Give up two minutes to earn yourself thousands of EXTRA dollars and answer the question ‘Should I Auction My Home?’
by Neil Jenman
READING TIME: 2.5 MINUTES.
Agents who claim that auctions get the best price are either dishonest or incompetent.
Gee, that’s insulting to many agents. Won’t they sue? Of course not, because it’s true.
Yet still, dodgy agents persist in telling sellers: “You’ll get the highest price with auction.” This lie catches thousands of sellers, most of whom never think about why auctions are a dead duck when it comes to the highest price.
Let me prove it to you. In two minutes.
Let’s say that you and I are both interested in the same home at auction. Each of us knows the maximum we can each afford.
Let’s say your maximum is $970,000 and my maximum is $910,000.
And let’s say that the lowest the sellers will accept (the “reserve price”) is $850,000.
Once the bidding starts, we both bid based on what we see each other bidding.
Let’s say you start at $800,000.
I then bid $810,000.
You then bid $820,000.
On it goes, bids rising by ten thousand dollars. Once the bidding reaches $850,000, the auctioneer may yell, “It’s on the market, going to be sold.”
You and I keep bidding. We are both still below our limits.
But, when you bid $900,000, how much will my next bid be?
$910,000, right. I have now hit my limit.
Still, you don’t know my limit, but you know you’ve got plenty ‘left in your tank’.
You then bid $920,000.
The auctioneer turns to me, but I have reached my maximum. I can’t bid more.
As there are no other bidders and as the reserve price is exceeded by seventy thousand dollars, the auctioneer will soon yell, “Going once, going twice, SOLD!!”
He will then ask everyone to applaud. The crowd will obey. Auctioneers love power.
What a successful auction – or so it seemed. Spirited bidding and the sellers received $70,000 more than their lowest price. But not for those who focus on a rarely asked question: How much more was the highest bidder willing to pay? In this case, $50,000!
Yes, you bought a home for a massive fifty thousand dollars below your maximum price!
This is the cruellest con with auctions: Hapless sellers think they get a high price, but they do not get the highest price. It rarely happens.
In the above example, the sellers missed out on getting an EXTRA $50,000!
All over Australia, sellers are collectively losing hundreds of millions of dollars a year by being duped into auctions.
So, Should I Auction My Home?
Here’s some good advice: Reject any agent who suggests you sell by public auction. Call us and we will help you find an agent who’s skilled in the art of negotiating, one who knows how to get you highest price – which is what you want when you sell, surely?
Here is a fact: Auctions are a dead duck if you want the highest price.
PLEASE NOTE: Our focus is upon helping consumers. Abuse from agents on our web site or Facebook page will be deleted or ignored or well publicised – it depends on our mood.
But one thing will never vary: No matter how much we are abused or threatened we will never stop doing what we love most – helping honest consumers to get the best deal possible in real estate. And, of course, if any agents are serious about taking care of consumers, we’d love to help you too. But, remember, the consumers come first. Thank you.