Canberra auction at the week end

From: Michael Croft


Hi,

Someone asked about the auction I was going to bid at on the week end but I can't find the original post.

It is a block of 4 unapproved units, well 2 are approved the other two are not. Address is 84 Dryandra Street, O'Connor.

My pre auction estimate was $430 - $465k and $465k was my limit. It sold for $490k. A friend was also bidding and told me he would go to $480k but that was before we found the termites! He pulled out at $450k.

Bidding was reasonably quick to $470k and then it bogged down, the agent took a bid at $475k from the vendor. It went "on the market" at $485k.

So the property has termite damage say $20k? (could be $50k) and all units needed major renos say $60-80k, add 20k stamp duty plus 5k for "other" and you have spent $605k. This would return about $750 per week or 6.44% gross. Not bad for a high growth area with views of the city, but not brilliant either.

The biggest unresolved issue would be the lack of approval of the two units which under current planning law is just not possible. Personally I would have overlooked that if the rental yield was higher.

The other thing was that the lack of a cap gain hit from the reno. It would probably only be worth $620-650k after the reno - not worth the effort really.

So on to the next one.

Michael Croft
 
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Reply: 1
From: Geoff Whitfield


Michael,

I haven't been to many auctions. I'm trying to go to a few to get the feel, before I actually try to bid (I'm not even sure I want to get that far!).

But, from the few I've attended, and the many I've seen on TV, I was surprised by the auctioneer's statement at that auction that there were no dummy bidders- and that the vendor had the right to one bid, which would be announced.

Was that correct? If so, is that common?
 
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Reply: 1.1
From: Michael Croft


Hi Geoff,

It was a bit unusual, it used to be that the auctioneer reserved the right to accept bids on behalf of the vendor, aka dummy bids.

I suppose this was an overt way of indicating the vendors desired $ amount without actually placing the property "on the market". It all felt a bit artificial and slowed the process down too much for my liking.

Michael Croft
 
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Reply: 1.1.1
From: Michael Croft


Sorry, I forgot to add that early on there was one dummy bidder who pulled out at about $440k (the guy standing in the carport with the dark wrap around sunnies on), so the agent told a big fib! I was watching the exchanges closely trying to pick where the reserve was, but I couldn't as new bidders came in and the dummy was no longer needed.

Michael Croft
 
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Reply: 1.1.1.1
From: .watto .


Hi Michael,

What gave the dummy bidder away?

Was it obvious?

Cheers
Watto
 
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Reply: 1.1.1.1.1
From: Michael Croft


Not that obvious I guess but he wasn't moving and bids were happening and being attributed to him. Actually he was moving after the bid, a bit like those old badly dubbed movies slightly out of sync.

I also saw him talking in an 'out of character' way to the auctioneer 10 mins before bidding commenced. Most bidders steer clear of the auctioneer (self excluded) trying to maintain distance.

So I suppose it was a bit of gut feel too.
 
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Reply: 1.1.1.1.1.1
From: Geoff Whitfield


Thanks Michael. That was very interesting.

I certainly did not see that. Thanks for the comment- it will help me just to be one more "the wiser" when it happens for real.

I think I am speaking for very many people on the forum in thanking you for your willingness to share knowledge and experience, in a very open way.

And to so many other contributors- a big thank you to all, in sharing so much enthusiasm.
 
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Reply: 1.1.1.1.1.2
From: Michael G


Michael,

I am interested to learn your reasons for avoiding the auctioneer?, how does this affect the bidding?

Michael G
 
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Reply: 1.1.1.1.1.2.1
From: Michael Croft


Hi Michael,

I don't know why people avoid the auctioneer, just seems to be so. I don't think it affects bidding either. Simply that when I see someone talking to an auctioneer in a 'non banter' way before an auction my radar is switched on.

I spoke to the auctioneer before the auction and I would be suspicious of me!

Michael Croft
 
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Reply: 1.1.1.1.1.2.1.1
From: Dale Gatherum-Goss


HI

I always talk to the auctioneer and the other agents he has swarming around the site.
And, I'm happy if that throws other potential buyers off as one of my tactics is to disrupt the auction process so that it does not flow well.

Just a thought . . .

Dale
 
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Reply: 1.1.1.1.1.1.1
From: Jas


One thing you might want to try before you bid at an auction for real is
talk to the real estate agents and ask them if you can be the dummy bidder.
you'll get close to the action, practice your bidding, and learn more about
house prices.

