Beware Auctions

Written by Paul Kounnas Wednesday, 02 November 2011

TV’s Auction programs have a lot to answer for, almost giving the auction process romance and excitement which is a far cry from the truth.

Newspapers too mislead the public with stories about the number of auctions and private sales over a weekend, failing to indicate that the private sales are only those reported and that the numbers are a long way from accurate.

In fact, the Herald Sun on September 17 reported that currently just 18% of Melbourne’s properties for sale are booked to go under the hammer.

There’s a whole raft of reasons why private sales are the most popular way to go and cost is right up there amongst the leaders along with the amount of time a property put to auction is locked in with the one agent.

Committing to selling at auction is committing to outlaying around $5500, and possibly upwards, for the marketing campaign. This is money you have to pay whether your property sells or not.

Buyers’ Agent and author Patrick Bright loves auctions simply because his job is to help purchasers save money.

“I attend many auctions and bid for properties on behalf of my clients. At majority of auctions where we were successful we had money left on the table – that is, we spent less than our authorised limits,” he said.

Nobel Prize Winner for Economics, the late William Vickery, developed a far better alternative to the auction, private sale negotiation using what he termed the Buyers’ Price Declaration.

With the Buyers’ Price Declaration, no competing party is privy to another party’s offer, meaning that each buyer must offer his or her highest price without being influenced by what somebody else may have offered.

Ask your agent about negotiation with a Buyers’ Price Declaration. If he or she still insists on auction, insist upon a price guarantee or look for another agent.

All the marketing and negotiation experts agree that in order to get the best price you must start high. Auctions are the opposite, they start low and it’s for this reason that very few real estate agents sell their own homes at auction.

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