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Auction price guides!

Discussion in 'Real Estate' started by Jacque, 19th Feb, 2009.

  1. Jacque

    Jacque Team InvestEd

    16th Jun, 2005
    It's becoming increasingly clear that certain RE agencies in Sydney are not only refusing to provide a price guide for advertised auctions (for fear of prosecution for underquoting) but are now reading from a script when buyers enquire about likely price range. "We're not at liberty to disclose any price guides..." etc etc :rolleyes:

    I usually find an agent I've known for a while and get at least something out of them if I'm unsure, but I imagine that for the majority of buyers it's such an onerous task to find out the price guide that they don't even bother pursuing the property. In the meantime, the property gets passed in due to lack of interest, a private treaty sale ensues and the vendor's lost a few thousand on advertising and auction campaign dollars. Seems pointless really, doesn't it?
    And yet thousands of home owners continue to take their property to auction based on the confidence of the REA to get them top dollar. Whilst I admit that this can be an effective sales technique in a vendors market, it certainly falls over in a buyers market and even more so when you consider that perhaps as high as 50% of genuine potential buyers don't bother with auctions, due to lack of information, costs associated (B/P inspection, contract review, strata search etc) and sheer laziness in finding out the likely price guide. Please note that this figure is completely based on my own anecdotal evidence from talking to buyers and investors and not any particular statistics, so take it as you will.

    I've found, in some cases, when you have a particularly closed agent, and there's no chance in hell they or their fellow agent is going to reveal the estimate on the sales agreement, a good question to ask of them is "Look, I don't want to waste anyone's time here. Is there any chance of it selling for $x? (x being just short of your maximum)" Most of the time, they'll provide something you can work with, and though the price you've suggested is merely a guide (which may ultimately change once you inspect the property ;)) it's also far from an offer on the property.

    I had one client recently, who liked a particular unit, which we tried to buy pre-auction, with no success. We never ended up putting an official offer in, but suggested amounts to the agent and made noises, knowing full well that she was using our "suggestions" as fodder to build up interest from other bidders.

    However, as the day neared, I used some other techniques (which I won't reveal here :D as I don't wish to share all my trade secrets!!) and we ended up winning at auction for some $25K less than the clients maximum. She was thrilled, needless to say. The interesting thing was, that had the vendors decided to accept a pre-offer, ours would have been c$15K higher than what we ended up paying.

    Sure, auctions have their place, but until agents like the ones currently not providing any price guides (and let's not include $x+ as any type of guide!) realise that they're missing out on so many potential buyers, the ones that are largely destined to lose are the vendors.