Stats can be deceptive! Bidderman says early Spring easing
Early Spring 2023M3 Begins
Mal James
Buy Sell Agent
0408 107 988
mal@james.net.au
There was a noticeable change in the weather this week, signaling the arrival of spring. Wasn’t it wonderful?
The auction clearance rate for the Top End market stands at 70%, but this might be misleading. It paints a picture of a solid market, yet only a week into our 3-week Spring 100 auction evaluation, there are emerging doubts.
The market appears to be softening, both on and off the auction block.
Today, we attended 37 auctions, specifically properties priced above $2 million. Although our choices were constrained by the limited availability, our sample was sufficiently large for trustworthy analysis. Interestingly, the current shortage of properties has become the norm post-Covid.
A 70% clearance rate might seem impressive, but the Bidderman metric, which measures bidders per auction, hints at a decline.
It’s commendable that out of every 10 properties, 7 sold. Agents are adeptly managing expectations. Only 5 out of the 37 auctions lacked bidders, even though the average number of bidders was just 1.4. Yet, how can there be a solid clearance rate when only 11 of the 37 auctions had competitive bidding? Yep, less than 30% were true competitive auctions. A reason? Nine properties were purchased before their respective auctions, meaning 25% never even reached the auction stage. This percentage increases when considering the 2 sellers who backed out prior to the day of the auction.
What does this pre-auction buying trend indicate? The market could be surging with keen buyers or decelerating due to knowledgeable agents and sellers. The reality leans towards the latter. When there’s only one potential buyer, street auctions become tricky. Auctions work best when a lone bidder believes competition exists. Many agents believe creating a sense of competition before an auction is more effective than revealing a lack of interest afterward.
This trend gives an illusion of market depth with a high clearance rate, obscuring the true scenario: declining buyer interest and a lack of urgency. The current interest rate regime feels like the key reason and is now biting at higher price levels where mortgages are required.
Bidderman, which accurately reflects market depth, shows a decline from 1.8 in May to 1.4 now. Bidderman is a dependable short-term market barometer. At present, it highlights market thinness, save for high-quality, reasonably priced properties.
As always, market conditions change weekly.
Boroondara (Inner East) continues to shine, though it’s less radiant than in May.
Spring 2023’s market has commenced on a muted tone, with sellers’ tactics outweighing buyer excitement.
With a potential influx of properties and promising days ahead, everyone hopes the Spring 2023 market analysis will conclude positively, echoing the Pies’ remarkable game last night. But that requires a marked turnaround from this week’s patterns.
This little guy/girl landed on my car as I pulled into home after auctions today. Spring. Lovely.
Opening Spring Stats (today)
Bidderman
1.4
Stock
LOW
Clearance
70%
Auctions Attended
37
Ducks
5
Volcanoes
3
Biggest Auction
HAWTHORN, 61 Wattle Road
SOI: $5,000,000 – $5,500,000
Sales Agent: James Tostevin
Crowd: 45
Opening Bid: $5,200,000 VB
On the market: $5,450,000
Under the hammer: $5,725,000
Bidders: 3
A decent crowd spilled onto the street and along the driveway. 3 bidders fought it out, the property sold to bidder 3 under the hammer
UnderQuoting Back in The News
What we saw TOP END today
INNER EAST:
All under the hammer sales were above the quote – that could be said to be market forces.
The strongest auction was $800,000 over the quote, but was on the market at the quote and was a volcano with 5.
The biggest action was on the market within the quote and sold under the hammer < 5% over quote
No pass-ins outside the range of the quote.
VERDICT: OVERALL SEEMINGLY FAIR QUOTING
STONNINGTON:
Nothing passed in above the quote
One auction: Quote was $2,800,000 – $2,900,000 Auctioneer placed a vendor bid of $2,900,000. Four bidders joined the race and the property was declared on the market at $3,175,000. The property sold under the hammer for $3,450,000.
