Correspondence: Hot property and investing overseas

One member discusses Melbourne's property market while another looks at investing offshore.

I’m just recently married with my first child on the way and am looking at buying my first home in the outer eastern suburbs of Melbourne. Like many more in my position I am spending countless hours looking up websites, speaking to agents, going to auctions on my weekends, arranging section 32s, building inspections etc all to just be smashed out of the park by someone (generally someone using equity to buy yet another home to build to their portfolio) who is happy to pay way more than what the property is worth.
I understand that auctions and houses are worth what someone is prepared to pay for it. But my real beef comes down to agents and what they advertise houses for with their recommended sales range. I have been to auctions where the house sells for over 30% the guide price.
I’m tired of putting in my maximum price range on what I can afford for mortgage repayments and just being smacked in the face with pictures of houses that appear to be in my price range but I know the seller just isn’t going to sell if I offer anything near or just over that.
Is there any regulation of this activity to keep agents in check? It seems to be getting more and more out of hand.
JC
Editor’s response: Thanks for your letter. This is a problem many buyers face and it can be frustrating. Still, market forces determine the selling price at auction, which as you’ve said, can often go above the reserve price. There’s no way of telling what buyer interest will be like at an auction, and the seller’s reserve set on the day of the auction can actually be higher than the advertised price if the seller believes a number of interested parties are in attendance.
If you are concerned about possible breaches then you may want to contact Consumer Affairs Victoria. You can find relevant information from them on property pricing here.

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