Why could a Schedule 3 Auction deliver a big result?

Our last auction of 2018 was indeed a special one. Unique, competitive, commercially zoned and sold significantly above the reserve.

In a climate of low auction clearance results, limited competition and a general correction above the $800,000 price point in Melbourne, this one bucked the trend.

Why?

The first hint is in the Auction Schedule itself. Most public auctions are a Schedule One in Victoria. Schedule One means that a property is being offered up by the vendor as a public auction and the auctioneer can aid the auction along with Vendor Bids.

This particular auction was a Schedule Three. Unlike a Schedule Two auction where one vendor may bid, a Schedule Three auction permits two or more vendors may bid. Given I was bidding on behalf of an existing owner I knew that had tough competition from another co-owner who didn’t want to give up the site they’d been co-owning for many years.

The auction kicked off at 1pm sharp and I kicked off the bidding. The auctioneer didn’t have to call very often for bids because the momentum was strong among the four bidders in the crowd. Not that the auctioneer could have pulled out any other tricks from his bag; the property was either going to pass in where the bidding stopped, or sell under the hammer. Under this Schedule, vendor bids were not permitted.

In the warm summer sun in Footscray’s bustling busy business centre with a growing array of observers crowding around this crazy auction, the bid count reached 620. Tony’s penciller whizzed through pages as the bids flew in staccato fashion and Tony’s only miscount was at $1.892M when he called “$2.892M”. 

I called out “No! You’ve cost me a million dollars, Tony!” 

The sale result of $3.05M was a surprise to most, but a clear indication of the power of competition between parting vendors and the value of a dwelling that has housed a local business with a strong goodwill value.

Value isn’t always about comparable sales. 

Value is dependant on the future use, the potential and the cost of loss. It is also an individual and emotional consideration for a buyer.

Not every auction result is in line with our analysis and this auction indeed proved that a successful bidding effort isn’t always about buying at or below market value. 

Sometimes it is about limiting the premium required to secure a very important property.

Photo credit: Vic Uni and REA