There is some marketing material circulating these days, particularly to people who are already selling that talks about an unnamed “plan that can get you a result soon and at the best price possible price”. The material talks about “getting your property marketed and sold in a positive and competitive environment as soon as is practical”.
What is this plan that they dare not speak its name? In case you haven’t guessed, it is auction.
If you want to sell in a hurry in today’s market yes an auction will find a willing buyer. If you want your property sold in a competitive environment right now quite possibly it will not.
Like any other selling method an auction involves a search for market price, usually over 28 days. Leading up to the auction Buyers are encouraged to believe that they have a chance to acquire the property for a figure that represents outstanding value for them but only if they can sign cash unconditional contracts and settle in 30 days.
The rest of the Buyers are told they will have to wait until after the cashed up Buyers have had a go.
The Seller hears all about the expressions of interest and price comments from all the inspections but does not truly get to test the market until auction day although they are experiencing constant price re-evaluation.
If there is competitive bidding a good price can be achieved. However most of the time, in a market like this unless the property is exceptional, bids are low and properties are passed in or, if the Seller truly must sell, the Buyer gets what he or she is looking for, outstanding value.
We took a serious look at the Private Treaty sales results for First National Palm Beach, The Pines and Burleigh in 2008, a year of falling prices, and we found that although 60% of the properties that we sold required some price adjustment during the process 40% of the properties that we sold were sold without a price adjustment and those properties were sold within an average of 34 days on the market.
How well did we do using Private Treaty in achieving a good price outcome for our Sellers? We sold 34% within 2% of lasted list price and 78.9% of our sales were within 5% of the last list price.
There is complete transparency in our sale process; the Sellers know what the property is being marketed for and the Buyers know what the Sellers want for their property. We did not need to “feed the greed” with Buyers by encouraging them to believe they were going to get a “bargain” in order to close a sale
Sales people conducting an auction cannot be a gatekeeper. They have to just reflect the market and expressions of interest back to the Seller who then must decide whether a particular offer or bid represents fair market value to their property.
by David Hamilton
They dare not speak it's name
palmbeachfn.com.au February 2009