Geelong West
Disappointing auction result
- Thread starter wobbycarly
- Start date
Geelong West
I don't think realestate is a very precise science.
At the end of the day there are really only 3 things you can change as a seller...price, marketing, process. If something appears over priced, buyers won't be interested, if it's not marketed, Buyers won't know about it therefore choose the selling process carefully...auction makes sense - leaves the price to be determined by the market, and marketing well will make sure people know about it.
I auctioned a block of land last week, had 3 offers prior at 350 and 360 and it sold to the buyer initially offering the 350 for 451.
At the end of the day there are really only 3 things you can change as a seller...price, marketing, process. If something appears over priced, buyers won't be interested, if it's not marketed, Buyers won't know about it therefore choose the selling process carefully...auction makes sense - leaves the price to be determined by the market, and marketing well will make sure people know about it.
I auctioned a block of land last week, had 3 offers prior at 350 and 360 and it sold to the buyer initially offering the 350 for 451.
Except there are so many people, like myself, who won't buy at auction. You're actually finding the "second highest price plus a small margin" within the "pool of buyers who are willing to buy at auction who are usually seeking a bargain".
I know that auctions do better in some states than others, but surely even in those states where auctions are common, there are people who can't/won't buy at auction. It doesn't seem sensible to me to place any limitations on who can buy your property.
I would be guessing the three prior offers were lowball offers, people hoping they have found a desperate vendor and hoping to snaffle an absolute bargain. I'm also assuming the block was worth probably $450K and you would never have considered selling at $350K.
If I went to an auction with the price guide at 500 to 550 and the reserve was over 550 I would walk away as I am dealing with a shady agent.
I would also expect that if it were passed in at auction I could buy it for 500 if there is no competition.
If they wanted more than this I would walk away citing they mislead me and that I couldn't afford more than the asking price of 500 - and was just hoping nobody would turn up to the auction so I could buy it within my price range.
I would also expect that if it were passed in at auction I could buy it for 500 if there is no competition.
If they wanted more than this I would walk away citing they mislead me and that I couldn't afford more than the asking price of 500 - and was just hoping nobody would turn up to the auction so I could buy it within my price range.
Wobblycarl,
say the place had structural problems and your bid at 500k had been accepted. This is crazy.
The auction process is structured to massively favour the vendor in real estate auctions. It is more cost effective in a warm/hot market where buyers are keen to not miss out.
Dissect the interaction and the information and power asymetry:
The vendor knows his reserve
They do not have to sell the property but once you bid must
You do not know at what stage reserve has been reached but at any stage they can exercise the option of taking your bid
You waive your rights to the cooling off period at auctions
The Vendor knows who has done a building inspection
You have to invest time and money (inspection etc) so they know you are quite interested
An auction in this sense is not an real auction. It is actually like call option of unknown value for the seller depending on how many buyers front. Hopefully there is at least one dumb buyer. The seller has the "option" to sell.
I refuse to buy at auction. The vendor will obviously not be motivated as why else would they waste money on this time wasting process. Having a building inspection to attend an auction is IMO a waste of money. I would rather negotiate on a listing and when the price is negotiated subject to this, then do an inspection.
I also think the whole building inspection process in most states is a complete waste of the buyers money. Why can't the vendor do a building inspection and make it available to all prospective buyers?
say the place had structural problems and your bid at 500k had been accepted. This is crazy.
The auction process is structured to massively favour the vendor in real estate auctions. It is more cost effective in a warm/hot market where buyers are keen to not miss out.
Dissect the interaction and the information and power asymetry:
The vendor knows his reserve
They do not have to sell the property but once you bid must
You do not know at what stage reserve has been reached but at any stage they can exercise the option of taking your bid
You waive your rights to the cooling off period at auctions
The Vendor knows who has done a building inspection
You have to invest time and money (inspection etc) so they know you are quite interested
An auction in this sense is not an real auction. It is actually like call option of unknown value for the seller depending on how many buyers front. Hopefully there is at least one dumb buyer. The seller has the "option" to sell.
I refuse to buy at auction. The vendor will obviously not be motivated as why else would they waste money on this time wasting process. Having a building inspection to attend an auction is IMO a waste of money. I would rather negotiate on a listing and when the price is negotiated subject to this, then do an inspection.
I also think the whole building inspection process in most states is a complete waste of the buyers money. Why can't the vendor do a building inspection and make it available to all prospective buyers?
I have a rule of never buying at auction, simply because I don't have enough control of the process.
Maybe one day I will buy a property at auction, but not any time soon.
Maybe one day I will buy a property at auction, but not any time soon.
I turned up to an auction to see what a house I liked sold for, and didn't bid (neither did anyone else). Ended up buying it for below the reserve at the set on the day, I didn't mind.
Nothing wrong with buying at auction. Just stick to your price limit. Same as any other way of buying.
The problem is that you lose the ability to control the rate of negotiation, which can sometimes be used pretty effectively.
Fair enough. But i think at the end of the day all that matters is how much you pay for the property. And that is determined by your price limit.
Just dont get caught up in the emotion of the auction, agents love that.
Just dont get caught up in the emotion of the auction, agents love that.
Agreed. I use the non-auction process to draw out the negotiation to try to make things work my way.
Emotion is the enemy of the good deal.
Completely disagree. If you get an emotional seller and you are rational, auctions can be a great way to achieve a great deal. Although not necessarily during the auction itself.
Agree if you're talking about emotion at your end...
Like I said, at the end of the day people should stick to their limit. If they don't, that's their problem. Personally my aversion to auctions is the unconditional nature of the bidding
Not to mention the total manipulation of everything by the agent.
But in the end, all that matters is the price. If you have a limit, stick to it. Nothing else matters.
But in the end, all that matters is the price. If you have a limit, stick to it. Nothing else matters.
Been away for a few days so haven't had an opportunity to update...
I rang the agent on Monday and said "Our offer is still valid until noon tomorrow (Tuesday). We need to sort out what we're doing before Xmas - either buying a house, or renting - we don't care which."
This seemed to get the vendors thinking, because after a few conversations on Tuesday, we ended up verbally agreeing, and signing contracts on Wednesday.
I know we didn't get a screaming bargain, but we are quite happy with the price. In this instance, price was slightly less important than the right school zone and a workable floor plan.
It's a 6BR on 1000m² in a great area. Quiet street, house needs some TLC, so we'll be able to add some value.
I rang the agent on Monday and said "Our offer is still valid until noon tomorrow (Tuesday). We need to sort out what we're doing before Xmas - either buying a house, or renting - we don't care which."
This seemed to get the vendors thinking, because after a few conversations on Tuesday, we ended up verbally agreeing, and signing contracts on Wednesday.
I know we didn't get a screaming bargain, but we are quite happy with the price. In this instance, price was slightly less important than the right school zone and a workable floor plan.
It's a 6BR on 1000m² in a great area. Quiet street, house needs some TLC, so we'll be able to add some value.
