Trading Up? Its as good as it gets!
Mal James
Buy Sell Agent
0408 107 988
mal@james.net.au
Last week the market statistically did what we didn’t feel it was doing in real life. It looked good.
Today it was back in the form we have seen overall this year – it was tough.
This week, a bumper edition of good news though:
- This market may be tough, but for upscalers buying and selling, it’s brilliant with a good Buy Sell strategy.
- There are some great agents out there, and we have two articles on them.
- Also a good news article on an architect – lately, they have been harder to find.
- As well, all the news from around the auction grounds from Hawthorn to Toorak to By the Bay in the 2nd week of a 2nd 2024 Market – May 2024M2.
Homes at the Top End are taking a lot longer to sell than in good times and currently usually with price revisions (code for price discounts) or they are not selling.
This is not being negative; this is being factual. And with facts, you can sell your home better and you can buy your next home better.
Factually, if you are trading up, then the current market is the best I have seen since pre-Covid. Price you home correctly as it’s selling and then make your money on good buying. If you are buying or selling, then we can currently show you a range of opportunities as there is plenty of stock (as a general rule, both off-market and on-market).
If you are selling, today’s stats prove you need to be persistent, price responsive, and patient. You all know my 3 Ps – Price, Property, and Position when buying. Well, today here are the 3 Ps when selling: Persistent, Price Responsive, and Patient.
Volcanoes (real auctions with 4 plus bidders) vs. Ducks (fake auctions with no bidders): Good news this weekend the market proved, that if you price correctly and market well with a good agent, then you can sell well.
Good News Volcanoes 4 Bidders: (5)
HAWTHORN EAST, 43 Clive Road Sales Agent: Sam Christensen – Anton Zhouk
HAWTHORN EAST, 8 Wiseman Street Sales Agent: James Tostevin – Marshall White
GLEN IRIS, 41 Alfred Road Sales Agent: Sam Macaluso – Jellis Craig
MIDDLE PARK, 132 Page Street Sales Agent: Warwick Gardiner – Jellis Craig
BLACK ROCK, 54 Arkaringa Crescent Sales Agent: Samuel Jay – Marshall White
Bad News Ducks 0 Bidders: (10)
Elwood (2), Hampton, Black Rock, South Melbourne, Brighton East (2). In fact, almost half the auctions we covered today in Bayside had no bidding. Whereas in Boroondara, almost every auction had bidding except 32 in Hawthorn, and Stonnington had such a small sample size of over $2m auctions, we could not do meaningful stats – 1 duck in South Yarra.
This week, for every volcano, there were two ducks. Last week was line ball with slightly more volcanoes than ducks.
The market is volatile, but there is a predictability about it: if you are not priced correctly, no matter how good your home is, with very few exceptions, it is NOT selling. However, if you are priced correctly and you have an A-Grader, then it is still attracting good interest. When the market is completely flat, volcanoes are almost non-existent. In this Mark (2024M2) market, they have not been overflowing, but they are happening when conditions are right.
But it’s not all tough love news in this edition. Below is a good news story on Sales Agent Paul Richards and his patience, persistence and price adjustment and the value of multi-agent selling AND architect Tristan Burfield, who gave such a good experience to our clients, Helen and Devinder, that we have recorded their words here, proving that architects can deliver a good experience if they can focus on the client and not themselves… often a lot harder than you think it should be… bit like us agents, hey!
When buying, I am looking for a buyer agent who can deliver a better home than you can in this opportunity market. Good buying in your 30s, 40s and even 50s and you set you and your family up for life.
When selling, I am looking for an agent who can bring me a result, bring me a real buyer and is talking to me truthfully because in Bayside half the sellers listened to the BS and got donuts this weekend.
Any selling agent can sell more for less, my focus is selling less for more and any buyer agent can see problems, but that is not really the problem, the problem can be your buyer agent’s attitude about the problem. Both these quotes came from my work colleagues Zali ‘Skip’ Reynolds and Sam ‘The Polite Gun’ Mercuri.
Go Pies we luvs ya all!!
