I am over auctions in Melbourne!!!!!!

H

hotproperty

Hi all,

Just need to vent.......My husband and l had our hearts set on a property in South Yarra that went up for auction today...

Once a upon time about 1 month ago Cinderalla and her Prince Charming (my husband and l) saw a lovey Victorian semi detached house for auction, it was inhabitable, needed lots of work but they could see past the holes in the floor boards and peeling plaster and thought it would be a great opportunity to get a foot hold on the property developer ladder with a guide price of $450,000 - $500,000.

The fox (real estate agent) could see the lack of experience Cinderalla and her Prince Charming had at bidding for properties at auctions and thought he would take them for a ride. The fox assured Cinderalla and the Prince that the owner of the property only wanted mid $400,000 and for that type of property in the current condition in South Yarra this was the correct market value however the fox told Cinderalla and her Prince charming that the seller would not except offers before the auction.

Cinderalla and her Prince hoped in their pumpkin carriage and decided to head to the auction but as Cinderalla had lost all her shoes they had no money left and needed to visit the wicked witch of the west (the bank) to ask for money.

The wicked witch of the west told Cinderalla and the Prince that she would lend them the money, this would not be a problem but first they would need to spend alot of money on a building inspector's report, get quotes from builders on how much the work would cost to bring the property up to a livable standard and finally pay the wicked witch of the west to get valuations done on their other castles, just as a formality so her paper work was in order.

This all took many weeks and cost both Cinderalla and her prince charming alot of money and heartache..but in order to get this bargin property they would jump through all the hoops and fight off all the dragons that the wicked witch of the west sent their way.

The week of the auction after doing all this work and spending alot of money Cinderalla and her Prince charming still had no word from the wicked witch of the west about whether they would get the money.

The day before the auction the wicked witch of the west was still not returning Cinderalla's or Prince charmings calls!!!!!!

They called and they called and they called the wicked witch of the west but she never called them back.

The auction day arrived and Cinderalla and her Prince charming watched as the property they had fallen in love with and spend so much on went under the hammer for......$680,000.....they watched the fox as he licked his lips and smiled at Cinderalla and her Prince.

Cinderalla hoped and prayed that her fairy god mother would turn the fox into a toad...but as the fairy god mother cast her spell the fox ran away......

So for all Cinderalla's and their Prince Charming be aware that there is a fox out there advertising properties cheap to get you into his den, he will then watch you spend all your hard earn money on false promises and then on the auction day he will lick his lips with greed and smile at you as he watches all you hopes and dreams wash away.:(:(

However Cinderalla and her Prince Charming lived happily every after just alot poorer.
 
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Sounds like the underquoting problem is still alive and well in Far, Far away land.

The lesson is don't buy at auctions.
 
This is an illegal practice and you should report the RE agent to your equivalent of the fair trading dept. in your state. Unbelievable!! I feel for you.
 
L.AAussie said:
Sounds like the underquoting problem is still alive and well in Far, Far away land.

The lesson is don't buy at auctions.
Click to expand...


The problem is that in many of Melbourne's inner suburbs good properties get sold at auction.

If I was a seller - auction is the only way I would sell.

So it's important to do your research well and understand what proeprties re selling for, and not believe the agent's "quoted price"
 
Know exactly how you feel, hotproperty. We went to an auction last weekend in a not so fashionable, further out suburb, desperate to buy as the property was perfect for our business requirements and there ain't many others at all in the area that are even near suitable.
The fox there was quoting 420 - 500, which we knew was lies but, having a cut-off of 670, we had our hearts set on success, and were guardedly confident of it, only for it to eventually go for 682!
Doesn't seem that these new laws have made one bit of difference to habitual underquoting.
 
unfortunately its this market where everything goes up monthly with an endless supply of buyers and not enough property.
L.AAussie, all the desirable suburbs like sth yarra you will be hard pressed finding ONE private sale so you are forced to buy at auction, probably a few duds a for sale privately or they wack on a huge dollar figure in the hope of a woodduck
cheers
pieman
 
Hotproperty, not to sound harsh, but shouldn't you already have a rough idea about how much such a property would sell for anyway? If you look in an area diligently for a couple of months, and get a rpdata report or something like that and drive around looking at places that have sold recently, I just don't understand why you would believe the agent when he underquoted by so much.

I've been looking in a couple of suburbs for my PPOR recently, and after a few months and going through comparable sales, going to open houses and following up on sold prices, I had a rough idea about what a certain type of property would sell for, maybe +/- 5%. I'd know if the agent quoted $400k for a type of property that would eventually sell in the 600s. Chances are similar properties would also have sold in the 600s? Or at least you would see that the market is so hot that prices were likely to be higher?

The other problem is that you got emotionally involved in the property. Don't. At least not until you actually buy it, and try to avoid getting emotionally involved even then. Otherwise it's going to be a very difficult experience.
Alex
 
Hotproperty understand your frustration completely and I know you will use this as a learning experience.

I recently was interested in a property just nearby from South Yarra, that was being quoted at $450-$500k. Seemed underpriced from what I thought to be fair value, and after some due diligence, it was obvious this place was worth $600k+. I was under the impression that this figure may have been a sworn valuation as this was a deceased estate. Interestingly, after the auction (because I purchased it) the executor of the will mentioned that they had received a valuation in September for $600k. The property was on the market at $550k.

The point is, that if I hadn't done the DD I would have been so out with my price expectations.

On a related note and picking up your issues HP on misquoting, I am still confused with regards to the quoting rules. There is still a grey area here. An agent can quote $450-$500 and can technically say, that the property was on the market at $550 (10% of the upper range quoted). The additional was just the nature of the market.

