Good properties aren’t dropping in price – and the clock is ticking toward a rise…

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The market has had some stereo typical results of late and the clearance rate of 55% is again representative of properties that sold via negotiation more so than under the hammer. Everything we viewed had genuine bids – but the disparity (as always) was between vendor expectation (not willing to drop the price) and the willingness of buyers (and ability of the selling agent) to negotiate a successful compromise.

However just because a property passes in at auction, it does not necessarily mean the purchaser will secure the home for a price close to that passed in number – (for example; it may have passed in at $460K, but strong negotiation can easily secure $520K.) A buyer may feel they’re in a ‘win win’ scenario doing a deal behind closed doors and not being pushed to dig deeper in a competitive public arena, however selling agents are all too good at playing on the heightened emotions home buyers have on these occasions, and can often end up generating a better deal than they would have done with 2 bidders competing outside the home.

Therefore just because turnover is down, does not mean discretionary vendors are willing to accept less than market value for their property. Indeed, if they felt the market was going to keep dropping, they would be settling for any number they could get, and this is simply not happening.

In metropolitan areas prices are not substantially dropping, and properties currently on the market – well suited to the buying demographic – are not in abundance. Home loans and pre-approvals are on the increase and so it’s not hard to conceive that as we approach the buying season –(Spring) – turnover will increase, and the top third of suburbs surrounding the CBD could start to push upwards in price. The question for buyers must be – ‘are you going to wait to find out?’

Of the 8 auctions we attended this weekend – 3 sold under the hammer, 3 were successfully negotiated post auction, and 2 were unable to reach a happy compromise between buyer and purchaser.

Passed in on a genuine bid

1/101 Spray St, Elwood

1/101 Spray St. Elwood was a somewhat disappointing auction. There was nothing wrong with the property. A nicely renovated good sized one bedroom apartment situated in a prime location in Elwood. It even possessed the stand out feature of a large courtyard ‘on title’, a rarity for a one bedroom unit. A huge crowd turned up and it looks promising enough. The auctioneer must have been channeling Robin Williams in ‘Good Morning Vietnam’ because after a fairly subdued pre-amble of auction rules and contract details, he raised his voice to a near scream by shouting out ‘Good Morning Sunshine!’ (twice). It caused a stir of entertainment, however I’m not sure how many believed him when he pointed out the location was the best street in Elwood because it had been reported as such in The AGE’s ‘best streets’ report.

They had been quoting 440-480K – so when no one opened up to place an initial bid, it seemed appropriate to start the auction with a vendor bid at the lower end of the range. There was however one willing participant out there– a loan voice followed the lead and dropped in at 450K, however even after the traditional ‘half time’ trip to see the vendor, it didn’t inspire further bidding. Passing in at this level, the buyer was lead to negotiate, but with a vendor unwilling to drop the reserve of 495K, negotiations look set to continue.

2029 Malvern Rd, Malvern East

2029 Malvern Road, Malvern East. I suspected this property may pass in due to the location. However it balanced this negative somewhat due to the house possessing a significant ‘wow’ factor. The four bedroom home – renovated and extended with a spa situated out the back did manage to attract a good sized crowd, and with limited street parking, a cold blustery wind, and the noise from the road so loud you could barely hear the calls, it was hard to conceive that everyone had just turned up to watch. They had been quoting ‘expecting interest at 1-1.1Mil’ and in the end this was what they got.

Every now and again you meet an auctioneer that’s a little addicted to the good old vendor bid. This was one such character. No bidder was going to open, so he started things off with a vendor bid of 1.050Mil. The auction clichés were flying today ‘I don’t mind where we start – anywhere at all’ ‘You’ve got to bid if you want to buy’ ‘don’t hang back!’ – but buyers were hanging back – so we got another vendor bid of 1,070Mil. Obviously we weren’t close enough to the reserve to risk passing it in too low. He popped inside to see the vendor – came back out to re-iterate that it was one of the best renovations he’d seen, and tried again – this time placing a vendor bid of 1.1Mil. Finally – after many minutes, and a few people wondering away, he got his bid with a buyer coming back with a 10K rise taking the price to 1.110M. Passing in at this level however, negotiations weren’t successful. The property passed in with an undisclosed reserve.

