Super Saturday: What it takes to win on Melbourne's busiest auction day ever
Bids for the three bedroom house at 36 Mills Street, Glen Iris, had not even been called when buyers' advocate Cameron Deal strode to the front of the crowd.
“$1.1 million,” he declared in a loud voice.
Everyone stopped and turned to see this bold newcomer.
Auctioneer Steve Abbott, of eastern suburbs agency Jellis Craig, was taken aback.
''Hang on, sir, I haven't even started the bidding yet,'' he said, slightly miffed but happy that the ball was at least rolling. Too often an auctioneer is left hanging while bidders, reluctant to show their hand, stall at the starting barrier.
''$1.1 million,'' came the retort. That's a bid.''
The 1971 house (pictured below) was certainly worth more than that, especially in this accelerating selling environment, and the Infolio chief buyers' advocate knew it. But strategy is all important, too, and often a strong opening bid by a confident buyer - who looks like he'll go the distance – can throw other bidders into disarray.
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Sadly for Deal's client, however, the bidding began again, continuing in small amounts up until the selling price of $1,272,500 to Chinese buyers. The vendors must have been ecstatic as the reserve was $1,100,000.
''It was a good tactic; fair and reasonable in the circumstances and it nearly had the desired result,'' Abbott said later. ''It took me a lot of cajoling to get the party started after that. Obviously his client didn't have the money and that strategy occasionally pays off in those cases.''
Strategy, tactics, inside knowledge: they are the buzzwords now as Melbourne's auction frenzy runs its course. Last weekend 1,450 properties went under the hammer in Melbourne making it the biggest auction day ever. It was called Super Saturday, with good reason. The Real Estate Institute of Victoria said more than $1.2 billion in property changed hands.
The strong clearance rate of 77% makes it clear that every edge, every advantage, is needed to ensure a winning bid.
Buyers' agents aim to give their clients that edge by searching for suitable properties in a certain price range, giving expert advice – especially taking emotion out of a decision to purchase - and, importantly, ensuring their client does not pay too much.
They enjoy a friendly, but often guarded repartee with selling agents, teasing out valuable information, looking for a snippet of information here, a dropped clue there. Anything that could earn them a sale.
Last Saturday, Property Observer spent the day with advocate Jake Milne, who works with Deal at Infolio, on a tour of auctions and open for inspections in Prahran, East St Kilda, Glen Iris and South Kingsville. It was a normal weekend for him as he researched what was on offer for his clients, supported colleagues bidding for theirs, and, later, bidding for his own client.
Photo: Infolio's Jake Milne
''Port Melbourne, Prahran, St Kilda, Elwood, Middle and Albert Park and Williamstown are favourite locations for the former events manager, 30, who became an advocate with Infolio two years ago. ''I bought my first property at 25 and love the industry and the whole buying process,'' he admitted. ''Those suburbs have a community feel, some tourism, shops, dining and the water which are all good selling points.''
Here, rentals of one bedroom apartments can earn a 4% yield and two bedrooms 3.8%. First or second level apartments are especially popular with single females – in fact, he said Elwood is the second most popular suburb for this cohort in Melbourne.
Infolio property advisors operate on a fee for service basis and not a commission based structure. Fees start from a negotiation only $1,650 to research the market and negotiate prior or bid on a client’s behalf (whether successful or not); from $9,800 for a full service arrangement for investors or from $12,200 for a full service arrangement for home buyers.
The advisers assist clients with budgets of $400,000 up to $5 million.
Next page: First stop on Super Saturday
First stop was 1/123 Chomley Street, Prahran (pictured below), a renovated two bedroom apartment that, in real estate parlance, ''ticks all the boxes''. Being sold through Marshall White the 1970s brick veneer is big – at 70 square metres – and well located near High Street. It has a sunny courtyard, car port, large rooms, timber floors and built in robes.
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Surveying the crowd – where several buyers' advocates were preparing themselves for battle, Infolio's Nick Morrison said: ''I think we may be in trouble here. A few of the advocates have a reputation for paying too much and we won't be getting into a bidding war.'' That's certainly not his strategy. ''We usually open strongly but there's no point doing that here. We'll be sitting back and coming in later. I've got a firm price in my head.''
Morrison's full service client is an international investor with whom he spent the week with inspecting six properties. The client asked him to bid on this one but the strong buyer interest, and the number of rival advocates, warns him his chances of success at her price limit are slim.
He was right. A starting bid of $620,000 was quickly overtaken as bidding reached the $650,000 reserve in minutes. ''We are now selling,'' said auctioneer Michael Derham which seemed to switch on the tap as 11 new bids flooded in. Morrison chimed in with an offer of $687,000 but this was topped by $688,000 and the final bid of $690,000 by first time buyer Belinda Arena.
Derham said later that the reserve had been the same as the opening bid - $620,000. ''I didn't announce (that we were 'on the market') until we got to $640,000 as bidding was going along so strongly. The vendor was very pleased that he got $70,000 over.''
