Did anyone cringe during location location last night. The episode was on Sun 28 mar 2004.
There was this elderly couple who wanted to sell their beachfront home in Sydney. Not sure of surburb – i dont know sydney.
They wanted $1.8m and thought thats what it was worth. Prior to auction they had a discussion with the agent and said they reckon its worth or would only accept $1.6m.
During the auction they started at a ridiculous $1.2m. Then they finally got it to $1.52m. They then came in and APPLIED the pressure to the owners. I cringed they said to the owners ‘if you put it on the market the other bidder has said he will make a bid” I cringed and yelled – DONT PUT IT ON THE MARKET.
They put it on the market and only got another $10-20k.
Did anyone see that and think the same……
I have learnt this goes on and experienced similar pressure when I sold my PPOR back in 1999. Since then I have read the ‘Dont sign Anything’ Book by Jenman.
It was exactly as he describes.
I did see that yack. Do you know how many years ago they paid 200k for the property? I didn’t see the first part of the segment.
Jenman, on his site, also has an article right now, about how people might choose to accept bids at auction now because they may have to accept lower later.
There’s a lot of articles at the moment written on people “reducing their expectations”, and agents are trying to ensure they don’t overestimate prices to vendors.
It depends on which perspective you have. I did absolutely cringe when I saw those discussions between the RE and the vendors. But because I didn’t see the beginning of the segment, i was wondering myself if the vendors were asking too much. The RE seemed to be just trying to tell them that $1.8 was out of the question. Seems the buyers were only willing to pay $1.4- so that was the market value perhaps.
Interesting thread, yack- thanks
kay henry
Interesting discussion Yack and although I didn’t see it on Sunday, it happens almost every show. As an investor and owner I hate to see the agents trying to work their ‘magic’ on less knowledgable vendors.
But as an auctioneer I have seen that it can work in some circumstances.
Playing the devil’s advocate again Kay!
‘Eat rich food, barbeque a yuppie’ [greedy]
Yep, yack, I cringed too. I didn’t scream at the tv, because I was fairly sure the segment was pretaped[wink] I think jenmans books are fantastic in terms of buying, selling, negotiating, etc.
It all comes down to the dollar. If a sale was made, the agent would have earnt about 2% ($20k), if it was not sold, they would have got zero. This makes the dodgiest used car sale look decidely wonderful.
Its like all of the other agents desperately trying to get their bidders to win the auction. Of course, they would crap on about ‘healthy, strong bidding’ to ‘secure your dreams’, ‘youve come this far’,’another thousand is nothing’. When the reality is this. They might be paid nothing on a missed auction, and half of 2% on a winning bid.
I hate watching the agents at those things. They make me cringe too, how can people say yes when they gotta know with cameras in their face they are on tv.
I wonder if they get some monmey for that too>?
I hate the way the agents do a suck up job…sorry folks, but they do. YUKKKKK
and yeah maybe it was overpriced
Elves” a blind man may see what a sighted man may not”
then again, there are less buyers around in that price-range, surely?
And while capital gain is a wonderful thing, easy come easy go, really – 10 or more percent less that you would have got “5 minutes ago”, on a 1.8 mill property, that’s a lot of money down.
elves –
yeah –“and yeah maybe it was overpriced”
yep I’d agree with you there – I read recently, that on a global scale, apparently Aussie properties are among the top three or four most overpriced countries in the world!!!
Not so devil’s advocate as you might think, Rugs :o)
Seriously, the couple opens their house for open house. 100 people look through it with the agents. Let’s assume these potential buyers know theitr market, have studied similarly sold properties, and realise they would have to renovate/restyle that older couple’s place (it was pretty old-style). So the buyer’s tell the RE that they would pay around 2.4 million. What is the RE to do? They are testing the market and think the older couple are being unrealistic. I am just not sure they screwed over that couple.
Rughead- you are an auctioneer?? Really? That is very cool :o)
kay henry
oh for the day I get to think of those kind of dollars!
imagine the land tax on that baby! ouch
” a blind man may see what a sighted man may not”
I reckon the good thing about shows like Location Location, internet forums, and the right books is that for next-to-nothing, you can learn about these ‘tricks of the trade’ which agents use – and be aware of them.
I haven’t had much experience with auctions, so I know I learned something from reading this thread. Thanks yack for sharing [smiling]
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They lost the game as soon as bidding stoped around $1.5Mil and they said is “what do we do now?”, they didn’t even have a plan if X or y happend – their only plan was that it would reach over their reserve of $1.6Mil, and when that didn’t happen they lost the game.
They had no game plan, and they were totally at the mercy of the RE agents (who wanted the commission of course), whom tell them the line “it’s what the market is telling us” and “we put it on the market and we will be able to get more bids” (in this case 2 more of less than $5K).
That said, the house was basically a knock down job (well it was damn well ugly, and you probably just domilish it and start over, esp. if you are paying over $1.5Mil!!!). They bought the house 20yrs. ago for $200,000 (so round about a increase of 14% per yr, minus inflation of 5%).
In an interesting note, if they hadn’t sold at auction I wonder how much they could of got if they played the mystery buyer game – I suspect a hell of alot more, as that guy was out to buy the property. I basically laughed when the owners said “were not happy” – yeah neither would I of been if I put it on the market and got less than $10K in bids befor the bidding stopped (for $1.5Mil prop!).
