15 December 2016

Selling, selling, sold! Bought at auction

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Lucky number 42 - enjoying some smoked meat at Pialligo Estate

Tuesday night I went to Pialligo Estate. “There must be a wedding or something,” I thought as I pulled up in the almost completely full car park. But no, everyone else was headed in the same direction I was – to the final end of season auction event run by LJ Hooker.

The mega auction featured 27 properties up for sale, with seven auctioneers across nine LJ Hooker offices. The auctions were held in four of the outside pavilions. Thankfully the warm weather held and it was easy to wander between the pavilions and mingle.

I had been to auctions before, but had never bid at one. Up until recently auctions were fairly rare in Canberra compared with cities like Melbourne. But times, well, they are a changing.

At social gatherings, the topic of bidding at auctions has come up a lot recently. I have gleaned there are various “tips” about how to get the deal. “Wear a suit and look professional,” said one guy. “Dress down and look like you don’t have a lot of money,” said another. “Use your body language to signal you have a lot of space around you, to show intention,” said another. “Act disinterested,” said someone else.

I had no clue about how to act or what to do.

Having just paid off the mortgage on my comfortable suburban four bedroom home in Western Belconnen, I decided a few months ago to sell up, move inner North and downsize to somewhere requiring less maintenance. I love my community – I know all the neighbours by name, my kids can cycle in the street, we attend the local church and there is a great primary school in walking distance. But now that I am doing the solo parenting routine, I wanted something that would create more simplicity in our lives.

The plan was to sell my home and to rent for a year or two before purchasing. My house is being auctioned this Saturday. But with the January/February rental squeeze approaching, I thought I should begin looking at rentals.

But then while looking at rentals, I noticed a three-bedroom apartment for sale. Why rent when you can buy? “It doesn’t hurt to check it out,” I thought to myself. I viewed it and thought it wasn’t too bad.

I wasn’t entirely sure I would even turn up for the auction. I hadn’t arranged finance (and when you buy at auction you make a firm commitment), but I knew what my borrowing capacity was and I had money for a 10% deposit. The promise of a drink or two at Pialligo Estate made the thought of attending appealing, although as it happened I didn’t indulge in even one alcoholic beverage. I wanted my wits about me.

With so many people at the event, I wondered about finding the right pavilion at the right time. I need not have worried. As I arrived, Andrew Browne from LJ Hooker Dickson spotted me and escorted me to where I needed to register in order to bid. I took a lucky number 42 card, a drinks voucher and an order of sale. I was set.

Andrew then walked me to pavilion 1, where the auction of a unit was underway. The auctioneer, complete with a Santa Hat on, was doing his best to drum up interest but there was none. The property was passed in at auction.

An auction underway An auction underway

I grabbed something to eat and some water to drink, and tried to appear nonchalant as I observed the next auction. I didn’t want the auctioneer to guess I was an auction newbie. I wanted to know the protocol and to look professional. It was hot and there were a lot of flies. Did I need to worry I might end up bidding if I shooed flies away or took a drink from my glass?

The bidding started in the high $600ks, and quickly climbed to the high $700s. It seemed to be a done deal at $790, but then it went on again. It was in the $800s now, and there was low-key tension with people obviously trying not to show emotion. The agent was working on two men in the audience, trying to help the auctioneer by drumming up support and making sure they were not overlooked (little chance of that). But there was a T-shirt clad mother holding her young daughter in the corner. She kept quietly bidding when it seemed the deal was complete. And other parties were in the race as well – there was quite a bit of competition. In the end the house was sold to the mother at $952,000. I later heard the original estimate was that it would go for around $650,000.

Next up was the property I wanted. I looked around the audience to see if I could find the earnest young man who had also been at inspection, but he was not there. I am short, and standing up the back people blocked my view. No matter – I was far from invisible to the auctioneer and agent.

There was, as I soon worked out, only one other person who had indicated interest in this property when registering. But anyone in the audience who had registered could bid. No-one was willing to make a starting bid. Nothing happened, despite the auctioneer’s best efforts, but after a while, with strong encouragement from Andrew, I waved my number 42 card. $530k.

Any other interest?


The amount was below reserve, so Andrew took me aside to negotiate. I noticed the other potential bidder walking away: it was just between me and the owners now.

“What price do you want to offer,” he asked. “Give me a figure.”

Errrrr. Ummmm. Not having thought I would even put my hand up, I was a bit stunned. So I phoned a friend: my mum on the Gold Coast who is an avid property investor.

She knew what was happening as soon as I called. “Ooooh, it’s sooooo exciting,” she enthused. “I say counter at $550k.” A rather odd time for a mother-daughter bonding moment, but also pretty cool to have an entrepreneurial, property savvy mother to give advice.

Andrew went away and I could see there was an animated phone call in progress to the interstate owners. After a while he came back with a counter offer. $580K.

We were close now. “$560,” I blurted out quickly, without really thinking. With the benefit of hindsight, I ought to have been more measured. Too late: I had done it.

More phone calls: Andrew to the owners, and me to my Mum, my ex-husband (a property investor), and my new male companion. Phone calls and SMS messages were flying everywhere. “Hold,” they all responded.

“$570,” said Andrew. “Meet them halfway and it is yours.”

“I’m holding,” I said. “And I need to go soon to pick up my kids.”

Somehow, within five minutes, I had won a bid for $560K at auction. I had to go back into the pavilion for the auctioneer to strike his gavel and declare I had won the bid, then there was paperwork and a deposit to pay electronically. I posed for photos, rang my Mum, rang my ex, and rang my male friend, and came home with two LJ Hooker bears and a box of Jansz sparkling.

Posing with Andrew Browne from LJ Hooker DicksonPosing with Andrew Browne from LJ Hooker Dickson

Some post auction giftsSome post auction gifts

“I have just bought our new home,” I said to my boys when I picked them up an hour later. Things had moved so quickly that they hadn’t even seen the place. “Cool,” said my seven-year-old when I showed him the brochure. “That looks beautiful and I love it. Now can I go and play on the computer?”

They might be disinterested, but my adrenaline was pumping and it was hours before I could get the smile off my face. I think I like buying property.

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I think you paid too much.

Housing Affordability problems in Canberra is a problem caused by the government drip feeding of land into the Canberra housing market to prop up property values.

It costs about $50,000 to service a flat block of land with roads, power, sewerage etc. In places other than Canberra you can build a 3 bedroom brick veneer house for $180,000; so why can’t I get a house and land package in in Canberra for $230,000?

The Government just drip feeds the land at a premium price at a pace well below demand to keep prices up. A quick look at a map and you can see space to double the residential space in Canberra. We are not short on space. Canberra has more land area than New York, we can fit a few more people in.

Just remember there has never in history been a debt fueled asset bubble that didn’t end in a crash. Australia has a total of $1.6 trillion in mortgage debt.

Congratulations on your purchase!

Forgive the following rant, but I’m a little jaded by the whole auction process in the ACT. 80% of homes listed on the market are listed for auction. It’s an amazingly high percentage. Why? Because real estate agents believe they can achieve higher prices through auction – well above what the house is worth. And the craziest part is that they are generally successful. I’ve seen too many solo bidders fooled into bidding against themselves simply because the auctioneer convinced them to. If nobody is bidding against you, don’t bid higher! Same with negotiating after the auction. Nobody else was interested, so why offer more than you bid?

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