I refer to auction shows on TV and notice that the sellers of the property seem to set the price for their properties by first deciding what they need to sell for. This they determine by working out how much they need to buy their new home for. depending on the location, their debts,what funds they need for all other sundries, such as furniture etc, whether they need a holiday etc. I find this is totally inrealistic as what they are selling their house for should be what it is worth, not how much they need.I then see these auctioneers use dummy bidders, put the price up by their own authority. Do they not work under the Trade Practices Act, re false and misleading etc. I have decided I would never buy a property at an auction. After watching these shows I have no faith in the auctioneers and I think most people who buy at auctions pay far too much
Glenda
[8D]I deal with real estate agents everyday and even they tell you that only “mullets” buy at auction and that you shouldn’t buy at auction at all.
[8D]
Gday Glenda and George,
all agents operate under the Property, Stock and Business Agents Act 2002.
i agree with George, if you want to buy a house put an offer in before the Auction so you dont get sucked in to all the hype of an auction.
[
] Powmow []Hi everyone,
I agree with the above. Auctions have become rather theatrical – a bit like Parliament!! I was interested in a 2BR unit at Ryde that was going to auction today and which was expected to for a little over $200,000 but couldn’t make it. Agent said it was really bad. Anyway, it sold at auction for $285,000. It needed a complete reno, paint, kitchen, carpet, bathroom. Not a good buy.
Anna
I’d never buy a property at an auction. I think they should be outlawed. [
].Also, “cockatoo” – I hope you’re not inferring that real estate agents are “unprofessional” – are you? HA HA [
]Hi guys,
Auctions aren’t all bad.
We bought our house (PPoR) at auction this year,
the quoted price was 350+ (In vic that means +20%, so about $420K)
The owner had moved interstate, had many properties and his wife had left him, so he apparently he was eager to sell.On the day, the bidding went slow. We put in our first bid at 340K, the RE spoke to the owner on the mobile, house on market.. no further bids…house sold!….$340K…couldn’t beleive it myself.
And don’t think that the price quoted was inflated either, it was an area well known to us.Maybe we just got lucky…
Sue [
]“Be careful not to step on the flowers when you’re reaching for the stars”
I agree with Sue. I bought a investment house at Auction and after spending about $15000.00 on a new kitchen I had qoutes from 3 real estate agent, they all show a 150k-200K from the price that I paid. At auction, you only pay a bit higher than the 2nd highest price! So never discount Auction![8D]
Hi,
My beef with auctions is that the property price range quoted by real estate agents never seems to be accurate. Obviously they can’t foretell the future and predict demand on the day of sale, but my experiences over the last few months have indicated that generally, they predict extremely conservative ranges, which can make you think you’re in the ball park range, when really you’re not. This becomes a problem when you go to the expense of getting building inspections etc done pre auction, then turn up and find out that the opening bid is much closer to your limit than the final one!! One particular example that sticks with me is of a property in inner Sydney where, after telling the agent roughly what I could pay, I was informed that I was “in the right price bracket”. Then, at auction, the place was passed in at 50K (!!) above the amount I had quoted to the agent because it didn’t meet the reserve price. In other words, I was nowhere near the expected purchase price. Luckily, I had not spent anyone money on inspections. In my book, this is blatant dishonesty – needless to say, I’ve been avoiding that real estate like the plague ever since.
That’s very bad Anastasia, just so unethical of the Agent to mislead people.
I once read in one of Jenman’s books (can’t remember which one) that if you MUST buy at an auction, that it would be wise to write to the vendors to tell them that you are interested in placing a bid, but that you want to know whether the pricerange the real estate agent has set is realistic. Good idea to ask them whether you at least have a chance of buying inside this range, before you spend heaps on inspection fees. THere was even a sample letter at the back of the book, I believe.
I actually hate auctions and don’t even look at properties for auction, but may be I should after reading Diclem’s story. But bad for the vendors though, they could have done much better. Shame that some vendors don’t want to hear about offers before auction.