HAMPTON CLASSIC HOME FOR SALE NOW
4 Bedrooms, 3 Bathrooms, 2 Car Spaces
women in Bayside real estate who are making a difference
Shelter By The Bay: Simone Clarke (0400 304 111) Zali Reynolds (0422 576 049)
Two of Melbourne’s top real estate agents are working in Bayside. Congrats to Matthew Pillios of Kay and Burton at no 2 and perhaps even more impressive, as she is not one of the corporate big boys, at No 5 is Zali Reynolds of Shelter Real Estate. The full article can be found in Herald Sun May 17th – author Nathan Mawby. Congrats to the rest of the Top 5, great agents whom we have bought off a number of times Helen Yan, Carla Fetter and Sam Rigopoulos.
'Round the Auction Grounds This Week
Biggest Auction Sale Today
BY THE BAY - BAYSIDE & PORT PHILLIP
Week 2 – 16 auctions
Clearance: 56%
Bidderman: 1.06
Week 1 and 2 combined – 29 auctions
Clearance: 66%
Bidderman: 1.34
BRIGHTON EAST, 6 Lysander Street
SOI: $2,150,000 – $2,300,000
Sales Agent: David Hart – Buxton
Before auction: $undisc
Bidders: 1
BLACK ROCK, 8 Arkaringa Crescent
SOI: $2,380,000 – $2,580,000
Sales Agent: Nick Sinclair – Hodges
Before auction: $undisc
Bidders: 1
BRIGHTON EAST, 5 Davies Street
SOI: $2,350,000 – $2,450,000
Sales Agent: Johnny Clarkson – Buxton
Before auction: $undisc
Bidders: 1
ELWOOD, 65 Ruskin Street
SOI: $2,900,000 – $3,150,000
Sales Agent: Chrisal
Before auction: $undisc
Bidders: 1
MIDDLE PARK, 132 Page Street
SOI: $4,850,000 – $5,300,000
Sales Agent: Warwick Gardiner – Jellis Craig
Crowd: 110
Opening Bid: $4,850,000 VB
On market: $5,450,000
Under hammer: $5,760,000
Bidders: 4
Two early bidders kicked things off. A third bidder jumped in to bring the property on the market. A late fourth bidder tried to steal the auction, but bidder 3 determinedly fought them off to secure the property under the hammer.
BRIGHTON, 5 Lindsay Street
SOI: $3,600,000 – $3,750,000
Sales Agent: Michael Derham – Whitefox
Crowd: 25
Opening Bid: $3,700,000 VB
Passed in: $3,710,000
After auction: $undisc
Bidders: 1
Michael Derham opens the bidding with a vendor bid of $3,700,000. A hopeful buyer adds $10,000 and the home is passed into him for further negotiations. Sold after.
BLACK ROCK, 54 Arkaringa Crecent
SOI: $2,000,000 – $2,200,000
Sales Agent: Samuel Jay – Marshall White
Crowd: 50
Opening Bid: $2,000,000
Passed in: $2,300,000
After auction: $undisc
Bidders: 4
The auction saw competition however concluded with the property being passed in at $2.3 million. Sold after.
BRIGHTON EAST, 31 Robinson Street
SOI: $3,500,000 – $3,700,000
Sales Agent: Halli Moore – Buxton
Crowd: 40
Opening Bid: $3,500,000 VB
Passed in: $3,500,000 VB
After auction: $undisc
Bidders: 0
Halli Moore of Buxton uses his time in the sun to extol the values of the home but it opens and closes with a vendor bid of $3,500,000
ELSTERNWICK, 13 Staniland Grove
SOI: $3,300,000 – $3,600,000
Sales Agent: Bill Stavrakis – Biggin Scott
Crowd: 60
Opening Bid: $2,950,000
Passed in: $2,950,000
After auction: $undisc
Bidders: 1
Auctioneer Bill Stavrakis encouraged others interested to join in the bid however after a short break to consult with the vendors the property was soon after passed into the single Bidder.
