This week the REIV reported that 773 auctions were held with a 73% clearance rate. Realestate.com, on the other hand, reported 1096 total scheduled auctions with a clearance rate of 68.25%.
We covered auctions and inspected properties all over Melbourne on Saturday, mostly in the areas of Port Phillip and Bayside.
The chilly morning kicked off at 14 Kanowna Street, a property on a slightly compromised block of 697 SQM, auctioneered by McGrath’s Michael Townsend. Michael placed an opening vendor bid at $1.85m and called for $10K rises. The crowd, consisting of neighbours, builders and developers were very quiet, and after no further bidding, the property was passed in. The lack of bidding enthusiasm was consistent with our views on B and C grade properties – with 14 Kanowna containing an easement down the side and a noticeably large tree on the block.
Hockingstuart Sandringham held the auction at 50 Bamfield Street in Sandringham, where three bidders, two of them with young children, bid in larger increments, starting with an opening bid of $2.55m. Auctioneer Steve Tickell was obviously pleased with this opener, which was$150K over his suggested amount. The second bidder, ignoring Steve’s call for $10K rises, placed a bid for $2.59m. Both bidders went back and forth until a third bidder came in at $2.67m. The auction was passed into the second bidder at $2.68m, and sold later for $2,700,000.
Over at 121 Sandringham Road, what started as a quiet auction was kicked into gear after Robin Parker from Marshall White started with a vendor bid of $2m. Despite the large and mixed crowd, we almost thought that the property would pass in until a bid came in at $2.01m. Agent Kate Fowler then assisted a second buyer in calling out bids, calling out $2.05m. A third bidder then placed a bid, unaware that he was already below the current bid.
After much back and forth with the two bidders and Robin, the bidding increments started decreasing, only to attempt to knock the other out with random larger bids. The auction was drawn out (35 minutes long) and Robin, as usual, kept things very entertaining.
The property was declared on the market at $2.2m.
After dropping down to $1000 bids, the property ended up selling under the hammer for $2.290m, to the relief of the crowd and finishing $90,000 over the reserve.
Considering it’s one of the largest blocks in the Castlefield Estate of Hampton, 22 Avelin Street drew a pretty average crowd size. Only one vendor bid was placed by Mark Earle from Buxton, and with no bidders coming out of the woodwork, the property was passed in for $3.1m. The asking price is now $3,350,000.
The contemporary church conversion at 75 Mills Street Middle Park drew a crowd, with Marshall White quoting the property at $1.75m-$1.925m. Kaine Lanyon placed a vendor bid of $1.7m to start the crowd but this drew no bids. A quick interlude inside and he was back out again to a silent crowd. Interested parties all seemed to have young children, quite amazingly given the 4 levels of this property. With so many levels we anticipated a narrow buyer pool and one that didn’t include young children!
Kaine urged the crowd to ‘engage in the process!’ One couple, accompanied by their toddler, placed a bid well below the marketed price for $1.72m. The property was passed in and is now asking $1.985m.
Over to 136 Page Street Middle Park and this home was back on the market after selling in February 2015 for $5.5m. The owner’s had enhanced the property with a cosmetic makeover. Three bidders entertained the thought of buying this home with two more seriously than the third. The home sold for $6.4m under the hammer.
The final auction of the day, at 31 Margarita Street Hampton had the largest crowd we had come across of some 100+ neighbours, on lookers and two buyers!. Mark Earle from Buxton placed an initial vendor bid of $3.3m, then proceeded to ask for $20,000 increments. Two bidders came forward and took the property the property relatively quickly to $3.6m where it was declared ‘on the market’. $2,000 bids continued until the property was sold under the hammer at $3.77m, a very high price for a Carter Grange volume build. Had this home been an architecturally designed and custom built home with a pool (almost a given requirement in Bayside) this home would have moved into the $4m + market.
The auction results this weekend around Melbourne still confirmed to us that the ‘A grade’ properties are still performing well with 2 or 3 bidders.The properties that we categorise as ‘B and C grade’ are struggling more often than not. These homes either have compromised floorplans, are on busy roads, unrenovated or are asking too much for what they offer.
Our advice would be that if a property you like is going to auction, then let it, especially if it is a ‘B or C grade’ property. See your competition transparently on the street (or auction room) and bid to win the right to go inside and negotiate. You must however be knowledgeable in your assessment of the market and the home so that you don’t run the risk of paying too much (meeting a vendor’s bullish reserve) nor missing out because you are ‘too smart’ and refuse to give a little bit. Chances are the vendor is your competition when it is passed in and therefore you should know their motivation for selling as well!
Our observations and dealing with ‘A grade’ properties, especially over the past 24 months, is that they are not even hitting the open market. They are selling off market with short, quiet campaigns that involve phone calls and inspections by appointment. Negotiations are done behind closed doors and neighbours are sometimes none the wiser. These properties are selling well as there has a been a distinct lack of really good stock to choose from in the open market. Many buyers have been looking for longer than they anticipated so when they find the home that ticks the majority of their boxes they are happy for a quick and quiet transaction.
Whatever you are looking for, make sure it is the right property. Buying the wrong one will be the most costly mistake you will ever make, whether it is for your family home, lifestyle property or investment. Do your homework and due diligence so you can make a really informed decision.
Have a great week ahead!