoting can work in a rising market – work for the agent and seller that is, not the buyers.
Underquoting can hurt inexperienced buyers in 4 bidder auctions BUT
In many instances in falling markets and with B and C Graders it actually hurts the sellers – e.g. duck or 1 bidder auctions.
Underquoting is fixable with a buyer education program as to what a quote is and what it can and cannot do AND moveable (not fixed) step up and step down written legal quoting AND timely stated auction reserves say ? days out from an auction AND mostly an industry desire, but there is minimal desire within my industry or the CAV or the government.
Legal Step Quoting: A term we invented to explain moves/strategies in quoting. We used to have a problem with it, but now we see it as sensible practise on behalf of the seller – so long as it is down legally and actually done. Step quoting if done legally is simply moving the written quote during the campaign in line with offers, changing or firming vendor reserves and any changing agent’s opinion of likely value.
Illegal Step Quoting: Is when the agent has a written quote, then tells you a higher quote on the phone and then an even high quote after you offer.
Legal Quoting: It is legal (and we consider ethical and professional) for the agent to quote above the seller’s reserve providing it meets the other two key criteria.
Legal Quoting: When it’s on the market and unexpected market forces take it well past expectations. Our only argument is how often can that happen to one agent or agency before it becomes obviously illegal.
Quoting even with the best intentions (and we have them) is not a perfect science, just as market valuations and your buying estimates are not.
James Buy Sell Process – Ethical quoting brings more real buyers and sellers to you:
Early Campaign: We quote to attract buyers but not below what we reasonably think the home may go for. Where the seller has a firm price, we do not quote below that price either.
We suggest the seller keeps an open mind on reserve (early days) if their main focus is to sell.
If the seller has a firm fixed reserve and it’s too high, then not only will he or she be unlikely to sell but he or she will get no feedback on price and therefore he or she could compound the selling issue down the track – a double negative for selling – eventually getting a lower price.
Middle of Campaign: We may Step Quote (change the quote, preferably up, but sometimes down to more accurately represent the sellers thought on possible reserve and/or feedback from buyers and/or if we have had an offer than has not been accepted)
Advertised final week of Campaign: We genuinely try and have the quote reflecting a seller reserve and where James Buy Sell now thinks the majority of buyers are. Please note: it is not an exact science, and we cannot predict all buyers (often buyers do not tell the door agent anything or say lower amounts – both sides can be guilty of misrepresentations).
We care about buyers and our quoting reputation. If you do a building inspection in the last week of the campaign and the reserve ends up outside the quote, please ring us and we will probably refund any professional building inspections up to $600.
The current Underquoting enquiry’s timing relates to a forthcoming election, is running into a falling market where underquoting is less noticeable.
The best way to deal with underquoting (currently) is through your own quality research or a quality buyer agent or if selling then an ethical selling agent.
