In case you missed my news: I’ve been looking to buy a basic property to help my daughter who is going to the University of Sydney, set up a “student digs” to avoid paying $12000-$14500 a year in rent for a pokey room in someone else’s dump.
The property that I went to bid on this morning after spending $1000 on a professional valuation, building and pest inspection, conveyance lawyer to review contract, and pre-approval of finance was sold at $1.4 million. It was a run-down dump at 44 Lander Street Darlington, with termite infestations, and hadn’t seen a decent clean in 47 years, but we were prepared to take it on and clean it up a bit and make it available to other students at an affordable price. My valuator valued the land at $1 million and the house at $80 000, and give or take $20 000, that was what I was prepared to pay.
Well, I never even got to open my mouth at the auction. When I realised that more than 100 parties had registered to bid I knew I this was going to get crazy. The opening bid was $910 000. One guy who looked like he might have been a builder quickly went up to $1.2 million, then bailed out when a Chinese bidder started adding increments in $25 000 till it got to $1.3 million. From there another Chinese bidder entered the race, and whatever the former bid, he would say: Plus $1000. This went on and on to amusement of the 200-300 strong crowd. The late-comer was going to keep adding $1000 to whatever his opponent offered till he got it! And he got it at $1.4 million.
According to the Sydney Morning Herald, 86% of all sales in Sydney last year were conducted by Public Auction. There were 700 auctions in Sydney today, 15 February. So, I’m wondering….
Let’s be conservative and say an average of 25 bidders register per auction. Each would have spent upwards of $750 on contract reviews by a conveyancer, a building and pest inspection report, valuations etc in doing their pre-auction homework.
THAT’s A WHOPPING $13,125 million dollars spent without getting anything back but disappointment and disillusionment.
And you have to do that all over again for the next house you chase, and the next, and the next! You could be out of pocket by thousands on useless pieces of electronic paper before you ever buy, all eating into your available capital.
Next weekend 22 Feb, there will be 735 auctions in Sydney- ….that’ll be another $13,781 million pissed into the wind!
Below are some comments via my Facebook update. What have you experienced in buying a property? Any ideas on how to make it better? Any advice?
Like · · Share · 11 hours ago near Sydney ·
Brendan O’Keefe, Caronne Carruthers-Taylor, Kathryn Ananda and 7 others like this.
Neerav Bhatt Cheer up. Hopefully this mass delusion about property values will end eventually and those sitting on the sidelines will be able to buy in without spending the illogical amounts currently being bid. Until then my plan is to rent
11 hours ago · Like · 1
Michael Nelson One of the best argument I have seen for fixing the broken real estate market. Too many people making too much money by restricting information flows.
10 hours ago · Like · 2
Michael Nelson You forgot to calculate the value of the time of the people at the auctions. (I count value my time on weekends at twice the usual rate.)
10 hours ago · Like · 3
Rachel Lim Oh my god! I know the house you went for auction today. It’s just a couple of street away from me. The prices are going so crazy!!! Might pay buying before auction.
10 hours ago · Like
Ash Donaldson For about 8 months I felt your pain Annelie.
It’s a crappy system for buyers here in Sydney. Worse when there are only 2 bidders left and you’re both making the property more expensive for each other.
All the auctions we went to (around Manly) before…See More
9 hours ago · Like
Debbie Kilian There’s a reason behind it. Wait, you”ll see xxx
8 hours ago · Unlike · 3
John Hagel So sorry to hear about this, but having spent 18 months in a similar situation in the SF Bay area, I can say that in the end you will hopefully find something that was worth waiting for . . .
6 hours ago · Like · 3
Simon Coultas Ouch.sorry for you Annalie. But at least your system is somewhat more transparent than here in Singapore
4 hours ago · Like
Simon Coultas Have a chat with my son in law – real estate is his hobby and hes done pretty well buying well
4 hours ago · Like
Arturo Pelayo Aréchiga Annalie- this happens a lot in Auckland too! A father of three wrote an OpEd in the local paper sharing the same disappointment- that they there was a bid for 5 homes in a neighborhood and a single agent that represented a wealthy Chinese investor had $3M “for the weekend” investments. The investor never saw the homes or anything. At the end of the day, he bought all 5 homes outbidding everyone.
3 hours ago · Like
Tony Hollingsworth It must be timing as just over a year ago ( Nov 2012), we put our property to auction, had little to no interest, withdrew from the market just prior and that was that. Now we’re told prices are up 20+%!
2 hours ago · Like
Kathryn Ananda Inflated markets. Severely broken systems. Inflated disparities… and buildings sitting empty to support the negative gearing tax losses of investors while others are denied access. Money begets more money. Looking forward to shifts in ownership model…See More
about an hour ago · Like
Craig Banning Agree Annalie the process of buying property needs to be reviewed keep your chin up!
about an hour ago · Unlike · 1
Oliver Weidlich We’re going through the same pain at the moment
about an hour ago · Like · 1
Christian Lafrance I can feel the pain. Also sounds like an opportunity for collaborative consumption to me. Wondering what’s stopping buyers from sharing the cost if these reports (apart from the ones who make a living on these reports)
58 minutes ago · Like
Ash Donaldson For a free way to get a pretty good ballpark estimation, use OnTheHouse.com.au
27 minutes ago · Like
Caronne Carruthers-Taylor We’ll be looking soon too & will be sharing your & Oliver Weidlich’s pain
17 minutes ago · Like
Matthew Shaw The laws should be changed and all vendors provide a licensed report for the sale. That would show up a lot more problems and keep the prices real because I know a few people who’ve not bothered with those reports and just bought places they walked into the day of the auction. Either that or sleep with a real estate agent lol
12 minutes ago · Like
Annalie Killian Update for the record: I did manage to obtain a “reduced cost” of the Building and Pest report at $330 because it was an exact duplicate of the report that the first person requested and they paid the full price of $440. But the solicitor was a furthe…See More
A few seconds ago · Like