Rgds.
Lucifer_auLet me recount my experience. It was back in 1999, well before I had heard of Jenman, Spann, McKnight etc. I had only heard of Somers and read a few property investor mags at that stage.
Our PPOR was a little 2 bed unit on Beach Rd in Parkdale accross the road from the beach. We had just come back from a year working in the US and needed to upgrade to start a family.
Our agent who looked after this property and our first investment property suggested we sell by auction. Since your near the beach, you may get a better price. So we discussed a marketing campaign which cost a few $000 and a reasonable commission as I was an investor customer.
My analysis suggested a price between $165k to $185k. I set a reserve price of around $165k.
The week prior to auction the agent calls and says I have had an offer for $130k from a woman from around the corner. This is one time I lost my kool after hanging up on the phone. It really pissed me off.
So for the next week or so I am wondering if I have been unrealistic in my price and should reduce my reserve price. I cannot remember if I told the agent what my reserve price was.
Driving to the auction I felt like shit. Butterflies, will there be any bidders, it was drizzling. The auction was in May/June, not the best time to sell a beachside property but we needed to sell to get into a house.
My brother in law was planted to get the bidding started but fortunately he was not needed. There were two bidders. Bidding stopped at $162k.
I need to refer to my vendors, he told the crowd of around 20. Not many by todays standards. So inside the unit we are told we should put it on the market – you will extract more bids. I felt i was in the twilight zone all day.
So on the market it is – We got a few more bids to $167k. The successful bidder was estactic. I came away thinking she probably would have paid more had I done a proper sale with an advertised price like $180k and no advertising costs.
Since then I have read the Jenman book and felt he was talking about my experience. And I too felt the same thing as the couple on Location Location.
I read somewhere else (maybe http://www.crikey.com.au) about Location, Location airing segments which were filmed 6-8 months ago when things were kicking along nicely – so when they are now aired vendors get lofty expectations.
I saw the show on Sunday too and while I think RE agents are rotten vultures, I must say this – in one part of the show the couple were discussing with the agent what price they wanted and their reason for wanting 1.8mil was because they wanted extra to compensate them for ‘having’ to leave their much loved house and all its memories. Even if they did get less than they wanted, and indeed less than what the buyer may have been prepared to pay, what they got is a pretty good retirement fund.[exhappy]
Atttened a auction at Umina Beach NSW on the weekend.
In NSW new law means that anyone wanting to bid on the property must register before hand.
About 20 people (8 couples) on site.
The Auction starts with the Agent going thru the contract: Location, size, inclusions, easement etc.
Then he closes the auction as no one has registered.
I guess since he has made his spiel he will get his auction fee.
Two couples stayed on to neg with the agent.
Originally posted by kay henry:Rughead- you are an auctioneer?? Really? That is very cool :o)
kay henry
Yes I have been an auctioneer for almost 5 years and am liscenced in WA and ACT (no need for NSW). No experience in house auctions though.
But it is not much different. You use the same techniques when trying to glean money out of potential purchasers. The only difference I had at my old job is that we worked 100% for the vendor so we tried to auction everything above reserve.
Sometimes there would be a challenge to get people to bid to the reserve (I never took vendor bids above the reserve) That is completely unethical.
I have been to many house auctions (to buy and to look) and some of the auctioneers are useless. I have seen them in person and on TV missing bids, taking two bids in a row from one person, dropping to a smaller increment way to early, and plenty of other mistakes.
There are definite tricks to working an auction both from the auctioneer and the bidder.
‘Eat rich food, barbeque a yuppie’ [greedy]
se7en,
depressing story (for the vendors, at least). The auction really is dead, post-boom.
kay henry
Originally posted by _se7en_:Then he closes the auction as no one has registered.
That’s happening more often with the new auction laws & shift in market sentiment to a buyers’ market
It should mean that we see a drop in the number of auctions as REAs and vendors realise that auctions are only useful in situations where there is high demand for a specific property.
Maybe it will make certain REAs work harder on their clients’ behalf.
Cheers,
Aceyducey
I certainly hope so as I am going to an auction for a potential IP in three or four weeks. I hope EVERYONE stays away!
‘Eat rich food, barbeque a yuppie’ [greedy]
This is what happens when you don’t have a auction plan. “What can go wrong will go wrong”.
If you live by this code of thought you’re never disappointed! [cry] Crying
The suburb was Warriewood,on the northern beaches of Sydney.(I live a couple of street away).[grrr]
I did see the first part, missed the second part.bbruham.
Satan
Winners make it happen.
Loses let it happen.this seems to be a pattern, why did they allow such small bids, what happen to working for the seller who is paying you?
one show I forget which actually had the RE pressure a couple to put the hous “one the market” as the RE walked away the wife said something like”if it doesnot come up high enough can we refuse the bid” so much for the agent getting informed approval!we wer actually turned off an auction for my mother’s house because it needed a bit of work. went on the market saturday, contract saturday night – asking price, for the next week we had offers coming higher and higher but as we had accepted the original offer we had to go with it – and weren’t the purchase a pain! I am sure the sale had been prearranged and the RE was working for the purchasers. we live and learn – oh the property definately have position, position, position – position!!!!!!!!!!!!
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