Stonnington RT Edgar Mexican Wave
Albert Park
Kew
Hawthorn East
South Yarra
A sleepy crowd of 40 gathered in the sun in front of 67 Hope Street South Yarra, a single fronted three bedroom, two bathroom single story home, described by Auctioneer James McCormack as a property and location that will “stand the test of time”.
The poignant nature of this statement foreshadowed an outcome that drew gasps, whispers and even a few laughs.
Like many auctions, Mr McCormack, didn’t wait for an opening bid and kicked things off placing a vendor bid of $2,800,000. Just moments after, confidently positioned between Mr McCormack and the property, a first bidder entered the race placing a bid of $3,000,000. A second bidder was quick to jump in placing a $50,000 bid and the race was underway.
Onlooking neighbours appeared energised as the property was declared on the market just moments later at $3,250,000. Little did they know, this was going to be an auction they would be speaking about over their coffees at Gilson and walks around The Tan for years to come.
The two bidders went back and forth until the property reached $3,500,000. Bidder two was unable to match this. Mr McCormack referenced Bidder one, now leaning against the fence basking in the sunshine “it looks like this gentleman might have it,” he said and thanked bidder two for his involvement.
Mr McCormack had just reached his “third and final call” and the crowd was beginning to move, thinking of their lunch to follow, Saturday sports and plans for the day, when a third bidders voice came from behind a parked car. $3,510,000 he declared, bidder one, unnerved swiftly matched this and a bidding war ensued. The crowd silent and still as the two bidders competed for the property that would “stand the test of time”.
Bidder one remained confident, repeatedly placing bids of $90,000 only to be met with a taunting $10,000 bid from the elusive bidder three, still unable to be seen by the crowd standing behind a parked vehicle.
Four million. Four million and ten. Four point two, Four point two one, Four three, four point three one. Children were shushed, neighbours began to whisper. Bidder two remained strong.
At $4,510,000 bidder one took a moment to chat with his companions, still leaning against the fence in the sun. The race continued, with a second call at $4,610,000 in favour of the second bidder. But bidder one wasn’t going down without a fight.
By $4,750,000 the bidders began to go back and forth in $10,000 bids. A giggle of shock and excitement can be heard from the crowd as we reach $4,850,000. The atmosphere electric. I feel my mouth drop at $4,900,000 quickly reminding myself to remain visibly unfazed.
“Dare I say five,” asked Mr McCormack in a rare moment between bids. Gasps could be heard in the crowd. Challenge accepted. “Five million” declared bidder one. Nonchalantly bidder three remained consistent counteracting this with a $10,000 bid. “Am I getting a commission on this,” joked bidder one. Nervous laughter was heard among the crowd as bidder one met this with a bid of $5,050,000.
Bidder three relented until bidder one could no longer match his $10,000 jabs. The property was sold to the composed bidder three for $5,110,000. This result met with applause from the crowd as neighbours marvelled in disbelief with exhilaration in their eyes.
Toorak doldrums continue
What are people clapping about at 67 Hope St South Yarra (James McCormack). So, the quote was $2,800,000 to a bit over $3 million and its 3 beds 2 bath - no car parks. Yep no car parks. It’s on the market at $3,250,000. What did it go for?
Stonnington is also volatile on the quiet. Good news!
This week in Stonnington and in particular RT Edgar.
The Boroondara hotspot has rippled through to Stonnington (away from auctions) – and make no mistake this week was a market mexican wave of some note. Sure, we are not out of any woods, but a few bidders are cutting swathes through the forests of negativity to rediscover beacons on the horizon.
And while we rarely see eye to eye – hats off to RT Edgar – a most momentous week since we all decided to go bearish last year?
What a big week in Stonnington property.
Jeremy Fox, Lachie Fox, Max Ruttner, Anthony Grimwade and Antoinette Nido all hitting balls out of the park on some bigger deals.
5 Montrose Court, Toorak
1500sqm sold above $14,500,000 – international buyer from Hong Kong. 2 underbidders.
5 bedroom single level residence on
784 Orrong Road, Toorak
737sqm of land sold above $9,000,000 to a local family. There was significant interest in the 4 Bedroom home. 3 underbidders.
5 & 7 St Georges Road, Toorak.
