In today’s show, together with Rod Amos, a professional auctioneer, we look at the best way to sell a property, by auction or private treaty.
Kevin: A question that’s commonly asked is, “What’s the best way to sell my property? Should I do it through auction, or should I do it through private treaty?”
My next guest is Rod Amos. Rod is professional auctioneer who works around New South Wales. His company is East Coast Auctions.
I guess we come across this quite often, Rod, where people genuinely want to know: is it about the property? Is it about the market? Is it about the price? What makes a good auction?
Rod: Good question, Kevin. I’ve been an auctioneer for 15 years. Going back to 15 years ago, there was a bit of a belief in lots of areas that I do that auctions really benefited something that was a little bit unique. Why would you take a property to auction, for instance, in the estates where the only difference might be the color of your front door?
But when you look at the agents and offices who do specialize in it, they understand the dynamics of it. It has pretty much been proven that even where you’re looking at like for like, it’s a matter of really getting the clarity and, importantly, the competition of people on the day. That’s a big difference.
As a buyer, it’s taken with a grain of salt when you’re told, “The offer’s not high enough, and there is somebody else who is also looking at it.” The big thing for buyers is that on auction day, they’re actually able to see and listen to the competition, as well.
To me, that’s oftentimes a bigger advantage for the buyer because they get to see that the market is just in favor of that property as they are. But it also means they have some clarity there that they’re not the only ones who definitely want to get their hands on it.
Kevin: There is a common saying in the industry, too, that if you want to get a premium price, the only way to do it is to go to auction. Do you subscribe to that?
Rod: Every property I’ve sold myself – which is only a handful – I’ve always taken to auction. Naturally enough, I’ve employed another agent, and then I’ve had to entrust and put the pressure and responsibility on another auctioneer.
It’s also the case that the thing for me different to most people is that because it’s a day-to-day occurrence, I’m familiar with the process, I understand how it works, and naturally enough, that’s what gives one the confidence to go forward with it. It’s a little bit different, obviously, if it’s a vendor, and for most people, you’re selling every ten years, or as a buyer it might be the same time in between purchasing property.
I think in general when we look at some of the major markets, Sydney and Melbourne in particular, it is the preferred way of selling. The reason it’s preferred is the vendors see that it’s working for their neighbors and buyers also get a little bit on clarity of the fact that they’re exactly where their competition is on the day when it gets down to finding out who the new owner is.
Kevin: I think sometimes, Rob, we ask the wrong question. We ask whether this is the right property to be taking to auction when we should be saying, “Am I the right person to have my property auctioned?” Properties are properties. They don’t make the decisions about whether they should sell or not. It’s really the buyers and the sellers who make those kinds of decisions.
Rod: That’s right. The point being that I find with auction, too, the pressure goes back onto the agent. I’m in an area where lots of agents who probably aren’t quite as effective in the marketing and negotiation and doing the hard yards will say to people, “Don’t go to auction because it’s a really strong market. We’ll sell it probably in less time, and you’re going to be really happy with the result.” We know when we have that level of competition, in most cases they’re probably going to achieve more at auction or through an auction campaign.
Bear in mind, not everything sells under the hammer; it may well be that the pressure of going to auction will often draw forward an offer from the buyer well beyond the vendor’s expectations, and we do see properties selling prior to auction. That’s generally because you have one buyer well out beyond the rest of the pack due to the competition.
Kevin: As I’m speaking to you, Rod, of course, you told me off air that a number of your properties this weekend have actually sold prior to auction. Is that a good idea for a seller to accept an offer before auction?
Rod: There’s only one person who can make that decision, and that’s certainly the vendor. What it basically comes down to is obviously when an agent is listing a property, the vendor and the agent deciding, “Based on where the market is and on comparables, where do I see it?” and obviously, a vendor would like to see a higher figure than a lower one.
You’re working on a figure for the vendor that the agent’s responsibility is to deliver and exceed. Throughout the campaign, it’s often a case of there’s one buyer who, for whatever personal reasons, is well beyond the indication other buyers are giving leading up to the auction. Now, generally that will only happen in the last week of the campaign where the agent knows who they’re working with and is aware of who is prepared to be there on the day.
I should make a distinction. It’s one thing to make an offer. What any good agent should be doing is saying, “Well, if you do want to move forward and purchase this property, there’s no point in just giving me your price. What I’m going to need to do is have a signed contract with that with that 66W to ensure that it can go forward. I’m going to need to have a check to deliver to the vendor. Once I have that, I’m to leave it with the vendor to make a decision.”
In fact, there were three instances out of six this weekend where there was one party who was well beyond the expectations of the rest of the market.
Kevin: It goes to show, but as you say, it’s really up to the seller to make that decision.
Rod, we’re out of time, unfortunately, but it’s great talking to you. Rod Amos has been my guest from East Coast Auctions talking about whether or not you should go to auction or private treaty.
We have a lot more to cover, Rod, so we’ll come back in future shows and talk to you again. Thanks for your time.
Rod: Thank you, Kevin.