Fresh Market News

April 26th & 27th Weekend, 2008. Melbourne.

Overall Clearance rate: 68% on 358 properties to auction.
Expected Clearance Rate on a larger than normal offering for a holiday weekend.

Million Dollar Melbourne.

What are you going to do at AUCTION on a PASS IN or VENDOR BID?

Many buyers turn up to an auction with little planning having been done, other than “I think I will bid up to” or plan B “I will see what others do”.

If you want to spend all your money in this market that, as a general rule, has shifted downwards between 5 and 20% in the last few months (inner Melbourne higher end properties) then this planning or lack of it, will achieve that (spending all your money).

2007 was to some extent easy - you turned up, put your hand up and at the end of the auction you had either bought the property or you hadn’t. Much of our work as buyer agents was buying before auctions, stringing together bidding strategies, assessing value or negotiating off market properties.

In 2008 the rules have changed for buyers. In 2008 if you turn up and put your hand up,  quite often you are the only person to do so. Look at the results below of the million dollar plus passed in auctions; more than half had the auctioneer issuing vendor bids at the pass in price.

So what happens next after you have put your hand up and its passed into you?

Usually you are feigned over by a number of surprised agents (who are surprised because they thought there were going to be five bidders but for some reason nobody else showed up). You are taken inside and immediately told just how lucky you are and the reserve is only “x” dollars above the quoted range and this is your lucky day.

Can we rewind a bit before we discuss what are your options from here.....................Roll Back

........................You have found your dream home and it is going to auction on this or a later weekend then there are a few things you should do prior to auction day.

1. Get an architect or builder to assess the home’s current condition. A pest inspection in many cases is also money well spent.

2. Documentation needs to be checked by a solicitor – not a conveyancer, a solicitor who can give you a legal opinion on its validity.

3. Get some professional help, and we don’t mean the help that involves somebody giving you some medication. We mean a professional buyer advocate, experienced in the type and price of property you are looking at. A buyer advocate experienced in the ways of the other side (granted good selling agents also know a thing or two about managing buyer advocates – so make sure it’s an experienced advocate at the price levels and property types you are looking at).
   
   Of course we are going to say get a buyer advocate – but we can show you numerous examples where we have had a lot of money left in our pocket (or should I say your money stayed in your pocket) when acting on behalf of clients who freely admit they would have planted it down on the table if asked. This is not a sleight on selling agents – to the contrary – this only confirms why 99% of all sellers hire selling agents because they do work – they do make a difference and in this market good selling agents make a difference more than ever. For some reason many buyers are embarrassed or feel it’s an assault on their manhood or feel they can, on their first or second go at auctions, match it with the best in the business (high end selling agents) and therefore they don’t hire a professional buyer advocate.
   

4. Get an FIRM idea on different value ranges – in today’s market, last year’s data is a guide but not a bible. The market has shifted and next week it may shift again – we are in volatile times so you need different price guides for different situations. ON THE SAME PROPERTY.

5. Get a plan – flowchart scenarios, prepare scripts on what to say when under pressure.

6. Practise your breathing, your scripts. We know some clients laugh when they read this bit. It’s true. If you cannot go to Harvey Norman today and HAGGLE $150 off the asking price of a computer, or you cannot get up in front of twenty office colleagues and give an off the cuff talk on why your dream home is in fact not your dream home, then are you sure you are the right man (or woman) for the job this weekend against experienced buyers and quality selling agents. Alternatively, have you the skills to take advantage of poor selling agent preparation?

OK so it Auction Day

1. Does the auction feel alive or not?

2. Should I open the bidding or not? The advantage to opening the bidding is you can make it lower than a vendor bid and if you are smart that may stop the vendor bidding. The disadvantage is it gives your buying opponents Nervous Nellie or Nervous Neil a confidence boost that somebody else likes this and then they start bidding.
3. You’ve bid $1,830,000. Vendor BID $2,100,000. OH MY GOD. What do I do now???? .............................................................................. Roll Forward – It’s passed into you and you are sitting in the lounge room of your dreams and your final bid was $1,125,000 and agent has said you can buy it for $1,350,000. What do you do?

Thoughts that run through our mind?

1. The quote
2. The agent and his or her experience (What has been their recent successes or not)
3. Was there any other bidding?
4. Has the vendor bought (research beforehand)

Some of the Tactics and Techniques an agent may use on you – do you know what to do?

1. The Squeeze
2. Silence
3. Walk Away
4. Double Tag - one responding and one listening
5. Higher Authority
6. You instead of us
7. Multiple Offers
8. Over the Top – New Player
9. The trial agreement – if I can get my guy to
10. The Deadline
11. Build the Pace
12. Slow the Pace
13. The Alternative (Competition)
14. The No Response
15. Show Me the Money
16. The Fait Accompli
17. Grinding
18. Timing
19. Bridge building
20. Laugh and Pause
21. The Withdrawal
22. The 1,2, 3 Drop
23. The dribble, dribble, solid amount – last gasp.