As far as I’m concerned I agree with Johnny, auctions should be outlawed [xx(]There isn’t anything wrong with auctions other than possibly that a vendor should be required to provide a pest control inspection report (or else an escape clause would take effect).
There are some wonderful surprises available at auctions. The only problem is that you never know beforehand whether many or few bidders will turn up for the property you are interested in.
Often the vendor is under pressure so you could strike it lucky !!! You’ll never know unless you spend the time and frequent the auctions.
Yes, a lot of work but would you really expect it to be otherwise ?
Pisces133
I don’t see anything wrong with auctions either. If you’re a shrewd investor and not swayed by the hysteria of auctions, they can’t be bad for you. If anything, auctions would show how much people would be willing to pay for the house – bad if it does get sold, but if it doesn’t – wouldn’t that mean that your offer a short while after the auction would be more readily accepted?
My point is I think auctions should be treated as merely sources of information on the demand and supply of properties.
On the flip side of auctions I recall selling a house that the agent said was worth $ 400,000. On the day of the auctin the bidding halted at $ 320,000 some 20% below what the agent said the value was.
At this stage I asked if he was either a liar in setting the price too high or incompetent in setting the pricr too high. He took his sign away as he left the auction (on my insistance).
They do tend to guild the lilly to get the listing in my humble experience!
Hi All,
Auctions like REA’s have good points and bad. I have a pretty good rapport with a few REA’s in my area and the auctions I went to all sold within 10% of the price I was told.
If you want to see a strange auction system then go to Japan. It’s more like a tender. They tell you the reserve price and then you put your offer in an envelope and the highest bidder wins. You don’t know what other people are bidding and have to accept the final result. If you are bidding on multiple properties you need a different envelope for each one. A friend of mine recently mixed up his envelopes put a bid in of nearly 100K over the reserve price. When he realised his mistake (which was only about 2 minutes after handing over the envelope and 10 mins before the auction actually starts) he asked for the envelope back. Guess what the law states? Once the envelope is exchange there is no return even if it’s before the auction time starts and is only returned after the auction finishes.
C2
“Is it true the more you owe the more you grow until the bank steps in?”So did your friend have to buy the overbid place C2? Or was there somebody out there that wanted it more than him?[
]Cheers
MelHi Mel,
It’s his and he’s not happy. The funniest part of all this was watching him tell his wife about what happened.
C2
“Is it true the more you owe the more you grow until the bank steps in?”G’day….
Real Estate Agents recommend Auctions for a couple of reasons and you should avoid them like the plague as a buyer or a seller.
(1) This method allows them to avoid giving the Vendors a Selling Price when listing the Property
They do this because of the fierce competition from other Agents in listing properties. Owners can invite it upon themself as their greed blinds them to reality. Agent(a)tells the truth and says $500,000 Agent (b) says $530 – $550,000 (c) Agent says “we should put it to auction”.When questioned on a price… he says” that’s the beauty of an Auction you just need a few strong bidders and blah, blah, blah…then proceeds to talk of the “Sales that went $x above reserve”
Vendor is sucked in and even writes out a cheque for the Advertising costs. The market place has been conditioned to pay for advertising for an Auction and thats reason number (2) $2,000- $5000 and at times heaps more for the Auction Advertising .
The Agency that listed the property for Auction now realises the Vendor needs to see some action…buyers are initially told Mid to High Fours…. to get as many at the auction as possible. Now they spend the next few weeks conditioning the Vendor down in price. He’s been dreaming of “above reserve sale” and allowed to think like that for a little while.
As the Auction draws nearer they tell the vendor ” the market is telling us Low $500’s so you’ll have to be realistic with your reserve price.
