[MEDIA RELEASE] Block Bidders Be Warned

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Block Bidders Be Warned

 

On the eve of the most watched auction of the year, Australia’s leading specialist property tax accounting and wealth advisory group, Chan & Naylor, are warning its clients to show ‘extreme caution’ before making a bid on any of the five apartments from The Block’s ‘Octagon’ at 1A Affleck Street in South Yarra tomorrow.

In an urgent advisory note sent to its thousands of Australian clients today, Mr Ken Raiss has warned not to get caught up in the media hype or pay for someone else’s expensive designer tastes.

“Historically, what we’ve observed on Block auction days is people paying a premium for a top end property, and the designers’ highly polished and personalised tastes,” Mr Raiss said.

“By stepping into the auction room tomorrow, bidders play directly into the hands of the The Block and risk getting caught up in a made-for-TV environment, designed to bring maximum gain for the show’s contestants and to create maximum spectacle for the TV viewing audience. From an investment perspective that can be recipe for disaster.”

Chan & Naylor’s client advisory were triggered following several requests in recent days for advice from clients considering purchasing one of the top-end apartments that were previously home to the Hotel Saville seedy motel tower.

“For most Australians, it would be far wiser to invest in properties in areas that are below their intrinsic value and then manufacture equity by doing basic cosmetic renovations matched to the potential tenants or buyer’s expectations.”

Chan & Naylor’s analysis of previous sales from previous Block Series has shown:

  • An average 0.45 per cent capital growth since ‘Block Triple Threat’ auction in April 2015;
  • Negative 8.4 per cent growth since the disastrous ‘Glasshouse’ auction in October 2014 which shattered contestants and shocked a nation;
  • 14.29 per cent average capital growth since ‘Fans vs Faves’ auction in April 2014

“Australians tend to have this almost innate belief that property investment is the key to instant wealth and when it comes to auctions of apartments from The Block this could not be further from the truth,” Mr Raiss said.

“In the current market, you need to negotiate hard and see the potential capital upside of your investment before any money has left your bank account.

“Setting foot in the auction room tomorrow you step into the hands of the auctioneer whose job it is to maximise the price and maximise the exposure for their real estate agency on prime time TV, so will work the crowd and the cameras, to do just this. “Do not play their game.”

 

 

Chan & Naylor shared the following 10 tips with its clients in today’s advisory:

Tip 1: Avoid auctions if you’re buying a family home

“Bidding for a family home could be risky as you will get emotionally blinded and attached to a particular property and risk overcommitting,” Mr Raiss said.

Tip 2: Target properties with a twist

“Look for properties that are uniquely different that no other property on the street has – a little rough around the edges but one that has potential.”

Tip 3: Don’t bid on a polished diamond

“Don’t pay for someone else’s designer tastes,” Mr Raiss said. “Instead, find potential and let someone else pay for yours.”

Tip 4: Establish a firm ‘walk away’ price

“Never over-extend yourself and don’t risk paying above true market value for any property no matter how good it may seem.”

Tip 5: Crunch the numbers

“If you’re considering a potential renovation, work out how much this will likely cost beforehand and factor this into your ultimate budget.

Tip 6: Bid with confidence

“Open the bidding high, close to where the reserve will be. Remember, the property will not sell below the reserve price. Make your bids, fast and assertive and state your bids in full amounts to reinforce to competing bidders that there is a lot of money involved.”

Tip 7: Scope out the competition

“Stand where you can see your competition at the auction – their body language can reveal a lot.”

Tip 8: Enter a bid before the auction

“Do not be afraid to enter a bid prior to auction and if you have finance and all aspects covered maybe make it unconditional except for maybe pest inspection.”

Tip 9: Do not be bullied by the auctioneer

“Attend as many auctions as possible prior to the big one to get a sense for how this auctioneer interacts with the bidders and what they do and say.

Tip 10: Know when to stop

“Be prepared to miss out and stick to your ‘walk-away’ price. It’s far better to walk away and live to fight another day than over-commit to a property you’ve become emotionally blinded by,” Mr Raiss said.

 

 

 

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