Ahh, who doesn’t enjoy a good auction, every now and again you can stroll down the street to check out your neighbour’s house and take part in this now standard ritual that is part of Australia’s culture. Sometimes the event can turn into a street fair with some auctions in Melbourne having a BBQ out front or a Mr Whippy to feed the crowds who gather to watch this marvellous spectacle. By the end of the auction there is usually a result but looking at 2012 clearance rate figures, nationally, only 55% of properties that went to auction sold at auction.
All that time wasted fixing the property up for opens, all those marketing costs, stress and the final slow reality that you won’t get the price you want for your property sinks in. This happens every week to thousands of home owners who take their property to auction expecting a result. The sale usually doesn’t happen because the property is priced too high. It is your right as the home owner for you to market your property at whatever price you like but your agent well and truly knows that the price you are asking is unrealistic and won’t achieve a sale. Instead of telling you the honest truth, they agree that your asking price is reasonable and even over quote as to “buy” the listing as the agent knows that if they disagree, you the home owner, will pick the next agent from the other Mc Donald like franchise to sell your property.
Now that the agent has your exclusive listing they need to bring your expectations down to achieve a sale. It doesn’t matter to an agent if your property sells for 5%-10% less than your asking price as it only means a couple of hundred dollars off their commission. However that 5%-10% difference can be huge financial difference for the home owner. Instead of the agent having an interest in achieving the highest price possible their interest is in achieving a sale at any price possible and the best way to do this is via the auction process. A normal agency agreement lasts 90 days and the standard auction campaign goes for 4 weeks, this means the agent has 62 days to get the vendor to accept a lower price if the property doesn’t sell at auction.
Using an auction to condition the home owner to take a lower price is the best way to change the expectations of a home owner. On average it costs $10,000 for a standard marketing campaign in the local newspapers and about $500 for the auctioneer. If we look at the current statistics and see that there 350,000 properties currently for sale nationally and that 1 in 5 are to go to auction, if we use a clearance rate of 60% that means 28,000 properties will go unsold at auction. This means as a nation we wasted $280,000,000 on marketing which is worthless as no one reads last week’s news paper. That’s an extra $14,000,000 to auctioneers who didn’t even sell your property. This was all done just so the agent could use the auction process to condition the vendor into accepting a lower offer after the auction. These figures don’t even take into account all the properties that were planned for auction and withdrawn a week prior to auction due to no interest.
All that time wasted fixing the property up for opens, all those marketing costs, stress and the final slow reality that you won’t get the price you want for your property sinks in. This happens every week to thousands of home owners who take their property to auction expecting a result. The sale usually doesn’t happen because the property is priced too high. It is your right as the home owner for you to market your property at whatever price you like but your agent well and truly knows that the price you are asking is unrealistic and won’t achieve a sale. Instead of telling you the honest truth, they agree that your asking price is reasonable and even over quote as to “buy” the listing as the agent knows that if they disagree, you the home owner, will pick the next agent from the other Mc Donald like franchise to sell your property.
Now that the agent has your exclusive listing they need to bring your expectations down to achieve a sale. It doesn’t matter to an agent if your property sells for 5%-10% less than your asking price as it only means a couple of hundred dollars off their commission. However that 5%-10% difference can be huge financial difference for the home owner. Instead of the agent having an interest in achieving the highest price possible their interest is in achieving a sale at any price possible and the best way to do this is via the auction process. A normal agency agreement lasts 90 days and the standard auction campaign goes for 4 weeks, this means the agent has 62 days to get the vendor to accept a lower price if the property doesn’t sell at auction.
Using an auction to condition the home owner to take a lower price is the best way to change the expectations of a home owner. On average it costs $10,000 for a standard marketing campaign in the local newspapers and about $500 for the auctioneer. If we look at the current statistics and see that there 350,000 properties currently for sale nationally and that 1 in 5 are to go to auction, if we use a clearance rate of 60% that means 28,000 properties will go unsold at auction. This means as a nation we wasted $280,000,000 on marketing which is worthless as no one reads last week’s news paper. That’s an extra $14,000,000 to auctioneers who didn’t even sell your property. This was all done just so the agent could use the auction process to condition the vendor into accepting a lower offer after the auction. These figures don’t even take into account all the properties that were planned for auction and withdrawn a week prior to auction due to no interest.
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