By VICKI HOLDER
You've got to be quick to buy a house these days. Auction campaigns are designed to span three or four weeks, but with the property market running so hot these days, many houses don't last that long on the market.
Ray White Real Estate chief executive Carey Smith says the company's 'prior to' and 'under the hammer' sales results are approaching 86%. The figure would be higher, he says, if it wasn't for institutional and mortgagee sales, which often have conditions attached.
While many people are under the impression that a good auction campaign means selling under the hammer on the day of the auction, the process is set up to accommodate three sale opportunities - before, during and after the auction day.
Smith says that the auction concept is not necessarily about taking the property to auction. "We are charged with the responsibility to find a buyer," he says. "Our job is to find a premium price. Each property should be looked at according to particular scenarios. However, the opportunity to sell prior is much greater these days."
Accredited auctioneer Mark Sumich says agents selling before auction are giving their clients poor advice. "In this market, vendors should not be selling before auction," he says. "It's ridiculous, because if they are going to give their property three weeks of marketing exposure, there are going to be more buyers out there willing to compete in an auction.
"It means revealing the reserve figure - the minimum price vendors have set for their property - before the auction, which is sacrosanct. The only time you should reveal the reserve is when the property is sold."
SELLING PRIOR TO AUCTION
The reason buyers want to buy before auction is to avoid competition during the bidding. Vendors have to assess whether it's worth it to them, for it may mean missing out on a higher price for their property.
Smith says properties should be sold prior when the vendor believes they have a buyer in a position to pay the most. "This is always subjective and there is never clarity. You don't know whether you'll get more or less."
He says if a vendor is comfortable and wishes to proceed with a prior sale, the advantage is having absolute knowledge of a sale. "Many buyers will pay a premium for the certainty of securing a home."
Some vendors are keen on selling prior, says Smith, because it lets them condense the sale period, thus curtailing a potentially stressful time.
Due to the likelihood of homes selling earlier than the auctions, buyers must be prepared to move quickly by checking statistics and assembling as much information about the property as possible, so that they are ready to make an offer.
SELLING UNDER THE HAMMER
When Sumich advises buyers to hold out until auction day, they tend to go away and do more homework on the property. Then they come to the auction more informed. He says having to bid early is like having a blind tender, where nobody is sure what price they want to pay.
He says: "On auction day, it's a level playing field for everyone. Buyers can take solace from other people bidding. They can assess the lie of the land, consider their options and make a calculated decision. And they tend to pay a bit more, because they can see the value."
Leaving it until the auction date allows judgments to be made on actualities, because the price is set by individual buyers, he says. "Selling under the hammer will set the true market value, at that particular time."
SELLING AFTER THE AUCTION
Says Sumich: "The main reasons why properties sell after the auction are that the vendor's expectations are too high, there hasn't been enough exposure of the property or the agents have done a bad job."
The vendor and their agent may also be aware of conditional buyers who cannot bid at auction but want to negotiate afterwards. Sumich's policy is to enter into negotiations exclusively with the best or highest bidder at auction, to get the best price for his vendor and conclude the sale.
He says: "The skill [of an auctioneer] is turning the conditional buyer into an unconditional buyer during the time they know they want to buy."
Under the hammer
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