Are auctions beginning to fade into insignificance? With only 442 reported auctions to the REIV this week and about 200 next week, it seems that Real estate Agents are losing faith in this method of sale. There were in excess of 900 private sales reported to the REIV last week and add this to the auctions that either sold before, sold after or passed in and were then negotiated to a sale, it seems that Melbournians are beginning to see that auctions are not the only method of sale in this town.
If this trend continues, it will hurt the advertising budgets of most real estate agents. The auction process, by definition, is a fast paced, highly visible, highly marketed system of selling real estate. It gives both the property for sale and the agency a high profile with the hope of attracting multiple offers for the property in a short period of time. By creating competition, the price should increase. Even if the price does not increase it brings the property to its conclusion quicker by putting a fixed date. This is great if it works. It is not good if it doesn’t. Many vendors will agree to pay thousands of dollars to build the competition to get a good price for their property. If it fails they are still liable for this advertising fee.
More vendors are now opting for a more cautious approach of private sale with a minimal marketing budget. As there are fewer properties on the market, it is not as necessary to pay huge marketing dollars to help your property “stand out from the crowd”. This will cause no end of angst for most Real Estate Agencies. They will need to fund their own advertising campaigns. Profile is the single biggest selling feature of a real estate agency.
As the advertising dollars dry up, there are less signs on houses, as there are less houses for sale, and as turnover drops down to much lower levels than the heady days of 2006 and 2007, watch out for the larger franchises moving to generic marketing of their brand. The smaller agencies will not be able to compete and, as we saw in the early nineties, there will be a lot of consolidation of Real estate Agencies.
To the buyer this will mean private treaty negotiation will take on a whole new meaning. This is the time when more “cowboys” may be seen in the industry. This is the time that “creative” advertising campaigns tend to be seen more often. It may be much more difficult to find out exactly what the agent actually wants for the property he is trying to sell. To attempt to do this yourself without an experienced Advocate/Negotiator, you may cost yourself a lot more and worse than that, not get your terms, or make a costly mistake of buying a property which does not meet your needs.
If you are looking to buy property at the moment, please give us a call. We will organise a no obligation meeting to discuss your needs show you how we can assist.
