‘Elephant in room’: Melbourne sellers blamed for auction woes - realestate.com.au

Melbourne's real estate market is facing challenges, primarily due to sellers holding onto unrealistic price expectations, according to insights from a prominent auctioneer. Recent data from REA Group revealed that the preliminary clearance rate for Victoria stood at 62.8 percent over the weekend, with 236 properties sold out of 376 auction results. Specifically, 120 properties were sold at auction, 113 before the auction took place, and three after, while 106 auctions were withdrawn entirely. This week, a total of 774 auctions were scheduled in Melbourne, marking a 56 percent decrease compared to the same period last year.

Luke Banitsiotis, the chief auctioneer for Ray White Victoria and Tasmania, emphasized that many sellers continue to expect prices beyond what buyers are willing to pay. "The elephant in the room is that vendors are still trying to overshoot the market," Mr. Banitsiotis stated. Under new legislation in Victoria, sellers are now required to disclose their reserve price at least seven days before the auction. Banitsiotis noted that when sellers align their reserve with buyer feedback, they tend to attract four to five bidders, as published reserves can act as a "magnet" for interest.

He also highlighted the importance of preparing sellers well in advance of auction day, rather than relying on last-minute negotiations to close deals. "You have to have the owner ready for auction day," he remarked. According to the figures provided by Banitsiotis, the percentage of auctions transitioning to private sales has decreased from 11.8 percent to 10.5 percent since the introduction of these new regulations. However, the same-day clearance rate has dropped from 54.7 percent to 40.7 percent during the same timeframe.

Buyer’s advocate Cate Bakos expressed her surprise at having no auction appointments on a Saturday in October, a month that typically sees her extremely busy, often impacting family celebrations, including her daughter's birthday. "I’ve never, ever had a Saturday in October off," Ms. Bakos said, noting that agents are canceling underperforming campaigns before the scheduled auction day. Some properties that received no bids during auctions have later attracted competitive private offers, but without the transparency that auctions provide, buyers must rely on agents' accounts of competing offers.

Despite the overall slowdown, Bakos observed that renovated family homes are still drawing interest, whereas properties in desirable locations that require work present opportunities for buyers. Christopher Sybenga from Cate Bakos Property shared a contrasting perspective through an Instagram video that showcased the weekend's auction activity. In Essendon, he noted an auctioneer mentioning a resurgence of interest in properties that had previously struggled to sell in the preceding months. Another agent remarked that he and a colleague successfully sold two properties at auction that day.

Ryan Currie, an auctioneer from Nelson Alexander, witnessed competitive bidding firsthand at a property located at 38 Alfred St, North Melbourne. Three families vied for a four-bedroom home, which eventually sold for $1.506 million, exceeding its published reserve by $256,000. The bidding commenced at $1.14 million, with Currie placing a vendor bid of $1.2 million. He declared the property on the market at $1.26 million, with the contest ultimately narrowing to two bidders. Currie noted that the 332-square-meter block, along with its rare side driveway, attracted families despite the home needing renovations.

At another auction on 26 Marsh St, Maidstone, a family purchased a home for $960,000, surpassing the published reserve of $910,000. The sellers, who emigrated from Lebanon in 1982 and raised four children in the house, had two of their children present at the auction. Currie mentioned that while the underbidder intended to demolish the property, the successful buyers expressed their desire to keep it, which led to an emotional moment as both the husband and wife of the selling family were moved to tears upon hearing this news.