Based on Reported Auction Results*

Auctions Soldier On Despite “Quoting” Changes

The smallest of declines in auction success rates can be observed in the winter quarter just past. This is very much anticipated given the government’s vote catching exercise of “toughening up” on selling agents and how they “quote” a property’s expected sale price at auction. The new regime commenced in May. In brief, agents are required to provide a more accurate and justified price expectation of a property they are marketing for auction. The clear intended purpose is to make it easier for buyers to predict a price outcome and thus avoid wasting time and possibly money, not to mention avoid continuous disappointment when “missing out”.

Sounds fair enough. However, whilst I am a property buyer’s advocate who has the aim of helping buyers, I cannot agree with this further tweaked policy. Why not?

I do not agree because it flies in the face of what it means to auction something. Auctions are about putting items, anything, up for sale to the open market without prejudicing the outcome by stating your own or the seller’s opinion or desired outcome, on price. The part in italics is what it is all about, folks – the very essence of it. It is a matter of buyers competing to buy and if the price is acceptable to the seller (the party who owns whatever is being sold), the seller will elect to sell. Every other way of dressing this up as to how it should be done in order to be “fair”, derives from self-interest and is distorting what this marketing process truly represents. It may or may not suit ones position, but that is irrrelevant. Buyers whine (assisted by interest groups such as some buyers advocates who wish to be seen as “white knights”) and the authorities respond in order to appease and stroke. One need only look at every other object and commodity auctioned in our society – furniture, racehorses, antiques etc. and how many have legislation governing how it is quoted? None. It’s nice to be popular and lots of people (voters) do the property thing … enough said.

The reason it was reasonably anticipated the auction success rate may have been lower this quarter, was because more properties should have passed-in. This is because most buyers would need time to adjust to any “quoting” changes. Buyers will still continue to assume that what an agent quotes needs an amount to be added on, thereby anticipating a higher price than may actually be expected. The result could be buyers not attending auctions believing they wouldn’t have a chance, or the price the vendor wanted would be too high. In any event, a readjustment will take place with time as buyers become more savvy.

As an agent who has been in the industry over forty years and has spent an equal amount of time representing both sides of the fence, I have the following opinion…. Such restriction on selling agent’s to market a property by auction will be to the seller’s disadvantage. The agent will no longer be able to practice marketing methods which work well to develop competition. Hooray(!) buyers may call out. But what about the sellers who own the property and pay the agent to achieve the best outcome they can? What’s fair about that for them?

When one day in the future the market is quiet, struggling for buyers, today’s buyers will be tomorrow’s sellers. They may truly lament the interference to good old fashioned free marketing, that was cheered on previously.