Watched an online auction today out of interest.
Range on the statement of information was $1,900,000 to $2,090,000.
Property passed in, only one bid at $1,925,000.
Anyway, the listing has since been updated on REA at $2,175,000
Thoughts?
I get the market is hot but to me this just screamed unrealistic from the get go.
it isn't this is illegal? under quoting is not permitted at least in NSW
My understanding is the quoted price may have been at the start of the campaign though the reserve price is based on what the vendor thinks they can get/ want by the time it goes to auction.
Yeah the comparison properties were from July sales, although imo they were better than the one I looked at today.
Maybe the agent just got it super wrong, was not expecting crickets but I did suspect they had unrealistic expectations
The price guide is usually set 10% below what the vendor expects to be the minimum they have indicated to the real estate agent that they want when they first spoke with the rea.
This is why it is lower than what the vendor will actually accept. This is legal and okay in NSW, but it should not be as it wastes allot of people's time.
Including the top end of a range?
No idea.
10k but no doubt they make that back
Every single property I looked at this year in Melbourne went for at least $100k above the upper end of the price guidance.
in the bluechip areas this number has been 150-200…
Honestly, the minimum price should be whatever the owner is willing to sell it for to prevent stuff like this. Imo the guy who bid should've gotten the house. If they weren't prepared to sell it for 1.9m, don't set it.
Why isn't price guide the reserve price?
is it in Victoria? if it is, it is underquoting against law. They must advertise with a Statement of Information with price range they expect to sell. You can report the agent.
If in another state then I'm not sure.
Nothing worse than showing up to auctions every Saturday and getting your internal budget get blown out within the first three bids.
I have reported a few agents. One specific agent had a price guide as 800 to 900k. Sold for 1.2 Million, and the agent then had on his facebook post
"Another one SOLD!, Sold for 100,000 above the vendors reserve!!"
So reserve was 1.1 million, but you prices it at 800 to 900? Got caught out on multiple properties doing that.
Issue is, the loop hole is usually exploited by using the reason "oh the vendor changed his reserve on the day" which is perfectly legal.
Agents are cockroaches.
was this in Vic?
Correct!
any link? I'll report too. I hate these f***wits
@yellowfever: Gone now! They have learnt their lesson!
Even then, i felt like I was doing the evidence digging for ACCC.
The key is to always screenshot the price guide, because when the sale is done, they remove it.
Unless you go through the cached!
Saw that recently too in VIC
Advertised at approx $500-550 or so
Passed in at $575 and it never hit the vendor reserve
How can you have a reserve higher than the range given?
The reserve is probably 610.
550 is within 10% of 610 which is how they justify it.
Having sold a few times via auction (in NSW), my reserve is always much higher than whatever guide or expectation.
My r/e agent told me to answer three questions to help set a reserve price, after being given final market feedback 1) a realistic price 2) a really happy price and 3) a dream price. My reserve price would be the 'dream price' so that I get the last say in the auction process. Using the above example, a realistic price would be $550k, a really happy price might be $600k and a dream price might be $700k. I would use the dream price as my reserve.
I do not care if you beat the other bidders during the process, I want you to beat the other bidders then add another $10k or $20k or whatever to close the deal (hence my dream reserve that is unlikely to be met but give me one final push to get a little more).
When many properties along the east coast cost a million dollars, an extra $20k or $30k may be negligible when 1) emotions are higher 2) $30k or so is negligible when you are spending a million or more and 3) why waste any more time shopping around when you are that close from buying a house in the next minute or two.
I love the auction process and have been through this method of sale, multiple times as both a vendor and a seller (in NSW)
I remember back in 2005 when I was selling my first property and I had to select an agent to run the sales campaign. There was one agent who told me that they will not get my reserve price and while this sounds counter-intuitive, she explained that her agency rarely hits reserve prices deliberately (ie set the reserve at an unrealistic price) so that it gives me (the seller) one final tool in the auction process to ensure that I can have one final negotiation tool to extract some extra money from the potential buyer.
She said that agency's who sold for "above reserve" were good for the agency's marketing perspective but may not have been the best price extracted from the buyer.
In reply to my comment, this was an article in today's SMH, suggesting that passing in of properties rising (even though the numbers are still quite low);
https://www.domain.com.au/news/sydney-and-melbourne-auction-…
Underquoting is like jaywalking. It is supposed to be illegal but everyone does it anyway.
I avoid buying at auctions for this reason. Waste of time since they can choose not to "sell".
If the statement of information was $1.9m to $2m and I was the initial bidder, my (first) bid would have been $1.9m maximum.
If anyone else is interested, then the fun begins.
If no-one else is interested, the pressure is all on the seller as to what happens next.
Not much pressure, they will just pass it in and claim the reserve has now changed to 2.1m.
Thats the work around!
That is one option. It depends on their circumstances (e.g. already bought elsewhere and need to sell).
But as the top bidder, my understanding is that you have the right to first option / negotiation after the property is passed in.
Guide prices are all intentionally low to sucker people (like me) to the auctions. Every single one I've been in has sold for much more than the guide band and most of them start bid at the higher end guide price.