VERDICT: OVERALL SEEMINGLY FAIR QUOTING
BAYSIDE:
2 cases of quoting where there was bidding but a property was passed-in over the quote
VERDICT: QUOTING MAY BE AN ISSUE
Boroondara
Camberwell Canterbury Glen Iris Hawthorn Hawthorn East Kew
May M2
Bidderman
2.1
Stock
LOW
Clearance
80%
Spring Early M3
Bidderman
1.6
Stock
LOW
Clearance
76%
Boroondara (17 Auctions)
Clearance: 76%
Bidderman: 1.58
CAMBERWELL, 18 Laxdale Road
SOI: $2,000,000 – $2,200,000
Sales Agent: Sue Wooldridge – Jellis Craig
Before auction: $undisc
GLEN IRIS, 37 Welfare Pde
SOI: $2,100,000 – $2,300,000
Sales Agent: Jesse Matthews – Marshall White
Before auction: $undisc
KEW, 11 Ridgeway Avenue
SOI: $3,500,000 – $3,750,000
Sales Agent: James Tostevin – Marshall White
Before auction: $undisc
CANTERBURY, 39 Maling Road
SOI: $2,000,000 – $2,200,000
Sales Agent: Geordie Dixon – Jellis Craig
Before auction: $2,700,000
GLEN IRIS, 1 Ventich Street
SOI: $3,900,000 – $4,290,000
Sales Agent: Ash Howarth – Marshall White
Before auction: $undisc
ASHBURTON, 53 Gloucester Road
SOI: $2,000,000 – $2,200,000
Sales Agent: Mike Millington – Shelter
Crowd: 45
Opening Bid: $1,900,000
On the market: $2,450,000
Under the hammer: $2,580,000
Bidders: 4
The auction started quickly, before you knew it there was 4 bidders in the race. In contrast towards the end, 2 bidders limped to the finish line with $1,000 bids back and forth. The property eventual sold under the hammer.
CAMBERWELL, 13 Kirkwood Drive
SOI: $2,100,000 – $2,300,000
Sales Agent: Rebecca Scanlon – Jellis Craig
Crowd: 40
Opening Bid: $2,100,000 VB
On the market: $2,375,000
Under the hammer: $2,421,000
Bidders: 2
A quick auction this one, with two bidders competing for the property which saw a sale price of $2,421,000.
CANTERBURY, 12 The Ridge
SOI: $3,900,000 – $4,290,000
Sales Agent: Walter Dodich – Kay & Burton
Crowd: 60
Opening Bid: $3,900,000 VB
Passed in: $3,950,000
Sold After: $undisc
Bidders: 1
A referral of a vendor bid at $3,900,000 prompted a live bid of $3,950,000 to pop up at the restart. Passed in on the single bid. Sold after.
GLEN IRIS, 23 Tower Hill Road
SOI: $2,100,000 – $2,300,000
Sales Agent: Michael Rosano – Fletchers
Crowd: 15
Opening Bid: $2,200,000
Passed in: $2,200,000
Bidders: 1
A small crowd gathered, and with only 1 bid the property was passed in.
SURREY HILLS, 18 Albany Crescent
SOI: $2,200,000 – $2,420,000
Sales Agent: Spring Chen – Fletchers
Crowd: 100
Opening Bid: $2,200,000
On the market: $2,500,000
Under the hammer: $3,285,000
Bidders: 5
This auction saw rapid-fire bidding between a total of 5 bidders with the hammer eventually falling on $3,285,000.
HAWTHORN, 61 Wattle Road
SOI: $5,000,000 – $5,500,000
Sales Agent: James Tostevin – Marshall White
Crowd: 45
Opening Bid: $5,200,000 VB
On the market: $5,450,000
Under the hammer: $5,725,000
Bidders: 3
A decent crowd spilled onto the street and along the driveway. 3 bidders fought it out, the property sold to bidder 3 under the hammer
CAMBERWELL, 25 Orrong Crescent
SOI: $3,400,000 – $3,600,000
Sales Agent: Peter Vigano – Jellis Craig
Crowd: 80
Opening Bid: $3,400,000 VB
Passed in: $3,450,000
Sold After: $3,525,000
Bidders: 1
A couple of vendor bids to open then a lengthy vendor referral pauses the auction. One live bid squeezed out at the restart. Sold after.
HAWTHORN EAST, 14 Loch Street
SOI: $2,750,000 – $2,950,000
Sales Agent: Sam Christensen – Anton Zhouk
Crowd: 40
Opening Bid: $2,850,000
Passed in: $2,850,000
Sold After: $3,100,000
Bidders: 1
One genuine opening bid was enough to secure exclusive negotiating rights. Sold after.
