With the REIV stating a 64% clearance rate, spring seems to have come early for some vendors and agents. There were over 600 auctions on Saturday with another 526 private sales last week. This time last year there were approximately 628 auctions with only a 53% clearance rate and only 505 sold privately throughout the week. Obviously next week, with the AFL grand final there will be basically no results worthy of mention. I believe there will be less than 50 auctions.
Yesterday I attended several auctions, all of which successfully sold. However, one of the auctions highlighted to me why the Real Estate profession is not trusted very much. The auction started like most others; nobody opening the bidding. The auctioneer placed a vendor bid, and after a good three minutes finally received another bid. As this was the only bid at the time the auctioneer announced that he was going to seek instructions from his vendor and he went inside. I noticed another of the agents moving through the crowd and speaking to different people, obviously trying to drum up another bid.
When the auctioneer returned he began talking about the prospects of passing the property in to the highest bidder. It was at this point a further bidder entered the fray. With only the two bidders it was exceedingly slow and difficult work for the auctioneer but eventually he got close to what I thought the property would be worth. Probably a little light but with some half decent negotiating any reasonably effective auctioneer should have reached a slightly better deal than where the bidding had stalled. The auctioneer had done very well to get to this level leaving only a short jump to what I thought would be a good result for the vendor. With the only other bidder obviously out and having no other bidders I was expecting the auctioneer to call a halt and pass the property in.
The auctioneer did call a halt, but only to go inside to take instructions from his vendor. This made absolutely no sense. The auctioneer only had one option in the crowd. The obvious thing to do was pass the property in and negotiate with the highest bidder. If you couldn’t get anything more, then at least you had tried. But any decent negotiator should have been able to get between $5k and $20k more. After an inordinate wait the auctioneer returned to his “stage” at the front of the property and explained that if there were no further bids, then the property would be sold. I wish I could say I was flabbergasted. Unfortunately I was not. I had even said as much to my clients who were standing with me.
What the auctioneer did was make sure he was going to get paid. Regardless of whether his client, the vendor, got the best possible price. To be fair on the auctioneer, if he was inexperienced or knew he was a poor negotiator, then I can see why he convinced the vendor to put the property on the market. Only someone putting their own interests ahead of those of their client, or someone that is totally inept would have put that property on the market when they did.
I have purposely not made any reference to area or price. If the auctioneer who did this on Saturday is reading this, then they will know who they are. Unfortunately, there will be many auctioneers reading this today and wonder if I was at one of their auctions on Saturday.
I have been buying property for my clients for over a decade and I was a selling agent before that. I see time and time again, selling agents not going the extra mile. I have even heard agents say that you can only sell a property for what the market says it is worth. If that is the case, and it is not, then why would you pay these people a commission. There are some fantastic selling agents out in the market place today. They always got the extra mile for their client. These are the agents that always negotiate hard with me. They push for the very last cent for their clients.
Five weeks ago in a very similar situation, a property passed in at $785,000. The property was worth about $800,000. Two people had fought out the bidding battle until there was one left. The auctioneer passed in to the highest bidder. That property was sold for $795,000. The auctioneer had negotiated a further $10,000 for his client.
If you are thinking of selling your property think very carefully about who you use as an agent. It is not just a few dollars that you could miss out on. It may be tens of thousands of dollars or more.
We are buying agents and never work in conjunction with selling agents. But we do consult on property matters. If you hire a vendor advocate, just remember two agents are splitting one fee. You are unlikely to get the best job from either of them. If you are trying to work out which agent to use, if you are unsure of the process, give us a call and we can have a chat.
There will be no market news next week as it is Grand Final weekend.
JPP Buyer Advocates