The REIV are reporting a clearance rate of 58% for the weekend. With results now firmly sitting under 60% we are starting to see more agents doing deals outside the auction method of sale. Selling agents will be looking for more innovative ways of selling their clients homes over spring. With annual turnover down substantially, every listing and then every sale becomes more and more important to each Real Estate Agent.
Recently, we have seen a great deal of publicity from a country agent who believes that all reserves should be declared prior to the start of a selling campaign. The agent has found good traction in the media saying that it is far better to declare the reserve from the outset and let market forces take the property where it will. This is the fairest possible way for prospective purchasers.
And if I were working for the buyer, which I do, I would agree that it is much more beneficial for the buyer than it is the seller. One of my team recently looked at a property in Richmond. It was openly advertised with a reserve that was astonishingly low. My advocate immediately called the agent and asked if he could purchase the property at that price. He was told no. He was told that was the reserve and with no better offer on the day of auction, he could purchase at that price. We knew immediately that the reserve on the property was very low and would not sell at that level. The reserve was set at $695k and the property sold on Saturday for $765k. We would normally have seen this property advertised at around $650k – $700k.
Richmond faired very well on Saturday with 9 properties sold from 11 Auctions and there are many other suburbs performing just as well as this. Rob Larocca, communications manager for the REIV, said Surrey Hills, Glen Iris, Camberwell and Richmond are all showing clearance rates this year well above 65%.
In Saturdays Age, Chris Vedelago, has reported on an internal REIV memo to members relating to vendor bids at auction. Chris Vedelago has said the memo has indicted that if an auctioneer makes a vendor bid over an existing bidder, this action does not relinquish the original bidder to the exclusive right to negotiate at the vendors’ reserve. This would seem to be exactly opposite to what currently happens at an auction. Many times I have been in the audience of an auction when the auctioneer vendor bids over the one and only bidder and then says to that original bidder, “you will need to bid over my vendor bid to still have first right to exclusively negotiate with our vendor”. In fact, apart from the using the vendor bid to open proceedings, I don’t see very much further use if the vendor bid does not relinquish to the public bids rights to negotiate exclusively.
This will most likely be a very hot topic around the water cooler in most Real estate offices over the spring selling season. Whether or not it will ever be “proven’ by a court case is anyone’s guess. What it does point out categorically is the fact that if you are considering purchasing a property this year and you are more than likely going to have to bid at auction then it is incredibly important that you get professional advice. Professional buying agents (advocates) will save you tremendous angst and most likely tens of thousands of dollars.
If you are considering a purchase this year please feel free to call our offices and we will catch up for a no obligation chat.
Ian James
Director
JPP Buyer Advocates