12 Bubalo St Warriewood Auction
When a property passes in $370,000 above the advertised guide a lot of buyers walk away scratching their heads
The Property
12 Bubalo St Warriewood is a very appealing family home - 2 level, 4 bedroom, 2 bath, double garage and a pool. On a quiet street. It was built a couple of years ago and maintains a modern finish.
It sits on 332sqm of land, and a floor plan size of 247sqm.
These type of homes are usually in hot demand. Fascinating then, that in a market with no comparable stock on market, the property was passed in. Especially because, there was hot demand!
Price Guide
- The price guide was set at $2,000,000 and did not change throughout the campaign. A price guide is there to reflect recent comparable sales and provide a benchmark as to the expected final sale price.
- The nearby area has had very few comparable sales in the past 3 - 6 months that reflect the same size block of land and internal floor size. In fact, the average block size for 4 bed homes in the past 6 months sits at 560sqm, which is 1.5x 12 Bubalo St.
- The average price per square meter of internal floor plan on 20 recent comparable sales sits at $10,757. If you apply this to 12 Bubalo, you'd want to be hitting $2.65m - but adjusting down to account for the smaller block size.
- The other interesting aspect here is the property started on market with standard settlement terms of 42 days, and was then updated to be 90 days non negotiable (allowing the vendor time to purchase elsewhere). This may have put some buyers off.
The registered bidders
Prior to the auction, the agent indicated there would likely be 4 registered bidders. There was actually 8 or 9. For an auction like this, it is normal to assume that about half of the parties registered have a limit within 10% of the price guide, which would rule them out around the $2.1 - $2.2m mark.
Then there is the other half, who can likely spend more than 10% over the guide. The question then becomes:
How much more over 10% of the guide do they want to go?
How much more over 10% of the guide will they actually go?
These are 2 different questions, as a good auctioneer like Vic Lorusso our traffic chopper guy, will use buyers emotions to get them willing to bid more than they had wanted to when they walked in.
The auction
With a guide of $2m, and 8 or 9 registered bidders it was clear this property wasn't going for under $2.2m.
Opening bid $2,200,000 (10% above price guide). The pace moved it to $2,350,000 fairly rapidly, where one of the two remaining parties indicated they were out. Vic managed to get another $10,000 out of them, taking it to $2.360m.
In total, only 3 active bidders.
The final bid back came at $2,370,000
The result | PASSED IN.
Sitting at $370,000 above the guide, representing 18.5% over guide, the property was passed in to the highest bidder.
Update post auction
There was an increased bid up to $2,450,000 (this is $450,000 and 22.5% above the guide), which was still NOT accepted by the vendor.
The property was then listed for sale at $2.45m - $2.50m for a day
The Vendor then came to their senses and accepted the post auction offer of $2,450,000 and it sold.
Really, just a complete waste of time for any buyer who saw the property advertised with a guide of $2m.
So what went wrong?
The issue is best explained like this:
The price guide is set at the start of the campaign based on recent comparable sales. It can be adjusted up or down throughout the campaign. It is set by the real estate agent
The auction reserve price is set in the days preceding the auction. It is set purely by the vendor. Yes the vendor should take the feedback the real estate agent has given them on price, but ultimately they can set the auction reserve wherever they like
There is no correlation between the price guide and the auction reserve.
If the auction does not hit the reserve price, then the vendor is left to decide if they reduce their reserve and sell. Or not.
How do you avoid investing your time, money and energy in properties that are passing in 22.5% above the advertised price guide?
Engaging an industry professional who buys property in this market every day, will make sure you are not wasting your time and energy on properties that you can't afford.
I offer a free 15-20min Buyer Consult if you are interested to find out more, click here to book.
Property passed in at $2,370,000