KEW, 176 Peel Street
SOI: $3,300,000 – $3,600,000
Sales Agent: Alex Broque – Marshall White
Crowd: 20
Opening Bid: $3,300,000 VB
Passed in: $3,300,000 VB
Bidders: 0
No bids from the smallish crowd and the property was passed in.
GLEN IRIS, 51 Kerferd Road
SOI: $2,300,000 – $2,500,000
Sales Agent: Zali Reynolds – Shelter
Crowd: 60
Opening Bid: $2,300,000 VB
Passed in: $2,300,000 VB
Bidders: 0
Auctioneer Mike Millington opened and closed on a vendor bid before passing the property in.
HAWTHORN EAST, 16 Westley Street
SOI: $3,300,000 – $3,500,000
Sales Agent: Peter Vigano – Jellis Craig
Crowd: 40
Opening Bid: $3,250,000
Passed in: $3,350,000
Bidders: 2
A bid from a couple got the auction away quickly but a vendor bid soon rounded up to $3,300,000. A second bidder weighed in at $3,350,000 and here the home passed in.
MONT ALBERT, 5 Victoria Cres
SOI: $3,000,000 – $3,300,000
Sales Agent: Tim Heavyside – Heavyside
Crowd: 80
Opening Bid: $3,000,000
Passed in: $3,265,000
Sold After: $undisc
Bidders: 2
Two bidders wanted it, although the amounts they offered quickly fell to $10,000 and then $5,000 rises after the start. Passed in to the initial bidder. Sold after.
Stonnington
Armadale Malvern Malvern East Prahran Richmond South Yarra Toorak
May M2
Bidderman
1.3
Stock
LOW
Clearance
65%
Spring Early M3
Bidderman
1.25
Stock
LOW
Clearance
63%
Stonnington (8 Auctions)
Clearance: 63%
Bidderman: 1.25
MALVERN EAST, 15 Emo Road
SOI: $2,000,000 – $2,200,000
Sales Agent: Daniel Wheeler – Marshall White
Before auction: $undisc
MALVERN EAST, 28 Forster Avenue
SOI: $2,700,000 – $2,800,000
Sales Agent: Daniel Wheeler – Marshall White
Before auction: $undisc
MALVERN EAST, 148 Darling Road
SOI: $2,000,000 – $2,200,000
Sales Agent: Jack Moss – Marshall White
Crowd: 13
Opening Bid: $2,000,000 VB
Passed in: $2,005,000
Bidders: 1
A last-second $5,000 bid was welcomed to the top spot in an otherwise silent auction.
ARMADALE, 14 Horsburgh Grove
SOI: $4,200,000 – $4,600,000
Sales Agent: Gowan Stubbings – Kay & Burton
Crowd: 50
Opening Bid: $4,500,000
Passed in: $4,500,000
Sold After: $undisc
Bidders: 1
An immediate start from the crowd. The lone bidder opened and closed the auction almost before it could begin. Sold after.
PRAHRAN, 44 Perth Street
SOI: $2,100,000 – $2,300,000
Sales Agent: Nathan Waterson – Jellis Craig
Crowd: 40
Opening Bid: $2,150,000
On the market: $2,315,000
Under the hammer: $2,366,000
Bidders: 2
Two bidders were quick out of the gate as soon as Auctioneer Nathan Waterson finished his opening spiel. After a swift exchange of bids, the hammer fell with bidder two taking the keys.
MALVERN, 89 Stanhope Street
SOI: $2,800,000 – $2,900,000
Sales Agent: Andrew Hayne – Marshall White
Crowd: 100
Opening Bid: $2,900,000 VB
On the market: $3,175,000
Under the hammer: $3,450,000
Bidders: 4
The bidding was swift to commence once Mr Hayne placed a vendor bid of $2,900,000. Four bidders joined the race and the property was declared on the market at $3,175,000. The property sold under the hammer for $3,450,000.
MALVERN, 12 Milton Parade
SOI: $2,500,000 – $2,750,000
Sales Agent: Fraser Cahill – Marshall White
Crowd: 12
Opening Bid: $2,750,000 VB
Passed in: $2,750,000 VB
Bidders: 0
Auctioneer Fraser Cahill opened and closed the bidding placing a sole vendor bid. The property was passed in for $2,750,000.
