18 June 2018
Buying and selling property in WA has traditionally been by way of a conventional private treaty arrangement, however buyers and sellers are missing out on a more pure form of transaction, and that’s the auction.
Granted, auctions are becoming a more accepted selling method and the numbers of weekly auctions in WA has increased significantly over the past five years, but still lag a long way behind private treaty sales and the Eastern states. So why is that we’ve been slow to jump on the auction bandwagon?
Firstly, WA’s law for property transactions using the current “Offer & Acceptance” method protect both buyer and seller and in the majority of cases are easy to follow. The system works effectively for all parties to the transaction including the buyer, seller, settlement agent/conveyancer and banks. The downside of this system is that is can be time consuming and in many cases is conditional upon buyers obtaining finance, property inspections, having to sell their current home, etc.
More importantly, the system has a major flaw in it and that’s the asking price is disclosed and typically buyers knock the price down to where they feel comfortable – so it’s not good for sellers.
So why should we look to auctions? The auction system is the most pure form of selling and buying as there are no “secrets” surrounding price or selling terms; all terms are provided in the marketing campaign and the buyers set the price on where they see value. Selling by auction in most cases is quicker than private treaty. And the seller has three bites of the cherry; sell before auction day, on auction day or usually within 30 post auction day.
There are two main misconceptions surrounding auctions:
1. They cost too much. The cost of the auction is merely the auctioneer’s fee for calling the auction and working with the seller, buyer and agent to achieve the desired result. Typically, an auctioneers’ fee is in the vicinity of $700 to $1000. All other costs are associated with the marketing campaign to promote the property.
2. Auctions only “work in expensive areas”. That’s just a suburban myth. There’s many examples of properties below the current Perth median price of $510,000 selling at auction.
WA is one of only two states, the other being Tasmania, that don’t have a cooling off period in our property contracts. A cooling off period allows the buyer to “break” the Offer to Purchase usually between 2 to 5 business days after the offer has been signed. In other words, if the buyer changes their mind for whatever reason they can legally break the offer and walk away for a very small consideration to the seller, usually between 0.2% – 0.25% of the purchase price.
As WA doesn’t have cooling off provisions in our property contracts, this makes it far too easy for sellers and agents to default to Private Treaty transactions. If cooling off provisions were introduced to our property contracts, I’d predict a huge increase in the number of property auctions taking place in WA.
Finally, too few real estate agents embrace auctions and the auction process with vigor. They lack confidence and in some cases, the ability to explain the different marketing options available to sellers and automatically default to Private Treaty. This is a marketing injustice to sellers and the sooner we can demystify and legitimise the auction process for both buyers and sellers, the better.
13 February 2018
More Perth properties may soon be sold under the hammer. Photo: Peard Real Estate
With the Perth property market in a state of recovery, agents are predicting auctions will rise in popularity in favour of the traditional offer and acceptance sales method.
While latest Domain Group auction data revealed there were 180 auction listings in Perth in November, with a clearance rate of 30 per cent — in comparison to Sydney data for the same month of 4,187 listings with a clearance rate of 55 per cent — there were signs more homes will be sold under the hammer in Perth in 2018.
Domain Group data scientist Nicola Powell said a seasonality effect was obvious when looking at auction data for Perth, where there tended to be more homes for auction in the spring months.
Auctioneers expect to be busier in Perth this year. Photo: Dan Soderstorm
She said auctions were ingrained in the Sydney and Melbourne vendor market, and as the Perth property market began to recover, auction conditions might improve.
JLL buyers advocate Lachlan Delahunty said “auction” seemed to be a foreign word in WA.
“However, we should start to get comfortable with the process, as it will soon hit our shores,” he said.
“Properties sold under the hammer signify only three per cent of Perth property. Unfathomable when comparing that to the likes of Melbourne and Sydney with clearance rates of 80 to 90 per cent.
“Hot markets attract auctions – like bees to honey, as we have seen in Sydney in the early stages of last year.
“However, this form of selling is certainly no place for a soft market, which Perth has experienced in recent years, recording clearance rates as low as 30 per cent in the final parts of 2017.”
Mr Delahunty predicted if the WA market continued to improve during the first few months of this year, properties in coastal and blue chip suburbs would start to see the benefits of a bidding frenzy.
LJ Hooker national auction manager David Holmes said auction volumes in Perth remained steady and almost unchanged: 1973 in Perth last year, compared to 1964 in 2016.
