Is it just me? Or is this crazy?

As many know i've recently moved to Melbourne and started working in RE.

In my first week or so there was a property for sale - 1950s style cottage, 2 bed, 1 bath, no garage or carport, nothing interesting IMO.

Long story short, tiny little cottage, nothing fantastic, not reno'd, not for a family, just a small 2 bedder cottage!

Point being, it went for about $30K over the asking price! To add to that there was an all out bidding war on the thing, at the end of it a young couple bought it for $386k!!

Is that crazy? Or am i just looking at it in the wrong light?

It's located in the Eastern part of Melbourne, near Boronia.

Obviously i've been doing research and getting to know my area (i felt quite good today when i could explain to a lady whereabouts some houses were that she was looking at, i felt like a true Melbournian) and i know it's not the best area, but i've also been looking at the prices of houses for myself and i'd put the median at $350-$400K ish, but that's for something with 3 beds, double garage, anything that could actually be a family home, not a cottage!

So please educate me, because i think it's absolutely mental to pay that much for a tiny, old house.
 
Don't come to Sydney, people pay $500k+ for that in the inner west!

$30k over the asking price is not that much over. What was the reserve?
 
hi lil skater, hope your enjoying melb so far?? i think i met you briefly at the ss meet at slowvale (burvale). thats been the case for the last 6 months in eastern melbourne at least, prob same for all of melb, bugger all for sale and heaps of buyers, all going crazy and gettin emotional. they're all frightenend that if they don't get in they never will..... good for owners selling and agents i guess. which re are you at?? will keep my ear to the ground if any potentail listings come up....:)

enjoy.
yorkie
 
Point being, it went for about $30K over the asking price! To add to that there was an all out bidding war on the thing, at the end of it a young couple bought it for $386k!!

Haha, you've got a lot to learn. Anything under $400k ANYWHERE within ANYWHERE of Melbourne is not expensive.
 
Not sure what part of RE your working in, but sales is never about facts.
It's about emotions.
People don't generally buy cause they need, but buy casue they want.
If they want it, then whatever they can afford is not too much.
This is the golden rule. And it applies to anything.
The next golden rule is sales is not about talking, it's about listening.
Only noobs think the opposite. But never contradict them, just smile.
Third golden rule, always smile & nod. Specially when you dont agree.
If your in sales, never forget these, they'll buy your next IP.
 
Don't come to Sydney, people pay $500k+ for that in the inner west!

$30k over the asking price is not that much over. What was the reserve?

I just moved from the inner west of Sydney for the record. I'm the one at my work saying that the prices of places are so cheap in comparison to Sydney.

The asking price was $340-$360K

What was the land size?

Not that big, i can't remember exactly.

hi lil skater, hope your enjoying melb so far?? i think i met you briefly at the ss meet at slowvale (burvale). thats been the case for the last 6 months in eastern melbourne at least, prob same for all of melb, bugger all for sale and heaps of buyers, all going crazy and gettin emotional. they're all frightenend that if they don't get in they never will..... good for owners selling and agents i guess. which re are you at?? will keep my ear to the ground if any potentail listings come up....:)

Melbourne's awesome! I believe we did meet briefly, i was talking a lot to Mazda :)

I've seen the trends, especially for the eastern suburbs of Melbourne. I'm at Harcourts.

Haha, you've got a lot to learn. Anything under $400k ANYWHERE within ANYWHERE of Melbourne is not expensive.

Not exactly, we have plenty of listings under the $300k mark. I understand it was an emotional sale.

The thing that struck me was the fact that it's not like it's close to the city, or it had large land, or it's had a massive reno. It could easily be compared to a small unit.
 
I just moved from the inner west of Sydney for the record. I'm the one at my work saying that the prices of places are so cheap in comparison to Sydney.

I bought my PPOR in the inner west of Sydney so I'm quite familiar with the area too :)

Auction prices are largely governed by demand - must've been a lot of ppl bidding. Did it get frenzied?
 
Have to agree with the points regarding emotional purchases. This seems to be becoming the norm in sydney as well, which is good news for those who already own :)

Point in case: my fiancee's sister's house in Revesby, Sydney.
- teeny little 3bd/1bath house in revesby.
- backs onto the train line
- walking distance to the station
- pokey inside, living room is more the shape of a hallway (cant fit 3seater couch across it!)
- dated bathroom, and moderately dated kitchen.

Was bought in early 2006 for $370K.
Just sold on the weekend for $497K, after being listed at $495K for 7 days!!


This is not an exciting house at all, it was all she could afford at the time... but yet there were 3 desperate buyers who bid over the top of each other to get it!