Would be interested to hear an agents vieew on this?
 
pieman said:
unfortunately its this market where everything goes up monthly with an endless supply of buyers and not enough property.
L.AAussie, all the desirable suburbs like sth yarra you will be hard pressed finding ONE private sale so you are forced to buy at auction, probably a few duds a for sale privately or they wack on a huge dollar figure in the hope of a woodduck
cheers
pieman
Click to expand...

yeah; I know this is the problem in those areas. My first I.P was a townhouse in Mentone, and it was a nightmare finding properties that weren't auctioned, weren't underquoted by a gazillion dollars, and were decent value. I eventually found one though.

I should have made myself a bit clearer; if the property that H.P was buying in Sth Yarra was a PPoR, and he just HAS to live there, then you just have to cop it on the chin and pay whatever is the going rate in that suburb at that time, and if they are all by auction then so be it.

But, if it is an I.P, then there is no reason to buy in Sth Yarra at all, and there is no reason to buy by auction if it is an I.P.

As Alex said; it comes down to knowing the area values well, and being prepared to play the auction game. It's not fun at the best of times.
 
the wizard of oz

Dorothy knowing that the wicked witch of the east was burning people with hot rising property prices went to the Governor of oz (RBA) to ask him to cool down the wicked witch of the east. The Governor threw an interest rate increase and threatened to do it again to cool down the wicked witch of the east. For the Governor knew that this would also stop the fox as he relies on the wicked witch of the east to be red hot to have his auctions work for him rather than against him. Also the fairies had purchased lots of fairy dust with credit stored on their credit cards that would also help cool the witch of the east as the fairies tried to pay off their credit cards and mortgages.
 
saying dont buy at auction really limits the possibilities of buying in the inner melbourne, most properites i've seen passed in usually have problems or the vendor is looking for too much money.

if the property is passed in, above the 10% of the upper range then you have some evidence to go further and complain to the REIV (there is very small evidence of this though). if it sells for 40-50-60% higher than lower limit, you have nowhere to go or complain, its market forces.

Nice story about foxes and princes etc, you now need to join the real world, and it costs to get a good asset in this market, do alot more due diligence pound the street, go to lots of auctions speak to agents (foxes) and you will be armed with alot more information, its pretty hard work and very time consuming, if your lucky you will pick up a bargain, but more likely you'll pay over the odds to get the asset but hopefully will be laughing in a few years from now.

go for it
 
Don't you just love buying in a boom? I'm no big fan of agents as they are down there with lawyers and used car salesmen but in their defence, agents would not know the spending limits of everyone at the auction. An emotional bidder who has a nagging wife and 3 kids in tow does not care about market values on auction day. Such is your competition. There is a simple solution really - buyer's strike!
 
We're all entitled to a bit of indulgent self pity after missing out at an auction, I've done it on numerous occasions, actually I think every occasion I've missed out on :rolleyes:.

After that though spend a bit of time examining why exactly you were disappointed to miss out. You stopped bidding at $670k, presummably no one physically forced you to stop bidding. Then at least 2 others continued bidding until it was knocked down. Why exactly does that disappoint you? Assigning blame to the agent or to the method of sale is satisfying for about 2 days, but beyond that it is pointless.
 
evand said:
Michael, thats a 66% increase on the agents quoted price! If an agents cant estimate closer than that in his own backyard he's either lying or shouldn't be in the game.


http://www.theage.com.au/news/natio...e/2006/10/28/1161749357917.html?page=fullpage

http://www.consumer.vic.gov.au/CA25...2=996-2007+-+Edition+2~&3=30-Compliance+news~
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The problem is that the agent has no idea what people are going to bid on the day. The bidding could be due entirely to emotion. The agent can only price the property based on recent sales of similar houses in the area. He cant look into the hearts and minds of emotional buyers to see how high they will bid.
 
What's that got to do with giving the prospective buyer a price guide of $450 - $500k?

Any agent worth his salt (and who is honest) should be able to give an estimate within 10%. 20% on the outside to be generous. 66% is a bit rich.

Any agent loves a crowd at an auction. Even a crowd of tyre kickers. Theres nothing worse for an agent than an auction with only a few people.

And the way they get a crowd is to lower the expected sale price of a property and therefore broaden the prospect base.(widening the net as it were)

Which is fine except that people waste money thinking they are in with a chance of buying.

voigtstr said:
He cant look into the hearts and minds of emotional buyers to see how high they will bid.
Click to expand...
 
voigtstr said:
The problem is that the agent has no idea what people are going to bid on the day. The bidding could be due entirely to emotion. The agent can only price the property based on recent sales of similar houses in the area. He cant look into the hearts and minds of emotional buyers to see how high they will bid.
Click to expand...

Too right, I think buyers should take more responsibility instead of blaming agents (and anyone else) for their predicament.
 
evand said:
What's that got to do with giving the prospective buyer a price guide of $450 - $500k?

Any agent worth his salt (and who is honest) should be able to give an estimate within 10%. 20% on the outside to be generous. 66% is a bit rich.

Any agent loves a crowd at an auction. Even a crowd of tyre kickers. Theres nothing worse for an agent than an auction with only a few people.

And the way they get a crowd is to lower the expected sale price of a property and therefore broaden the prospect base.(widening the net as it were)

Which is fine except that people waste money thinking they are in with a chance of buying.
Click to expand...

The other reason why they have lower advertised prices is that there is a bigger pool of buyers in the lower price ranges, and every enquiry they get is a potential customer.
It's quite often about the sales leads of the future.
Same reason for why they take your name and phone number at open houses; not for security; it's for the sales leads.
 
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