What regular renovators and home owners can learn from The Block auction result

So who watched The Block Glasshouse auction last night?! It was a very disappointing and anticlimactic end to what has been a great series and I can only imagine how awful the three couples who made so little are feeling today. It was hard to watch.

However, as the producers have repeatedly said, the only guarantee of The Block is that one couple will walk away with $100,000 and after that it is up to the market to decide what everyone else makes. Despite that, after the enormous results over the last few years, particularly with Fans v Favs when the losing couple made over $500,000, you can’t blame the couples for having their hopes up and feeling bitterly disappointed with the outcome.

We went into our All Stars auction knowing we were the bookies favourite to win, but never once did I feel confident we had it in the bag. I wasn’t even sure it would sell on the day! We knew there were buyers interested in ours, but some of them were also interested in the other houses too, so when we drew the last auction on the day we didn’t know if the pool of buyers would have already dried up by the time ours came around. The nerves I felt as our auction started were so intense I thought I might pass out and I perform on stage for a living! The pressure was immense, so I can only imagine what the couples went through last night and really feel for them.

Luckily for us there was one buyer who only bid on ours and another to bid against him, because you need at least two bidders to compete against each other to push the price up. Unfortunately last night it seems there just weren’t the number of bidders needed across the five apartments to get top dollar for everyone.

But what can a regular renovator or seller learn from this experience? Well firstly that the real estate market can be fickle and you are never guaranteed a sale or a profit. Secondly, you have to know your market, what they are looking for and what they are prepared to pay for it.

With The Block All Stars we knew that area in Bondi was full of young families so that is who we designed, styled and marketed to. And with our new home, despite it being for our own family, we have made very conscious decisions so far about where and what we’ve bought, in order to make sure we recoup (and hopefully profit from) our investment.

We had a ‘formula’ that we followed that helped us work out how much we could spend on a house, depending on what condition it was in, what needed doing to it and what area it was in. If we liked a house we worked out a rough figure of how much we needed to spend on it to renovate and extend it and added that to the sale price. We added $100K to the figure we were left with and that was the amount it needed to be able to sell for, for the exercise to be financially worth it. We then researched what other houses in the street and area had sold for in the last two years, and if there were no previous sales of what we would eventually need to sell for we didn’t buy that house. No matter how much we liked it!

As we knew our house would be most suitable for a family we also looked at factors like being zoned for good schools and being near good shops, cafes and parks. We also looked at the street appeal of the whole street, because you can create the most amazing house in the street but if every other house is run down and unappealing you will not get top dollar for it. The same goes for access to amenities and transport, as the best reno in the world can not change those things and they will work against you when you come to sell.

I am hoping we will stay in this house for many years to come and won’t want to even contemplate selling for a while. However you never know what life throws at you, so we wanted to ensure that we wouldn’t overcapatalise on both the sale price and renovation, to ensure that if we did want or need to sell straight away we would still make a profit.

We learnt our lesson on this the hard way, with one of our first renovations in Sydney. We bought our first apartment in 1999, just before the real estate boom. We did a very cost effective reno on it and sold it a year later (at the peak of the boom) for a fantastic profit. We were so impressed with ourselves and thought it was all so easy! Our next apartment we got over excited (and perhaps a little cocky) and spent twice as much on the renovation. It was a much higher standard renovation and I was very proud of it, but we sold that one a year later for a $10k loss. We had over-capatalised and spent too much, and I have never forgotten that lesson.

The renovations they do on The Block are amazing and feature the best of everything. They are fantastic for inspiration, but never forget that when you’re doing your own home there are way more factors than which tiles you choose that contribute to the value and sale price of your house. So keep a check on how much you’re putting into the home and make sure you will get it back. Because as we saw last night, no one wants to walk away working that hard and getting nothing for it. It hurts.

 

 

 

Comments

  1. Kirsty says

    The biggest uproar I have seen is how everyone is complaining that the reserves were to high.
    The median price (so average) is $960 000 BUT is you look at the price for a 3 bedroom apartment the median is roughly $1.5 million which is around what the reserves went for

    • AmityAdmin says

      Kirsty, I know the reserves are Independently determined and would obviously be based on past sales in the area so I tend to agree. I think they seem ridiculously high to those who don’t live in Sydney or Melbourne (and I also think $1.9 million for an apartment is crazy!) but there would have been a reason they were set at the price. The producers wouldn’t have wanted this result

  2. Janet Harradine says

    There are never guarantees..I could be made redundant tomorrow…..although many opportunities come from the Block..an opportunity only few get…..what a great way to get your name out there, any future business ventures already have great publicity……. Great experience money can’t buy if renovation is your thing too .

  3. Stacey says

    Amity it sounds as though you guys have gone into this new reno very well prepared and with a very realistic approach. I think your advice is spot on and quite timely too, as many real estate markets around the country are peaking now, creating a very interesting situation for sellers in particular. You could not be more correct about choosing the area carefully- this week we’ve sold out first home, a house that was built only 3 months ago, and many comments were made about wanting to “pick up the house and put it in a better location”. Thanks for some excellent advice and for putting the auctions into perspective.

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