The Sporadic Nature of Auctions

Yesterday we bid on a rare property; a classic single-fronted Victorian cottage in Footscray on just over 300sqm of land with dual street frontage. Many such blocks have since been subdivided and it is no surprise to familiar locals that these streets boast a blend of period cottages and street-frontage townhouses.

When our investor clients selected this property and asked us to assist with the acquisition it was easy to give them assurance that they’d targeted a high scoring property.

Not surprisingly, there was reasonably strong buyer interest and the campaign had tracked well. We were aware that another advocate firm was representing a client and we prepared for tough competition with a Plan B property going to auction in the coming weeks.

Our comparable sales analysis included a few recent sales supporting a figure well into the $900,000’s however the most  accurate comparison was a property within stone’s throw which had sold to an investor client of ours back in December in Commercial Rd Footscray. While the sale was considered old, the properties were very similar so it had to be factored into our analysis. Both properties were two bedroom, single fronted, free-standing cottages on dual street frontage and the land size additional differential was less than 3%. One faced east and one faced west. Both  were in similar internal condition and each were weatherboard. 

The perfect comparison? Perhaps..

Interestingly though, the property in Commercial Rd didn’t have strong bidding and didn’t reach the reserve. These rare diamonds would usually have every agent anticipating a strong level of interest from multiple genres of buyers, inlcuding:

• home owners who desire off street car parking, 
• investors who aspire to ‘land bank’ the rear yard with street frontage,
• developers or builders who are ready for a townhouse project, and
• investors who value the increasingly scarce commodity of land in the inner 6km radius

The interesting thing about Commercial Rd and Leander St Footscray is that the pair of them showcase the sporadic nature of auctions. It could be argued that Commercial’s auction date was quite close to Christmas and buyers were busy with the festive season, or that Leander was in a limited pool of period house options at the time. It could have been influenced by subtle town planning restrictions, or appeal of orientation.

More likely it was just a mere case of the mix of buyers at the time.

Auction results, buyer numbers and popularity of a specific property aren’t always accurate measures of the quality of a property. Luck can strike in many different forms.

Leander St was contested and sold under the hammer for $15,000 more than Commercial Rd’s result.

The comparison of the two campaigns reminded us of an adventurous auction day we experienced back in April for a dear client who had missed out a few times at auction in his quest for a single-fronted Victorian and found himself picking out three auctions on one busy Super Saturday for us to target.

Each of his three properties had a lot of commonality. All were single fronted cottages in the inner north-western pocket of our city. 

While they each had varying qualities, locations and land sizes, we broadly assessed the likely range from high $900,000’s to a tad over $1,000,000. Our client had felt his share of pain at past auctions, and this time – on April 8, he was determined for one to be his.

My instruction was clear. To bid at each in succession up to the budget and purchase the first one we could score.

We felt that our best chance was this one in Princes St Flemington. It was the smallest of all three (in land and dwelling size), arguably had the most repair work required and had the commission housing tower in the vista. We felt that a million dollar budget could have a reasonable chance on such a property. Competition was strong and two emotional buyers fought for it to $1,116,000. Our client’s shoulders slumped and we did feel concerned about his chances at the other two.

An hour later I found myself standing in the crowd out the front of 84 Canterbury St Flemington staring down the underbidder from the previous auction. Dread washed through me when the bidding commenced and she raised her hand to bid.This property was arguably the best of the three we had targeted for the day and it was the one our client liked the most. Boasting a third bedroom and sitting on larger land in a pretty street, this maisonette could easily have been a heart-breaker. To our shock though, the hammer fell and we secured it on a bid of $953,000. Our underbidders from Princes had opted out and the sound of the auctioneer’s “SOLD!!” had never sounded so sweet for our client. 

Needless to say, we never had to attend 75 Bowen St Moonee Ponds’ auction that weekend because we’d scored him his prize. The original cottage requiring a substantial renovation was our last resort that we didn’t have to turn to. This property was the toughest to assess though because it needed money spent on it immediately. The desirable street aspect was a threat to our budget and we feared it could eclipse $1,000,000. That it did. The property sold under the hammer for $1.04M later that afternoon.

These three outcomes were a perfect illustration of the uncertainty of auctions. The same day, the same crowd, the same (and similar) suburbs.

Properties are like people. Individual, unique, and often hard to predict.