977sqm of land. After a previously unsuccessful campaign with another agency sold at $10,000/sqm. Local developer. 1 underbidder.
49 Irving Road, Toorak
637sqm of land sold via a private boardroom auction with 4 bidders. The 4 bedroom home was on the market at $8.5m and sold $1,000,000 above the reserve. 3 underbidders. 90% growth in a bit over a decade.
Ouch, those guys are burning! Mal, you are full of it! Really?
Well explain above and also explain away what’s been happening in Boroondara all year.
You’re deluded there is no stock -this is why.
Yep, correct and this is the market! It’s called demand and supply. Supply is down and demand is strong! Prices are up in Stonnington and Boroondara – this week!
The market is UP, DOWN and this week it was strong in Stonnington and ……. volatile.
Sackville Ward Classic - 2430 sqm - $20m - $22m
Multi-Agent - Off-Market
Kew
James 0417 003 333
Marcus 0411 411 271
100 Auction Test. Feb v May. Volatile
Hard to find enough stock – heard that before. We covered 25 auctions today.
Feb First Week 2023
Bidderman
1.5
Stock
LOW
Clearance
63%
May First Week 2023
Bidderman
1.4
Stock
LOW
Clearance
64%
Boroondara Still Strong!
Camberwell Canterbury Glen Iris Hawthorn Hawthorn East Kew
Mar 18 2023
Bidderman
2.9
Stock
LOW
Clearance
86%
May 12 2023
Bidderman
1.9
Stock
LOW
Clearance
88%
Boroondara – Week 1
Clearance: 87.5%
Bidderman: 1.87
Surrey Hills, 20 Scottsdale Street
Changed method
Kew, 24 Carson Street
Bought Before: $undisc
Camberwell, 162 Through Road
Bought Before: $undisc
Ashburton, 17 Yuille Street
SOI: $2,200,000 – $2,420,000
Sales Agent: Andrew Mackintosh – Fletchers
Crowd: 60
Opening Bid: $2,300,000
On the market: $2,500,000
Under the hammer: $2,520,000
Bidders: 2
On the market with relative ease and with one bidder’s upper limited now tested the home was soon knocked down.
Kew, 155 Wellington Street
SOI: $2,500,000 – $2,750,000
Sales Agent: Mark Josem – Jellis Craig
Crowd: 50
Opening Bid: $2,500,000 VB
On the market: $2,655,000
Under the hammer: $2,889,000
Bidders: 4
A slow starter, where auctioneer Mark Josem kicked off with a $2,525,000 vendor bid; this soon gave way to a long, protracted bidding war in which four bidders participated, resulting in the hammer eventually falling on $2,889,000.
Camberwell, 11 Hunter Road
SOI: $3,800,000 – $4,180,000
Sales Agent: Jonathon O’Donoghue
Crowd: 65
Opening Bid: $3,800,000 VB
On the market: $4,010,000
Under the hammer: $4,100,000
Bidders: 2
An offer under the opening vendor bid and then a quiet moment before two bidders reveal serious intentions. On market at a squeak over $4,000,000 and then the initial bidder holds off several counter punches.
Balwyn, 14 Wills Street
SOI: $3,000,000 – $3,300,000
Sales Agent: Nick O’Halloran – Jellis Craig
Crowd: 40
Opening Bid: $3,000,000 VB
Passed in: $3,100,000 VB
After auction: $undisc
Bidders: 1
Auctioneer Nick O’Halloran kicked off with a $3,000,000 vendor bid; when this failed to rouse bidding, a second vendor bid of $3,050,00. The sole bidder offering $3,075,000 wasn’t enough encouragement for further bidding, so the property was passed in on a third vendor bid of $3,100,000.
Hawthorn East, 1 Grandview Grove
SOI: $2,910,000
Sales Agent: David Smith – Marshall White
Crowd: 80
Opening Bid: $3,100,000
On the market: $3,300,000
Under the hammer: $3,501,500
Bidders: 4
Well-paced auction with bidding away quickly and fresh entrants beyond the on market call. $1000 rises at the pointy end squeezed every drop.
Kew: 4 Bed / 3 Living / 2 Car. Gorgeous garden. Ready to move in family home. Walk to major schools.
