Understanding Markets
by Gina Kantzas, Mal James, Randall Smith, Simone Clarke, Catherine Ross, Jo Gallagher, Kathy Russell, Phoebe James, Maddie James
65 Orlando Street Hampton
Sales Team: Brydie Mark Gina Josh Barbara Noah Scott Mal
Crowd: 130
Opening Bid: $2,350,000
On market: $2,525,000
Sold under hammer $3,070,000
Bidderman: Volcanic 4
These folks made $570,000 since Easter through teamwork
Whether you’re in a bazaar in Kabul, on a digital bourse in New York or at a Toorak street auction, true knowledge of markets can help you as a buyer or seller, better enter or exit those markets, meaning deal at a better price.
Big Statements coming up
Some weeks, months, years our clients make millions of dollars because it is possible to read property markets (well).
- They understand the science of process combined with the art of reading opinion, can estimate an individual market price within a range, but not every time.
- They understand different market PPP segments or mini markets do perform somewhat predictably over a longer term, but very differently – this can be a good science for investing and buying homes.
- They understand short term prediction of the overall market cycle is a crapshoot for headline hunters and is an entertainment, a sales pitch and not a science.
More on this, but first a true story from the weekend.
This is about Josh (Barbara and Noah), Scott (Brydie and Mark) of Buxton and James Buy Sell (Gina and Mal) with an investment at 65 Orlando Street Hampton.
2014: Josh through James Buy Sell bought with a strong one bid of $1.7m, passed in and deal done at $1.725m.
2020: Josh rang us and said time to sell to free up some capital. We discussed Covid. We discussed presentation and tenants – we advised to sell without a tenant. We also talked to Josh of Multi-list and agreed on an auction with Scott Hamilton from Buxton as the conjunctional agent – we split the standard agent fee 70/30 in their favour – it cost Josh no more.
2021 pre Easter: we started the campaign on a $2.2m to $2.4m quote – the tenant was still there – we didn’t agree. But Josh wanted it sold.
By week 2, on our second OFI visit, it was obvious this was going to be a disaster – the quote was fine, the presentation was appalling.
We advised PAUSE and RESET after Easter.
Very robust discussion took place and to Josh’s credit he was able to see value in maintaining Scott and James Buy Sell, pausing the campaign until the tenant had moved out and further investing in the home via painting and furniture.
2021 Post Easter: After presentation had moved from 1/10 to 9/10, Scott lifted the quote to $2.4m to $2.5m – great numbers through, great buyer engagement, culminating in a volcano 4 bidder auction. Pre-Easter interest was at 2.4m, maybe 2.5m.
This weekend: 4 bidders and sold under the hammer at $3.07m during a non-referral auction.
Josh and Barbara’s response as we stood with them yesterday.
“I wasn‘t expecting this – thank you Scott, Brydie, Gina and Mal.”
The numbers difference between good and bad presentation, good and bad market reading:
- Yesterday: $1.725m to $3.07m a raw capital growth of 78% over that 7 year period.
- Pre-Easter: $1.725m to $2.5m would have been a raw capital growth of 45% during that 7 year period.
Making good market exit (selling) decisions by:
- Listening to strong uncompromising advice from James Buy Sell and PAUSING
- Not panicking as first port of call and not sacking or abusing the agents
- Not just giving up and taking whatever the market said
- Reinvesting in presentation after comprehensive advice to do so.
Josh, Barbara and Noah put a very provable $570,000 into their family’s finances since Easter.
We are mostly on opposite sides with Scott and Brydie from Buxton and as such don’t always see eye to eye. We also think the tenant fiasco maybe shouldn’t have happened, but Scott was acting in good faith on Josh’s wishes.
However what was super impressive was the way Scott and Brydie completely turned things around through hard work and great attention to detail and presentation, which contributed greatly to this mega result. Brilliant!
They more than returned the client support, that was shown to them at a difficult stage. Well done, great work.
As for auctioneer Mark Earle. This was a walk in the park for him in front of crowd of 130 with 4-8 buyers to corral and push. However, his patter, his presence, his change of momentum, his bid suggestions put him in rarefied are – he is a joy to watch. Mark is consistently one of Melbourne’s best auctioneers and was on his game this weekend.
We have full permission from Josh to print names and results.
Sunday May 9th
Hi Mal and Gina ,
A short note to say a very big thank you for what was an incredible result at the end of a longer than expected selling campaign.
Trying to manage the sale of any property when you live interstate is never easy and that is why we engaged your team at James Buy Sell once again.
We did have such a positive and encouraging experience seven years ago when we bought this property, so it was always going to be a no-brainer for us in utilizing your expertise.