“Perth is still a long way off the auction volumes of the eastern states – Melbourne recorded more than 50,671 auctions last year (a 19 per cent increase year on year) with Sydney notching 40,281 (a 16 per cent increase),” he said.
“However, at the end of 2017 and already in 2018, our offices have fielded more inquiries from sellers about the opportunities to auction their properties. LJ Hooker Kalamunda Foothills auctioned four times as many properties in 2017 than they did the previous year and expect to hold even more in 2018.
“Data has indicated a shift in the Perth market, with the first positive price recorded in the last quarter for a long time. When markets begin to recover, that’s when auctions rise in popularity as buyers openly compete to determine what new market value is.”
Rob Druitt, First National Real Estate Druitt and Shead principal and auctioneer, said auctions were on the rise in Perth, with buyers becoming more savvy in their understanding of the process.
“It’s unlikely in the short to medium term that we will catch up to the like of Melbourne or Sydney, however, as our market improves we are likely to see more auctions,” he said.
Mr Druitt said there were many benefits to selling and buying at auction.
“For the sellers, it is a quicker sale process and if the property is worth more than we all think, they will achieve it,” he said.
“For the buyers, in what is becoming a more competitive market place for certain types of properties, if they are organised, they have a genuine opportunity to buy the property in an open fair forum as opposed to properties selling off the market or quickly with multiple offers.
“For the market, it is good as it helps to genuinely set the market value of property and provides immediate feedback to the market on sales evidence and interest.
“Also, if the property doesn’t sell on the day of auction it will come on the market post-auction and is available to conditional buyers.”
Acton auctioneer Boyd Fraser said the benefits of auctions included a compressed campaign for 21 days and a 50 per cent chance of selling under the hammer on the day.
“Both buyers and sellers are in the same forum so transparency in the process is guaranteed. There is a significant difference in the number of days on market,” he said.
Western suburbs were popular areas for auctions, but other standout areas included Spearwood, Hamilton Hill and Coogee, Mr Fraser said.
16 January 2018
As an auctioneer, clearly, I’d prefer that every auction made it to the big day. Sometimes, however, vendors opt to sell beforehand because of their unique financial or personal circumstances.
Can you really buy beforehand?
There has always been some skepticism amongst buyers whether properties are really for sale prior to auction or whether it’s just a price fishing expedition.
In my experience, vendors who are open to selling before auction, generally are committed to the idea if an appropriate offer is made on their property. I generally find there are two types of buyers who make offers before auction.
The first is the buyer who is dipping their toe in the water, so to speak, and hoping to learn the seller’s price expectation. The other type of buyer is one who genuinely doesn’t want to bid at auction perhaps because they’ve missed out on a few properties already and want to learn sooner rather than later whether they’re in with a shot.
Selling before auction happens more often in specific market conditions, of course, but also at particular times of the year like before Christmas.
Some sellers just don’t want to have their properties still on the market over the holidays and for them certainty is more important than going to auction.
So, for those sellers, they are chasing peace of mind more than the best price. Selling before auction can happen in rising and falling markets in my experience. When a market starts to shift to the positive, more buyers tend to make solid offers before auction because they don’t want to run the risk of missing out on the day.
In southeast Queensland at present there are more sales before auction than usual for this time of year, because the market appears to be strengthening. In fact, I don’t think it’s increased this sharply for a number of years. If we use history as a teacher, it may be indicating that the southeast Queensland market is shifting into another gear as we head into 2018. Conversely, when a market starts to cool off, sellers think that they don’t have the same security blanket so they opt to accept offers beforehand.
What are the pros and cons?
Buyers must understand that buying before auction is an opportunity so you really must make your biggest and best offer if you’re serious about securing the property. You can’t try and buy prior by putting your toe in pool – you can only buy prior to auction by diving into the pool.
Don’t make an offer with the expectation that the seller or the agent is going to come back and tell you exactly what their lowest selling price is going to be, because that just doesn’t happen.
They’ll either say you’re close or you’re not even in the same ball park. Also, if a seller is prepared to accept offers prior, it’s unlikely that you will be the only buyer in the running so you must put your best foot forward.
Likewise, if you’re buying a property prior, you almost have to compensate the seller for the risk of them not taking the property to market on auction day. That means that quite often you have to pay a premium because you’re compensating the seller for not going through the campaign that they’ve been advertising for three or four weeks.