BRIGHTON EAST, 12 Plunket Street
SOI: $2,000,000 – $2,100,000
Sales Agent: Chris Hassall – Buxton
Crowd: 25
Opening Bid: $2,000,000 VB
Passed in: $2,000,000 VB
Bidders: 0
Chris Hassall from Buxton opens and closes the bidding in front of the small crowd at $2,000,000
ELWOOD, 88 Mitford Street
SOI: $2,500,000 – $2,650,000
Sales Agent: Sam Gamon – Chisholm and Gamon
Crowd: 22
Opening Bid: $2,575,000 VB
Passed in: $2,600,000 VB
Bidders: 0
Mr Gamon encouraged opening bids, however with no initial offers he placed a $2,575,000 vendor bid. Shortly after he placed a second vendor bid of $2,600,000. With no further bids the property was formally passed in.
SOUTH MELBOURNE, 270 Albert Road
SOI: $3,100,000 – $3,400,000
Sales Agent: Besim Kanacevic – Belle
Crowd: 17
Opening Bid: $3,200,000 VB
Passed in: $3,200,000 VB
Bidders: 0
Despite its promising attributes, no bidders stepped forward and the property was passed in on a vendor bid of 3.2 Million
BLACK ROCK, 76 Stanley Street
SOI: $2,425,000 – $2,525,000
Sales Agent: Andrew Soloman – Belle
Crowd: 17
Opening Bid: $2,425,000 VB
Passed in: $2,425,000 VB
Bidders: 0
A contemporary family home in Black Rock was passed in on a vendor bid $2.425 million. The Auction failed to solicit any active bids from the crowd
HAMPTON, 40 Grenville Street
SOI: $6,200,000 – $6,800,000
Sales Agent: Joel Fredman – Fredman
Crowd: 60
Opening Bid: $5,900,000 VB
Passed in: $5,900,000 VB
Bidders: 0
Michael Paproth conducts the auction for Fredman and there’s a number of onlookers in the sunshine, however, no bidders as the home is opened and closed at the vendor bid of $5,900,000
ELWOOD, 6 Kendall Street
SOI: $2,600,000 – $2,860,000
Sales Agent: Campbell Kilsby – Kay & Burton
Crowd: 26
Opening Bid: $2,600,000 VB
Passed in: $2,600,000 VB
Bidders: 0
A small crowd gathered to watch this Victorian Home with a large street frontage pass in on a vendor bid of $2.6 million
BRIGHTON, 479 New Street
SOI: $3,700,000 – $3,900,000
Sales Agent: Johnny Clarkson – Buxton
Crowd: 30
Opening Bid: $3,700,000 VB
Passed in: $3,875,000
Bidders: 3
Shelter by the bay Buyer Bank
We have a growing buyer pool at Shelter ByThe Bay. We are looking for homes for these buyers.
HAMPTON GOLDEN TRIANGLE: Looking for family home, budget $8m to $9m, land over 1400 swm or room for a court.
HAMPTON: Looking for family home, budget $3m to $4m.
Brighton: Looking for family home - modern contemporary, can be a little dated, budget $8m.
Brighton: Looking for family home - modern contemporary, up to $12m.
BRIGHTON EAST: Local family loooking for a ready to move in bigger home with a budget of $5m - needs to be close to schools.
BRIGHTON EAST: Move in bigger home with a budget up $8m - Marriage Road Precinct.
BOROONDARA
Week 2 – 13 auctions
Clearance: 54%
Bidderman: 1.61
Week 1 and 2 combined –
Clearance: 68%
Bidderman: 1.92
GLEN IRIS, 12 Allison Avenue
SOI: $2,100,000 – $2,300,000
Sales Agent: Todd Braggins – Shelter
Before auction: $undisc
Bidders: 1
MONT ALBERT, 12 Gordon Street
SOI: $2,600,000 – $2,800,000
Sales Agent: Stuart Evans – Marshall White
Before auction: $undisc
Bidders: 1
HAWTHORN EAST, 43 Clive Road
SOI: $3,000,000 – $3,300,000
Sales Agent: Sam Christensen – Anton Zhouk
Crowd: 60
Opening Bid: $3,000,000
On market: $3,500,000
Under hammer: $3,595,000
Bidders: 4
After a couple of bidders dipped their toes in at the bottom of the quote range a new bidder jumped in with $150,000 straight to the top of the range. Two of the four bidders battled in 10s and 5s as the home surpassed the reserve.