If we haven’t at least made you think about your auction this weekend then apologies but if we have then lets meet and have a chat – no obligation and you assess if we can add some value.

After all GREAT NEGOTIATING is not about missing out – anybody can do that. GREAT NEGOTIATING is not about paying over the odds by a long way and spending all your money and then some – anybody can do that. GREAT NEGOTIATING is about getting what you want at a price you are happy with.

Why should a SELLER have all the odds in their favour – the market has shifted direction – HAVE YOU?

30 March 2008

Dear Mal, Peter, Melissa and Adam,

Re ............ Avenue Balwyn,

We would like to take this opportunity to thank you very much for securing our future home.

When one of our colleagues pulled out at the last moment in assisting us for the purchase of ......... Ave Balwyn, we thought we would need some help in making one of the most important decisions (financially) in our lifetime.

We were both extremely impressed given the short time frame you and Peter had to work with ie less than 48 hours before auction.

Your professionalism in putting together a substantial report on the property and the follow up strategy at auction and post auction negotiations, we believe gave us the edge in securing the property.

We were glad that you were bidding for us at that auction as you took control of the proceedings immediately and certainly made it clear to other bidders that they had a real fight on their hands if they were to be successful.

We cannot talk highly enough of your overall approach and in particular your post auction skills in negotiating a great price for us. We firmly believe that you have added value in the process of purchasing our home and would not hesitate to recommend you to any friends or family.

Well done to your team.

Yours sincerely

Ezio and Sonia

MILLION DOLLAR SALES (all results can be found at REIV)

ALBERT PARK
S 116 Beaconsfield Pde B 8rm 222sqm $2,220,000 Hocking Stuart

ARMADALE
PI 5 Murray St B 6rm 430sqm $1,600,000 VB lo $1,600,000 res $1,875,000 Marshall White & Co

ASHWOOD
PS Katta Ct v/land 1000sqm $1,000,000 Ray White Mt Waverley

BALWYN
S 88 Belmore Rd B 7rm 815sqm $1,020,000 L J Hooker Balwyn
PI 3 Belgrove Av WB 10rm 1076sqm $1,590,000 VB res $1,675,000 Jellis Craig

BALWYN NORTH
PI 79 Hill Rd BV 10rm 785sqm $1,200,000 lo $1,230,000 res $1,300,000 Fletchers
PI 5 Kalka St B 9rm 774sqm $900,000 VB res $1,000,000 Fletchers

BEAUMARIS
PI 6 Fairleigh Av BV 7rm s/div $1,170,000 lo $1,200,000 res $1,250,000 Hocking Stuart
PI 6A Fairleigh Av BV 7rm s/div $1,100,000 VB res $1,150,000 Hocking Stuart
PS Hotham St 11rm 675sqm $1,180,000 Buxton

BRIGHTON
PS Cochrane St BV 7rm 417sqm $1,500,000 Buxton

CAMBERWELL
S 26 Sycamore St WB 8rm 588sqm $1,210,000 Noel Jones
PS Oxford St WB 8rm 773sqm $1,231,000 Jellis Craig

CANTERBURY
S 20 Logan St WB 7rm 722sqm $1,615,000 Marshall White & Co

CAULFIELD
PS Webb St BV 6rm strata $1,615,000 Gary Peer & Associates

CLIFTON HILL
SB 389 Wellington St B 5rm 300sqm $1,000,000 Collins Simms

FERNY CREEK
PI 17-10 School Rd 5500sqm $925,000 res $1,000,000 Michael Knight RE

FITZROY
S 49 Greeves St 5rm $1,100,000 Nelson Alexander
PS George St 4rm $1,731,100 Nelson Alexander
PS Rose St $1,200,000 Hocking Stuart

GLEN IRIS
S 27 Ranfurlie Cr B 8rm 800sqm $1,525,000 Mcpherson Glen Iris
S 7 Wallis Av WB 5rm 700sqm $1,031,000 Bennison Mackinnon
PS Beryl St B 7rm 712sqm $1,090,000 Jellis Craig

HAMPTON
S 2 Ocean St WB 5rm 444sqm $967,000 Hocking Stuart
PS Orlando St WB 8rm 461sqm $1,300,000 Ray White Hampton
PS Small St WB 6rm 487sqm $1,440,000 Hodges

KEW
S 7 White Lodge Ct B 5rm 707sqm $1,595,000 Kevin Sheehan Property
PI 6 Moonbria Av BV 11rm 573sqm $2,400,000 res $2,800,000 Jellis Craig
PI 14 Miller Gr B 7rm 756sqm $1,410,000 VB res $1,500,000 Jellis Craig
PI 15 Barry St B 8rm 1358sqm undisc VB res undisc Bennison Mackinnon
PI 68 Cecil St BV 9rm 599sqm $1,260,000 VB res $1,295,000 Jellis Craig

