Auction Addict ??

[Gordon Gekko]

Hi All,

I am not intending to buy my nexy IP for some 12 months, but every sat morning, you will find me at Auctions......learning all the time.

Should i go to AA (Auction Addicts)

Gordon

 

[Sim]

Maybe as therapy sometime, you can look at property outside of auction-addicted Melbourne and actually learn to negotiate on a property ! Just a suggestion

 

[Peter Parker]

I must admit that auctions scare me a bit, and my disposition is more towards buying through private treaty.

But I love estimating the price and seeing how close I get (usually I estimate too low!). Attending them is wonderfully educational.

You also get to see other people's houses and hone one's critical skills on matters from looking at cracks to bidders' psychology.

And they're free!

Peter

'keep your hands in your pockets and don't nod!'

 

[Peter Parker]

Then there's times you walk away feeling the buyer was the biggest loser.

The last auction I went to was for four townhouses in Carnegie (Melb) on busy Dandenong Rd a few months back.

They were half-built (needed carpets, fittings, flooring, etc) and the workmanship I saw was a bit shoddy (eg you'd stub your toe on the uneven kitchen floorboards). It was a mortgagee sale and they'd been like this for 2-3 years.

The location was good, but there were no views and the units were really crammed in to the block. Thus there was almost no green space at front or rear.

I thought that $900k might have been reasonable given all the work necessary. Anyway they sold for $1.2m (ie $300k each)!
There would be big depreciation allowances, but apart from that I couldn't see the attraction. I'd have preferred spending the money on a few houses or duplex units in the area.

Several months later absolutely nothing has been done, so maybe the buyer has realised they paid too much!

Peter

 

[foxysilvers]

Once you have been to a dozen or so auctions what possibly more could you learn.

I always read the results in the next days paper for areas where I have properties but would not waste my time going .

Think you are right about learning to estimate values but you really dont need to attend unless the auction assistant is an absolute spunk or you want to look at the latest leased Merc parked three meters away.

I started in RE as a cadet valuer and every Monday was spent going over auction results but never attended any.

I would prefer to buy before auction if possible and if a property goes to auction I regard it as one for the punters.

If nothing puts you off why not join a real estate agency and get paid for being there...........nice suit......red silk tie.......leased Merc....spunky assistant......earnest smile........maybe TV..............


Cheers

 

[Peter Parker]

An auction is a bit like race day. The actual event is secondary to the ambience, the auctioneer's salesmanship, the chit-chat and the hundreds of local residents milling around. That is of course if you're just a spectator like me.

Just got back from an auction of a 2br/2storey unit, and it seems that things might not be quite as hot as they were a little while ago.

I thought about $300k, though the back courtyard was tiny. Bidding started at $295k and went up very slowly with only a couple bidding. The auctioneer had to go inside to see the vendor a couple of times as it wasn't up to reserve. At times they were going up in $500 increments. A third bidder bid late at $315k. It was passed in at that price. Scuttlebut from one of those there was that before the auction the vendor was offered $320k, which he refused. Then on leaving a neighbour asked me how much it went for and he said the vendor wanted $330k.

So in this case maybe the vendor should have called off the auction and accepted $320k.

Peter

 

[Les]

G'day Foxy,

Once you have been to a dozen or so auctions what possibly more could you learn.

Take a look below - maybe it's "what you can earn by going to an auction, not what you can learn".

This is a transcript from one of Geoff Doidge's early posts to the Somersoft forum. It was from his well remembered "Cookie Store" story.



Okay, I hope this inspires you!
Research 5 minutes, experience 28 years.
This is exciting and where the serious investors among you are heading.

Let me tell you the story of Sat 10/6/00.

This week, too busy to look at the 3 flats returning $16380 pa on a 37 perch (935sq met) Res A block in a blue ribbon suburb 7 k's out from CBD... so I asked my mate to look.
He said they were promising .
They were on 2 + lots (a major bonus Twist ) and were 100 metres from the train (a major advantage) but they were asking too much $210K.
No worries we will just turn up any way. Arrived at 9.55am for the auction at 10 am.
(I dont recommend this by the way - I have been doing it so long that I dont need acres of research - and so will you after 10 years...if you last)

Quick inspection to assess the potential and the rents....$315pw rent...we can increase it to $350 easily.
Assess the land value (my secret method), decide to buy if I can get the property at land value and a min of 10 % return. ie less than $163800.
Dont expect to buy...dont care....have another auction at 11am....could be a better deal.

Auction starts... dont want the auctioneer to pull a high bid... so call $80k...auctioneer accepts (to my surprise).
He calls a bid of $90k.
I question the auctioneer, I didnt see anyone bid.
He points out the bidder...we exchange bids to $145k...
the bidding stops...interesting?
Is that a real bidder or a plant?...
The auctioneer sees the vendor and says he will sell for $150k...interesting...
The other bidder goes to $147.5k ...
Why did he do that? he had the highest bid any way.
Is he stupid or a plant?
We dont know so we dont bid.

The auctioneer passes in the property which is what we wanted (and expected).
Agent appears to negotiate with the highest bidder at $150k, cant get agreement...comes to us ...
We say 14 days finance ...he says no...we say ok but we want 40 day settlement...they agree.
He says ok...

At $150k ...thats 11% return from day one ...no money down ...105% finance cash +ve before tax deductions!!!
We say 3% deposit, he says ok and we have a deal...

The RE agent phones me a couple of hours later.
They have someone interested at $195k. We are back on the market...in 2 hours...

Is this fun or what?...I used to work all year for $40k... and you can make that in 2 hours!

Work smart not hard (if you know how).

A day in the life...of an investor

- Geoff Doidge


Do a search to get to read more of Geoff's posts - his handle was Geoff1. I found the above because I was searching for "cookie" - this was the story he posted which was headed something like:-

"Hey gang - check this out - it's a Cookie Store out there !!"

Note I DIDN'T find that actual post - but the transcript came from Mike's "Hall of Fame" post which used the transcript. Onya Mike - we mighta lost this gem otherwise.....

Regards,

 

[foxysilvers]

Hi Les......Nice story but I bet that did not happen in Melbourne in the last few years.

I have "nicked" quite a few good property deals in Melbourne over the years but every one bar one has cost me a minimum of $5000 cash to have it flicked to me.

The only exception was a deceased estate that had to go to auction and after a lot of digging I found out the deceased ladys doctor was in cahoots with the estate agent and solicitor.
The auctioneer ignored my bids until I put on a real performance, to the horror of everyone there.
Anyway the three amigo's got together and let me bid and win the property which I later renovated and resold.

Sure I will go to an auction if there is a good reason but certainly not for amusement or thinking a bargain will pop up.......not in the market of the last five years or so in Melb..

Cheers

 

[Les]

G'day Foxy

Nice story but I bet that did not happen in Melbourne in the last few years

Correct - it was in Brisbane - I believe the suburb might have been Clayfield.....

Regards,