A faint ringing sound came from beneath a pile of cobwebs that had lain undisturbed for as long as he could remember. A faintly familiar ringing sound.
He rolled up the form guide he had been reading and, tentatively, pushed the mess aside. It was a telephone. He picked it up.
“I want to sell my house.”
[pullquote]The Agent stared at the phone. Was this a joke?”[/pullquote]The Agent stared at the phone. Was this a joke?
“Pardon?”
“My house. I want to sell it. Six and a half mill I reckon. That’s what the place down the street sold for last year and mine’s just as good.”
Christmas? Could this be Christmas? A real, live, top end listing? How long had it been?
They talked. The agent knew the house. Knew what it was worth today: $5.25, tops.
“Bewdy,” he said, “Not a prob. Market’s tough, but we know our way around. Big marketing campaign. That’ll pay for itself a dozen times over.”
Or something like that. And then the house goes to auction and there’s only one bidder and the highest bid is $5 million.
That’s one of the three scenarios that are playing out at the top end right now.
When you get to $5 million plus, there are those who must sell (moving interstate, Family Court, deceased estate, etc), those – our friend above – who would sell if they could get the price they would have early last year and those whose agents really do know what they are doing and earn their 2%.
The first group are the vendors agents’ dreams are made of. The have-to-sells will sell because they’ll lower their expectations until they do (the wealthier agents are particularly skilled at lowering expectations).
Those still living in last year are tougher. Some will be worn down, many not. There are lots of wallflowers still out there. They’re often the once-were-auctions or expressions of interest that are now being offered for private sale. Their vast marketing spends have gone for nothing but to increase their agents’ exposure.
And then there are the houses which sell because their agents priced them accurately and sold them effectively. Yes. It happens. Really. It happened at Blessington Street only last Saturday.
But the one rule of markets is that markets rule – and in our current environment one market rule is that auctions aren’t working at $5 million plus.
Evidence?
- 32 Canberra Road, Toorak Not a bid. Last time it was auctioned there were three hands in the air.
- 2 Iona Avenue, Toorak No bid on the day and sold post-auction for less than had been offered prior to that auction. (“Sold Some Time Later” is the sign you should see most often on all but AAA auction boards.)
Then what about the market stats? Don’t they tell a different story?
Yes. They do. But then you have to look at who is providing the data. It’s the estate agents and their trade union and they don’t care for any news which suggests that anything growing in the garden is less than rosy.
It’s you-be-the-detective time
There are a number of $5 million plus properties currently for sale or on their way to market. Keep an eye on them and you’ll soon work out which of the above scenarios is in play.
- 16 Kenley Court, Toorak is among those coming up. 20,000 square feet and a reasonable house. $10 million plus is likely, but will it sell?
- There’s a house on Montalto Avenue with a court and a pool which is due to hit the market in the next couple of weeks.
- The $10 million plus wallflowers, including 26 Albany Road and 8 Myora Road.
- Those sellers waiting until late October to enter the market. Great expectations? Realistic?
There are also a number of houses we have made offers on where agents and owners think they can do better on the open market. We’re betting they’ll run into the brick wall of reality, they’re betting that six weeks and $50,000 in marketing costs can turn things around. History suggests we rarely lose and there are a number of vendors currently out there who will be wishing they had taken what was offered before they were persuaded to take similar bets.
All this is playing out against a background of new agents trying to elbow their way into the top end paddock. We’re hearing a lot about them from owners trying to decide between the old bulls and young bucks (they ask us because they know we have nothing to sell).
And we can’t help wondering whether $1,000 spent on the internet wouldn’t be just as effective.
One thing seems sure: the over-optimistic are courting failure.
Interesting times …
David Morrell
Bayside: back next week
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