HAWTHORN EAST, 8 Wiseman Street
SOI: $2,650,000 – $2,850,000
Sales Agent: James Tostevin – Marshall White
Crowd: 50
Opening Bid: $2,650,000 VB
On market: $2,910,000
Under hammer: $3,100,000
Bidders: 4
Auctioneer James Tostevin commenced the bidding placing a vendor bid of $2,650,000. Four bidders entered the race and the property was declared on the market for $2,910,000. The property sold under the hammer for $3,100,000.
CAMBERWELL, 21 Kerr Crescent
SOI: $3,800,000 – $4,150,000
Sales Agent: Todd Braggins – Shelter
Crowd: 70
Opening Bid: $3,800,000 VB
On market: $4,220,000
Under hammer: $4,650,000
Bidders: 3
A well-paced auction by Todd Braggins. An initial vendor bid was required before three bidders galloped some $400,000-plus past the reserve.
GLEN IRIS, 41 Alfred Road
SOI: $2,100,000 – $2,300,000
Sales Agent: Sam Macaluso – Jellis Craig
Crowd: 80
Opening Bid: $2,100,000 VB
On market: $2,380,000
Under hammer: $2,440,000
Bidders: 4
A vendor bid was placed to start the bidding at $2,100,000. There bidders joined the race and the property was declared on the market at $2,380,000. A fourth placed a bid before the second bidder purchased the property for $2,440,000.
KEW, 12 Yarra Street
SOI: $3,000,000 – $3,300,000
Sales Agent: Lloyd Lawton – Jellis Craig
Crowd: 45
Opening Bid: $2,900,000 VB
Passed in: $3,000,000
After auction: $3,100,000
Bidders: 1
The Hilly Studley Park environs drew one bidder, who held up a paddle at $3,000,000. Sold after auction.
GLEN IRIS, 5 Lurnea Road
SOI: $2,900,000 – $3,100,000
Sales Agent: Jesse Matthews – Marshall White
Crowd: 25
Opening Bid: $3,700,000 VB
Passed in: $3,710,000
After auction: $undisc
Bidders: 1
Mr Wheeler both opened and closed the bidding, passing the property in on a single vendor bid of $2,900,000.
HAWTHORN EAST, 80a St Helens Road
SOI: $2,500,000 – $2,750,000
Sales Agent: Hamish Tostevin – Marshall White
Crowd: 25
Opening Bid: $2,500,000 VB
Passed in: $2,550,000 VB
Bidders: 1
Auctioneer John Bongiorno opened the bidding placing a vendor bid of $2,500,000.
After consultation with the vendors a bidder placed a $50,000 bid. The property was passed in to the sole bidder for $2,550,000.
CAMBERWELL, 43 Athelstan Road
SOI: $4,200,000 – $4,600,000
Sales Agent: Sophie Su – Kay & Burton
Crowd: 80
Opening Bid: $4,200,000 VB
Passed in: $4,350,000
Bidders: 1
With no initial offers Mr Patterson placed a vendor bid of $4,200,000 to gain momentum, then shortly after another of $4,300,000. After a quick break a bid of $4,350,000 was placed, with no other bids being placed the property was shortly after passed in.
HAWTHORN, 3 Oak Street
SOI: $5,000,000 – $5,500,000
Sales Agent: Richard Winneke – Jellis Craig
Crowd: 40
Opening Bid: $5,000,000 VB
Passed in: $5,100,000
Bidders: 0
A quiet auction which saw vendor bids open and close proceedings.
CAMBERWELL, 16 Kasouka Road
SOI: $3,500,000 – $3,750,000
Sales Agent: Mike Beardsley – Jellis Craig
Crowd: 60
Opening Bid: $3,500,000
Passed in: $3,785,000
Bidders: 1
An engaged crowd witnessed a bit of action here before a pass in to one of two bidders for post-auction negotiations.
