Over the weekend the REIV auction clearance rate was 69%. Out of the 804 results, 107 were sold prior and 450 were sold on the day or passed in and negotiated after the auction. There are only 46 results still outstanding.
With over 1200 auctions gazetted for next weekend before the Easter hiatus, the scene is well set to see if we will have a distinct increase in turnover or just a comfortable, steady climb through April, May and June. I believe prices will very steadily but very slowly increase throughout this year. We would need to see a mid to high 70% result next weekend to see another small jump in price straight after Easter. We have seen a mini jump of about 3% in the past 4 weeks.
What this means is a property you would have bought for $400,000 in January, is now going to auction and achieving $410K – $412K. It is not a significant increase, and as every property is different it is only the Real Estate Professionals that are in the market every day that can really see this jump. Everyone else see that market sentiment is up in the media, but is finding it difficult to translate that into something meaningful.
I had four auctions to attend on Saturday, one, we successfully negotiated on Friday and of the other three, one had multiple bidders with a sale price significantly above reserve and two passed in. Both very similar in that only one single bid were received by the auctioneers who passed these in without further vendor bids. Both auctioneers knew they had a second interested party who had not bid.
The first auctioneer was Steve Burke, ably assisted by Andrew Wilke. Mid-way through the auction, one of the Jellis Craig agents implored the party that had not bid to make a bid. They did not. Once the property passed in, Steve and Andrew diligently negotiated with the one party to reach an acceptable outcome. At no point during the negotiations did they communicate in any way with the other interested party that remained waiting directly out the front of the house. These agents did a good job for the vendor and honoured the ethical code of conduct set down in legislation by dealing with the highest bidder first and foremost. Do not get me wrong, these agents alluded to the fact there was other interest, but at no stage did they go and talk to that party.
I have negotiated with hundreds of real estate agents across Melbourne after pass-in auctions. Almost all will act in this exact fashion. They will reward the bidder who makes the bid. BUT THERE ARE SOME AGENTS WHO CLEARLY HAVE NO ETHICS!
At a further auction a property was passed in on a single bid. The auctioneer was talking to another interested party before giving me the reserve price. Even after asking him to deal solely with me, I was told he can speak to whomever he wants. In short, over the course of 30 minutes he spoke to the other party a total of 4 times, he always took any further offer I was making to the vendor and then the other party and then back to us. When asked why, he clearly saw no issue with dealing with someone who did not even raise their hand at the auction at the same time as dealing with us.
It is these agents that give the real estate profession such a low standing in public opinion. Why would anyone bother to bid at auction if you have no first right to negotiate.
However, the moral of the story is not about the agents’ ethics, it is the fact that in both instances the person who bid purchased the property. IF YOU WISH TO PURCHASE A PROPERTY AND YOU ARE NOT THE HIGHEST BIDDER YOUR CHANCES OF SUCCESS ARE VERY LOW. If you bid at auction and are the highest bidder, most agents throughout Melbourne will reward you with the first right to negotiate. Please do not think that this means you will win, and or buy the property cheap! I get asked all the time who the best negotiators are. Especially by people who are considering selling their property. I have no problem in saying that Steve Burke and Andrew Wilke of Jellis Craig did a fantastic job for their client on Saturday. They were quick, smart and received a good price for their client. And they never crossed the boundaries of ethical standards. They did not need to. Unlike our other auctioneer, who just did not have the ability to negotiate without crossing the ethical boundary.
If you are considering a property purchase in Melbourne, you will need professional assistance if you wish to been a level footing with the vendor. They will almost certainly have hired professional counsel to assist them with negotiation and the sale of their property.
Give our office a call to have a no obligation chat before you have to deal one on one with a professional negotiator.
Ian James
Director
JPP Buyer Advocates