Barry Plant Ivanhoe agent Alex Morgan sold a three-bedroom home in Melbourne last weekend for $2.061 million – $561,000 above the $1.5 million reserve.
The 849-square-metre Heidelberg property,situated on a corner block 800 metres from the station, was marketed for its development potential.
Heidelberg’s median house price is $873,000, according to CoreLogic RP Data. Mr Morgan said that when he attended the listing presentation he explained to the vendor that it was hard to give an accurate valuation, because it all depended on development plans.
“I had an idea of what I thought it was going to be worth – I thought it was going to be around $1.4 million, maybe $1.5 million if there was interest on the day,” he told REB.
“That’s why auction was a perfect method for that property, because it took away the ceiling and made it clear that it was always up to where the buyers saw value instead of up to where we were quoting.”
Once Mr Morgan secured the listing, he took aerial photographs to highlight the property’s potential for apartments and townhouses, and contacted the developers on his database.
Mr Morgan said that all six bidders were developers – and that he had done business with every one of them except the winner.
One of those old clients helped drive up the price by fighting hard with the buyers over the last $200,000, he added.
Bidding started at $1.65 million and proceeded in $1,000 increments from $2.01 million, according to Mr Morgan.
“The lady who owns the property – she’s a retiree who has been there since the 1980s and who would’ve bought the house for next to nothing. She was in shock: she couldn’t believe the result we had.”
Mr Morgan told REB that he planned to keep in close contact with the buyers – even though they said they were unclear what they planned to do with their new purchase.
“I’d be crazy not to. That’s the beauty with those developments – hopefully we’ll be reselling something for the client. Obviously, if they’re spending good money they’re going to expect good prices on the resale, so that’s what we always hope to do.”