by Neil Jenman
Reading time: 2.5 mins apx
Last week, 1,559 properties were listed for auction across Australia. Of these, 690 were sold.
As any school-child will attest, this is a clearance rate of 44 per cent.
The official (fake) clearance rate released to the public was 62 per cent – at least.
In Victoria, there were 801 properties listed for auction with 393 being sold, a clearance rate of 49 percent. According to the REIV the clearance rate was 79 per cent.
Anyone who knows anything about the Australian real estate industry knows that auction rates are deliberately inflated to make them appear successful. Such misinformation continues week after week in every capital city where auctions are held.
Most home sellers are blissfully unaware that selling by public auction is the worst way to sell – especially if their home fails to sell at the auction.
If you are considering selling by auction, consider this: With auction, you will, at best, have a 50 per cent chance of selling your home. Most homes listed for auction fail at auction. They become auction lemons.
There is nothing more damaging to a home’s value than the ‘lemon’ label. When buyers know that a home has failed to sell at auction, two thoughts can enter their minds: ‘What is wrong with the home?’ And: ‘It must be over-priced.’
Both thoughts lead to the home being devalued. The sellers, who now appear desperate, will likely be under huge stress. As an auction lemon, low offers will pour in. Buyers sense desperation and act accordingly.
Meanwhile agents look on gleefully. They know the formula for selling real estate: “The lower the price, the easier the sale”. They also know that, regardless of whether a home sells for a high price or a low price, their commission is always high.
If home-sellers were privy to how agents talk behind their backs, they would never sign-up to sell by public auction.
Contrary to what the public is told, auctions are not about selling for the best price, they are about selling at any price. And, of course, the lower the price, the easier a home is to sell.
The challenge for agents is convincing sellers to lower the price of their homes. This is done by a process called “conditioning” – which means hitting sellers with a barrage of bad (and often fake) news – under the guise of “market feedback”. As real estate institute training states, “Auction is the fastest and best conditioning method”.
Recently, a bloke who calls himself “Australia’s number one real estate trainer” (but some call “the foul-mouthed real estate trainer”) was boasting to his “students” how auctions get sellers down in price.
At the conclusion of a failed auction – when a home had just been turned into an auction lemon, the foul-mouthed trainer-cum-auctioneer, said to the highest bidder: “I want to thank you a lot; our vendors, they were up in the clouds until you came along. Your negotiation has got them down a hundred grand.”
As his audience of agents chuckle at the sellers’ plight, the foul-mouthed trainer snaps his fingers at how easily the home will now be sold.
And presto, the agents get paid.
And that’s what agents call “success”.
But success for agents often means a monumental loss for home-sellers, most of whom have no idea just how deliberately and callously they have been manipulated.
Auctions are the best way for agents to get the biggest commission. They are the worst way for sellers to get the biggest price.
Especially – as happens more than half the time – when homes become auction lemons.
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PS If you want to see the video clip of the sales trainer boasting about how his auction just got the sellers to drop their price, let us know.
Also, if you – or anyone you know and care about – is considering selling by public auction, please contact us on support@jenman.com.au or call us on 1800 1800 18. We will now send genuine sellers (not agents) a complimentary copy of the acclaimed book, ’88 Reasons Why You Must Never Sell Your Home by Auction’.
“Auction Lemons” is just one reason; there are 87 more.
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Steven says:
I suspect that if a vendor resists pressure to auction a property, the agent will regard it as a “red flag” and reduce effort to sell. This could also result in the property being seen as a “lemon” and the agent feels validated.
Chris Maurer says:
Neil, I always look forward to getting your emails and yes, I would like to see the video clip of the sales trainer.
Shaun says:
Could not agree more. The Domain ‘results’ always have homes withdrawn, sold before auction and frustratingly, the Price withheld. How do they get away with saying ‘Price Withheld’? Obviously they want more buyer leads to ring in to ‘Contact Agent’. Very lazy, but very well paid work, if you can get it.
B. Stapo says:
Hi Neil,
I’d love to see the video of the sales trainer.
I just keep needing to show my husband every article and book you have ever written.
I’m a believer he’s needs convincing.
Cheers,
Bernice
Kay Foenander says:
“She grabbed a rolling pin and waited” I love everything about it, made me giggle.
Margaret says:
Tks Neil. I suspected this myself. You have confirmed why I will never again sell at auction.
Ian Anderson says:
It really is criminal what some agents are doing . That trainer you’re talking about with the auction ‘conditioning’ is really bad . That should be exposed to the media. I’d be very interested to see that video .
You’re right about the clearance rates , I’ve been preaching this for years .
Where I am in Surrey Hills in Melbourne, the auctions are pretty kosher – always 90% clearances .
Rick Scharnitzki says:
I would love to see the video clip of the trainer boasting. please send it to me . Thank you so much Neil.
Kind Regards Rick
Graham Smith says:
Hi Neil,
I was recently discussing my gift with a NSW Charity representative as I have left a couple of properties to charity in my will.
The representative advise me of the process that the charity undertake on receiving properties gifted to them.
I mention that as a charity, that receives properties gifted to them, they may like to contact Jenman Support to obtain the best price on selling gifted properties.
To my surprise, she has not heard of Neil Jenman or Jenman Support, so I spend about 5 minutes providing her with a brief outline.
I have been asked if I could forward to her some of the email articles I have received from Jenman Support, to enable her to brief management on you and Jenman Support, on how you can assist the charity to obtain the best price on selling the gifted properties.
AILIN says:
Hi Neil, would appreciate the video clip of the sales trainer. Thanks in advance