The Block 2012 properties sold for around $100,000 above estimates, reflecting improved consumer sentiment from last year: Frank Valentic

The Block auctions in 2012 are now over, and we congratulate all the contestants on their big financial windfalls. From Dale and Sophie ($355,000), Mike and Andrew ($434,000), Dani and Dan ($448,000) and the overall winners Brad and Lara ($606,000), the total combined profit was $1,843,000, working out to be an average of $466,000 each.

You would be disappointed if you were last year’s contestants, who combined won less than any of this year’s contestants, with total winnings of only $225,000.  That’s a total difference of $1,618,000 or 719% increase. No wonder this year’s contestants were crying with joy! Unfortunately there were no bargains to be had this year, unlike our purchase of Polly and Waz’s house last year for $858,000 for one of our investor clients.  With a fantastic rental of $995 per week and an extra $30,000 per annum in depreciation, this represented great buying.

I and other real estate professionals believed that Brad and Lara’s house would set the benchmark, as it was estimated to be worth at least $200,000 more than the other homes. This was based on the land size, which was 21% larger (158 square metres) and 44% wider (7.91 metres). I estimated that it would sell for $1,510,000 based on many recent comparable sales in the area. One recent example is an inferior townhouse at 3/297 Dorcas Street, South Melbourne (land size 113 square metres, 46 square metres smaller in land, two metres narrower frontage), which sold for $1,500,000 two weekends ago.

We were bidding for a female home buyer for Brad and Lara’s property with a budget of $1,380,000 and unfortunately were blown away by at least six bidders and an eventual sale price of $1,620,000. Our client was disappointed we were $240,000 short as she had already missed out on two properties on her own in the South Melbourne area. Karl Gillion from Buxton Real Estate did a textbook auction and made sure he got every last dollar out of the remaining buyers.

My predictions were then revised upwards to around $1.4 million for the remaining properties. We had an investor client who was keen to snag a bargain (around the $1,050,000 mark) for the next two auctions, but we didn’t even get a bid in with six to seven bidders taking Dan and Dani’s property to $1.44 million and Dale and Sophie’s to $1.33 million.

The last auction was the most talked about with the branded T-shirt guy (not going to give them any more publicity!) who had three other staff at the auctions in branded T-shirts and was bidding in ridiculous dollar and cents amounts. I was bidding for another investor who was attracted to the quality of Mike and Andrew’s property and in particular, their backyard. She was attracted to the potential rental return (about $1,100 to $1,200 per week fully furnished plus about $700 to $800 per week in tax depreciation) totalling around $1,800 to $2,000 per week or around 7% gross return.

I have bid at over a thousand auctions over the last 17 years and as a buyers’ advocate / buyers’ agent, I have attended many other auctions each weekend and I have never been involved in an auction as bizarre as this where a bidder bids in uneven increments, including cents with every bid. The auctioneer, Andrew Stuart of Hocking Stuart, did a good job trying to work out his bids, but I am surprised he accepted the uneven bids. In a normal auction, the auctioneer would round the amount up and only drop the bidding in set increments.  The backlash to this crazy bidding has started an online frenzy of annoyed viewers.

We stuck to our client’s pre-budget limit of $1.4, which would have delivered a healthy return of approximately 7%, and it was awarded to Mr T-shirt man for $1,401,001.01.