In Scott Pape’s article In the Herald Sun on Saturday 27/8/2011 “Doing Your Block” he articulated that “The Block” was an abject failure. “The only thing that saved the show was the young bloke proposing to his girlfriend.” He put this down to the failure of the properties to sell. He explained that if the renovators had put their money up they would probably end up bankrupt.
Scott’s idea of the equation was: average purchase price of a property including stamp duty was listed as $950,000. The major renovations were about $300,000 and cosmetic renovations were $100,000 for a total of $1,350,000. With the purchase prices ranging from $850,000 to $1,000,000, Scott and his “expert Valuer”, Louis Christopher, have claimed the losses would be as much as $500,000. And what is worse still, this result shows what is happening to the Melbourne Property Market.
What the article really shows is that taking property advice from the wrong people will end up costing you a fortune. Unfortunately many people will look at this article and assume Scott has some idea of the Melbourne Property Market.
In this instance he could not be more wrong.
For starters, the property was purchased from a developer with plans and permits to develop the property into units. However, an incredibly astute production advisor envisaged a better use for the properties. A reality TV Show that out rated all of its predecessors. I think if the four contestant couples had put the money in to purchase the properties and were given equal shares of the shows profit then they would not have made $500,000 losses.
But let’s take the TV show out of the equation. Four houses in the one street all up for auction at the same time is totally ridiculous, however, they all sold within four days of their gazetted auction dates; All four at or above reserve. In the current market, I had assessed the properties at low $800’s for the single fronteds and low $900’s for the double fronted. All four of these properties sold very well, considering their locations, their lack of off street parking and their limited land size.
Again, this morning The Age writes about “Channel Nine’s fizzer finale on its hit series The Block”. The reporters simply do not understand what is happening in the real estate market and how the auction process works. If you were selling your home and the agent sold the property on a Saturday afternoon or the following Wednesday would you care too much? Especially if the agent handed you a price that was $50,000 – $70,000 over what you were expecting. And the reserve was well above market expectations to start with!
Is the Melbourne property market flat? YES. Do all properties fail to meet expectations of the market? NO! If the property that is on the market has good attributes for the suburb, it is priced well and is well presented, then it should sell well under competition. Alternatively, if you have a multi-million dollar advertising campaign, you can still sell properties that do not have the best attributes for a suburb.
If you are reading an article in the paper, you must understand that it has been written specifically to assist in the selling of advertising for that paper or TV channel or radio station. In order to get specific advice on anything from Taxation advice to buying stocks or buying property, pay a registered expert to give specific advice to you on what they are qualified to give advice on. If you are submitting a tax return go to a registered accountant, if you are thinking about insurance or investing talk to a licensed, registered financial planner. If you are buying a property, pay a licensed Real estate Agent to act on your behalf. It does not matter whether it is my company or another one, but you will do far better with an expert on your side.
FREE ADVICE IS NORMALLY WORTH EXACTLY WHAT YOU PAID FOR IT! – NOTHING!!!
Many people offering free advice are being paid – just not by you!
Ian James
Director JPP Buyer Advocates