GLEN IRIS (Stonnington), 49 Dorrington Avenue
SOI: $2,500,000 – $2,700,000
Sales Agent: Bill Xian – Abercromby’s
Crowd: 25
Opening Bid: $2,450,000 VB
Passed in: $2,450,000 VB
Bidders: 0
With no crowd participation, the property was passed in.
Glen Iris family home - multi agent on-market
Elsternwick - multi agent on and off-market
Bayside & Port Phillip
Albert Park Brighton Brighton East Elsternwick Elwood Hampton Middle Park
May M2 2023
Bidderman
1.6
Stock
LOW
Clearance
58%
Spring Early M3
Bidderman
1.2
Stock
LOW
Clearance
67%
Bayside/Port Phillip (12 Auctions)
Clearance: 67%
Bidderman: 1.16
ELWOOD, 9 Wave Street
SOI: $2,000,000 – $2,200,000
Sales Agent: Jesse Raeburn – Whitefox
Before auction: $undisc
BEAUMARIS, 129 Tramway Parade
SOI: $2,000,000 – $2,100,000
Sales Agent: Romana Altman – Buxton
Before auction: $undisc
ELSTERNWICK, 34 Riddell Parade
SOI: $3,300,000 – $3,600,000
Sales Agent: Daniel Ashton – Biggin & Scott
Before auction: $undisc
BRIGHTON – Changed method
ST KILDA – Changed method
ALBERT PARK, 11 Foote Street
SOI: $2,350,000 – $2,550,000
Sales Agent: Ben Manolitsas – Marshall White
Crowd: 40
Opening Bid: $2,500,000 VB
Passed in: $2,605,000
Sold After: $undisc
Bidders: 2
After no initial bids auctioneer opened with a vendor bid of $2,500,000. 2 bidders entered but the property was passed in at $2,605,000 to bidder 2.
BRIGHTON EAST, 22 Sunlight Crescent
SOI: $2,450,000 – $2,550,000
Sales Agent: Leeanne Porter – Buxton
Crowd: 50
Opening Bid: $2,450,000 VB
Passed in: $2,500,000
Sold After: $undisc
Bidders: 1
Only one bidder emerges as John Clarkson from Buxton offers the home for competition. He opens the bidding at $2,450,000 and the lone bidder adds $50,000 and is ushered inside afterward when the home is passed in. Sold after.
BRIGHTON EAST, 6 Davies Street
SOI: $3,300,000 – $3,500,000
Sales Agent: Robert Eierwies
Crowd: 70
Opening Bid: $3,200,000
On the market: $3,515,000
Under the hammer: $3,610,000
Bidders: 3
Anthony Molinaro from O’Brien real estate had agents running between various parties as the opening confident bid at $3,200,000 rose between three bidders, past the reserve called at $3,515,000 and to the eventual winner at $3,610,000. The crowd of about 70 applauded the winner as he was congratulated by family in the crowd.
ELWOOD, 53 Addison Street
SOI: $2,100,000 – $2,150,000
Sales Agent: Kylie Block – Buxton
Crowd: 30
Opening Bid: $2,100,000 VB
Passed in: $2,125,000 VB
Auctioneer placed an initial vendor bid of $2,100,000. With no additional bids, the auctioneer placed a second vendor bid of $2,125,000. It was passed in.
BLACK ROCK, 22 Arkaringa Crescent
SOI: $3,350,000 – $3,500,000
Sales Agent: Matthew Pillios – Marshall White
Crowd: 55
Opening Bid: $3,450,000 VB
Passed in: $3,650,000
Sold After: $3,700,000
Bidders: 2
Enthusiastic Auctioneer Matthew Pillios passed in the property to the second bidder and negotiations moved inside. Sold after.
PORT MELBOURNE, 57 Swallow Street
SOI: $3,000,000 – $3,300,000
Sales Agent: Kaine Lanyon – Marshall White
Crowd: 40
Opening Bid: $2,800,000
Passed in: $3,100,000
Bidders: 2
An opening bid of $2,800,000 was placed followed by a vendor bid of $3,000,000. The property was passed in to a second bidder at $3,100,000.
