Three out of four houses in the hit TV show The Block failed to sell and this lead to a group of would be overnight property moguls learning that there is no such thing as get rich quick in property.
I guess what we witnesses was Reality TV for once being “real.”
There’s noting new about this -you can’t make money in renovations with a buy renovate and sell strategy. Especially if you break all the rules of property investment.
Now before you think I’m being smart after the fact, I predicted this result in my blog when the show first started.
Just out of interest…even if the properties were sold at the reserve, they would still have been sold at a loss.
Watercress, the production company behind The Block, bought four unrelated homes for $3.6 million in November last year after they passed in at auction for $2.85 million. Once you add stamp duty and acquisition costs, this would have brought the cost of each house to about $950,000 before the renovations began.
A couple of other points of interest:
Late last week Consumer Affairs Victoria Inspectors visited the offices of the 4 selling agents – Hocking Stuart, Biggin & Scott, Woodards and Jellis Craig and seized sales documents and advertising material. It was said they were investigating “alleged underquoting.” It seems that none had anything to hide after all.
I wonder how the solo purchaser felt, having paid above the reserve, when he could now be negotiating with some more desperate vendors after the other properties passed in. Of course this is easy to say in hindsight, but the lesson is don’t buy property on emotions – especially on national television when everyone can see you.
Late comment: 2 further properties sold at the reserve price after the auction – that’s not unusual. Just remember the price achieved for these sales meant the renovators sold the final product for less than the properties cost to initially buy unrenovated. In other words, as a proeprty deal – they made a huge lost.