Sydney auction fatigue a risk

Sydney auction fatigue a risk

Posted on Wednesday, November 20 2013 at 3:37 PM

High clearance rates and limited stock could result in buyers suffering ‘auction fatigue’, according to one real estate agent.

Braden Walters, principal of True Property and Real Estate Institute of
New South Wales 2013 Salesperson of the Year, says sellers may start adopting other
sale methods if buyers continue to miss out at auction.

“If they miss out on five or six or seven auctions in a row, you’ll find
there’s a lot of negativity from the buyers around the auction.”

Walters says some sellers will start turning this to their advantage by
creating a marketing point of difference.

“If you start getting into an environment where buyers are shying away
from auctions because they’ve been burnt by them, then there’s an opportunity
to go against the crowd and put a price on the property.”

Sydney and Melbourne have been achieving clearance rates around 80 per
cent in 2013, and this can result in buyers becoming disillusioned with the
process.

Walters says despite this, he still considers taking your property to
bidders as the most effective method of marketing.

“Auctions work in any market.

“If the market is falling or is on a slight decline, the auction
strategy is great because it draws a line in the sand for buyers to make a
decision if they want to buy it.”

Walter says while most properties will suit the process, auctions
achieve their best outcome with uncommon real estate.

“As an agent, if you see a property that they’ve renovated really
uniquely, or its in a location were there hasn’t been any recent comparable
sales, you may find the auction strategy is much better because buyers will
come and get emotionally attached to it regardless of the price.”

John Potter, author of A Property Investor’s Guide to Negotiating, says
auctions continue to be the most effective method for achieving a sale if
there’s pressure to sell and you’re prepared to meet the market.

“Auction is the best way to go because you’ll get a result on the day,
or at the very least you’ll get an indication of where the market lies.”

Potter says it’s more important to read the property cycle and level of
demand accurately.

He says having your property ‘pass in’ can put you on the back foot.

“You can be unlucky and have a good property but, for one reason or
another, you don’t get the interest that you’d have liked, and the price it’s
passed in at has exposed what you’re going to take, so you’re open to the
vultures a bit. “That can be a bit of a disadvantage, but in most cases,
auctions work well.”

 

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