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.

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?”

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:

• 19 Cole Street reported as undisclosed but understood to be a little over $2 million.
• 45 Windermere Crescent passed in at $1.725 million and later sold for closer to $1.8 million
• 33 St James Park Drive sold post-auction for $1.69 million

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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This much you know: the market is soft, its top end especially so. Many listings, few must-haves. And plenty of those less than exceptional houses which a year ago would have had crowds queuing today can’t attract a stray cat – any bets on how long it will be before the offers of free coffee and cake re-emerge?

And, in any direction you look, there are more and more explanations being laid on the table: it’s the uncertain economy, it’s the banks, it’s the bubble, it’s the weather, it’s the footy (always), it’s the…

The explanations from the pundits are near-always certain, near-always neat. But out here where the deals are done, the world is a messier place.

That’s where the exceptions rule: the AAA’s with all boxes ticked; especially if renovated and ready to move straight in – the exceptional properties which make their own rules.

20 Gordon Street, Toorak. On the market at $2.5 million and many hands took it lightly to $2.925 million. Exceptional.

And then came Armadale and exceptional turned to weird. High-profile property offered by two high-profile agents in conjunction. A huge ad spend which came up with a great big expression of little interest. And then it sold. Over $8 million. Agent? Well … not one of the high-profiles in conjunction. The commission on a sale at that level is likely to be around $160,000+ so it’s not exactly kitty litter. But whose commission? The agents who didn’t or the agents who did? Those who made the sale or those who have the contract to sell? Lawyers at close range, anyone?

So what can you expect?

• AAA choice will continue to be narrow. That’s certain.
• The long weekend will be an interruption.  That’s certain.
• School holidays will be an interruption. That’s certain.
• Some who think they know better will ignore the forecasts and list anyway. That’s certain.
• Some who have no choice will list because they must. That’s certain.
• Some will still find hidden treasures. That’s certain.

And there will also be exceptions.

David Morrell

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Bayside relativity principles

The published results suggest that Bayside performed relatively well on the weekend. It’s only when you drill down that it becomes apparent all is not as it seems. Those which sold often attracted nary a bidder and were only saved from joining the PI list in drawn-out post-auction negotiations.

12 sales from 18 auctions over the weekend in the Brightons, for example, suggest it’s quite a solid market but in fact it’s skating on thin ice over waters of unknown depth.

With a soft market and winter approaching it’s understandable that many would-be buyers feel the bottom is yet to be reached; but it’s also true that trying to pick the bottom of any market is a daunting task and when lifestyle is involved, price should not be the final decider – that the investment component of a well-chosen house will, given enough time, look after itself.

Brighton gets busy

The very pointy end of the market in Bayside has been notoriously quiet this year with sales over $5 million virtually non existent, so the sale of a landmark Victorian house on 2790 sq m at 70 Halifax Street, Brighton is worthy of note. It’s been on and off the market at various times and with different agents over the past couple of years and finally sold during the week for a figure believed to be between $7 million and $7.5 million. Although a far cry from the $9 million plus quoted when first offered to us in 2008, that price is a positive for a property of this calibre, particularly given the less than prime location at this end of Halifax Street.

Those which sold at auction?

• A brick pair at 86-88 Wilson Street on total land of 1340 sq m. It passed in on a lone vendor bid of $2.3 million and when a token $10,000 extra was offered later, a sale quickly resulted.
• 7 Tucker Avenue, $2,010,000
• 482 New Street, $2,000,000
• 37 Windermere Crescent, $1,420,000

Those which didn‘t?

• 39 Orchard Street. Nary a hand raised for a fine single-level renovated Victorian. Passed in at $1,950,000, reserve $2,090,000.
• 5 Tracey Crescent. Again no bids nor bidders. Passed in at $1,750,000 with a hopeful $1,950,000 reserve.

And just as the demise of the entertaining Saturday arvo auction draws nigh, along comes the most engaging street theatre we have witnessed for some time.

126 Bay Street is an unusual property – a period-style double-storey residentially zoned shop in a group of four; but nowhere near Bay Street’s commercial and retail centre. Before the auctioneer could call for bids, a heated discussion ensued between the auctioneer and an increasingly angry questioner regarding flood zones. At the end of the day he with the loudest voice always wins and with the assistance of his portable amplifier (“Never argue with a man with a microphone.” – J Kennett), the auctioneer prevailed. That seemed to fire up the crowd and half a dozen bidders competed, pushing the final sale price to $855,000, $100,000 over the reserve. And no, Mr. Angry did not bid.

Bentleigh fired up as usual with 15 sales from 21 auctions and with three sales above $1 million, Bentleigh’s top end seems near-impregnable.

