“Why do buyers want to see a price? So that they know what they don’t have to pay!”
Leading New Zealand auctioneer Phil McGoldrick made this statement at our recent Auction Boom seminar and it certainly had an impact.
It is a very confronting comment, but it’s very true
Think about it, as a buyer, what do you do when you see the advertised price for a property – you start thinking about how much lower your offer will be. We’ve all done it – knocking tens of thousands off the asking price.
Selling with a pricing strategy, which is the most common method of sale in Perth, puts buyers in competition with the seller, and if the property remains on the market for month after month, eventually there is conflict between the seller and their agent.
However when you use a no price marketing strategy like auctions, buyers compete against other buyers, which gets a better result for the seller. You also have a call to action – like the auction date – that encourages buyers to act, you have multiple chances to sell, and your property generally sells in a faster time than the traditional private treaty method.
The latest REIWA figures show that the average number of days on market for a private treaty sale is 71 days, compared with 40 days for properties sold using the auction process. In the last five years the quickest average time for private treaty was 50 days in the 2013 December quarter, still outclassed by auctions with an average of 33 days in the same quarter.
Statistics also show that as well as selling in a shorter time frame, because of the competitive environment, auction properties usually sell for a higher price than those sold without a price.
It was great to see so many agents at our seminar and we hope they’ll be able to grow the use of auctions in WA – we certainly have plenty of room for improvement!
Phil told us that in his home town of Christchurch they sold over 2,000 properties via the auction process last year. They have a population of about 350,000. In 2014 1662 properties went through the auction process in Perth and we have a population of over 2 million!
The latest data from CoreLogic RP data also shows how much the Perth market differs from Sydney and Melbourne where auctions are much more common. 39 percent of properties were sold via the auction process in Melbourne in 2014/15. Sydney recorded 38 percent, while Perth saw 3 percent of properties sell though auctions.
We need to boost that number.