Archive for April 2018

Now, more than ever, it’s important to understand what the selling agent is really saying: Adam discusses the market with Bernadette Kiraly from Marshall White.

Clearance rates are still good but the method of selling is shifting. The REIV reported a 68% clearance rate at 6pm on Saturday. While not the 70% and 80% clearances we have become used to seeing over the past two years, this is still healthy, suggesting that the auction process is still delivering desirable outcomes.

The method in which the transactions are completing, however, is becoming more varied: ie bought beforehand, sold under the hammer, bought in post-auction negotiations or even a few days later.

Some vendors’ price expectations are too high, quoting laws are tricky to interpret, and banks are tightening lending criteria, which adds up to an environment where alternatives to the auction system are attractive.

Whichever way the property is sold, the opportunity is there for buyers and sellers to achieve their objectives.

For buyers, this means more research to obtain a greater understanding of the process, prices and strategies. For some, this may mean inspecting many more homes in varying suburbs and price ranges to get a better understanding of what their money can buy, interpreting the quotes, interpreting the volume of other buyers (working out the serious buyers from the neighbours, serial inspectors, family etc) and knowing how many buyer groups the property may appeal to and why, to name a few.

We are noticing an increasing divide in the number of properties selling above expectations and those selling below, and this isn’t taking into account the quote. The quote doesn’t determine whether the property is a good one. The fundamentals do: position, size, orientation, style, flow and quality. If one or more of these isn’t quite right, the price can vary significantly.

Of the auctions we attended on the weekend, we saw competition at all of them. They were good properties, however, they didn’t all sell under the hammer and some are still for sale.

• Hawthorn East – single-fronter on good land, but needing work (major renovation down the track) – sold under the hammer, 2 bidders
• Hawthorn – fully renovated, well located, single-storey two-bedroom home – sold strongly, 2 bidders
• Malvern East – renovated period home on good land, sold afterwards, 3 bidders
• Brighton East – modern home (as new) on good land, passed in, 2 bidders
• Glen Iris – large renovated period home, sold under the hammer, 3 bidders
• Bentleigh – modern home (as new), sold under the hammer, 3 bidders

The ‘done’ properties – the ones buyers can move into and don’t need to do anything else to seem to be attracting stronger interest than those needing work. In terms of houses that suit downsizers, that market hasn’t really changed since this time last year. In fact, it may have even strengthened.

We have noticed, with the banks tightening their lending, properties needing unquantified additional spending above the purchase price have lost a little bit of intensity in recent months.

That being said, if the vendors are holding strong on a figure, rather than an outcome, they may well be owners for a bit longer yet.

Some of the bigger pass-ins:

Over $4m

• Brighton – well-located modern home, good land, flexible floorplan and triple garage
• Toorak – dated home, predominantly land (approx. 429sqm)
• Parkville – two-storey terrace, 3-4 bedroom, good living spaces, no off-street parking

Over $3m

• Kew – renovated family home with pool, court location
• Canterbury – period home (with heritage overlay), ready for next update, good land

Properties we like:

23 Manor Street Brighton – Justin Follett, Follett & Co.

77 Brunel Street Malvern East – John Manton/Fiona Ansell-Jones, Marshall White

14 Kasouka Street Camberwell – Jonathan Graham/Evan Lykourinos, Bekdon Richards

19a Valentine Grove Armadale – Fraser Cahill/Madeline Kennedy, Marshall White

‘Off-market’ Properties:

Buyers will no doubt be offered many off-markets right now, and we have inspected dozens in the past month. Here is a small sample of the better ones:

• Single-storey townhouse, Brighton East – $2m
• Family home with court, Brighton – over $7m
• Period family home, Brighton – $3.6m
• Two-storey terrace requiring work, Prahran – circa $2m
• Family home with pool, could be further improved, Camberwell – $3m 

Auction Spotlight:

43 Plantation Avenue Brighton East

Peter Kennett from Hocking Stuart heads up the well-attended auction of 43 Plantation Ave Brighton East.

The sun was shining on the large crowd spread along the reserve on the south side of the street to see Peter Kennett and the rest of the Hocking Stuart team in action. This modern home gained a lot of interest for the indoor-outdoor lifestyle and entertaining zones it offered. The north rear orientation was another plus. Dramatic two-storey windows spread light in the southern zones of the home. Once the preamble was complete and the call went out for bids, an opening offer of $4.2m was quickly received. A second bidder made one $50k offer, which was countered by the first bidder. Here the action slowed and a vendor bid of $4.35m was placed to move things along. Eventually the first bidder replied with an offer of $4.375m and the property was passed in at this level. It sold after for an undisclosed amount. Perhaps the lack of a downstairs bedroom-bathroom combination and the vendor’s price expectations deterred  some potential buyers.

