Auctions require confidence as well as bidders, and while confidence is in short supply, don’t expect the clearance rate – which again came in at 57% – to increase any time soon. However, there are changes in the market place, and depending on how the next few weeks pan out in the global arena, a marginal turning point may be lurking.
Firstly, the numbers attending auctions (buyers – not neighbours) has increased markedly – there is clearly a lot of interest from prospective purchasers ‘monitoring’ the market. Secondly there has been a slight elevation in numbers bidding. More commonly auctions are attracting bids from 3 or 4 buyers as opposed to the 1 or 2 we have seen over the last few months. This hasn’t yet equated to a ‘gold rush’ on property or a mad surge to the safety of ‘bricks and mortar’. In light of our changed market, even with more bidders, the pace of the majority of auctions is painfully slow. When competition does eventuate, buyers are trying to break down the requested increments long before the property is placed on the market and as a result, the event itself can easy stretch out in excess of 30 mins – from ‘pre-amble’ to finish – before the hammer falls, or the home passes in.
It’s rare to see that fast and furious bidding which traditionally results in a round of applause when the auctioneer shouts ‘SOLD’. Auctioneers, who are used to the ‘old’ multiple bidding of the auction process, are also showing frustration. There are so many clichés bantered around to try and inspire some action, “You’ve got to bid if you want to buy” , “I can’t help you unless you raise your hand”’ – ‘”If you don’t bid, I’ll have to pass the property in and no one will have exclusive right to negotiate”. However none of this is instigating confidence into the attendees or acting as a starting gun to get the ball rolling – an ingredient is missing!
As such, like retail, this new arena is separating the good agents from the bad and only those who have a clear talent for negotiation, coupled with the will to put in the hard yards, are getting deals across the line in a timely manner.
Don’t fall into the trap of thinking it’s all doom and gloom out there. Prior to us attending an auction we’re usually aware whether the agent expects the property to pass in, or if there are enough prospective bidders to make an event. This is easily assessed if buyers have taken the time to negotiate changes to the auction contract or requested differing settlement dates, and over the past few weeks, predilection of sales has been higher and selling agents are reporting a better overall expectation of positivity.
It’s clear therefore that buyers are not simply rocking up to the auctions for mere entertainment value. They are there with intention – at some point – to put their money where their mouth is. It’s just that in our changed market place – even when agents display the upmost confidence that the property will sell – it’s still a 50/50 bet whether prospective purchasers will ‘openly’ raise a hand! The preference is still to do the deal behind closed doors even if it means competition in a non-transparent atmosphere. For this reason, most of the homes that pass in do sell in the hours following the auction, or in the next few days. However fortitude is the vital ingredient which has always provided a back bone to Saturday’s street theatre and it’s clearly missing. With this in mind, we may see more vendors opt for private sale rather than a robust auction campaign. (Something that could already be evident considering there has been a reduction in the numbers of homes listed for auction over the next few weeks). Unless spring inspires a change of mood, this may be the trend for the rest of the year and instead of the once ‘normal’ 70% spring clearance rate – it looks like we could have a new ‘norm’ of 50%. Prices will still climb with the increase of purchasers; however with this trend, we could be looking at much more moderate levels for some time to come with little, if any, volatility.
5 Voltri St, Cheltenham presented a really good ‘blank canvas’ for a family to move in and add their own stamp of individuality. This three bedroom, two bathroom, ‘somewhat’ updated home, in an area of Cheltenham which is often over looked, managed to attract quite a crowd of attendees. The auctioneer clearly expected bidders – mentioning pre-auction enquiry had been strong – and considering the 60 or so people who were gathered outside the home – there was nothing to suggest different.
After a lengthy pre-amble booming (with the help of a loud speaker) to bidders and street traffic alike – the auctioneer asked for an opening bid. He was close to making a vendor bid, when some brave soul offered a genuine opener of 600K.
What initially looked hopeful of inspiring further bids, soon fizzled out. Despite taking a quick half time break, no other buyers raised their hands, and the property was dually passed in at 600K. It failed to sell via negotiation – with a reserve price just in excess of the top end of the price quote at $665K.
24 Barkers Rd, Hawthorn looks attractive in the pictures, however the main road address probably would have deterred buyers if it wasn’t offered with a relatively rare ‘duel’ street frontage – the second entrance being perfectly situated on Elm St. As such, the renovated home didn’t have any problem attracting at least 70 onlookers, and a good handful of neighbours.
Bucking the usual trend, the auction opened with a genuine bid of 1,050Mil. The bid was offered without much persuasion, and as such, it sparked a bit of confidence into the atmosphere, thus giving the resulting action a bit of pace.
By 1.16Mil three bidders had joined in, and at 1.250 we welcomed a fourth. Needless to say the property sold. Announced on market around 1.2Mil, it finally sold under the hammer for an undisclosed price in excess of 1.260M.
29 Winter St, Malvern was a ‘once in a life time’ chance. In a much sort after pocket of the suburb, only a stone’s throw from three tram lines and the delights of Glenferrie shopping strip – this house also offered a classy renovation, 4 bedrooms, and near 900 sqm of land with rear access on a corner block. It’s not often buyers get the chance to bid on such a unique home – and considering the land is also free of any Heritage overlay, it had unique appeal for land hunters who didn’t want restrictions on any future development.
Getting bids in excess of the expected 2Mil was akin to getting the crowd to volunteer for a trip to the dentist. Opening on a vendor bid of 2Mil – and following lengthy persuasion – the auctioneer finally managed to inspire a bidder to offer a further 25K. Knowing – and announcing – the house was a good, long, and windy road away from reserve didn’t do a thing to get bidders motivated.
At this point it may surprise you to know there were 4 bidders at this auction – however every bid looked like the last, such was the length between each number offered.
The auctioneer had to take a trip inside to see his vendor three times. At one point a bidder refused to offer the requested 10K – sticking stubbornly to 5K. With much frustration, and a little sarcasm, the auctioneer finally told him ‘give me 10K, and I promise, if you buy it for that amount I’ll pay you 5K’ – and it did the trick.
After 40 minutes, with bidding having reached $2.235 Mil, the home passed in. Negotiation failed to accomplish a sale with the reserve set at $2.590Mil.
Finally 215/285-305 Centre Road, Bentleigh resulted in un-expected disappointment for the vendor concerned.
Despite a popular auction campaign which resulted in such a positive response the agent increased his quoted range two weeks into the sale – no one was inspired to take any action.
It was always going to be one of those homes that buyers either loved or hated. The layout and presentation of this apartment/townhouse was appealing. Set over two levels, modern in design, with two balconies and attractive views of the landscape – it was the location that threatened to deter owner occupiers – especially if they were looking for a bit of peace and quiet.
Aside from the hustle and bustle of the street traffic, the apartment was situated on top of a shopping centre, and no doubt the thought of sharing land with a supermarket would have detracted from the interior appeal.
Quoted in the low 500K – after initially being pitched in the high 400K – the auction was passed in on a vendor bid of 550K with reserve set at 585K.
Catherine Cashmore
