Unpacking ‘The Block’, The Precarious Position Of The Property Market & The Perfect Lazy Sunday

Finally, we have discussions in the media that aren’t about interest rates or affordability – this week, all discussions are about the Channel 9 hit TV show ‘The Block’.

Now I must admit that I don’t watch the show with the exception of the last episode where the auctions take place.

In case you don’t follow the show or haven’t read about the result, one of the teams sold their home for a record figure of almost $1.6 million above reserve with much speculation about the authenticity of one of the bidders.

One of the other couples made a profit of approximately $170,000, another made around $20,000 and the remaining two properties failed to sell with negotiations still underway from all accounts.

From an agent’s point of view, there’s plenty of observations to make about these results…

Firstly, was the home that sold for almost $5.7 million that much better than any of the other properties that were auctioned (keeping in mind that they all had the same reserve price of $4.08 million)?

The answer is probably no although I must admit that I didn’t see each of the properties so can’t really comment.

One thing I will say with absolute certainty is that this is very normal in real estate – if one property has a few certain features that attract a couple of buyers despite other listings appearing very similar, the final selling prices can be very different.

I’ve lost count of the number of times a seller might tell me that their home is ‘virtually identical’ to one that we sold nearby but that slight difference could be enough to attract numerous buyers that could drive up the price…irrespective of the method of sale chosen.

Quite frankly, from what I could see of the properties created, I thought they were all rather peculiar.

Traditional Colonial or Queenslander style of homes with modern extensions, sheds or attachments hanging from them were (in my opinion) bloody awful.

Secondly, the area that these homes are located is (I believe) quite upmarket but a fair way out of Melbourne and in a declining market, this series had “overcapitalise’ written all over it.

Can you imagine what the result would have been had the properties not had 30 odd episodes of prime-time TV, there’s little doubt that none of the owners would have gone close to recovering their money, let alone making any sort of profit.

But let’s look at the auctions themselves…

The eccentric buyer “Danny’ seems to buy at least several of the properties every season now…so the question begs “How would these auctions have gone without this one single buyer?”

The answer is “Not very well’.

But credit to the guy…apart from bidding odd amounts designed to confuse the auctioneers and the act of asking his dog for advice, he apparently donates a home to assist with those that are in need so good luck to him.

And what of the under-bidder of this first auction?

I think he’s an absolute genius.

For those that aren’t aware, he turned up in a flashy Lamborghini and bid with confidence only to fall short…and subsequently, left after the first auction, thus showing zero interest in the other properties.

There was a quick shot of him ‘high-fiving’ the successful contestants before the auction, thus orchestrating a theory that he was a dummy-bidder just planted there to drive up the price.

Think about this – he has everyone in Australia talking about him and his company, just secured several minutes of prime-time TV (in one of the highest rating hours of TV of the entire year) all for absolutely no investment whatsoever.

And what if he successfully purchased the home?

Well, I’d be guessing that paying a good one million plus dollars above what the property is worth would probably be recouped by raffling the home (which is his core business) so it was an investment he was prepared to make.

Walking away and high-fiving the contestants really shone the spotlight on him and had everyone talking – as I said, pure genius!

But the mood changed quickly…

After the first auction, the other contestants seemed to have grand illusions that they would profit multi-millions for a little over 3 months’ work but alas, they would be brought back to earth very quickly.

You’d have sworn that someone had taken the first-born child of the second couple…profiting a measly $20,000 and quite frankly, the third couple (who profited $170,000) seemed just as disappointed.

I’m not sure if this money is taxed or not (as prizemoney in Australia is not normally subject to income tax) so I can only assume that this money is paid out in full.

I don’t know about you but if someone had given me $170,000 of tax-free money coupled with a newfound media profile for 12 week’s work, I’d have been doing cartwheels with joy.

To be frank, whilst I would have been disappointed that the couple before me had made almost $1.6 million, I still would have been thankful of the $20,000 I’d made too, given the contestants often go on and make money in other endeavours.

But welcome to a very pertinent lesson in real estate – it’s not all champagne and barrels of cash when you renovate and build…particularly high-end properties that are polarising in style out in the middle of no-where in a rapidly falling market.

Need I say more?

Finally, there’s the criticism of the auctioneers involved in the show.

The contestants virtually ran an auction with 2 different reserve prices (which is legally very questionable at the very least).

As you know, I’m not a huge fan of auctions in the first place but I can say that any auctioneer is there to drive an auction towards the reserve and then as far past this figure as he or she can – they are not there to ‘pull’ up an auction short of the reserve price.

Often times, a property that hits the reserve will spark renewed interest from buyers (some of them that might not have even bid before this) so with a huge number of people present, the attention of cameras and all of the momentum created, I would defend these auctioneers who were (in my opinion) placed in a very difficult and legally precarious position as it were.

If they made any mistake at all, it was to insult the bidders that made low offers, and this is generally not a good tactic to invite competitive and willing bidding.

The very fact that the last couple of contestants (and host Scott Cam) were screaming down a phone to “pull the property” so that it could go to a ‘Private Treaty’ situation is an admission in itself that the auction method of sale is completely flawed.

But of course, it’s hard to create riveting viewing without the drama of an auction.

One thing is for sure…’The Block’ will go around again next year with plenty of willing contestants and it is sure to be “The biggest Block ever” with salacious sandals and untamed controversy…and an eccentric bloke taking advice from his dog is probably going to determine the winner.

Brace yourselves.

Finally, please take a moment to remember our fallen men and women (and the lives of those affected by War) this Friday on ‘Remembrance Day’.

We live in a very lucky and primarily ‘free’ country…and can thank those that gave their lives for the wonderful freedoms we enjoy today.

Lest We Forget.

Until next week…Happy Listing & Happy Selling.

Feature Property Of The Week

This week’s feature property is 38 Tarcoola Avenue, Ferny Hills – A gorgeous tri-level 4 bedroom residence that’s nestled neatly amongst the tree-tops in a peacefully quiet cul-de-sac. Offering a wonderfully elevated position that attracts the light cool breezes, two beautifully renovated bathrooms, ample storage and two sensational outdoor areas including the elevated front deck and the extended rear pergola with an insulated pavilion style roof that overlooks the picture-perfect backyard and serene nature reserve at the rear, this fabulous home is perfect for those that want something a little different. Already with strong interest, act fast if you’d like to view this incredible property.

Separability, Serenity & Sensationally Elevated! A Tri-level Residence With A Difference!

Insights Article…

This is a very telling news article that illustrates the precarious position of the property market and economy right now. It’s clear that there’s many who are drawing down the equity in their homes just to pay the bills…and this is never a good long-term strategy to create wealth. An interesting read…

Click Here To Read Article

Did You Know?

If you’d like a lovely weekend day out, Michael insists that the markets at ‘Old Petrie Town’ are wonderfully ambient way to spend a lazy Sunday. With ample food options, jumping castles and pony rides for the kids and plenty of market stalls and things to do and see, it’s a thoroughly relaxing place to wander around and have a coffee in blissful serenity. Here’s a few shots from Michael’s family trip there last Sunday…

‘The Michael Spillane Team’ have already started  on their annual Christmas card ‘recording’ sessions. If you have sold or purchased a property from Michael and his team or even just had your property appraised, we’re sure you know the unique way that Michael and the team send their Christmas wishes. The goal is to have them finished by December 18 but it’s a huge task and often runs into Christmas Eve. Off to a good start this year (we actually started in September), we’re feeling optimistic.