Some one, please get spammers out of this forum !

What ever for, they may just know more than you and you might learn from them – if you dare to listen.

Jon

I'm only starting out in property investment and still learning. I still don't get it why is she doing this. Is she lying or am I missing something here?

I don't know all the answers, but how long ago did she purchase the property?   What if she purchased 2 years ago and by your statement she only paid $60,000 for it then $140/week is not a bad return on her investment but not good on the new buyer at $170K.   You would buy better closer to a main City somewhere.

LA Auzzie says,
I'd rather make a profit and pay some tax on it, than lose some money in neg gearing every month.

Not sure that lose money on neg gearing is the correct terminology – isn't it just contributing to saving?

Jon

Hi Ezn,

I'm not sure why you would want to build a 4 bedroom however in Brisbane, a typical 110m2 3 bedroom 2 bathroom Townhouse would be around $200,000 to construct.

Jon

Hi Marc, Oh dear, a Jenman fan. Perhaps I should give up while I’m ahead as I know that it is useless to preach to the converted. In my opinion Neil Jenman has done more harm to the general public through his psychological use of peoples greatest weakness – Fear. Everyone believes that they are being ripped off so tell them they are – but hey! I’m different I wouldn’t do that I’m totally ethical. Yeeear right!!!

Am I an Agent? Yes I am, I began my career in 1977 so I to have a lot of experience in selling property. I don’t profess to know everything but I guarantee that I have seen just about all there is to see when it comes to Agents, Sellers and Buyers. I can quote some horror stories about Sellers and Buyers as well as Agents. But most people would just call that human nature, we all wear different hats to suit our position at the time.

But back to the point, you say:-

You are right Jon; I don't like auctions as there are so many dodgy practices involved in their process it is totally disgusting, and in my opinion the process is bordering on, at the very least; gross negligence by the real estate industry for not cleaning up the disgrace that it is. The terms "overquoting and "underquoting" should never have to be mentioned in the auction process of selling real estate, but unfortunatley they are mentioned – very often.

So let me explain how Neil Jenman handles the process. Property for sale with an over inflated price or ‘By negotiation’, Purchaser decides that they like the property so they make an offer in writing, agent takes offer to Vendor. Purchaser has to chase up Agent to find out what happened to the offer, Agent says, sorry the offer was not acceptable do you want to make another offer? Purchaser asks the obvious question, well how much will they take? Agent says I don’t know how much more do you want to offer? Frustrated Purchaser raises the offer and waits for Agent to get back to them. After a day and no contact from Agent, Purchaser calls again to find out what happened to their offer, Agent says sorry Vendor says it’s not enough do you want to offer more? Very frustrated Purchaser says he has to talk to his wife that night and will call Agent back. Next day Purchaser calls Agent to raise offer only to be told that sorry Property sold last night.

Now if you call this ethical then we are on different buses, I firmly believe that a public Auction would be better than the one that this Agent ran. And by the way, this is a recorded experience of an acquaintance of mine dealing with one of Brisbane’s top Jenman offices. Suffice to say that they will never deal with a Jenman office and I hazard a guess that none of their friends will either.

Let’s look at this example of yours:-

For example; if I have $400k to spend on a property, and at the auction my nearest competition only bids $385k, do you think I will bid the full $400k to secure the property? Absolutely not Jon; I'm going to offer $385,500, or even $385,100 thus robbing the Vendor of $15k that I might have had to spend if there was genuine interest in the property and I had to offer my best price, not knowing what other buyers have offered.

This is right out of the Jenman handbook and is exactly an indication of how he works on peoples fear of loosing money. Let be honest, everyone knows that all Sellers have an inflated value of their property and all Sellers believe that they have paid too much for it and all Agents do nothing but get paid for just being there. But lets look at your example from both sides of the scenario.

First the Auction. If after four weeks of marketing the best offer on the day is $385,000 and you raise it to $385,500 and there are no more bids then it is highly likely that this is the best price that the Vendor is going to get on the day and he has a decision to accept or decline the offer. Unless the offer is higher than the reserve set by the Vendor then you must realise that they do not have to accept the offer (and many don’t). This is the short story, there is much more to it than this simplified version.

