Appraising a unique property… science vs art

Yesterday we had an auction bidding assignment in Armadale at a beautifully renovated, substantial family home in a pretty street near the train line. While we knew we’d have tough competition, gauging the interest and appraising the property was indeed a challenge. 

This is because of the uniqueness of the house.

This beautiful brick Federation home had been masterfully restored, renovated and offered for sale. Combining old with new was done quite dramatically and everything about the sunlit renovation was on trend. Over 200 groups had inspected the property and recent comparable sales of similar conversions and the broad appeal and popularity of such renovations in the area indicated that the price would easily sit above the $5M level… but how could we accurately pinpoint where the price could sit for our clients?

Appraising the property was not easy though, and applying other factors such as scarcity, numbers of competing properties for sale, most suited family types and demographic, and marketing of the property was imperative.

It’s usually far more of an exersise for us to appraise a property than just relying on other recent sales. We always take market conditions into account, and this assignment was no different.

Sitting on a conservative 515sqm of land, this huge five bedroom, three bathroom, three living area house inhabits a vast majority of the land footprint. The garage with rear street access was indeed considered a valuable bonus, but the pool… could the pool be seen as a positive or a negative? Pools are always hard to assess because some buyers love them and some loathe them. In this case, the majority of the already limited outdoor living area was dedicated to the pool. Interested buyers on this property would need to love a pool or have minimal requirement for outdoor living space.

There was little doubt that this home would be popular given the vast numbers of people who visited the opens, but identifying a target buyer group was tricky. With private schools nearby and rail amenity scoring highly, the likely demographic seemed to be families with older children.

Appraising it was difficult.

This beautifully renovated but smaller period house in an arguably superior street had sold only weeks earlier for $5.1M. While the landsize was slightly larger, the house was not. The renovation was nowhere near as spectacular and the property offered one less bedroom, no garage and considerably less living area; a significant set of items for a large family.

Clearly yesterday’s property was superior, but how superior?

And then this property on a whopping 880sqm in Kooyong Rd was considered. Selling for $6.52M back in March, but boasting a fine address, four bedrooms, four bathrooms and a similar scale of living area space, it was clearly superior but warranted a place on the comparison chart. 

Could our appraised property have reached $6M?

We thought it could certainly get close, particularly when we factored in market conditions. Acknowledging that it would be a record for this land size in the area, the quality of the renovation, size of the dwelling and scarcity of other comparable products and appeal to older families meant that we had to prepare our client for a strong auction result.

As at auction day, there was only one other established property boasting four or more bedrooms in the entire suburb of Armadale. In an area with strong demand from high household income families, the supply and demand equation was indicating that this property could likely have the whole market share of eligible buyers. Combined with fears of a winter stock shortage, cashed up buyers fighting it out against us were on the cards.

The bidding was opened on a Vendor bid of $4.4M by the auctioneer. The first genuine bid was from a buyer who meant business at $5M. While the crowd gasped and people called out to ask whether it was on the market, other bidders threw their hat in the ring to fight for the prize. Declared on the market on a $5.06M bid, two buyers went head to head for the large majority of the fight, with the hammer falling on $5.925M. Obviously a strong result for the vendors, neighbours were buzzing with commentary about what their own properties could be worth.

What we saw yesterday was a classic case of what can happen when two people are emotionally attached to a property.

Commiserations to our lovely clients and congratulations to the successful buyers.