The truth behind dodgy auction results
by Neil Jenman
Reading Time: Apx 5 minutes
Fake real estate figures are booming in 2020.
For those not good at maths, look at the weekend auction “results” from Canberra – the city many say is always awash with distortions.
There were 60 real estate auctions in Canberra on Saturday February 22.
From those 60 auctions, there were 30 sales.
Let’s imagine we work in the real estate industry and need to paint a rosy picture about the market, especially when it comes to auctions, the preferred selling method of dodgy agents who constantly feed sellers the big lie: “Auction always gets the highest price.” [Truth Alert: Public auctions do not get the highest price.]
And let’s imagine that no one of consequence checks figures from the real estate industry. Yes, that’s right, imagine a multi-billion-dollar financial industry such as the housing market where the market players issue dodgy financial figures with impunity. “We say it, they believe it”.
The industry players need to achieve two outcomes: First, make the public believe the property market is on a permanent upward trajectory – yes, yes, it’s always “a good time to buy”.
And second, we need to convince home sellers that public auction is the best way to sell.
Okay, so let’s start by getting back to those Canberra auction results.
Remember, there were 60 auctions and 30 sales. But we are not going to use a normal calculator. Instead we’ll use “we-select-whatever-result-we-want calculator”.
So, with 60 auctions and 30 sales we need to announce a percentage clearance rate. We punch in the numbers and out comes our desired result – 68 per cent. Yes, that sounds right.
And guess what? We know how it works: few people outside the real estate industry question how we calculate our results, so who’s going to know what or how we calculate our “make-em-up” figures. And, of course, if anyone from inside the industry dares to mention what’s going on, well, we have our standard solution for wretched recalcitrants – if they are employees with most “research” companies, we fire them. Or if they are in business in the real estate world, we boycott them. That’s how it works. Shut up and go along.
But let’s all be sensible. The real estate industry needs deception for its growth the same way a cotton crop needs water to grow.
The public won’t keep buying real estate if fed the truth. If they knew about the Melbourne businessman who bought a block of land for $850,000 in a gorgeous coastal resort back in 2008 and is now trying to re-sell the same block for $220,000 that’d rock them.
As we head towards the end of the second month of 2020, the industry needs to keep the property ball rolling – and what better way than fake auction figures.
Get a look at other cities on the weekend – and watch the real estate “we-select-whatever-result-we-want calculator” weave its wizardry: In Sydney there were 826 auctions of which 448 sales occurred; the industry claimed that as an 82 per cent clearance rate (yours and my calculator says it’s 59%).
Ditto Melbourne, where our calculators again tell us the truth is 59 per cent with 1,123 auctions and 672 sales, but the industry calls that a 79 per cent success rate.
In Brisbane – where there were 68 auctions for 19 sales – the fake reported rate was 53 per cent. The true clearance rate, of course, was 28 per cent.
And on it goes. Fake figures pumped out each week to pump up sales and keep the hapless public buying.
How can they do this you may ask? It’s simple, they cheat. They lie. They follow the con artists’ maxim: “If you can’t beat ‘em with brains, baffle ‘em with BS.”
But the main reason they do it is because they get away with it. No one takes them to task. It’s not worth it. If quizzed, they hit back with absurd calculations which can be summed up in two simple words: “We cheat”.
What other word could be used for counting homes not sold at auction as being sold at auction?
Agents love auctions. With auctions, it’s easier to condition sellers down in price. As the real estate institute training book once said, “Auctions are the fastest and best conditioning method.” And remember this: Whether an agent sells a home for a big or a small price, the agent always gets a big commission.
And, of course, advertisers love auctions because the advertising spend is thousands of dollars more with auctions. The same people who take your advertising dollars write the “good news” about auctions. And circulate the fake figures.
There sure is a boom in fake news from the real estate industry in 2020. Just be sure it doesn’t lead to a bust in your finances.
Do your research before you buy or sell. Don’t believe anything until you check it thoroughly.
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