Have fun
Jas

_________________________________________________________________
Send and receive Hotmail on your mobile device: http://mobile.msn.com
 
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Reply: 1.1.1.1.1.2.1.1.1
From: Robert Forward


Your nasty Dale.

But yes, I'd do the same if I was buying at an auction too.

Cheers
Robert

The Sydney "Freestylers" Group Leader.
 
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Reply: 1.1.1.1.1.2.1.1.1.1
From: Michele B


You can put inexperienced buyers off at open inspections too. Armed with clipboard, I've been known to peer worriedly at walls and damp courses muttering hmmmmm. Helps remove heart buyers from the field.

michele
 
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Reply: 1.1.1.1.1.2.1.1.1.1.1
From: Joanna K


You guys are so wicked!! I love it!


Kind regards
THE RENTAL SPECIALISTS

JOANNA KARAVASILIS
Principal

rentals@rentalspecialists.com.au
www.rentalspecialists.com.au
 
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Reply: 1.1.1.1.1.2.1.1.1.1.1.1
From: Dale Gatherum-Goss


I do the same with Section 32's. I have a worried look that I use and i flick backwards and forwards over a page as if there is something decidedly wrong.

Furthermore, I use the Section 32 as the Auction starts to throw off other buyers who may not quite understand the implications of the information.

The last auction that I attended, this actually stopped someone experienced at auctions, who was there on behalf of a third party.

It works!

Dale
 
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Reply: 1.1.1.1.1.2.1.1.1.1.1.1.1
From: Michael G


Dale,

I know what a sec32 is, but how exactly do you use it? what it;

a) sec32 in hand while pre-inspection was done?

b) visibly checked sec32 while before each bid was made?

c) interrogate agents with sec32 in hand before bidding?

d) none of the above?

Michael G
 
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Reply: 1.1.1.1.1.2.1.1.1.1.1.1.1.1
From: Joanna K


What is the Section 32?


Kind regards
THE RENTAL SPECIALISTS

JOANNA KARAVASILIS
Principal

rentals@rentalspecialists.com.au
www.rentalspecialists.com.au
 
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Reply: 1.1.1.1.1.2.1.1.1.1.1.1.1.1.1
From: Dale Gatherum-Goss


Hi Joanna!

The S. 32 is the Vendor's Statement and is a document that is used in Victoria to identify the property and to show other information such as:

Restrictions
Planning permits
Outgoings & Statutory Charges
Building Approvals
Notices
Title documents

Does this help? I'm not sure what they're called in other states any more.

Dale
 
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Reply: 1.1.1.1.1.2.1.1.1.1.1.1.1.2
From: Dale Gatherum-Goss


Hi Michael!

Short answer is, however I can!!

The last one was to identify an anomaly within the S. 32 that created doubts in the mind of other parties.

The auctioneer was not particularly reassuring in his answers and this left him open to further attack and questions.

There is nearly always something that you can pick on to ask questions when the auction is about to start. I watch the auctioneer and if he does not answer confidently, I keep at him and try to make it sound like the issue is a large one.

I can't find a copy of this one in particular - must have thrown it out, sorry!

Dale
 
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Reply: 1.1.1.1.1.2.1.1.1.1.1.1.1.2.1
From: Dale Gatherum-Goss


HI

I found it!!

In the S. 32 it had two things that got my mind working . . .

The first was that it was signed under a Power of Attorney and yet there was not a copy of the POA available to peruse.

I questioned whether anyone had validated the fact that the signature was in fact binding given that we had to "assume" that the POA was in force and empowered the person signing to actually sell the house.

The auctioneer was a little too vague for my liking and this allowed to me make a nuisance of myself on this point.

More importantly, the second thing that I noticed from within the S. 32 was that under the Land Titles search there was a mention of "Registration of dealings with this unit is restricted"

The plan of sub-division also had a similar comment.

I questioned the auctioneer what this meant and he glibly suggested that all such sub-divisions have these restrictions to stop people painting one unit red, and another blue and a third green or something.

As I had been to a previous auction that morning and had picked up a copy of a S. 32 there, I was able to prove that he was in fact wrong and suggested that the auction stop until such time as we would accurately identify the "restrictions"

Obviously, this did not happen, but, as I mentioned in my earlier post, this information, or misinformation if you will, was enough to scare at least one experienced buyer away from bidding as he told me himself that he had missed that information.

I hope that this explains a little better what i meant in my earlier posts and that some find it useful and helpful.

Cheers

Dale
 
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