Chainsaws and crossed fingers

Morrell and Koren, the 1st buyer's advocates

Those seeking the real action at the top end should take a look at 250 William Street, Melbourne. Yes. The County Court.

It’s fun for all the family as QCs take aim at when an offer is or is not an offer and whether an agent had a real counter-offer or was crossing his fingers behind his back and if so whether that’s only what’s to be expected.

All of which might seem like some innocent entertainment if not for the $200,000 plus in fees on one side (and, presumably, the other) and the consequences for others if, in fact, the agent invented his offer in an attempt to raise the price paid by the complaining party.

[pullquote]It has the potential to be an overdue game-changer…”[/pullquote]If that is proved, there could be a queue at the County Court. Stories of invented offers in negotiation are legion – and those who can prove them may be entitled to significant compensation. It has the potential to be an overdue game-changer for the industry.

And then you have to wonder why this whole affair has been greeted with such resounding silence by those who in theory should have an intense interest.

Consumer Affairs Victoria? Anyone home?

REIV? Are you there? Would you like to reassure your public that you’re on top of this?

Other agents we’ve spoken to? Outraged: Horror that, if guilty, an agent could do such a thing and thus bring all into disrepute. And a great unstated relief that it’s not them in the witness box up against a chainsaw-wielding QC.

And then, as if enough isn’t enough, on Sat arvo, our phone rings. It’s a high-profile agent who has been bidding on behalf of a client and he’s been enticed to attend the auction by … underquoting! And he’s been bidding against … a dummy! And he’s … furious!

Lordy! What will they think of next? Maybe now he’ll begin to understand how the rest of the world feels when forced to deal in a market of distrust.

This is increasingly driven by volume levels and buyer pessimism and the problem – especially when properties are sold post-auction or off-market – is the complete lack of transparency through the negotiation process. Never has “buyer beware” been more appropriate.

And now the weather report …

When agents start telling the media that auctions are no longer the automatic choice, when they lament having to tell vendors what they don’t want to hear, when they speak of finding innovative ways to engage buyers (not, we trust, of concern to the County Court), you could say there’s been a change in the weather. That’s not a cloud on the horizon, it’s right over us and it’s raining like hell.

And it seems to have brought on a new strain of flu among the auctioneers: Lots of huffing, puffing and very red faces, high blood pressure and low spirits. They should go home to bed.

But …

But there are always exceptions. Tick all the boxes and the buyers will come.

46 Elizabeth Street, Malvern. A good Victorian with ticks all over it (that’s why we bought it years ago). Four bidders competing. On the market at $4.5 million and sold at $4.68.

But still there are wallflowers. Still no sold sign on “Little Mytton” 29 Albany Road, Toorak. Expressions of Interest? Supposedly three punters? But still light years between the owner and buyer.

$10 million+ Toorak has always been about joining the dots and never more than now when there are alternatives quietly available off-market.

David Morrell

Bayside: reality rules?

Auctioneers and seller’s agents have been acknowledging for some months now that it is indeed a buyer’s market.

In fact this concession to reality seems to have become a part of auctioneers’ preambles in recent weeks. However there is an increasing edge to the spruikers’ tones as frustration and annoyance sets in with buyers simply refusing to buy into the argument.

“It is supposed to be a buyer’s market, so why on earth aren’t you all bidding?” one gavelman was heard to plead as he gazed into the blank faces of his not so enthralled audience looking for the three or so bidders he thought he had ready to go. “Now,” he must have been wondering, “How do I explain this to my vendor?”

[pullquote]So when is a buyer’s market not a buyer’s market?[/pullquote]

Can it be a buyer’s market when the buyers haven’t come out to play?

Now even the banks are concerned with the lack of activity and the effect on the lending market; so much so that they have cut interest rates on larger loans and increased the loan-to-valuation ratio in an effort to stimulate lending (and to no doubt pinch some market share from the opposition).

The tea leaves indicate this holding pattern will continue for some months at least with clearance rates and prices continuing to ease a little over that period.

Will the traditional Spring market bring some respite to sellers? Too early to call.

But if history is repeated, when buyers decide to re-enter the fray, it will be in numbers and when that happens a market with barely a pulse can become resuscitated very quickly.

Greater Melbourne recorded an official clearance rate of 59% and that is likely to be adjusted down a little.

Bayside barely got to the 50% level with the clear exception of – yet again – Bentleigh and Bentleigh East. 79% sold: 15 from 19 offerings.

Beaumaris and Black Rock were back on the job after last weekend’s holiday with 12 auctions listed and seven of those finding buyers.

The standout offering was three adjacent allotments at 493-497 Balcombe Road, high on Balcombe Road hill. Ranging in size from 836 sq m to 936 sq m, the three coincidentally sold for exactly the same price of $1.4 million each.

A quiet day for Sandringham and Hampton with only three sold among the seven offered. Highest of the day was 4 Holloway Road, Sandringham: $1.63 million.

The top end in Elwood was not troubled with a prime opportunity at 24 Meredith Street not finding favour. It was passed in at $2.25 million, just shy of its reserve of $2.385 million.

A big weekend in Brighton and Brighton East resulted in half of the properties offered under the hammer eventually finding buyers.

Of the 10 that did sell, the vast majority were passed in on a single bid and bidder and negotiated afterwards.

The standout offering was at 2C Dudley Street in Brighton’s Golden Mile. Although the address implies an apartment or town house, it is in fact a very substantial family house on a battleaxe allotment of 1100 sq m. Genuinely described by the auctioneer as the best home he has had to sell in over 30 years in real estate, he was still met with a subdued silence. Passed in on the auctioneer’s bid of $5 million, discussions continue.

The auction of two adjacent vacant allotments in Hanby Street also failed to excite. Number 38 (1144 sq m) was offered first on the basis that if sold, number 40 (914 sq m) would be available to the purchaser at the same rate per sq m. A not-to-be-sneezed-at bid of $2.6 million was apparently received but a brief post-auction negotiation (held surprisingly with all to see) failed to find agreement and the reserve is now undisclosed. Number 38 did not attract any bids under the hammer and was also passed in on a vendor bid of $1.9 million. A later offer of $2 million was reported and again the reserve is to be disclosed but a figure of $5 million for both has been mentioned.

63 Outer Crescent, a brand new townhouse, has finally finding a buyer. First offered last year with an expectation of at least $3.5 million, several agents and many many months later a sole opening bid of $2.5 million was gleefully received and a post-auction chat encouraged said bidder to add some weight to the offer before a price of $2.61 million was agreed.

11 Thomson Street was a test of patience for both agent and buyer(s). An opening bid from an advocate of $1.5 million was made. The auctioneer was heard by most there that he did not intend to make a vendor bid and that the property would be passed at said $1.5 million in the absence of any further bids. Surprise, surprise when he then announced a vendor bid of $1.55 million. Said advocate was suitably unimpressed and made his displeasure known. The outcome was a standoff with the property passed in and negotiations then being conducted with no less than three parties. Against an initial reserve/expectation of $1.75 million a sale eventually was made but believed to be a lot closer to $1.6 million

Also finding buyers:

And in Brighton East, in arguably the most expensive street in this locale, number 14 Shasta Avenue was unusually but candidly reported as having “no bids”. It now has a reserve of $2.875 million.

There’s another biggish weekend coming up. Our prediction? More of the same.

Anyone for footy or the snow ?

Damian Taylor

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