The auction for a renovated house in Epping, where the price was $1.2m over reserve.
An inner west family who bought an Epping house has become the latest casualty of Sydney’s pressure cooker auction market after a high stakes bidding war pushed the price about $1.4m higher than what valuations said it was worth.
The 90-year-old house on Crandon Rd in the northwest suburb sold for $4.21m, which was more than $1.2m above the $3m reserve.
An automated valuation report, based on comparable sales, had pegged the property’s value between $2.4m and $2.8m and agents said this what they had initially expected the home to sell for.
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A massive crowd of 100 people, including 28 registered bidders, attended the auction, with observers revealing the event descended into an emotional bidding war between two cashed up parties.
The Epping home had scope for development.
The sale of the renovated house is being hailed as a “freak result” by industry insiders, who claim it has shocked neighbours and led many to question what their own homes are now worth.
Agents had originally planned to set a reserve of $2.7m for the Crandon Rd home but increased it to $3m on the day due to the high demand.
The final price represents the highest amount ever paid for an older three-bedroom house in the area, a sum usually reserved for Epping’s newly built five-bedroom houses.
One observer said the price skyrocketed because the two most committed bidders had deep pockets and neither wanted to back down. The underbidder was an investor and the buyer was a family from Strathfield.
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Auctioneer Chris Scerri said the result was at odds with the rest of the market. Picture: Monique Harmer
Selling agent James Jin of Vue Property Estate Agents attributed the higher than expected result to the psychological pressure of the auction.
“The competition in that environment can be tough. When you are at auction, the nerves kick in. Everyone is shouting. It triggered them,” Mr. Jin said.
“(The buyers) didn’t want to back down. They didn’t want to lose. And I think partly, they were sick and tired of looking for a home. They wanted their weekends back.”
The underbidder was reported to have tried discouraging the competition with huge bid increments of $100,000, $150,000, and even $200,000, but the eventual buyers held firm.
A similar sized property on nearby Albuera Rd sold the same day for $2.6m.
Auctioneer Chris Scerri admitted he was struggling to explain the sale, which defied current market trends.
“I went back to ask the vendors if they had gold plates buried underneath the house. It was one of those sales where you look around and say ‘what happened?’” Mr Scerri said.
The auctioneer said the sale was at odds with broader market conditions.
“Buyers are a lot more cautious in this market,” he said. “Every other sale we had that day sold below the reserve price.”
The disconnect between the property’s features and its price has left locals bewildered.
A home with similar proportions just a few blocks away, sitting on a larger block, sold on the same day for $2,625,000.
The Crandon Rd property had zoning potential for duplexes, but agents noted that other properties in the area had the same zoning.
Mr Jin noted that the sale has sowed confusion among neighbours.
“There were a lot of people who bought for about $2.5m last year who are now asking, is my home suddenly worth $4m?”
The vendor, reported to be an elderly man moving into care, watched from inside the house as the crowd outside broke into applause at the price.
Mr Jin said the seller was “gobsmacked”.
The Crandon Rd interior was renovated.
It should be noted that an automated valuation would not necessarily reflect what banks would value the property at and it is not known how lenders valued the Crandon Rd property.
Typically, buyers who pay prices significantly higher than bank valuation estimates are usually required to pay higher deposits.
Mr Scerri said it was worth remembering that the value of an asset ultimately came down to what a buyer was prepared to pay for it. “We had two bidders who both saw a lot of value in the property and were prepared to bid up the price.”
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