Kew
Off-Market
$3.0m to $3.3m
Helen Yan 0404 078 588
Stonnington - not all volatile was good today!
Armadale Malvern Malvern East Prahran Richmond South Yarra Toorak
Mar 18 2023
Bidderman
1.3
Stock
LOW
Clearance
71%
May 12 2023
Bidderman
1
Stock
LOW
Clearance
50%
Stonnington – Week 1
Clearance: 50%
Bidderman: 1
Glen Iris (Stonnington), 4a Wilson Street
SOI: $2,700,000 – $2,900,000
Sales Agent: Justin Krongold – Marshall White
Crowd: 40
Opening Bid: $2,700,000 VB
Passed in: $2,700,000 VB
Bidders: 0
Auctioneer Daniel Wheeler welcomed a crowd of 50 to the auction of 4A Wilson St Glen Iris. Mr. Wheeler opened and closed the bidding passing the property in for $2,700,000.
Prahran, 20 Airlie Avenue
SOI: $3,900,000 – $4,200,000
Sales Agent: Carla Fetter – Jellis Craig
Crowd: 65
Opening Bid: $3,900,000 VB
Passed in: $4,025,000
After Auction: $undisc
Bidders: 1
Two vendor bids, both with subsequent raises from the same bidder, resulted in the property being passed in.
South Yarra, 67 Hope Street
SOI: $2,800,000 – $3,080,000
Sales Agent: Dean Gilbert – Marshall White
Crowd: 40
Opening Bid: $2,800,000 VB
On the market: $3,250,000
Under the hammer: $5,110,000
Bidders: 3
Hot, hot, hot
Prahran, 32 Wrights Terrace
SOI: $2,100,000 – $2,300,000
Sales Agent: David Sciola – Jellis Craig
Crowd: 20
Opening Bid: $2,150,000 VB
Passed in: $2,175,000 VB
Bidders: 0
An immediate opening vendor bid with no crowd participation. A second vendor bid closed out the auction.
Bayside & Port Phillip - still struggling!
Albert Park Brighton Brighton East Elsternwick Elwood Hampton Middle Park
Mar 18 2023
Bidderman
1.3
Stock
LOW
Clearance
67%
May 12 2023
Bidderman
1.2
Stock
LOW
Clearance
54%
Bayside & Port Phillip – Week 1
Clearance: 54%
Bidderman: 1.2
Port Melbourne, 64 Station Street
Bought Before: $undisc
Brighton, 8 Webb Street
Bought Before: $undisc
St Kilda, 16 Waterloo Crescent
Changed method
Middle Park, 76 Park Road
SOI: $3,700,000 – $3,900,000
Sales Agent: Oliver Bruce – Marshall White
Crowd: 60
Opening Bid: $3,800,000 VB
Passed in: $3,800,000 VB
Bidders: 0
No bid result and the property is opened and closed at the vendor bid of $3,800,000
Albert Park, 67 Page Street
SOI: $2,600,000 – $2,800,000
Sales Agent: Sarah Wood – Marshall White
Crowd: 58
Opening Bid: $2,550,000
On the Market: $2,850,000
Under the hammer: $3,100,000
Bidders: 4
The enthusiastic auctioneer, Nicholas Hoo, commenced the auction by pointing out the rare Albert Park location. An exciting auction with 4 bidders battling for the beach side property. The home was sold at $3,100,000.
Elwood, 22 John Street
SOI: $2,500,000 – $2,650,000
Sales Agent: Kainen Schrape – Chisholm & Gamon
Crowd: 20
Opening Bid: $2,500,000 VB
Passed in: $2,600,000 VB
Bidders: 0
Property was opened with a vendor bid before another one was placed and the auction closed.
South Melbourne, 374 Park Street
SOI: $4,000,000 – $4,400,000
Sales Agent: Adrian Wood – Kay & Burton
Crowd: 70
Opening Bid: $4,000,000
Passed in: $4,010,000
Bidders: 1
Gowan Stubbings fought hard in front of around 70 people for increases over his vendor bid of $4,000,000, but only one bidder reluctantly added $10,000 when the auction closed for further negotiation.
