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Commenting on “The day I was at the Auction in Wheelers Hill”
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On Saturday 25 August 2018, a few members from Melbourne Real Estate by Sin Fong Chan (Group) joined me in attending a property auction at Wheelers Hill. For privacy reason, I shall not disclose the property address, and also refer the members attending the auction simply as members hereafter.
By Thursday evening, the members were informed of the address, accompanied by a few questions. The intention was to arouse their interest and motivate them to explore further. A couple of members submitted their answers or comments. The next day, a list of 22 questions / instructions was messaged to the group so that the members could do further preliminary research prior to attending the auction. Some questions could only be answered after inspecting the property and paying attention to the auction process.
It was a beautiful sunny morning, no dark clouds, no rain in sight - perfect day for an auction. Unfortunately, I could not really see Port Philip Bay as described in the brochure.
The crowd was not very large; the number of attendees was around 40, mainly from the neighbourhood plus a few the members.
The property is located close to primary and secondary schools, but no way it is a stone throw away from Jells Park, Brandon Park Shopping Centre and The Glen Shopping Centre.
Although the house number is 18, an auspicious number for the Chinese, the first impression of the front view does not attract many Chinese buyers who believe in Feng Shiu; furthermore, it is not a squarish-design housenor with a grand entrance.
The carport is directly and immediately in front of the front entrance. Two roller doors and a gate have been installed, turning the carport into two unofficial “garages”, or technically speaking enclosed carports. It is matter of a choice between security and appeal, but the latter is the loser.
Just think for a moment of a scenario if two cars are garaged with the roller doors closed, and the house is on fire. How easy is it for emergency personnel to access the house?
Due to the blockage by the enclosed carports, the front entrance is dark due to lack of natural light. However, the rest of the building does capture good natural light as it is almost in a north-south orientation.
Like the properties given in the comparable sales, the walls and doors of the property are painted white. Kitchen bench top, cupboards and floor of the bathrooms and laundry are also white. Such colour scheme not only enhances the brightness of the house, but also gives a spatial perception of spaciousness.
What the members did not point out is that the house was not cluttered and there were no tables in the bedrooms. All these helped to add the extra space, which is more important for the smaller bedrooms.
The house was originally built as a 3-bedroom house with a study. The study was small and had no built-in wardrobe. A cupboard was added at later stage.
The interior was professionally decorated with hired furniture, pictures and possibly the mirror in the dining room. I believe most of the owners’ original house content except the furniture in the family room had been stored at a storage company.
The large family area is an extension built around 20 years or longer. The telltale sign is the choice of brown tiles used throughout the kitchen and the extended area. The tile colour is totally different from that of the other white-tile areas.
Closer examination of the external walls proved that the house was extended. In fact the room below the rear deck was also a later addition. The sales staff was excited to show off this hide-away cum cellar, but I did not share his sentiment.
Members were also alerted about the higher than normal rise of the steps of the stairs from the deck to the garden level. This is rather hazardous and definitely NOT permitted. I doubt some part of the house was DIY job not passed by the authority.
The gutters are concealed behind the fascia boards. They are not well designed, especially the ones in the the enclosed carport. Rain water does not flow well, and certain parts are blocked, resulting in water running into the eves. Certain parts of the eves are evident of water damage.
The house was probably painted not long ago before it was put in the market. Freshly painted house can hide parts of the house being attacked by mildew. While I did not spot mildew attack area, one member detected musty smell and rising damp.
A pool can be an asset or a liability depending on whether any member in the family takes advantage of it. It can be fairly costly to run, and it is an added chore to maintain. It is difficult to determine whether the pool is in good condition. I know of at least two nearby houses having problem with cracked pools and leaky pipes.
One option is for the new owner to fill the pool with soil, or turn it into a lily-fish pond. It is important to consult a specialist before using a backyard handyperson to do the job.
If I were interested in the property, I had to inspect it thoroughly myself or engage a professional to do the job prior to auction. An auction sale contract is an unconditional one, that is, the buyer cannot ‘buy” the house subject to, say bank loan, building inspection or pst inspection.
I believe the owners are not very pedantic or worry about fine details. The cupboard in the former study is left in its original state with varnished side panel, instead of painting it white. In one of the bedrooms, a light fitting has two different types of light bulbs which give out different colour light, namely, white and yellow respectively. As mentioned before, the floor tiles are not white throughout.
With most furniture in storage, and all the rooms with rented beds, it is a sign that the owners are not living in the house at present.
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Before the start of he auction, I made the following observations:
Knowing that the property is very likely to be unoccupied, one can assume that the owners have certain degree of urgency to sell the property;
There were no expensive luxurious cars parked in the street;
There were no cars with Chinese auspicious number in sight;
The attendance appeared to be very relaxed;
No young people accompanied by parents.
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The price range quoted in the statement of information was between $1,150,000 and $1,265,000. According to realestate.com.au Wheelers Hill median house prices for 3-bedroom and 4-bedroom houses are $1,027,500 and $1,194,850 respectively. The overall median price is $1,170,000.
In Section 32, the site value (SV) and capital improved value (CIV) are $815,000 and $965,000 respectively. During boom time, CIV is general well below the market value, but during a downturn, the valuation is comparable.
What a difference a few months make! If the property was auctioned in April like those mentioned in the comparable sales, it could fetch at least $1,280,000 or another $100,000.
Why is it important to note who are attending the auction and who are bidding? There are at least 50% of Asians, mainly of Chinese origin. A quick scan of the crowd, I could not detect any serious bidders except the Indian/Sri Lankan young couple with a child.
The auctioneer opened a bid of $1 m and the young couple raised it by $100,000 to $1.1 m. No other bidder entered the ring, and the auctioneer called a vendor bid of $1.15 m. The couple was under pressure to increase the bid by one of the staff present. Was there a need to put in an increase bid if there was no one around to compete?
Without doubt, I can only assume that these are first time buyers, who buckle under the pressure exerted by the sales staff.
On a prior visit to the property at an open-for-inspection, I asked the staff whether the owners were looking at $1.3 m. He did not respond, which would mean it had to be over the quoted price range, and possible between $1.25 m and $1.3 m.
How likely the price would go beyond $1.2 m? I was certain it was not likely, because the two-storey property across the road was sold in September 2017 for $1.209 m.
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After evaluating what I knew about the CIV and based on other observations, I came to the following conclusion:
The owners have moved out of the property, and may not like to leave the house empty for too long. The cost of renting the furniture can be substantial and put a dent to the pocket;
The absence of luxurious cars indicates buyers with deep pockets from other suburbs were not showing particular interest in the property;
Similar to 2, not many crazy Chinese were going to bid up the price ridiculously,
It was unlikely to have other genuine bidders;
Mum-and-dad bankers were absent. They tend to be too excited to see their children win the bid for their dream home.
Since there was no other bidder, the young couple did not have to push the price higher after the vendor bid of $1.15 m. The property was pass-in after they bid $1.17 m.
If I were the young couple, I would not pay more than $1.1 m.
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The auctioneer and staff went into the house while the highest bidder and family waited eagerly outside in the cold in the “garage”. I believed the auctioneer and his colleagues must have negotiated intensely with the owners. They were inside the house for at least 15 minutes before the young couple were invited in for further action.
Another 10 minutes later, the emerged and told me that the property was sold for $1,180,000.
It was a good outcome for the owners with present market condition. As for the buyers paying $1.18 m, I could sense that they were happy with a price close to median price.
Thank you for reading
