$10,000 drop in house prices helping buyers

[cube]

Heard a story recently from a couple who were very happy with the auction of their home - the first bid came in $12,000 ABOVE their reserve. The auctioneer didn't disclose that the property was on the market and went to "consult with the vendor". On return, he had managed to talk the buyer up another $18,000. Good work by the auctioneer, but does show that being educated in the process is important - if you ask 'are we on the market?' they have to answer truthfully.

[Bob Kane]

Yep - and some are still saying house prices are going downhill, the crash is coming and get out now.

[Rosco]

Has anyone looked at reinz new stats for March?

I notice that the median sale price is up to $365k, which is above the 2007 peak!

Ross

[Keys]

In that case, it is clear the reserve is too high.
Where do you go from there?, easy... lower the price.

Let's modify that a little then. If the one bid is on reserve but the winner could have easily gone another several if not tens of thousands more?

I hate auctions.

[damage]

If there is only the one bid and it's 10% below the reserve. Where do you go? If there are two bidders and the winner could have gone to 15% above the competing bidder...................

In that case, it is clear the reserve is too high.
Where do you go from there?, easy... lower the price.

[damage]

Closed tender sets a deadline, just like an auction. If you need a result in 6 weeks do a 6 weeks tender campaign.

Most auctions I have been to in the last year involved the auctioneer having a very passionate conversation with himself about what the vendors wished the price was, with absolutely NO action from the floor. About 1 in 5 properties got a single bid from a single bidder, way below reserve, and many of them turned out to be the same offer the same buyer had made before the auction campaign had started.

If you are in a really really desperate hurry then a fixed price can work (as long as it is clear you are giving away the property way below market value).

Market value is what someone will pay for it, not what the agent thinks it might be worth.

[WGN ex-property manager]

The so called low ball offer would be greater than the reserve I would have thought?
Also, how would a closed tender be useful when time is constrained? Surely a fixed / open price would be better if you are in a hurry?

Closed tender sets a deadline, just like an auction. If you need a result in 6 weeks do a 6 weeks tender campaign.

Most auctions I have been to in the last year involved the auctioneer having a very passionate conversation with himself about what the vendors wished the price was, with absolutely NO action from the floor. About 1 in 5 properties got a single bid from a single bidder, way below reserve, and many of them turned out to be the same offer the same buyer had made before the auction campaign had started.

If you are in a really really desperate hurry then a fixed price can work (as long as it is clear you are giving away the property way below market value).

[Keys]

The so called low ball offer would be greater than the reserve I would have thought?

If there is only the one bid and it's 10% below the reserve. Where do you go? If there are two bidders and the winner could have gone to 15% above the competing bidder...................

[damage]

An auction is an effective way to get a sale price one increment over the maximum price of the second place bidder. The winner could have had another $100K in them and you'll never know. If there is no 2nd place bidder then all you get is a low-ball bid from the sole interested party.

If you have a time constraint then closed tender is the way to go.

The so called low ball offer would be greater than the reserve I would have thought?
Also, how would a closed tender be useful when time is constrained? Surely a fixed / open price would be better if you are in a hurry?

[WGN ex-property manager]

An auction is an effective way to get a sale price one increment over the maximum price of the second place bidder. The winner could have had another $100K in them and you'll never know. If there is no 2nd place bidder then all you get is a low-ball bid from the sole interested party.

If you have a time constraint then closed tender is the way to go.

[damage]

Totally agree with BB and Davo... auctions are great for TV and emotions but really it just eliminates quite a number of potential buyers from market – like myself.

A good friend once spent over $2K on builders reports and LIMs before he bought his first home. He vowed he would never buy at auction after getting out-bid time and time again. This is all well and good in a boom market. The problem for a vendor is that in a quiet market, my friend will not take on the auction process at all and may go to another property with similiar characteristics, simply because of the agent's choice of sale. This disappointment rubbed off on to me and I've only looked at PBN, set sale or asking price properties where I can attach conditions. As a vendor, I would want as many genuine buyers interested in my property as possible, rather than just looking at cash buyers speculating for a bargain.

The 'special' properties at the very high end of the market will always attract selected buyers in a position to buy cash unconditional, therefore auction is the best method. For the average buyer, looking at average properties, it's not an option.

K

I'm hearing ya, but they still sell at the end of the day. Would love to know how many get passed in

[kane656]

Totally agree with BB and Davo... auctions are great for TV and emotions but really it just eliminates quite a number of potential buyers from market – like myself.

A good friend once spent over $2K on builders reports and LIMs before he bought his first home. He vowed he would never buy at auction after getting out-bid time and time again. This is all well and good in a boom market. The problem for a vendor is that in a quiet market, my friend will not take on the auction process at all and may go to another property with similiar characteristics, simply because of the agent's choice of sale. This disappointment rubbed off on to me and I've only looked at PBN, set sale or asking price properties where I can attach conditions. As a vendor, I would want as many genuine buyers interested in my property as possible, rather than just looking at cash buyers speculating for a bargain.

The 'special' properties at the very high end of the market will always attract selected buyers in a position to buy cash unconditional, therefore auction is the best method. For the average buyer, looking at average properties, it's not an option.

K

[SwissKiwi]

To stop so many auctions happening - do not attend auctions.

or

Do attend them - so you can complain about auctions - to auction participants.

?

[speights boy]

All they have to do is listen to people and find a middle ground, surely its not too hard? They are not driving the market, they are the vehicle.

It worked in Tunisia, it worked in Egypt.
Social media makes it possible.

Buyers control the market, not sellers or agents.

Boycott or make your presence felt at auctions for a month or two, the vendors will get the message and tell their agents...no auction.

[AMR]

Yep I make a point of telling the agent that I would only be interested in the property if it gets passed in at the auction.

My other gripe is price by negotiation where the agent says "We don't know what their expectations are - you'll have to put in an offer." In which case I take 10% off the price I was going to offer and throw it in.