Photo: Michael Derham and winning bidder Belinda Arena at Chomley Street, Prahran
Morrison didn’t win but, unlike many buyers, he hadn't spent too much or – perhaps an advocate's greatest strength – been carried away in the heat of the contest. Emotion is a no-no.
Milne's next call was an auction at 2/29 Charnwood Road, St Kilda (pictured below) which he was assessing for a client. The one and a half bedroom apartment had been renovated and decorated with paintings and furniture designed to appeal to a professional couple. A courtyard added to the appeal of living in this historic locale but the ground floor position was a minor drawback.
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''This is a good entry level apartment and we are quoting low fours although it may go over $500,000. The market will see a lot of value here as there's nothing to do and it's got all the internal features.
''Also, this is a good block (eight apartments) and there have been a lot of good sellers around here – and this is a sellers' market. The sub-$500,000 levels are really competitive right now and this is exactly what young people want even though it's not even a genuine two bedroom apartment.
''It's a good time to sell; the market is going nuts.''
Hocking Stuart auctioneer Rob Harvey (pictured above centre) set a cracking pace before knocking down the apartment for $495,000 to buyers' advocate Janet Spencer, of Buyer Solutions, Kew. Spencer is no stranger to winning: she was recently named 'Buyers' Advocate of the Year' at an REIV awards night at Crown Casino before 1200 agents, principals and industry representatives.
Photo: Janet Spencer and her happy client at Charnwood Road, St Kilda
Coincidentally, Infolio was nominated for the REIV Buyers’ Agent of the Year.
Next page: The Super Saturday action continues
Off to our next open for inspection, Milne pondered what was driving up the Melbourne property market. ''Unemployment is going up, the Aussie dollar is at parity, business confidence is low and yet we have prices going up. That proves the enormous faith we have in the market.''
If he's not involved in a Saturday auction, Milne visits eight to 12 properties – mostly open for inspections – to see what's available and gauge the 'feel' of the marketplace. His expertise can save clients thousands, such as arranging building inspections which many potential buyers neglect. He tells of a client whom he convinced to have a clause inserted in the contract insisting that any chattels be in good working order.
''It's lucky we had that clause put in because, in settlement week, the buyer found the oven was faulty and the vendor had to get it fixed. This saved my client thousands because the oven was fixed for free and there was no time lost – read income - getting tenants.''
Off-market sales are another ''weapon'' in the advocates' armoury. ''I'd say one in three properties we buy are not even listed yet,'' Milne said. ''We chat to real estate agents all the time and find out what's coming onto market and when, which most buyers simply don't have the time – or the contacts - to do.''
When judging a property as a potential 'good buy', Milne said criteria for a one or two bedroom apartment included being over 50 square metres of internal space, with a less-than-18 apartment block not having a lift or a pool, being in a quiet street, having a carport, a laundry, some outdoor space and being close to transport. He reiterated that being on the first floor was especially relevant for security reasons.
3/11 Osborne Avenue, Glen Iris (pictured below) satisfied all this criteria, but Milne was not on the hunt, just doing some early research for a client. ''This is our bread and butter,'' he said.
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''It's in a street with lots of trees; has a great floor plan with large sunny rooms; has a balcony, bedrooms with built-in robes, and a separate toilet - although the bathroom needs a little work. There's storage space and heating and it would be easy to rent out – especially as it's near the tram and Harold Holt pool.
We could not stay for the auction and agent Alex Voronin, of Jellis Craig, would not disclose the selling price. However, the apartment is believed to have gone $40,000 over reserve. ''The vendor has asked me not to disclose the price but you can say it was a 'keenly contested auction with four bidders','' he said later.
Milne's main goal for the day was to buy 57 Paxton Street, South Kingsville (pictured below), for new client ‘Vanessa’. The outer suburban resident is keen to move closer to the city and this popular suburb is high on her hit list. She had paid $2750 for Milne's expertise and he's determined not to let her down.
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The new, four bedroom town house on 310 square metres had been ''built with love,'' Milne says, pointing out examples of quality and expertise. Further proof of confidence in the construction is that the builder-vendor lives next door.
Agent Tate Moore, of long-standing western suburbs agent Jas Stephens, confirmed a pre-auction estate of ''mid-800,000s'' but Milne, naturally, was hoping to pay less.
Bidding began but, without any opening offers, Tate threw in vendor bids of $800,000 and $810,000 to get things moving – they didn't. After inside talks with the vendor, he emerged to reopen the bidding and Milne seized his chance. However, his bids of $817,500, $821,000 and then $823,000 were matched by a rival until the property was passed in for $825,000.
Tate ushered the higher bidder inside for private negotiations, hoping to draw an offer closer to the reserve. He emerged, downcast, to announce that the vendor's reserve was $850,000 – about $20,000 more than Milne was prepared to pay – and that the property was still on the market.
''We could have kept on going but what would be the point,'' Milne confided to Vanessa afterwards, with the reserve price obviously well above her limit. ''We were in there with a chance and it's a tough pill to swallow but it does give us time to consider our next strategy. We'll just keep on looking.''
