If you watched The Block on Channel Nine from start to finish, you may have been disappointed by the final result. Three properties were passed in at auction, with Waz and Polly winning by default when the program aired (their property was the only one to sell under the hammer for $855,000, which was $15,000 above the reserve of $840,000).However, Catherine Cashmore of JPP Buyer Advocates says the result is actually no surprise and believes taking the properties to auction was actually a mistake. This is because agents know they can get more money in the current market if a property passes in at auction."When you go to an auction, eight or nine times out of 10 it's passed in, then it goes through to negotiation," she says."A lot of homes don't sell under the hammer but they still sell. I think it would have been more educational for the audience to see what happens in a passed-in negotiation, because all the action happens behind closed doors."When an agent is aware the buyer has more money, quite often the agent knows they can get an extra $10,000 or $20,000 through negotiation, because they negotiate every week. If the reserves hadn't been disclosed, it wouldn't have been hard for those agents to negotiate and get over the reserve."It's also no secret that the Melbourne market has been flat for "15 weeks", according to Cashmore.In the new market, buyers lack confidence when it comes to auctions, so that's also holding people back."Bidding in such a public place would be extremely intimidating and the confidence at the moment is dead flat low. If nobody bids, it's a psychological game. There are few that are willing to openly bid and when they do, their head is well under the reserve price. It means the agent has a lot of work to do, but if he takes them inside, he has a better chance of getting a higher price."However, Monique Wakelin of Wakelin Property Advisory disagrees that negotiation would have been better for the vendor."The market never lies when it's an auction," she says."It's extremely transparent and you wouldn't have sold them by private sale. When it's in demand (the suburb) you need to create open competition to make people make a decision. An auction tells you what something is worth without a shadow of a doubt."Unfortunately, Wakelin says the particular part of Richmond where the houses were was all wrong."It's a question of underlying demand and getting the match right between where you buy, how much you spend and what you spend it on, relative to what the market will bear in a particular part of a suburb," she says."The prime part of Richmond goes like an absolute rocket but this was a case of the less desirable part of Richmond. There was a mismatch between the quality of that part of Richmond, the level of renovation and the relatively high reserve."Cashmore adds she was surprised that arguably the worst house was the one that ended up selling. Like Wakelin, Cashmore actually took a few of her own clients through each property, but they all ended up getting cold feet. The main reason was because those who viewed the properties wanted to start a family, but didn't like the fact that the main bedrooms were upstairs and separate from the smaller rooms."They were across the road from a carpark and in the shadow of a Housing Commission flat," Cashmore says."There was no off-street parking and it wasn't a good area for Richmond. Most families want off-street parking so this means the buyer demographic is going to be small."Cashmore also warns just because something is renovated doesn't mean it will sell."A lot of buyers like to put their own stamp on a home. It's very rare that a buyer doesn't want to change something."Michael Yardney of Metropole Property Investment Strategies agrees that the reserve prices were too high, and says the problem is that Channel Nine paid $900,000 for each home to begin with."The reserve they chose was related to what the end values would be and it definitely never made sense," he says."They paid the wrong price to start with. They didn't budget correctly. They did them up emotionally, not to what the marketplace wants or needs and they tried a strategy, which doesn't work, which is to buy, renovate and sell. When you take all the costs into account, it just didn't stack up."Yardney also claims the television show would have been better off renovating something in a lower price range, from $400,000 to $500,000."It would have been a much bigger market," he says. Results:37 Cameron Street, RichmondJosh Densten and Jenna WhiteheadVendor bid: $900,000First bid from floor: $750,000Final bid: $901,000Reserve: $950,000Result: Passed in39 Cameron Street, RichmondPolly Porter and Waz JonesVendor bid: $750,000First bid from floor: $650,000Final bid: $855,000Reserve: $840,000Result: Sold41 Cameron Street, RichmondKatrina Chambers and Amie GoddeFirst bid: $750,000Final bid: $822,000Reserve: $860,000Result: Passed in (but later sold for $860,000)43 Cameron Street, RichmondTania and Rod WalshFirst bid: $750,000Final bid: $832,000Reserve: $850,000Result: Passed inPosted by API on Monday, August 22 2011 at 6:11 AM