The “clearance rate” was 54% across the weekend. The media would have us believe there was no movement and that things are going from bad to worse. What they neglected to explain was the increase in total sales of 21.63%. These figures are the same ones supplied to the media by the REIV.
Auctions are designed to achieve one bid over the second highest price. When the market is “firing on all cylinders” there are frequently multiple people biding which pushes the price higher than it may achieve normally. When the market is only achieving one interested party at the higher levels then Auctions do not benefit either the buyer or seller. For example; if two people are interested in a property, Buyer 1 has $420k and Buyer 2 $450k then an auction would finish one bid over $420k and if this is well below the reserve then negotiation by both sides becomes very difficult. Once the auction has been passed in the negotiations can be strained. The Buyer will think they have offered something fair and reasonable as they were the highest bidder, but of course the vendors’ expectations maybe a little higher.
An auction pass in negotiation is as difficult as it gets. There are high emotions. Everyone is nervous. There may be a lot of people around, and as a buyer you may not understand what your rights are. During the auction everyone is bidding on agreed terms. That’s right! Agreed terms; we frequently arrange for different conditions, settlement and deposit amounts. Once the auction has passed in all deals are off. Everything is negotiable!! You can offer different settlements, different deposit amount, add a building clause or anything else.
If you are looking to buy a property at the moment, negotiation is truly the most important factor in buying well. Once the property is assessed, a professional, experienced negotiator could make tens of thousands of dollars difference. If you are using a professional negotiator, it will be in your favour not the vendors!
Ian James
