The auction for a renovated house in Epping, where the price was $1.2 million above the reserve price.
An inner west family who bought a home in Epping has become the latest victim of Sydney’s pressure cooker auction market after a high-stakes bidding war pushed the price about $1.4 million higher than what valuations said it was worth.
The 90-year-old house on Crandon Rd in the north-west suburb sold for $4.21 million, which was more than $1.2 million above the $3 million reserve.
A computerized appraisal report, based on comparable sales, had pegged the property at between $2.4 million and $2.8 million and agents said this is what they had initially expected the house to sell for.
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A huge crowd of 100 people, including 28 registered bidders, attended the auction, with observers revealing the event turned into an emotional bidding war between two cashing parties.
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The Epping house had room for development.
The sale of the renovated home has been hailed as a ‘bizarre outcome’ by industry insiders, who claim it has shocked neighbors and led many to question what their own homes are now worth.
Agents originally planned to set a reserve of $2.7 million for the Crandon Rd home, but increased this to $3 million due to high demand that day.
The final price represents the highest amount ever paid for an older three-bedroom house in the area, an amount usually reserved for Epping’s newly built five-bedroom houses.
One observer said the price shot up because the two most committed bidders had deep pockets and neither wanted to budge. 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. Photo: 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 fierce. When you are at an auction, the nerves kick in. Everyone is shouting. It has triggered them,” Mr Jin said.
“(The buyers) didn’t want to back down. They didn’t want to lose. And I think part of them was tired of looking for a house. They wanted their weekends back.”
The underbidder allegedly tried to discourage the competition with huge bid increases of $100,000, $150,000 and even $200,000, but the eventual buyers held out.
A similar sized property on nearby Albuera Rd sold the same day for $2.6 million.
Auctioneer Chris Scerri admitted he struggled to explain the sale, which flew in the face of current market trends.
“I went back to ask the sellers if they had any gold records buried under the house. It was one of those sales where you look around and ask, ‘what happened?'” Mr Scerri said.
The auctioneer said the sale was contrary to wider market conditions.
“Buyers are much more cautious in this market,” he says. “Every other sale we had that day was sold below the reserve price.”
The discrepancy between the property’s features and its price has left locals baffled.
A house of similar proportions just a few blocks away, located on a larger block, sold on the same day for $2,625,000.
The property on Crandon Rd was zoned for duplexes, but officers noted other properties in the area had the same zoning.
Mr. Jin noted that the sale has caused confusion among neighbors.
“There were a lot of people who bought for about $2.5 million last year and are now asking, is my house suddenly worth $4 million?”
The seller, reportedly an elderly man who was going into care, watched from the house as the crowd outside erupted in applause at the price.
Mr Jin said the seller was “stunned”.
The interior of Crandon Rd has been renovated.
It should be noted that an automated valuation does not necessarily reflect what banks would value the property at and it is not known how lenders value the Crandon Rd property.
Normally, buyers who pay prices significantly higher than bank valuation estimates usually have to pay higher deposits.
Mr Scerri said it is worth remembering that the value of an asset ultimately comes down to what a buyer is willing to pay for it. “We had two bidders who both saw a lot of value in the property and were willing to increase the price.”
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