• The highest price paid was for a well renovated and extended timber cal bung at 4 McLean Avenue. On a modest 557 sq m, it has a designer pool and all the other accessories deemed necessary. It sold for $1,590,000.
• Also up there was the sale under the hammer of 12 Godfrey Street. Although not in the same league as McLean Avenue, it still attracted competitive bidding from two keen parties and sold at $1,370,000; just over its reserve of $1,350,000. It was earlier quoted at up to a quarter of a million dollars below that reserve and prospective buyers dragged along by false hopes are justifiably furious.

Black Rock and Beaumaris? RDO

Sandringham and Hampton? 7 out of 10

17 Avondale St Hampton, good location, a typical example of a nicely renovated and extended brick period house, passed in at $2,300,000 and later sold for what is thought to be around $2,400,000.

Elwood flies

Two sales in Elwood support our observation that there is a continuing flight to quality.

• A townhouse at 89 Mitford Street sold for $1,737,000 at auction
• A lavish Nick Wright house at 20a Docker Street did not make it to the day and was snapped up in the first week of its campaign for a cool $2.5 million.

With a huge weekend coming up next week, most Bayside agents will be relieved they have cleared a good percentage this week. We predict this will not be the case come next Sunday night.

Damian Taylor

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Soft is pundits’ new hard-sell

They need the turnover,” says buyer advocate David Morrell. Australia
escaped the worst of the global financial crisis, but some investors have
given up on … Sydney Morning Herald

What happened at the top end over the weekend? Not enough to waste your time.

There’s action behind closed doors but that, at least for the time being, is where it must remain.

David Morrell

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Soft is pundits’ new hard-sell

“They need the turnover,” says buyer advocate David Morrell. Australia escaped the worst of the global financial crisis, but some investors have given up on … Sydney Morning Herald

What’s the latest? What’s really happening?

Depends on who’s doing the reporting. Any historian in years hence, trying to make sense of what happened in this real estate market (OK, an unlikely field for any historian, but stranger things, etc…), will spend considerable time rolling on the floor laughing at all the self-interested opinion found in what then survives in media archives.

The REIV, for instance, apparently sees a “consistent” market, so all is rosy.

Not from where we stand. It looks like it’s stalled on the runway. Now the excuses of Easter and school holidays are behind us, there’s still no take-off.

Last month? The quietest April in 10 years. At the top end little more than half the volume you would normally expect. In the inner-city, properties have been open for inspection and near-empty when last year there were queues.

Hate to say we told you so, but …

Reality has teeth and, from the chorus of howls we’re hearing, is now biting the agents, the vendors, the media analysts. Everyone but the REIV.

But should this have been so surprising? Does Melbourne real estate function in its own little vacuum? Are we unaffected by a soaring dollar and its impact on exporters and manufacturing and the concurrent departure of the Chinese to currency-friendlier shores? Are we immune to banks little-reported tightening? Is our bubble ever-expanding?

And how is a stalling market playing out where people live – or wanted to live?

There are some walking away from their 10% deposits, realising they have overpaid or finance has become unavailable. We have inspected mansions in Toorak which have been on the market for months – under-furnished, not a lamp to plug in and no funds for advertising.

So, are we about to be embraced in the clammy arms of disaster? In volume terms, it looks like it. In prices paid, less so.

Yes, overpriced vendors face disappointment and those who have paid too much may take years to recover; but for most it looks like stagnant is a flavour we’ll have to learn to love. The AAA and the truly “wow!” will continue to be exceptions (like one on a certain cliff at Portsea over Easter), but they have been and will always be exceptional.

The doldrums.

That way madness lies. It’s when people start throwing themselves overboard.

• Mr Bennison and Mr Mackinnon? No longer at Bennison Mackinnon. They have both washed up, up the street. Try phoning Marshall White.
• Scott Paterson of Jellis Craig? Try Kay & Burton.

The new auction? Commission bidding.

The agents are desperate for listings and will do the unthinkable to get them (OK, many do the unthinkable every day, but this is unthinkable even for them – this is them playing with their own money). They’re discounting fees! They’re competing! With each other!

You’re a vendor? Start comparing what you can get at what price from different agents.

Welcome back

… to all the old stagers who we thought had retired and who are now picking up the phone and trying to find out where the action has gone. And we thought your future was golf.

Got a spare $30 million?

Have we got the house for you …

3 Towers Road, Toorak has come on the market with a $30 million sticker price. Please join the queue.

Disinterest persists

“The expressions of interest closes at 5pm and we’re expecting two or more parties to commit.”

Yup. Heard that. Again. And again.

Funny how the same properties are still up for sale a month or more later. Paltry offers? No offers? Oh, the joys of EOIs – all the cards are the croupiers; even when nothing is trumps.

That said, if all boxes are ticked, we’ll be there.

David Morrell

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Bayside: Struggletown re-defined?

No prizes for observing that the auction scene is struggling. Buyers are taking some delight in frustrating auctioneers by refusing to dance to the agents’ tunes unless there is genuine competition and the property’s price reflects the current environment.