For vendors, selling before auction has to involve what I call a #noregretsprice. So it’s the figure that they’re not going to look in the rear view mirror and regret that they didn’t go to auction.
Going to auction could produce a spectacular result on the day if there are a number of competing bidders, backed up by a thorough marketing campaign. The reality is that sellers won’t know what the result will be until auction day – and for some peace of mind is more important, which is fine.
At the end of the day, buying or selling before auction can be a sound strategy as long as the vendor is prepared to accept that a higher price may have been achieved on the day and the buyer understands that they’re unlikely to get a bargain.
22 November 2017
Erin Delahunty via realestate.com.au
Property auctions can be intimidating, especially for first-time buyers, so knowing what to do and what not to do is essential.
David Holmes, LJ Hooker’s national auction manager, shares his advice.
Four top tips for a successful auction day…
Holmes says pre-auction preparation is absolutely vital to success. Would-be buyers should talk to the selling agent, research comparable properties, decide on a strict price limit and commit to sticking to it, he says.
“Once you’ve inspected the property, know you have a connection and want it, ensure your finances are all sorted and your deposit is ready to go. If your bid is successful, you will be required to pay the deposit on the day,” Holmes says.
“Get all the necessary inspections done before auction day too, because when that hammer comes down, it’s unconditional, with no cooling off period,” he adds.
Don’t let nerves take over
The biggest mistake many potential buyers make is turning up to an auction and not bidding because of nerves, Holmes says.
“If you’ve done your homework and know the market value of a property, put your hand up and bid, strongly and confidently. While it can be daunting, an auction is a genuinely transparent process, a negotiation that happens out in the open, with people who want to buy a property,” he says.
“People can have real peace of mind that they’re not paying, say $50,000 over the market value, because it’s all done in public.”
Think about your body language
At an auction, it’s also important to appear confident, Holmes says.
“You need to look confident and essentially, like you have very deep pockets, like you can bid all day long, to deter your competition,” he says.
“Don’t be on the phone or looking like you’re out of your depth or stressing out, as other bidders will be able to sense that. Appear very, very confident, put your hand straight up with a decent bid and you’re half-way there,” Holmes says.
Don’t be ‘invisible’
“As an auctioneer, I always go and meet the potential buyers before an auction, to ensure they’re aware of the relevant legislation and terms and conditions. There’s no point trying to hide up the back and not talk to the auctioneer and agent staff,” Holmes says.
“If you’re keen, polite and courteous from the get-go, the auctioneer will be more likely to engage positively with you too.”
18 August 2017
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08 August 2017
Author: REIWA President Hayden Groves via reiwa.com.au
New reiwa.com data has revealed Perth sellers who choose to auction their property are achieving significantly faster selling times than those who sold using the more traditional private treaty method.
The results for the three months to June 2017 showed it took Perth sellers just 28 days to sell under the hammer, compared to the 70 days on average it took for private treaty sales – a notable difference of 42 days.
While still only a small component of the Perth market, Western Australians have become more familiar with this method of sales in recent times, thanks in large part to the popularity of TV shows like The Block bringing auctions into people’s living rooms.
Auctions and the East Coast
If you’re considering selling, there are many reasons why an auction can be the way to go in the current market. You only have to look to the success of this method on the East Coast to understand how powerful of a selling option it can be.
In Sydney for example, auctions represent approximately 33 per cent of all sales, while in Melbourne that number is close to half of all sales. By comparison, auctions are only around two per cent of all sales in Western Australia (based on March 2017 data).
Benefits of selling at auction
For the seller, one of the biggest benefits of going to auction is the sense of urgency and competition this method generates amongst buyers, predominantly due to the shorter marketing and campaign period of auctions.
When listings are plentiful and buyers have plenty of choice available to them, an auction can help your property stand out. Additionally, selling by auction provides reserve price protection and as the seller you have the opportunity to set specific terms of sale.
If you’re considering going to auction, familiarise yourself with how they work and discuss your options with a REIWA agent to ensure it’s the right selling method for you.
Buying at auction
Alternatively, if you’re a buyer interested in a property that is going to auction, do you research prior to the day so you’re well informed and know what to expect.
If you’re uncomfortable with the idea of bidding yourself, you can consider hiring a buyer’s agent who can provide advice before and on auction day.