Private treaty. Lets take the same Property, only now the Vendor decides to sell with a price. Now working on the assumption that all Vendors have an inflated value of their Property value they decide to list it at $450,000. After many weeks and lots of inspections the Vendor says to the Agent, what’s wrong with our property no one seems to like it? Why haven’t you got us an offer? Now as Jenman doesn’t advertise property the Agent only has the Internet to rely on to find a Purchaser but fortunately a young couple have just looked at the property and have shown more than passing interest in it but seem reluctant to go further. The Agent knowing that his listing is on the line asks why they won’t put an offer on the Property. The Purchasers say ‘Look we really like it but we’ve been around looking for several weeks now and we’ve missed out on a couple, you know the one in Smith St was very similar to this one but it only sold for $370,000 and the one in Brown St sold for $400,000 and it was better than this one, we think that this one is way over at $450,000. We would however be prepared to pay $380,000. At this point in the process the Seller has a decision to make. How far does he risk pushing the Purchaser before loosing him or does he accept the $380,000.

In both scenarios the Seller has the final say. The most important factor that should me mentioned is the Buyer feedback and recent sales data that should have been supplied to the Seller along the course of the marketing programme in order for them to make an educated decision as to the market perception of their Property. As to weather or not you would have spent the $400,000 is just a scare tactic because of course you wouldn’t (unless you are stupid) or unless you thought that the Property was worth it in which case it was (to you).

As to your statement:-

So if offers are accepted prior to, or after the auction, then why have an auction that costs a lot of non-refundable dollars at all? Aren't offers to purchase normally what occur in a Private Treaty Sale? Of course they are Jon.

Before I attempt to answer the advertising debate let me first answer the ‘Prior Sale’ issue. If the Property is being sold under Auction conditions then it is Illegal to discuss any price whatsoever with a prospective Purchaser so any offer given must be made solely by the Purchaser. This offer would have to be high in order for any worthy agent to advise the Seller to consider it and would perhaps be best used when the market is slow. As there is no price mentioned by the Seller or their Agent then this is still deemed to be under Auction conditions. I think that you are just a bit hung up by the word Auction the aim is to sell the Property at the best price in the shortest time.

Advertising. I fully realise that the Jenman system does not advocate spending money on advertising. Well all I can say is the cheque is in the mail. There is an oft quoted saying in all sales circles which goes:- ‘You can’t sell a secret’ If a Seller does not expose their Property to as wide an audience as they can, then in my opinion they are destined for less competition which usually results in a lower price. As to your so called Non-Refundable dollars (obvious Jenman speak), I’m not sure about Victorian law but in Queensland it is illegal to charge a Seller more for advertising than it actually costs the agency. If the Property were sold prior to the Auction date then the only amount charged is that amount actually expended. Coupled with this statement it should also be noted that the only difference in cost between the Auction process and Private Treaty is the Auctioneers fee.

Your comment:-

It is a well known fact that real estate agents try to steer the Vendor towards an auction because it usually results in a sale by a certain date, (or soon after if the agent has done his/her job well) and they can also generate thousands of dollars in extra income through the marketing campaign. Of course, there is also the auction fee as well.

Another Jenman scare tactic. Agents simply don’t make anything out of advertising (It is Illegal). I will be honest and add here that it does improve the Agent and office profile but lets face it that is one of the reasons that you hired us to do the job isn’t it? Do you buy a brand new car and drive it home and remove all of the makers badges (Advertising) after all you paid for the car why should you give them free advertising?

And lastly:-

My final shot is this Jon; if Auctions were such an "open and visual forum", then why did the Govt have to introduce a law to outlaw dummy bidding, and why did the Govt introduce fines (that are not enforced) for overquoting and underquoting?

I’m not saying that the methods are fool proof, however in all my years of experience, I have noted that legislation is continually changing in order to make things better, however as in all situations where large amounts of money are concerned there will always be a scumbag trying to find an angle.

Jon

Hey MickyMouse,

Pay peanuts, get monkeys.  

I thought that the motivation would be  to sell the properties for as much as the market would stand, not see how much you can save in doing so.   Any agent who would negotiate the commission just to get the listing would be questionable to me as to wether they could negotiate the best price on the sale for me.

Jon