HAWTHORN, 34 Fordholm Road
SOI: $3,300,000
Sales Agent: Nicholas Franzmann – Marshall White
Crowd: 35
Opening Bid: $3,300,000 VB
Passed in: $3,300,000 VB
Bidders: 0
A quiet auction with only a single vendor bid at $3,300,000 pencilled in.
Good News on another agent - Paul Richards
Paul Richards almost singlehandedly made this deal work. Week in and week out in a very difficult market, he got what a competing agent described as a great price, and we concur. We love multi-agent because we know we cannot be the best at all times, but multi-agent often allows the best to come forward. Well done Paul Richards with 4 offers over the quiet campaign and well done to the clients for hanging in there and presenting magnificently every inspection – which were private inspections booked in beforehand. Persistence, Patience, and Price Responsive.
Good News on an Architect - Tristan Burfield
This was one of the most difficult EOI homes we had bought in 2018. Why?
Because it was so cheap for what it is and so good, and therefore so many people wanted it.
And it was a blind EOI negotiation, often the hardest for buyers, and thank heavens very few chose to hire a buyer agent.
Anyway, this week (5 or so years on), our clients Helen and Devinder contacted us to say thank you and to recommend their architect to our other clients.
Sim and I met Tristan for coffee, and he is a guy with his head screwed on and not up his… We liked him a lot and we can see why he did such a great job for our clients.
Callanans Road, Red Hill
On 18 Apr 2024, at 2:04 PM, Helen wrote:
Hi Mal
I hope you are your team are all well. Devinder and I are thoroughly enjoying our new house; it was definitely the right move for us we were lucky that you were able to bag the property for us!
The reason for my email is to introduce you to our fantastic architect Tristan Burfield. He did a first class job with our house and I’m sure he would be a valuable addition to your list of contacts. He was featured in Architecture magazine last month https://architectureau.com/articles/one-to-watch-tristan-burfield/.
I’ve taken the liberty of passing on your phone number so I expect that he will be in touch soon.
Make sure you drop in and see us when you’re down this way; we’d love to show you the house.
All the best
Helen
Great to hear from you! I’m glad you had the chance to catch up with Tristan.
Our house-building adventure began in late 2018 when we decided to make a lifestyle change and move to the countryside. We found a beautiful property and immediately thought of you to help us secure it, given our positive past experiences.
The next step involved planning the construction of a new home on the property. Fortunately, we were introduced to architect Tristan Burfield. From the beginning, Tristan demonstrated excellent listening skills and clear communication. He not only met our expectations but also inspired us to explore creative possibilities.
Despite the common belief that building a house is stressful, working with Tristan was a delight—even through the challenges of lockdowns and supply chain disruptions, as he adeptly managed the project.
With the house now complete, we accelerated our move from the city, with your invaluable assistance in handling the sales process. Living in this wonderful home is a joy, and we are deeply grateful to everyone who helped turn our dream into reality.
Warm regards,
Thats not a knife... thats a knife........drawer
STONNINGTON
Week 2 – 3
Clearance: 33%
Bidderman: 0.66
Week 1 and 2 combined –
Clearance: 43%
Bidderman: 1.42
MALVERN EAST, 20 Olive Street
SOI: $2,500,000 – $2,700,000
Sales Agent: Tom Hayne – Marshall White
Crowd: 50
Opening Bid: $2,500,000 VB
Passed in: $2,520,000
After auction: $undisc
Bidders: 1
A late bid from the crowd went without competition and the bidder was ushered inside.
TOORAK, 1/1 Woorigoleen Road
SOI: $3,400,000 – $3,600,000
Sales Agent: Nicole French – Marshall White
Crowd: 20
Opening Bid: $3,000,000 VB
Passed in: $3,100,000
Bidders: 1
One bid from the 20-strong crowd was enough to secure the first right to negotiate.
SOUTH YARRA, 5a Nicholson Street
SOI: $2,095,000 – $2,295,000
Sales Agent: Nick Gatacre – Belle
Crowd: 30
Passed in: $2,150,000 VB
Bidders: 0
Without any crowd participation, the property was passed in.
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.
