The Block – the real winners and losers
Watching The Block last night, the end story was that “everyone was a winner”.
The renovators won, the buyers agents won and the TV station won with the ratings, despite paying out a television record $3,165,000 in prizes.
Huge prices were paid for all of the St Kilda townhouses, with the winners Darren and Deanne selling for $835,000 over the reserve price of $1,455,000, or 57% more than what the property was valued at prior to the auction.
Winning a property at auction is a great feeling for buyers, with emotions of triumph and relief. In the following days the reality of a mortgage usually sets in and sometimes with varying degrees of buyers remorse.
Paying a huge price for a property would be fine if property markets were on an endless trajectory upwards. With growth in Melbourne and Sydney over the past few years at continually stratospheric heights, it is hard to blame buyers for thinking that growth will be endless.
For those of us who have been in the property industry for a long time, we know that markets rise, fall and also at times remain steady. We have seen many winners make large capital profits, however we have also seen many losers who have paid too much for their properties at the high end of a boom cycle.
Paying a premium amount for a property is less of an issue if the buyer will have no mortgage, however most people purchasing property do have mortgages and in the current market many have been borrowing a large percentage of the property purchase price.
Which brings us back to the large prices paid for the units in The Block. Now that the cameras have moved out and the production crew and media circus have moved on to other entertainment, the buyers will be preparing for the reality of settlement and paying the remainder due.
Is there any ongoing cachet or prestige for previous Block television properties? The answer in most cases is no.
The truth is that these places were renovated by amateurs finishing properties quickly on limited budgets to meet episode deadlines. Many will have repair and maintenance issues to be addressed, and when resold in the years ahead being a Block property is unlikely to be the sales agents main selling point. At that stage buyers will be more interested in the fundamentals of the property including the quality of the fittings and materials, the location, aspect and natural light, floor plan, noise, and the other important features.
As a buyers agent it was particularly disappointing to see the Melbourne buyers agent’s conduct at The Block auctions. The approach appeared to be more concerned about “winning” for their clients regardless of the auction bidding increments made and eventual price paid. Professional buyers agents should be acting in the interests of their clients and often that involves advising them not to proceed with a property or to set a measured maximum price.
If bidding at auction on behalf of a client, it is best to not be continually on the phone to your client during the auction as it is harder to keep a poker face and to concentrate properly, and your competition will find it easier to see when you are nearly finished. We suggest clients have a pre-written maximum bidding amount, which means that our client’s amount is determined by a proper price analysis on the property rather than being influenced by the frenzied bids of other buyers.
HENRY WILKINSON is principal of buyer’s agency Homesearch Solutions.