To sum up the answer to the title of this blogs question I can do it in one word, and that one word is “Transparency”.
I take you back to November 17th this year where I had 4 auctions in the city of Moonee Valley, it was a nice sunny day and I went in to the auctions having slight interest on all of them.
I had been tracking the real auction clearance rates for weeks at an average of 30-35% and the odds were not stacked in our favour moving all 4 of these properties in the one day. Nonetheless I was confident I had appraised the properties fairly taking into account market conditions, so I went into the day very confident we would move the majority.
The first auction was a townhouse in Essendon that we pitched at a range of $620,000 to $680,000 and had a reasonable amount of inspections throughout the campaign.
During the Pre-Auction open for inspection we recognised 3 parties that had been through previously and that gave me good confidence that we would see some bidding.
I went out to start the auction and read through the contract, auction rules and then gave a really good spiel about the property, it’s location and the tremendous value and opportunity it presented.
I called for and opening bid and all I could hear were birds chirping in a nearby tree. I engaged with the crowd stating “what a nice quiet place to live” and then said I’ll kick it off on a vendor bid to get the auction started if we’re all a little shy.
I kicked it off on a vendor bid of $630,000 and from there we got absolutely nothing. I decided to call a half time break and went in side to consult the owner and advised I’ll have to put the selling boots on here and then went back out and re-sold it to the crowd again before re-opening the bidding.
Unfortunately from there no bids came in above the vendor bid and I forced to pass it in. Directly afterwards however I approached and offered $600,000, $610,000 and $640,000 by 3 different buyers straight after the auction.
The buyers were like hawks going for the kill but I went from disappointed to excited knowing we were a chance to sell. I sent the two buyers below the vendor bid packing after they refused to move up above the $640,000 buyer and then started working directly with the $640,000 buyer.
We got the $640,000 buyer up to $650,000 in negotiations coming down from a reserve of $680,000 to $665,000 but both the buyer and the vendor were in a Mexican standoff at that point so we had to rapt up negotiations and then I went on to the next auction.
Later on in the evening I spoke to the vendor and potential purchaser again to re-open negotiations but both refused to move unless the other did. In the end I advised both parties if I could get both in agreement at $657,500 (halfway) would we do the deal and in the end after sometime they both agreed and we settled it and sold for $657,500.
This next 3 auctions after my first were all passed in below reserves and were sold afterwards in post auction negotiations with only one buyer to negotiate with on each property;
The Second Auction was a house in Strathmore we sold for $2,330,000.
We quoted $2,200,000 to $2,350,000 and passed the property in to one buyer at $2,260,000 after a vendor bid was placed to open the auction at $2,250,000.
After nearly an hour of negotiations post auction we did the deal at $2,330,000 which was a great outcome for both parties on a tremendous home.
The Third Auction was a house back in Essendon which we sold for $1,750,000.
We quoted $1,680,000 to $1,780,000 and passed it in on a vendor bid at $1,680,000. We were approached by a buyer after auction who offered $1,690,000 and with negotiations between the two parties we did the deal at $1,750,000 directly after the auction which was another great outcome for both parties.
The Fourth Auction was a townhouse in Essendon West which we sold for $810,000.
We quoted $750,000 to $825,000 and passed it in on a vendor bid at $780,000. We were then approached after auction by a buyer willing to offer $790,000 and after a while negotiating with that buyer we did the deal at $810,000 on a short settlement.
In summary all 4 auctions SOLD after being passed in and were all negotiated and sold in the upper end of the range;
3 out of the 4 auctions had no bids and were sold to buyers who approached afterwards but I was happy that the auction method and our pricing was in line and that we got the buyers along to the auctions on the day to do deals with.
What the day taught me was is don’t underestimate the power of an auction even in a challenging market as a great method of sale to draw a buyer out to the property and to give you an opportunity to sell.
My closing thoughts are that buyers do like the transparency of an auction as they can get to see the markets reaction to the property on the day. It’s also the closest you can have all 3 parties including the agent, vendor and buyer together in the one place and at the the one time to try and get the deal done and dusted which is easier.
if you’re interested purchasing a property going to auction you will show up prepared to negotiate. If you’re selling via the auction method you’re obviously there ready and prepared to negotiate with the best buyer on the day. The whole process is transparent for both buyer and seller.
My team and I have had a great month in November and we will finish up with around 13 sales for the month proving along the way that auctions still work if managed and priced correctly and that the market is really not that bad and in fact it’s probably more normal now then the crazy times of last year.
We have 3 auctions this week on December 1st and they all look like selling, so it should be a good day for all parties concerned.
If you’re thinking of selling soon and haven’t appointed an agent as yet please do not hesitate to contact me.