Stupid investors!

If you think I've been whinging about investors paying too much for property because I am too cheap to pay market price, here's a prime example for you.

About a month ago, a house went on the market we were very interested in. Decent sized block, good sized house (although the bedrooms seemed quite small, for some reason - maybe an illusion). It wasn't perfect (no room for a walk in robe), and it needed a lot of updating. The owners hadn't done anything to the place since it was built in the late 70s. For instance, there was a bar area off the kitchen which had walls completely covered in cork tiles! Anyway, we thought it had potential. The real estate was looking for offers around the high 4s/low 5s.

We went to view the property and were going to put in an offer, but then the agent told us the owners wanted it to go to auction. It was a deceased estate, and I guess they wanted to see exactly how much they could get for it. The agent organised a building & pest, which showed some termite and borer damage (so again, definitely not a perfect property).

The auction was on Saturday. The agent had still been predicting high 4s/low 5s. Some moron ended up paying $700,000 for it. The funniest thing about that is, he obviously hasn't done his homework. He is apparently a builder and was looking at subdividing the block and building another house on it. I checked with the Council when we were first looking at, and found out it was in Res A zoning, and they wouldn't allow any new structures to be built on the land (well, unless the house was subject to some kind of catastrophe and it was a necessity - fire, etc). So he's just paid $200,000 too much for a piece of land he can't do anything with. Well, not until they change the zoning, anyway. The land itself was valued in the high 3s. So he's just paid more than $300k for a house that wouldn't cost more than $200k to build brand new. The house as it was was definitely not worth more than about $100k.

Still, that just shows you what's going on. Houses are listed for high 4s/low 5s, and so we go to look at them. We put in very reasonable offers (usually at the list price - we're not the sort to play the game where you offer $50,000 less than they're asking), and we still get outbid. There are moronic investors out there who don't really care what they pay for the property. If it's listed at $500,000, they'll put in $550,000 just to make sure they get it. This is infuriating, not only because we're getting outbid every time, but also because it artificially inflates the prices of all the houses for sale. An agent who lists a 3 bedroom in Wavell Heights for $525k, and gets an offer of $575k for it automatically goes back to their other listings for similar houses in the same area and raises the prices of them, knowing they'll get offers at the higher level.

It's outrageous. It makes me so angry. I just wish those selfish investors would stop paying more for properties than they're worth! I know we'll end up buying something eventually, but I really hope the arse falls out of the market and all those greedy bastards are left with multiple properties they paid too much for and they all make losses.