[ Print Article ]Articles

AUCTION INSANITY

AUCTION INSANITY
Don't fall for it, sellers!

There was a time, not too long ago, when agents would tell sellers, "Yer'd be mad not to auction." More buyers meant more competition and more money. At least that was the theory.

The reality was different - a booming market disguised the sins of auctions. Despite the crowds, few sellers realised that their properties were being massively undersold. They failed to see the difference between a high price and the highest price.

For example, if sellers expected to sell their home for $500,000 and, instead, it sold for $550,000 (a high price), the sellers never realised that it may have easily sold for $600,000 (the highest price).

Today, the reality of auctions is easier to see. Low clearance rates are turning once-prized properties into either bargain buys or stale lemons.

If a property sells at auction, it sells for less than it would have sold without an auction. If it doesn't sell, it soon gets known as a local lemon. Either way, the sellers are losing - big time.

Remember the TV series, The Block?

Back in 2003, in front of a million viewers, one of the apartments sold for $650,000. That was boom madness. This year, the same apartment was auctioned again. It was passed-in at $540,000. This is gloom reality - and true auction insanity.

In a falling property market, only the chronically dishonest or the most hopelessly incompetent of agents could seriously recommend that sellers put their properties to auction.

And yet, despite all the evidence, hundreds of agents are still lying to sellers about auctions.

So, why do they do it? Simple. Auctions put huge pressure on sellers. As the Real Estate Institute of Australia once wrote in one of its national training manuals, "Auctions are the fastest and best conditioning method."

Auctions are recommended by agents because auctions suit agents not sellers. And, today, as the market gets worse, so does the behaviour of many auction agents. Deceptive quotes are given, figures are fudged, bids are rigged and clearance rates are concocted.

And then, when the auction fails (as most do, either by not selling or by selling too low), the agents come out with their excuses - it's the market, it's the economy, it's the season or anything other than the reality - auctions fail because of the dishonest or the stupidity of the agents.

Last weekend, in Melbourne, the auction clearance rate was 39 per cent (quoted at 58 per cent, of course). One agent who held 25 auctions and sold eight (in real estate la-la land, that's clearance rate of 50 per cent) came up with a doosey of an excuse for costing his sellers tens of thousands of dollars in lost expenses. The weather.

That's right - the rain meant that most of the auctions were "washed out".

Auction agents - in summer they make their customers sit in the gutters and in winter they make them stand in the rain. Dishonesty and incompetence on a grand scale.

It's insanity. Don't fall for it.

***************************

This news article was written by Neil Jenman, Author & Consumer advocate.


<< Back to Articles

Articles