A three-bedroom home in Melbourne’s east has sold for almost $900,000 above its reserve price, during another strong auction weekend across the country.
Around 300 people turned out to watch 82 Maud Street in Balwyn North skyrocket above expectations on Saturday, according to Hocking Stuart agent Claire Wenn.
The remarkable auction result follows an increased scrutiny of large sales that sell for a much higher price than expected and the issue of underquoting by agents.
But speaking to SmartCompany this morning, Wenn said the $3.083 million result was completely unexpected given comparable sales and land values in the suburb.
Wenn says the reserve price of $2.2 million was the price all bidders had indicated their interest at before the auction.
“There’s always an element of the unknown, but we never expected it,” Wenn says of the price paid for the red-brick home in original condition.
“The vendors were in shock. They kept saying, ‘oh my god, oh my god, I can’t believe it’.”
Wenn says the price ultimately came down to a combination of the property being on a 933 sqm block that is only a few hundred metres away from popular secondary college Balwyn North High School.
The bidding started strong from an initial offer of $1 million, with six bidders jumping the price by hundreds of thousands of dollars each bid.
The winning buyer, a local woman who had emigrated from China, plans to subdivide the block.
The home was one of 1110 properties that hit the auction block in Melbourne on the weekend, according to RP Data, contributing to an 80% clearance for the city.
Meanwhile, Sydney maintained its auction strength with an 86.9% clearance rate on 950 properties.
RP Data’s senior research analyst Cameron Kusher told SmartCompany the two cities had maintained strong clearances since interest rates were lowered last month.
Kusher says rates are higher in both Sydney and Melbourne than the same time last year, despite volume levels having remained fairly consistent.
“We haven’t seen levels like this for quite a while. Particularly in those two cities, auctions are tracking very strongly,” he says.
On the issue of underquoting, Kusher says the strength of the market can lead to a rise in unexpectedly large sales and a significant variance in the price that is quoted versus what it eventually sells for.
“In a market that’s climbing like it is at the moment, it’s pretty hard to nail down what price a property will sell for,” he says.
“An auction campaign is usually a period of six weeks but a lot can happen in six weeks – such as interest rates announcements.”
“This is where a real estate agent’s expertise needs to come in. Most data is based on what’s being advertised now and what’s sold, but agents need to be a bit more forward looking, and take into account larger economic conditions.”