REAL ESTATE AUCTION LEMONS

Sellers duped with worst way of selling home

Article originally published JANUARY 27, 2004 –Reviewed and approved.

By Neil Jenman

It used to be said that if the auction clearance rates fell below 60 per cent, it was a sign of a property slump. Even the most diehard auction agents believed that a clearance rate under 60 per cent meant that properties should never be auctioned.

So, with clearance rates at 40 per cent (or less), what are some agents saying now?

Many are still touting auction as “the best way to get the best price”. This is absurdity bordering on negligence. It demonstrates, more than ever, that the best price for the sellers is barely considered by many agents.

Auctions are all about convincing sellers to “be realistic” (an expression that’s rapidly coming back into fashion). Agents use auctions to get the prices down to a point where buyers will buy.

But what a tragedy for all those sellers who are being duped into auction in this climate. The majority are seeing their homes passed-in with a low bid, thereby stamping them as property lemons in their local area.

On the weekend some of the best homes in the country were passed in at auction. Today everyone knows the highest bid which, sadly for the sellers, becomes the price that stays in the minds of the buyers.

Take one example – a beautiful home at Portsea in Victoria. The owners wanted $3.5 million. And yet the highest bid was $2 million.

Where does this leave the sellers? Thousands of dollars out of pocket for “marketing expenses” (which promoted the agent) and a home that everyone knows didn’t sell. Worse, a home that now carries the tag, “Passed in at $2 million”.

Sellers, it’s time to stand up for yourselves. In a tough market you can’t be soft with agents. It’s your home, you have to take control. You must protect the value of your home and not allow it to become a lemon in your local marketplace. Say no to auctions.

It’s a well-known buyers’ maxim – homes that fail to sell at auction are ripe for a lower offer.

Yes, it’s the season for buyers to be picking auction lemons. Which means it’s time for sellers to avoid auctions.

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