Although a clearance rate hovering around 60% is now being put about as a balanced market by those wishing to push the auction line at all costs (REIV, anyone?), the truth is that the majority of “successful” auctions have one bidder, are passed in shy of expectations and are then the subject of protracted post-auction negotiations. This is where fun and games can and do happen and buyers must have their radar keenly tuned to prevent being worked over.

The typical auction program allows for “time on market” of a month. Now the stats are indicating that average time on market for all properties is two to three times that.

As always there are exceptions, so it is incumbent on responsible selling agents to accurately assess the suitability of their client’s property for an auction program. One size does not fit all.

Bayside is obviously still lamenting the summer it never had. With autumn quickly morphing into winter, it has been very tough on the auction front.

Beaumaris and Black Rock only managed to clear one from seven and that was down to a sale prior to auction at 6a Ray Street – $1,250,000.

Hampton and Sandringham reversed that ratio: only one passed in among the seven on offer.

• Hampton’s highest sale price on the day went to a vacant allotment at 37 Gordon Street. On 760 sq m, it sold for exactly $2 million. By reversing the address and demolishing the old house on the site, an astute vendor picked up a rather handy $400,000 extra. Nice work if you can get it.
• A townhouse overlooking Hampton Beach at 2/26 Beach Road sold – by private treaty – for $2.2 million.
• Sandringham’s highest auction price was at 7 McLauchlin Avenue where a 10 room brick house on a generous 1044 sq m sold for a more modest $1,752,000.
• 28 Sims Street, Sandringham, sold prior for $1,600,000

That said, two private sales topped Sandringham’s bill:

• A new architect-designed house on a modest 567 sq m at 14 Georgiana Street, a short walk from the Bay, was listed with an asking price of $2.2 million. It sold just shy of that at $2.15 million.
• At the other end of the spectrum, 70 Bamfield Street, a rambling 70′s house with soaring ceilings and lashings of exposed brick and timber and on an expansive 1,561 sq m sold for $2 million on the button.

Bentleigh was back to its active self with a robust clearance of 10 from 13.

• The standout was a pair of new town residences at 1A and 1B Mavho Street which sold for $1,162,500 and $1,190,000 respectively.
• The other million dollar plus transaction was the sale after of 1B Roselyn Crescent, East Bentleigh at $1,150,000.
• No cigar at 20 Carinya Road. Passed in at $1,005,000, a later offer adding $45,000 was rejected and the reserve has been posted at a lofty $1,200,000

Brighton was busy over the past week but with only half a dozen auction offerings. Of those 13 Maskell Street at $1,875,000 was the high marker followed by 11 Meek Street at $1,590,000.

The bulk of Brighton activity was away from the auction scene with a number of notable private sales and EOI’S.

• 15 St Ninians Road has sold following an EOI. Originally a 1930′s delight, the property has recently undergone extensive renovations and extensions and sits on just shy of 1400 sq m. Last sold 18 months ago for $8 million, the current selling agent was very tight-lipped about the outcome and would not be drawn on local whispers that the price this time was sub-$8 million and probably closer to $7 million.
• Nearby at 5 Mulgoa Street, two people expressed interest in a potential new house site. On 990 sq m, the selling price was almost $4,750 per sq m – around $4.7 million
• 130 North Road, at the Gardenvale end, has been sold for $3,250,000 following another EOI. Built by the late Bert Kaye in the early 70′s and extensively remodelled recently, the property sits on 1220 sq m. Given the main road location, this is an excellent result for the vendor.
• A related sale was at 1/7 Grantham Court, not 100 metres away. Newly built, one of three luxury townhouses designed by Edgard Pirotta, it has finally changed hands at $2,325,000
• Passed in well before Christmas last year, 54-56 Asling Street is now officially gone. The sale became unconditional recently and is recorded at $2,950,000. On 1700 sq m with two quaint brick houses with some heritage issues and with the railway over the back fence, the agent is entitled to breathe a huge sigh of relief.

In East Brighton a substantial house close to Dendy Park was passed in. The highest bid – $2,010,000 – was knocked back and the reserve is only available by speaking to the selling agent. Hard to understand why you would want to make it difficult in this market.

And, five weeks after auction, 77 Comer Street has sold at $2,380,000. Having been passed in initially at about $2,100,000 this is a sound result.

The top end in Bayside, and in Brighton in particular, is tough to very tough but it is clear that buyers are there – although not in great numbers – and that sales are being made. As noted, time on market has blown out markedly but if sellers accept the new reality and are prepared to shave in the order of 10-15% from previous expectations, we would be seeing a lift in that sector.

With a large number of auctions and private sales to clear before the winter hibernation, expect to see a further easing in prices; particularly among the big ticket items.

Back next week.

Damian Taylor

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Top end in retreat in Boroondara

Morrell and Koren’s David Morrell said the top-end market was “in a state
of flux”. “There have been no trophy homes changing hands, nothing in
the sevens… Leader News