The reserve prices set for the properties on Channel 9's The Block were set well below what they should have been, according to one local industry professional who participated in the auction.
“The reserves were ridiculously low, Brad and Lara’s [the eventual winning couple] was worth $1.4-$1.5 million, with a reserve of $1.1 million. And others were worth $1.2-1.3 million with reserves set in the $900,000 range," said Frank Valentic, managing director at Melbourne-based buyers' and vendors' agency Advantage Property Consulting.
“I would have suggested at least $200,000 more, but low reserves generated strong competitive bidding, unlike last year where reserves [on The Block] were set too high [and properties remained unsold].”
The winners of this year's show, Brad and Lara, saw their property sell for $1.62 million, $506,000 above the reserve price. The other contestants also enjoyed strong results, recording prices more than $300,000 above their respective reserve prices.
The properties were located on Dorcas Street, South Melbourne. According to the most recent RP Data numbers, the median house price in the area is $910,000.
Mr Valentic, who finished 38th on the 2012 Real Estate Business Top 100 Agents list, is no stranger to The Block auctions, after buying one of the properties from the 2011 season. Speaking with Real Estate Business, Mr Valentic described his purchase last year as a bargain.
“[Last year] I bought it for $858,000 plus $100,000 free furniture. This year I bid for [the same clients] again on two properties because they wanted a bargain like last year.
“They have been very happy, and they have it leased out for $995 per week.”
Mr Valentic said a number of agents and clients considered The Block's auctions as a good result. Each property included all fixtures and fittings.
“Most thought the auctions were a success with some positive strong bidding and very competitive auctions, with six to seven bidders on each property," he said
“There was a flurry of bids from the beginning, with often three people trying to open the bidding, no vendor bids needed. [The properties were] on-the-market with first bid apart from number 405, which was on-the-market after a few bids.”
The season finale handed out arguably the largest prize pool in on Australian TV ever, with the winners Lara and Brad given a new car, $506,000 from the auction and a $100,000 prize for the largest dollar gain above reserve.