The complete lack of properties for sales at the moment, combined with the number of people wanting to buy, is really starting to drive up prices IMO.
It's happening in my local area too. My PPOR townhouse we bought in May 2009 would now sell at least 5% higher.

Supply and demand. I love it.
 
newcastle is not that far behind either ... was happy to hear that a tiny, 2 bedroom/1 bath/0 gge unrenovated weatherboard/tin joint down the end of our street was part of a bidding war - sold for $50k over the asking price and $20k more than we paid for our 3 bedroom/2bath/4gge brick and tile place less than a year ago.
 
:confused: Have I said something wrong?

The property in question sounds like it's a PPOR too.

Sorry, wasn't directed in response to your post, but the OP.

Just saying a PPOR is different to an IP and when there's an emotional attachment, people will pay whatever they can afford for a place they absolutely love and think is perfect.
 
Have to agree with the points regarding emotional purchases. This seems to be becoming the norm in sydney as well, which is good news for those who already own :)

Point in case: my fiancee's sister's house in Revesby, Sydney.
- teeny little 3bd/1bath house in revesby.
- backs onto the train line
- walking distance to the station
- pokey inside, living room is more the shape of a hallway (cant fit 3seater couch across it!)
- dated bathroom, and moderately dated kitchen.

Was bought in early 2006 for $370K.
Just sold on the weekend for $497K, after being listed at $495K for 7 days!!

Nice! I agree on the emotion aspect as well, i just don't see the thinking process behind it. Personally if i had that much money to throw about on a PPOR i'd be looking at something that has potential to increase in value, then again that's from an investors perspective.

New listing today 4 bed house, 2 bath, double garage, very nice, listed in the same area for $350-$370K so will be interesting to see how much it goes for.

newcastle is not that far behind either ... was happy to hear that a tiny, 2 bedroom/1 bath/0 gge unrenovated weatherboard/tin joint down the end of our street was part of a bidding war - sold for $50k over the asking price and $20k more than we paid for our 3 bedroom/2bath/4gge brick and tile place less than a year ago.



Sorry, wasn't directed in response to your post, but the OP.

Just saying a PPOR is different to an IP and when there's an emotional attachment, people will pay whatever they can afford for a place they absolutely love and think is perfect.

I understand that, i'm not that dumb. I understand the whole attachment thing, but i don't understand how someone could become so attached to something materialistic (i guess you could say). Plus it was a young couple who bought it and obviously hadn't done the research or planned for further done the track.

When i buy my first place IF it's a PPOR admittedly i won't be looking for something to live in for the next 20 years, because lets face it, i can't afford it and there's no point if i'm living by myself, BUT on the other hand i'd be looking for something that has good potential to add value, or at the very least is easily tenanted.

Yes it's amazing what people will pay because they have an emotional attachment to their "dream home".

So i guess it is just me, because i'm looking at it as an investor. Not as someone that only cares about their "dream home".
 
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we just saw an undersized 2br townhouse in strathfield with an advertised price of 450k get bidded up to 630k at auction! Tbh we thought that the thing was overpriced even at 450k for it's size, although market rent here is probably around the $400-450/wk for that kind of place.

They did a minor reno, some floorboards to replace the crappy carpet and a repaint by the looks and are advertising it to rent for $500 a week. I don't see the sense in buying something that heavily negatively geared. At that price they will be lucky to see any capital gains either for some time I would imagine.
 
we just saw an undersized 2br townhouse in strathfield with an advertised price of 450k get bidded up to 630k at auction! Tbh we thought that the thing was overpriced even at 450k for it's size, although market rent here is probably around the $400-450/wk for that kind of place.

They did a minor reno, some floorboards to replace the crappy carpet and a repaint by the looks and are advertising it to rent for $500 a week. I don't see the sense in buying something that heavily negatively geared. At that price they will be lucky to see any capital gains either for some time I would imagine.

That's how i've looked at this one, although it was sold to an owner occupier not an investor, so this situation is slightly different.

Although Strathfield is a lot closer to the city than this house is down here.
 
newcastle is not that far behind either ... was happy to hear that a tiny, 2 bedroom/1 bath/0 gge unrenovated weatherboard/tin joint down the end of our street was part of a bidding war - sold for $50k over the asking price and $20k more than we paid for our 3 bedroom/2bath/4gge brick and tile place less than a year ago.

OK.................... was thinking of selling one of our town houses in Charlestown..... maybe I should hang on a bit...................
 
Revesby and the burbs around it are red hot at the moment due to lack of supply. My brother sold his house last weekend in Milperra after being on the market two days, selling it just under asking price. Based on previous sales in the area, they expected it to sell for 50K less, so they were very happy.
 
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