BRIGHTON, 78 Champion Street
SOI: $2,400,000 – $2,600,000
Sales Agent: Danielle Harvey – Jellis Craig
Crowd: 40
Opening Bid: $2,500,000 VB
Passed in: $2,510,000
After auction: $undisc
Bidders: 1
Nick Renna from Jellis Craig opens the bidding confidently, placing a vendor bid of $2,500,000. However there is only one participating bidder who adds 10,000 allowing himself to be ushered inside for further conversation. Sold after
Hampton family home - 5 Bedrooms
Multi-Agent - Off market
SOI: $2.9m - $3.1m
Julian 0418 558 408
Halli 0403 777 661
'Round the Grounds Today
Nicole Gleeson @ Ralston South Yarra
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.
2023 M1 Open
Bidderman
1.5
Stock
LOW
Clearance
64%
2023 M2 May
Bidderman
1.8
Stock
LOW
Clearance
69%
2023 M3 Spring
Bidderman
1.4
Stock
LOW
Clearance
70%
What I mean by a volatile market is similar to that unpredictable and fiery relationship you may have experienced. You show up, unsure if it will be an amazing date or a complete disaster. That’s exactly what a volatile market feels like.
It’s a risky situation. Do you take the chance and attend the party, risking a public embarrassment but increasing your odds of a positive outcome? Or do you play it safe and stay home, opting for a text instead, where not much can happen? That’s the kind of volatility you face when deciding between participating in an auction or sitting tight.
Volatility occurs when the market is going through a turning point, and indeed, the market is currently turning. However, it’s not a universal and consistent shift. There’s no bell ringing to signal a definitive change, as it could easily turn back again.
In May 2023, we experienced our second consecutive upswing in the Inner Melbourne Top End market after a chain of five downturning markets.
So, what do we know?
We are dealing with low stock, extremely low stock, and our market relies on the balance of supply and demand. Therefore, a significant increase in supply during spring may impact Bidderman (the number of bidders per auction) and potentially lower the market by the time footy finals roll around. Then again, it may not. My guess is that the market will remain solid in the early stages.
Geographically speaking, Boroondara is currently a happening place and has become quite predictable. If you go to auction there, chances are you will sell. This trend has only recently solidified between the M1 and M2 markets in 2023. On the other hand, Bayside is much more hit-and-miss.
When comparing the Inner East to Bayside, our Bidderman graphic below, representing the first 30 auctions in our 100-auction test for May 2023, shows a notable difference. The numbers indicate the Bidderman at each auction, with green representing an immediate success and red indicating a pass-in or failure.
The Inner East boasts a Bidderman that is 50% higher than that of Bayside, resembling the difference between a Sydney/GWS crowd and a Demons/Saints crowd. We still have some way to go before reaching the levels of the Pies vs. Bombers crowds from early 2022 and 2015/2016. However, last year, we were lucky to even gather a crowd the size of a suburban bowls club at auctions.
Things are on the up, and the early signs for Spring are looking promising.
Mal and Gina, so we know you as buyer agents – what’s the “off-market selling” you do?
In a buy sell, on the sell, we manage the whole process. Our focus is price, strategy, presentation, agent selection, execution, and extras, all of which are largely ignored in many off-markets, big mistake.
Price: The most abused tool in your toolkit. Get it right and it’s off to the races, get it wrong and you’re mucking out the stables. Why is so little testing done on price prior to going to market? Why is your decision made on who tells you the highest number or who sounds the most credible, when neither of those is consistently the best strategy to get the best price.
Strategy: When the average bidders at auctions in this market is 1, why is the only strategy suggested by the agent quote ‘em low and watch ’em fly at auction. Don’t worry about the sales pitch of somebody else’s miracle auction, give me the logic on why 1 bidder auctions, quoted low, are a plus for you. They are not, they are efficient for the agent and good for the buyer.
Presentation: Why is there an unwritten law that if you are selling your home off-market: it’s ok to look less than its best? Some of our strongest arguments with our off market selling clients are about spending money on presentation. You need to do it, even if the agent says oh, she’ll be right. That’s total BS. Why would we go out on a limb if we didn’t know it makes a difference – why does an agent not push as hard as we do: turnover and lack of time.