During this campaign, we were all thrown a few curveballs and had to think quickly and even due to your frank advice rescheduled the auction mid campaign (which I was bitterly disappointed about at the time) I am pleased I listened.
I certainly have learned a few great lessons out of this process.
Always engage professionals and listen to them – from agent suggestions to tenants
Presentation matters this is a non-negotiable!
Communication is the key to a great outcome.
Mal and Gina thanks so much for an amazing result, we could not be happier.
Josh and Barbara
GAME TIP: Back your selected agent, not bagging your selected agent when the going gets tough can pay dividends.
GAME TIP: Pause and reset when a disaster is looming, don’t just sit there and hope when it’s obvious something is not working. Do different!
GAME TIP: Presentation matters.
GAME TIP: Last week we got it wrong, this week we got it right. Buying and selling well is a science and an art, but like medicine it’s not perfect and like art, not always to your liking.
Markets, Cycles, Trends
Melbourne Cycles
Nothing stays the same. I think Buddha said that – he’s in real estate.
Mood’s change – like voting habits, like fashion trends, like relationships.
Mood changes are reflected in demand changes and then into price changes.
They change at the individual level, at the segment level and at the overall market level.
Individual Transactions Influencers
Two buyers heading to an auction and one gets hit by a bus. The home goes for less.
One seller reads that less headline and gets nervous – sells to the first offer. Gets less.
Two buyers heading to an auction and there is a bus strike. The home goes for more.
One buyer reads that more headline and gets nervous – buys next home at asking price. Pays more.
Mini markets or Segment changes
In 2007 Homes that needed a reno COST MORE than finished homes
In 2015 Vacant land COSTS MORE than land with a home on it in need of reno.
In 2021 Homes that are finished on smaller land COST MORE than homes needing a reno on bigger land.
Overall Market Drivers
Population, Migration,
Supply restriction,
Money Access and Inflation
Noise, Pandemics
Is the market already turning?
Address: 18 Dunraven Avenue, Toorak
Crowd: 50
Opening Bid: $5,900,000 VB
Passed in: $5,900,000 VB
Bidderman: Duck 0
Some say yes and some say no
Find out what is really happening in the Top End Inner Melbourne Market next week as our May 100 Auction Test begins 15, continues 22 and 29. Be there!
Are you aware of what is driving your market segment?
6 Edward Street, Kew
Sales Team: Nick and Rob Fletcher
Crowd: 115
Open: $5,000,000 (vendor bid)
On market: $5,600,000
Under hammer: $7,240,000
Bidders: Volcanic 5
Want to benefit from reading the markets?
Rule One: Stop listening to bullshit predictions.
Rule Two: Start listening to real research
Did you read the article this week titled Weapons Grade Bullshit in the Sydney Morning Herald (Noel Towell), a number of clients sent it to me. It is really good. It is backgrounded by Evan Thornley – Dotcom Looksmart Billionaire, former ministerial secretary, electric car pioneer and past board member of Brotherhood of St Laurence?
Evan is a caring and spiritual man and 7 times a James Buy Sell client over the last 15 years, before he set up his own property company. His IQ blows yours and mine out of the water.
Evan’s company, Longview – property advisory and management – this week produced this graph after examining 2.4 million Melbourne deals.
This graph represents the Melbourne markets well. James Property Ratings support these findings.
This graph makes a number of unambiguous and scientific market statements on the 3 PPP’s – Price, Property and Position.
Evan’s quality of advice also reinforces why you get 3 MMM’s – Mentor, Manager and Moneywomen to help you buy well, as discussed in the last 2 weeks’ articles.
We encourage you to read Evan and Noel’s article.
We have no financial connection with Evan or his company. This is high-quality research.
Our highest rating James Home Ever - 1000/1000
This is the perfect home 1000/1000 and Launch Housing wants to build several hundred of them.
Launch Housing needs to raise over one million dollars to fund the 15% the government requires Launch to raise from the public for Homelessness. The government then puts in 85% and hundreds more of these homes can be built for women and children falling out of private rental and onto the streets. For more information Jeanelle.Mariani@launchhousing.org.au
Paula Matlock and James Connell from the Marshall White Foundation are backing this and in fact, have committed $100,000 to Launch by June 2021. Wow! Thank you to them and all at Marshall White for what you are doing to help homeless Melburnians.
Don’t just sit there please. 1000’s of Melburnians are becoming homeless post this pandemic. If not this, then please support something else. They are women and children in your neighbourhood and the Melbourne pandemic has really hurt them.
Happy Mothers Day to all Mums
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