Passed in and negotiated

40 Grout St, Hampton

40 Grout St, Hampton was a bit of a show stopper. An impressive 4 bedroom architect designed townhouse with a foreboding exterior, not far from the bay and Hampton’s popular shopping district. Quoting $1,350,000 – $1,450,000 the auction opened on a genuine bid of 1.25Mil. There wasn’t a huge crowd there, and considering the upper end of the market is still struggling it looked like this one bid wasn’t going to go much further. Therefore the agent took the liberty of placing a vendor bid of 1.3Mil. The initial bidder didn’t seem to mind being pushed higher prior to any negotiation, and quickly responded with another bid of 1.310Mil. Passing in at this level however, negotiation took place behind closed doors eventuating at a sold price of $1,360,000 – In the current market, this seemed reasonable.

11a Exley Rd, Hampton East

11A Exley Rd, Hampton East looked as if it would tell a similar tale. Not such a flash townhouse as 40 Grout st in Hampton – an older design with 3 bedrooms. The location wasn’t first class either – it was situated in close proximity to the train line which at regular intervals forced the auctioneer to raise his voice over the noise of a passing train.

There were however 2 bidders at this auction, and it opened on a genuine bid of 750K. The agent had to follow this on a vendor bid of 760K before another bidder was confident enough to come in at 770K. The bidding edged up in 10K and 5K increments, but didn’t quite reach the vendor’s reserve. Passing in at 805K negotiations were successful and resulted in a selling price of 820K.

38 Lees St, McKinnon

38 Lees St, McKinnon attracted a fairly large crowd – no doubt because of its position right in the midst of the McKinnon Secondary College zone. Neighbours and buyers turned up to see if it was going to attract a similar result to a property opposite which sold a couple of months ago for 801K. I often think auctioneers go over the top with their statements about the current market. After being told 5,6 and 7 times a day that it’s a buyer’s market full of bargains, it starts to sound like spruiking rather than qualified market knowledge. However this agent did a fair job, because he managed to get a genuine bid of 690K to start the auction. There were 2 bidders in all – however the price didn’t get past 775K before he was forced to pass the property in under reserve. Negotiations were successful however, and the final price came in at 785K which – taking into account the smaller land size compared to the home opposite – was a fair compromise on comparable and current market value.

Sold under the hammer

1/101-103 Orrong Cres, Caulfield North

Hurray for a female auctioneer! However – it was unfortunate she hadn’t got the loudest voice to enable the sound to travel. The property at 1/101-103 Orrong Crescent, Caulfield North, was situated right in the middle of a shopping precinct, with regular passing traffic. The property – a 2 bedroom apartment, positioned above a craft shop and next door to a café, may not sound all that appealing, however the location in Caulfield North is very popular with owner occupiers and this presented a good entry level opportunity into the district. The unit had been quoted $390K – $420K, and with the low quote it wasn’t surprising to see interest from 4 bidders.

The auction opened on a genuine bid of 380K and didn’t take long to get to its on market price which was announced at 451K. The first bidder seemed to be winning the game throughout the whole auction, and there was more than one occasion when it looked almost a done deal. However the auctioneer strung her counting out longer than I’ve seen anyone do for a while. In fact it was bordering on the ridiculous – and something perhaps a more experienced bidder may have done something about – but it did the trick because it was around this level that 2 other bidders – after heavy persuasion – tried their hand. Edging up in 1K increments they finally managed to over step the first bidders limit, and the property sold for 464K.

95 Wheatly Rd, McKinnon

As you can see from the photo, 95 Wheatly Rd McKinnon attracted the best crowd of the day. With bodies packed into the front garden, and a renovated free standing Art Deco on 600 sqm of land on offer, the property had the stand out essentials it needed to attract 5 bidders. Opening on a genuine bid of 900K it was a brief few seconds before it hit its “on the market” price of 960K. from there on in it tracked in 5K and 1K increments – edging up to that invisible barrier of $1Mil, before selling just under at 993K (again – not a bad result in this market)

16 Addis St, Geelong West

Finally 16 Addis St, in Geelong West told an enlightening story of how well the market in regional areas of our state is performing. A nicely presented, well located, 2 bedroom house on over 700 sqm of land was ideally set up to attract a large crowd. Amongst that crowd were 7 eager bidders, therefore the opening bid of 300K was merely wishful thinking from one opportunistic buyer. It wasn’t announced on the market until around 440-450K, and without breaking pace sold under the hammer for 471K.

Catherine Cashmore

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