Brighton East, 5 Walstab Street
SOI: $2,300,000 – $2,500,000
Sales Agent: Simone Howell – Marshall White
Crowd: 90
Opening Bid: $2,300,000 – $2,500,000
Passed in: $2,800,000
After Auction: $2,925,000
Bidders: 2
After opening on a vendor bid, 2 bidders quietly exchanged bids but failed to reach the reserve. Auctioneer Stephen Smith passed the property in to our first bidder who moved inside to complete the transaction. Sold after.
Brighton, 2 St James Park Drive
SOI: $2,450,000 – $2,600,000
Sales Agent: Matthew Pillios – Marshall White
Crowd: 70
Opening Bid: $2,500,000
Passed in: $2,750,000
After auction: $2,800,000
Bidders: 1
A sole bidder bid twice on this property before moving inside to finalise the deal. Sold after.
Brighton, 25 Moule Avenue
SOI: $6,000,000 – $6,500,000
Sales Agent: Alex Schiavo – Kay & Burton
Crowd: 50
Opening Bid: $6,000,000 V
Passed in: $6,250,000 VB
Bidders: 1
A group of around 50 people basked in the warm sunshine as Gowan Stubbings was met by an immediate offer of $6,000,000 for the property 25 Moule avenue Brighton. Hoping to encourage further participation, Gowan added $250,000 as a vendor bid increase but there was no-one else willing to parry so the property was closed for further negotiation at $6,250,000.
Beaumaris, 15 Florida Avenue
SOI: $2,800,000 – $2,950,000
Sales Agent: Mark Blit – Belle Property
Under Offer
Caulfield, 1/21 Heatherbrae Avenue
SOI: $1,100,000 – $1,200,000
Sales Agent: Joel Ser – Gary Peer
Crowd: 50
Opening Bid: $1,200,000
On the market: $1,300,000
Under the hammer: $undisc
Bidders: 4
4 Bidders battled it out for the keys. Opening at $1,200,000 and selling for north of $1,300,000.
Elsternwick, 78 Shoobra Road
SOI: $2,800,000 – $3,000,000
Sales Agent: Bill Stavrakis – Biggin & Scott
Crowd: 35
Opening Bid: $2,800,000 VB
Passed in: $2,800,000 VB
Bidders: 0
A vendor bid of $2,800,000 saw this auction open and close.
Off-market Multi-agent
Elsternwick
720 sqm - Reno - Allison
North - $2.5m - $2.7m
Daniel 0408 078 515
Joel 0415 337 708
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.
Are we moving gears back to our 2016, 2021 powerhouse markets – not sure – one thing I am sure of though, we are moving direction.
Things will begin to 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.
In 2023M1, the opening market, we did see dramatic change, albeit on low stock and mainly in one council only – Boroondara.
But that council is one that matters and from here recent history has shown that Melbourne will follow it’s lead – Boroondara is not the canary in the goldmine – Boroondara is the goldmine, and the canaries are Aussie-Asian bidding and they’re flapping their feathers.
Momentum has swung around from 5 down markets in a row to a flat market by the Bay and a rising market in the East. The market in M1 was a lot stronger.
Stock Post Easter – stock feels incredibly low for this time of the year and that will definitely add to the volatility, as some home types will have wounded underbidders and other home types no interest at all – new players will find that hard to fathom.
Off-markets will flounder – unless their 4 Duck off-market Test waddles, looks and quacks like a duck. Authority to sell, clear price, contracts and access – are your Ducks lined up and must be present or else you are losing buyers as a seller and wasting your time as a buyer – and that is before either of you start to try and negotiate price. We discuss in detail I next weeks off-market podcast.
Buyers – are back in numbers (for the right PPP’s) – they were MINA (missing in no action) in 2022M3 and 2022M4 – but in 2023M1 they returned – the market god flicked the switch – welcome back or simply for many just welcome.
Family homes are not the same as investments (even though good ones are investments) – they are not driven by the money and stock markets all the time – granted in late 2022 they were. But in 2023 the $2m to $6m market where there are two transactions, a buy and a sell and a money juggle feels like it will be both challenging and profitable for those that get it right and the opposite for those that don’t.
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.
April 25 2023
“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.”
Our Buy Sell Client on this Aspendale home
James Buy Sell YouTube
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James Buy Sell Jargon
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.