Agent selection: You really wonder about some sellers when they say I am going with such and such, as I know her, or he is a mate, or he has been ringing me a lot for a long time (why isn’t he or she ringing buyers for existing selling clients). WTF. Would that cut it at work?
Does Ross Lyon or Brad Scott make their selections on mates or who is best for the job? The coaches they replaced have been hailed as hardly done by nice guys – but Ross and Brad are very different – a clear plan, good support and they don’t select their mate or who rings them up all the time – they select who is best for the job, after they have been through a series of tests.
Why narrow the field in your first act. Wouldn’t it make more sense to have more agents, bringing more buyers and wouldn’t it make sense to keep more agents on your side?
How do you feel when you are rejected? Pissed off and angry at who rejected you? Probably – so what do you think agents who didn’t get your job are saying to a buyer when asked about your home? Let them have a chance to sell it if they have the best buyer.
It doesn’t feel like rocket science, there is so much history and self interest in how some currently sell.
Competing: What do you want agents to compete on – promises or results. Huh? Why make your final selection on glossy brochures and a slick sales presentation – it’s a pointer for sure – but when all are slick and glossy (all look so similar) doesn’t it just become a case of mine is bigger than his, choose me.
What about bring me the offers – from multiple agents? Why not test credentials in an off-market competition? Agents tell you it’s all about competition to get you the best, well get them to compete. We compete all the time.
But be careful – if you can’t manage the public narrative, then multiple agents instead of a better deal, become a fight to the bottom.
Execution: For all the not so nice things you can say about agents – there is one huge plus – their ability to focus on cutting a deal. It’s brilliant. But what happens if that deal is not in your best interests right this second? There seems to be no pause and reflect button on our agent friends at times. We encourage pause and reflect and then accept or keep going.
Extras: How can your agent take the time to give you something extra when they have 6 to 10 campaigns running this week – sorry I can’t see you at this time or this time or this time, but I can see you at 10.57 in my office for 3 minutes – and you’re the client. The buyers must be getting less. Catch 22 – if they are not full on, then do you want them?
Solution: Let them do what they do best – call and call and call and combine them with someone who can bring strategies to the table like a mexican wave, another buyer, another agent and advice to hold until we get a competing buyer and more.
Real Life: This week the off-market above was a multi-agent home where we ran a mexican wave in Marketnews over the Easter weeks and sold in the low $4m’s having been bought in the high $2m’s during Covid – nothing done to it. It’s a great home.
Multi-agent Off-market began Feb 4 with a welcome meeting:
- Selling client was a reader of marketnews – unhappy with agent advice she had received.
- She rang us. We made a presentation to be open and look at all angles.
- We were given an authority, organised a contract, produced an SOI and gave access. The 4 off-market ducks.
- Gina replaced the styling with a new style.
- We selected to go off-market with a multi-agent strategy.
- We replaced the photography.
- We ran a mexican wave in Marketnews
- Solid interest in Week 1 from 1 buyer, via an agent.
- We at marketnews produced buyer 2 with solid interest in Week 3
- Selling client and agent and James Buy Sell meeting: strategy to make it happen as we now had 2 solid and understood buyers.
- An auction (we do love them when the ingredients are there) was organised over the phone and strong competition from mid $3m’s and on the market to over $4m. Agent did a great job. The buyer bought well.
- The buyer came from a marketnews mexican wave and looked at a beautifully presented off-market home and competed against another buyer from another agent – the brilliance of multi-agent.
- The total cost to our client was less than $10,000 for furniture, touch-ups, photos, contracts etc. and total agent fee was no more @ 2.2% split 50/50 with winning agent.
- Job done: Buyer bought a rare home well and the seller got what she wanted.
- Money: James Buy Sell Multi-Agent increase was $1.25 million or 45%.
Melbourne Median increase during the same time was 7.1% (reiv)
Aspendale Median increase during the same time was 9.5% (reiv)
Increase taking local agent opinion of value and not the result was: 21% (SOI)
The price in this volatile market was a record for area property type.
This graph above shows this and is to scale.