2 Irymple Avenue Glen Iris

A slow start to this auction, but auctioneer John Morrisby fielded bids from three Chinese parties and eventually sold the property under the hammer for a very healthy $2.75m.

A compact two-storey builder-spec home was on offer here, and a reasonable crowd of about 40 were keen to see how the market would receive it. Located not far from Central Park, this is not a typical offering of the area, but that didn’t deter many Chinese groups who clearly saw interest in a home they traditionally fight very hard for, particularly in suburbs such as Kew and Balwyn. Opening with a vendor bid of $2.4m, auctioneer John Morrisby had a bit of work to do get some crowd participation, but that eventually came with a $25k offering. Not long after, another party joined in. Soon after the half-time break, another party got involved, and the property was announced on the market at $2.7m, selling not long after for $2.75m. Good result for the vendor and well run campaign by local agents Ian McLennan and Danielle Waterton.

There is a new market emerging. Like 1950s furniture, wallpaper and black granite benchtops from the ‘90s, expressions of interest (EOI) campaigns are back in fashion.

EOIs are a take on the old-fashioned method of private sale, just with a deadline to create urgency.

Peruse the advertised properties in Stonnington Council over the past month and the number of properties advertised as ‘EOI’ has increased substantially.

Brighton, in the past fortnight, has followed suit.

Vendors are seeing it as a positive alternative to higher quotes and potential auctions with no bidders.

A year ago, it was fair to say that most properties saw multiple bidders, whether it was an ‘A’, ‘B’ or ‘C’ grade property.

The market has definitely cooled and, while certain properties within the market are still out-performing, many now have limited interest, particularly at the level the vendors are hoping to achieve.

What does this mean for buyers? Smoke and mirrors. If the house is an ‘A’ grader, there is likely to be good interest still, so how do you work out where other buyers’ levels really sit? Is there anything you can do to increase your chances of buying? What are the rules?

If the house is a ‘C’ grader, you may be the only interested buyer. How will you know whether the asking price is realistic or well above what others may be prepared to pay?

Expressions of interest, sometimes known as expressions of confusion, are a perfect campaign for vendors when the market is softening, as it provides opportunity.

What does opportunity mean?

• Opportunity for a good agent to encourage a sole buyer to pay a price well above what others might pay.
• Opportunity for buyers to increase their chance of certainty.
• Opportunity for vendors to maintain higher prices.
• Opportunity for properties to sell well, even if there is only one buyer.
• Opportunities to buy well, if there are no other interested parties.

It therefore comes down to the rules and communication.

• Communication with the selling agent (who is being paid by the vendor) to treat you as the preferred buyer.
• Communication with the agent about your price limits.

In the emerging EOI market, some buyers will come out winners, but others may be left wondering why they paid the price they did.

Highlights:

• 28 Selborne Road Toorak (Andrew Smith/Ross Savas, Kay & Burton) – modern townhouse with lift as all bedrooms upstairs – $3,800,000
• 43 Cobden Street Kew (Maurice DiMarzio/Joshua Brinkhuizen, HockingStuart) – semi-detached smaller home needing work – $1,285,000
• 4 Netherlee Street Glen Iris (John Manton/James McCormack, Marshall White) – Stonnington Glen Iris, modern family home over three levels with a flexible floorplan – $3,740,000
• 58 Armadale Street Armadale (Carla Fetter/Andrew McCann, Jellis Craig) – well positioned townhouse over two levels, all bedrooms upstairs, sold before auction – $2,800,000
• 5 Collingwood Street Sandringham (Scott Hamilton/Brydie Hamilton, Buxton) – approximately 727sqm of unencumbered land with wide frontage, with a dated home likely to be replaced in the future (stca) – $2,216,000 or $3,048sqm
• 38 Clarendon Street Armadale (Tim Wilson/Anthony Grimwade, RT Edgar) – townhouse over three levels (no lift) – $2,212,000

Some of the better properties scheduled for auctions on 28 April : an architect’s view

43 Plantation Avenue Brighton East – Peter Kennett/Chelsie Cargill, Hocking Stuart

81 Kerferd Street Malvern East  – James Redfern/Daniel Wheeler, Marshall White

25 Connell Street Hawthorn – Chris Barret/Zali Reynolds, Marshall White

12 Rockley Road South Yarra – Justin Long/Fiona Counsel, Marshall White