KILSYTH SOUTH
S 22-24 Chandlers WB 8rm 2000sqm $1,030,000 Barry Plant

MENTONE
PI 5 San Antonio Ct BV 10rm 665sqm $1,550,000 VB res $1,700,000 Buxton

SURREY HILLS
PS Essex Rd BV 10rm 600sqm $2,350,000 Jellis Craig

VIEW BANK
PI 38 Old Lower Plenty Rd B 8rm 1347sqm $1,150,000 VB res $1,250,000 Jellis Craig

WILLIAMSTOWN
S 24 Lyons St WB 8rm 1002sqm $1,970,000 Sweeney
SB 27B The Strand B 5rm strata $1,150,000 Sweeney

1st and 2nd Homebuyers

Not much to report on the auction front this weekend due to the Anzac Long Weekend. There were some strong results for good properties particularly bayside in Hampton and Sandringham. For example 2 Ocean Street, Hampton click here for rating. The home was fully renovated in a fantastic location with ocean views and comprised 3 large bedrooms ( main with ensuite ), central bathroom and huge open plan north/east facing kitchen and living. The estimated price range was $930,000-$990,000 and sold for $967,000. A perfect quote by Jennifer Dwyer of Hocking Stuart, Sandringham.

In Search of Home Sweet Home.

House Hunting 101.

Following-on from last week's article you will have your finances in place, as well as the name and contact details of a conveyancer/solictor and building inspector to act on your behalf.

The following information will allow you to become value savvy in the suburb you wish to live in! That is the key to real estate - you want to buy, but not over market value, your new home.

Firstly, it is important to get your mind right and no matter how frustrated you may become during your searching you must remain positive. Be prepared to be searching for six months. You will start-out with a 'wish list' and it may soon become a 'compromise list'. If you look hard enough you will come across a property you love and more importantly for a price you are prepared to pay.

As soon as possible narrow down the suburbs in which you would like to live. Doing this will speed-up the buying process. It is false economy to be searching in more than three suburbs. The market can change within a matter of weeks and if your search criteria is too wide and consequently drawn- out, you may miss good buying opportunities. Bear this in mind; we are in a changing and unpredictable market at the moment. You do not want to be searching aimlessly for months on end as you may end-up paying more for a property than when you started your search. (another cost to factor-in these days is the petrol consummed driving from suburb to suburb

When you have narrowed-down the suburbs in which you would like to live ( no more than three and ideally one ), spend time in the suburb. Get to know the shops, cafes, parklands, sports facilities, schools and child care facilities.

In your mind decide if the home you are looking for is for five years or less, or the dream home where you will begin a family. This criteria is very important and will have a huge bearing on the type of property you will buy. If it is your first home and is part of a five year plan, buy a home that you can improve, for example, a property that may need a cosmetic update such as polishing floorboards, a quick paint, new kitchen and bathroom cupboards. This will add value to your home so that when you come to sell in five years you will make money. If your plan is to buy a home to live-in for the long term, a large back yard and proximity to schools and kindergarten maybe more important. You may purchase a home that is liveable but in the future may need a renovation. This is okay because you will be living there for more than five years and any renovation you do will not overcapitilise your home.

So, we have our finance organised, a building inspector at the ready, a conveyancer/solicitor qualified to peruse the legal documentation ( Section 32 ), found our ideal suburb and decided on the style of property you can afford. What's next? This is where the fun begins and we'll look at that in next week's article. Until then, happy house hunting!

Investors

Cashflow over long periods.

When talking to prospective investors, the most asked question is where to buy. Probably half of our investor clients like to know the area they are investing in; it just gives them some comfort and if the numbers stack up, they prefer the devil they know versus the devil they don’t. The other half; it’s all about the numbers and location can be flexible.

When considering areas, we look for those that have had solid growth over the last ten years or so, both in terms of property values and rental returns, and take into considerations future forecasts, economic and social conditions, as well as where your financial position will allow you to go.

Not rocket science you say? I’d completely agree, but having access to all the data and actually being out and about, at the coalface, does place us in a very strong position to help investors make sensible, long term decisions. Understanding the data is also important and a good example of this is Flemington. REIV data suggests that about 1/3 of the Flemington residents are housing commission tenants and this significantly impacts statistics such as weekly income levels, both individual and family, and weekly rent.
Whilst Valuer General data shows reasonable growth from 1996 – 2006 of 11.3%, in the last twelve months it has jumped significantly. REIV data tells us that the median unit price jumped from $270,000 in Dec 06 to $311,000 in Dec 07, or a 15.2% increase.

Click here for the full report

There are some great parts of Flemington in and around Flemington and Newmarket stations, vibrant cafes and lots of young families. Some information on Flemington for you..

Happy to chat further about your property investment plans.

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