JAMES Buy Sell TrustBox
In addition to our successful Off-market and Multi-Agent approaches, we have introduced a ground-breaking method of quoting known as Trustbox. Developed over the past year, Trustbox aims to instil greater trust and meaning into our quotes, benefitting both buyers and sellers.
When marketing homes, whether on or off-market, we ensure the following components are included within our Trustbox:
- Authority
- Contracts
- A transparent Statement of Information (SOI) or Real Price guide
Here’s how Trustbox works for buyers and sellers:
Once our selling clients establish a firm price, typically after the first week, our SOI transforms into a Trustbox.
- Offers below the price range are not accepted.
- Offers within the range are referred to both the sellers and other potential buyers.
- Offers above the range are treated as potential sales or sold directly to the buyer without referral.
In the off-market realm, many agents struggle to execute effective sales strategies. They often beg for offers, promise updates, and handle negotiations with less transparency, regardless of the offer’s quality. This lack of trust not only proves annoying but also fails to elicit the best possible offers, particularly in the current market conditions.
Trustbox, on the other hand, brings forth several advantages:
- It encourages exceptional offers from buyers.
- It provides certainty to the best-suited buyer.
- It builds trust between agents, buyers, and sellers, fostering a more transparent and fruitful relationship.
At James Buy Sell, we believe in empowering our clients through innovative approaches that prioritize trust and optimal outcomes. Trustbox represents a significant step forward in revolutionizing the real estate industry’s quoting practices.
Hawthorn
Glen Iris
Malvern
Kew
JAMES BUY SELL
our spring clients are looking to BUY your home off-market now
TOORAK big family home $18m.
Classic family home on more spacious land – in a good location – nothing to reno.
Mal 0408 107 988 Sim 0400 304 111
TOORAK big family home $15m.
New Build family home – would like a great cinema room and a big garage.
Gina 0457 835 255
TOORAK big family home $12m
Will do some work – family home.
Mal 0408 107 988 Sim 0400 304 111
ARMADALE family home $6m + $12m
2 Buyers – looking for ready to move in homes. Both currently living in Armadale and have homes to sell – swaps possible. Children at schools in the area. We’ve bought dozens of homes in Armadale – here is evidence map. Mal 0408 107 988 Sim 0400 304 111
DOMAIN – the TAN – Downsizer to $3.5m
Who doesn’t love the Tan – we love buying for clients off-market here and having a coffee at the Bot. Looking for a downsizer – will do some work. Kathy 0401 296 630.
South Yarra $6m
5 Br family home.
Mal 0408 107 988
GRACE PARK family home $6m
Classic or will do some work. North sides preferred. Grace Park is one of our favourite buying estates – here is evidence map. Mal 0408 107 988 Sim 0400 304 111
URQUHART HAWTHORN $6m
Smart families who don’t want Grace Park or Scotch Hill love the Urquhart estate. And we love buying here is evidence map. Looking for a client up to $6m. Mal 0408 107 988 Sim 0400 304 111.
KEW: $4.5m renovated 4 bed/garage home
GLEN IRIS: 5 bed/garage home – $3.5M
BAYSIDE $2.5m smaller family home and will fully renovate as experienced.
HAWTHORN doctors rooms will reno $3m
ALBERT PARK Investment $2.5m
Call us and be pleasantly surprised at how easy and private it can be. Mal 0408 107 988
“If you’re thinking of selling don’t look past Gina and Mal for exceptional results. It’s their business to know how to stage a house and garden, know the best time of the year to sell in different areas, and they will know the key selling points of your house (and they can arrange for all of this to happen for you). They know how to negotiate and more importantly, how to time negotiations. They know the real estate agents and know who will be the right one for you. You’re in really safe hands and most importantly they’re honest – they will advise to not sell if the offer isn’t right. They’re truly ‘on your side’ and advise you on how to get the best outcome for you. My advice: at the very least meet with them – you won’t be disappointed.”
What JAMES BUY SELL short-term advice looks like
2021 Bought - $19m
2023 Sold - $23m
Normally we say nothing - privacy - but somebody else splashed it all over the papers. In 2021 we bought for our client. This week sold for a $4m gross profit in 2 years. Same home, same agent. In fact same clients we acted for on another $4m+ profit Toorak home previously. That's a +20% uplift as the Toorak median dropped 10%.
