It is now becoming frequent that we see auctions with ridiculously low reserves that are set in advance or even as one auction just announced – $1 reserve. What will this mean for the future of Real Estate?
If a reserve is set so low as to be meaningless or indeed a “no reserve” auction then the only person that now has any influence in the transaction is the auctioneer and the purchasers. There is no longer any necessity to have an experienced real estate agent in the transaction. THERE IS NO NEGOTIATION! If the vendor has specified that it will not be sold prior to auction no matter what the offer, and the reserve will be met by the first bid, then the property cannot pass in. Apart from marketing the property, what does the real estate agent add in this transaction?
A vendor selling a property through an estate agent is already paying separately for the marketing, SO THERE IS ABSOLUTELY NO REASON TO PAY ANY COMMISSION TO THE AGENT. They are simply not doing anything. Simply pay for “fee for service” auctioneer, many of whom are more experienced than a local real estate agent anyway. You may do better on EBAY and it would be much cheaper than paying a commission to a real estate agent.
If you are a vendor and this is the best option you are given – find another agent!
Professional Real Estate Agents should get paid because of their ability to negotiate. You already pay a marketing fee, so the agents are not being paid to get people to your property. If the agent is not going to do any negotiation for you then all he is doing is collecting names that he can potentially get more business from and holding the door open at inspections. The best-selling agents are the best negotiators and if you want to maximise your selling price find a good negotiator.
The best way to sell a property is to have an auction or a set date sale and then have a professional negotiator get the best price from all who wish to make an offer. And that does not mean simply saying who wants to make one bid over the second highest bidder. A good negotiator works out whether there is a substantial difference between the top two prospective buyers and then acts accordingly.
If the two top prospects are similar then run the auction and let them fight it out – simply pass the property into the highest bidder unless the auction ends up well over expectation and has stalled. Then consider putting the property on the market. Alternatively, if the professional agent has worked out one party is substantially higher than anyone else, he will most likely push for a pre-auction offer and get the highest price from all prospective parties without letting them see what the other offers are.
I am a buyer’s advocate or Buyer’s agent. It is my job to buy property for my clients. It is my ability as a professional negotiator that my clients see as the true value of my service. Whilst we offer so much more in choosing types and styles of properties, searching and finding those hidden gems and also saving our clients plenty of time by having them only look at properties that meet their criteria, it is the assessment and negotiating skills that we will save our clients a lot more than the fees they pay us.
Unfortunately there are more and more selling agents looking to simply make a quick buck rather than add professional service to their clients. If you are considering either buying or selling please feel free to call us for a chat. One phone call may save or make you tens of thousands of dollars.
Ian James
Director
JPP Buyer Advocates