From here on in, the relationship begins to sour
but the vendors done his dough and the Auction is in a weeks time. The rest is history…repeated week in week out all over Aussie. Property doesn’t get near the Reserve, Vendor encouraged to “put it up for sale as some buyers won’t bid until they know it’s on the market” maybe a bit more but generally it’s all over bar the shouting.Yes, of course there are exceptions… but generally speaking, unless you are selling something really unique avoid auctioning your property. Many buyers will not go to or bid at Auction, yet no buyer refuses a sale by Private Treaty.
That’s not to say that Private Treaty Sales by Agents are much better. With nearly 30 years in the Industry I wouldn’t feed half of them. However the Vendor generally gets the Agent they deserve… They won’t admit it… but they usually list with the Agent that gave them the highest estimated selling price.
Is it any wonder that, on average properties sell at 94% of the initial asking price and only 2% of the Public are satisfied with the Agent the engaged.
I’ve probably said more than enough…
Cheers
Bill
Bill O’Mara
Real Estate,Mortgages,Share Market Strategies.
[email protected]
<Warning>Newbie poster</Warning>Just as those shows don’t tell you when the auctions took place, they don’t necessarily tell you everything that goes into the vendor’s decisions. Seems to me the riskiest vendor behaviour I’ve seen is to buy before selling, and that’s dangerous no matter what method you use to sell.
We’ve just sold a Sydney property at auction, and we were very happy with the firm and the agent who handled the sale. We went to dozens of auctions and saw the auction practices of 5 firms before we signed up, so we were confident about how they’d handle the auction itself. Obviously we don’t know first hand how they compare with the others during the marketing phase, but the number of buyers on the day reflected the numbers of “interested lookers” the agent reported to us. We kept looking at houses for sale in the area during the marketing phase, and the agent’s reports of buyers’ comments made sense. So our experience is that this agent was straightforward with us, and the agency seems to have been straightforward with potential buyers.
Our auction was in the second week of new rules, which require bidders to be registered and permit one only vendor bid. We had five registered bidders, of whom one (a friend, not an estate agent) was the vendor’s bidder. The other four all made bids. However, only one, the eventual purchaser, bothered with inspections. That had me worried, but the agent said that many buyers aren’t bothering with inspections when they’re looking at a lot of properties. Maybe that’s another sign of a nutty market.
We sold for less than we’d hoped, but we’re comfortable that the auction was a genuine competition and that the price was fair on the day. Now it looks as though we’ve managed to sell just past a market peak, and we’re feeling quite cocky about it. Auctions around here last weekend were very slow affairs.
From the vendor’s side, I’d say that the real work of auction sale is during the time the house is open for inspection. From the purchaser’s side, I think auction can be as good way to buy as any other provided you’ve done your homework, know what you’re prepared to pay, and don’t bid more than that. Which all sounds much like sale by private treaty.
We’ll probably be buying property again, and if the right property happens to be for sale by auction, and the auction price doesn’t go higher than we’re prepared to pay, then we’ll buy at auction. Though we’ll almost certainly make an offer beforehand.
Ghoti
>>Seems to me the riskiest vendor behaviour I’ve seen is to buy before selling, and that’s dangerous no matter what method you use to sell.<<
Ghoti, in a strongly rising market that is the best way to go about it.
Imagine selling your own house first and thence to find out that you are no longer able to buy in the area because prices have flown away from you by the time you found the right kind of house.
BTW house prices definitely appear to be softening up.
A property in Dover Heights I know of which would have sold for say $ 1.2 M a few months ago still attracted 91 inspections but no-one even asking for contracts or making a bid at auction.
Another friend had an open house for a semi in Rose Bay and had 34 inspections last Saturday.
So people are still looking but I guess they all are looking for bargains now.There just doesn’t appear to be the same kind of urgency now as there has been lately.
Some years ago I myself experienced a particular frenzy real estate prices period and it was very hard not to be affected by the panicky mood (of fearing to be missing out) prevailing at the time.
At the time it was just about impossible to imagine the market coming down.
Today is different and one may well pick up a bargain if the vendor happens to feel under pressure.
At auction or after auction is a good time.
Cheers,Pisces133
] Powmow [
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