They also help with a number of other tasks including due diligence on the property, researching the property’s value, helping you decide on your purchase price limit and bidding for you on the day.
Here at Porter Matthews Metro we have a well thought out Auction process and success rate, if you have queries as to how this method might suit you, please give us a call on 9475 9622 or email us at email@example.com
25 July 2017
Perth sellers struggling to sell should look at going to auction, with reiwa.com data revealing it was 42 days faster to sell by auction in the metropolitan area than by private treaty in the three months to June.
REIWA President Hayden Groves said while auctions represented a small component of the Perth property market, those sellers who did choose to list their property for auction were experiencing significantly faster selling times.
“On average, it takes around 70 days to sell by private treaty in Perth, but sellers who go to auction are achieving sales in as quickly as 28 days,” Mr Groves said.
“In this market, when there is plenty of competition between sellers to secure a buyer, standing out from the crowd is paramount. Selling at auction has plenty of benefits for the vendor, with a short but high profile marketing campaign bringing serious buyers to the forefront quickly.
“You also have the security of knowing if your home doesn’t sell at the fall of the hammer, you can continue to negotiate a purchase price with those interested buyers after the auction using the more familiar private treaty method.”
reiwa.com data shows auction sales in Perth peaked in December 2016, lifting to 2.31 per cent of total sales activity in the metro area for that month, before returning to just below two per cent by March 2017.
“Auctions are still relatively unfamiliar to West Australians, but you only have to look to the East Coast, particularly Sydney and Melbourne, to see how successful this method of selling can be. I encourage WA sellers to speak with their real estate agents about whether auctions are the right fit for them,” Mr Groves said.
Here at Porter Matthews Metro we have a well thought out Auction process and success rate, if you have queries as to how this method might suit you, please give us a call on 9475 9622 or email us at firstname.lastname@example.org
12 April 2017
Modified by realestate.com.au
Did you know that the rate of Auctions being sold is now an average of 28 day on the market? Whilst the Perth market average days on the market for Selling via Private Treaty is 76 days. Here at Porter Matthews Metro we have a well thought out Auction process and success rate, if you have queries as to how this method might suit you, please give us a call on 9475 9622 or email us at email@example.com
Read more here why Auctions are becoming more popular in WA.
Perth real estate agents are predicting an increase in the popularity of auctions over traditional offer-acceptance sales in Western Australia, saying auctions could help fuel the state’s dull property market.
Auctions are not typical in Perth and only represent about 3% of the market, but agents and auctioneers say that is changing, with a growing number of vendors favouring auctions over private treaty sales.
CoreLogic data shows the number of auctions in Perth is on the rise, with 1964 held last year, compared to 1692 in 2015. So far this year, there have been 404 auctions in Perth.
First National Druitt & Shead Doubleview principal and auctioneer Rob Druitt says auctions have become more popular because it heralds speedier sales in a slow market.
Druitt says auctions enable the vendor to get a quicker understanding of where their property sits on the market, with the intensive marketing campaign usually spanning 30 days.
“The other important phenomenon is that in this market, the ‘no price marketing’ clearly isn’t working… because the market is driven by price. If your price is right then the market will see value and you’ll get offers.
“Price is the driver in this market. Buyers are looking for value.
“In inner-city Melbourne… 80-90 % of properties sell by auction. In Perth, you’re only talking about 2-3 % of total transactions. It’s a smaller number but it is rising and there’s a number of prominent firms around Perth who are embracing it more and realising the benefits for both the buyer and seller,” he says.
Acton chief executive officer Travis Coleman says the number of auctions in Perth has been on the rise for the past three or four years.
“A lot of people are doing it because we’re moving from a market where there are extended days on market and we’re trying to shorten that and bring the price discussion to a head in a shorter time.
“Auctions are not just limited to the upper end of the market. [Acton Coogee agent] David Bombara is doing it down in Spearwood, the mortgage belt areas, with great success and actually selling quite a few properties prior to auction,” Coleman says.
He says auctions are a transparent property sales technique and generally mean quicker turnaround times, rather than having a property sit on the market for four to five months, or in some areas even longer.
Realmark Western Suburbs director Adam Gilbert says the increased take-up of auctions across Perth was due to the competitive market and shortage of supply.
“What the market wants is transparency. In a market where there isn’t a real understanding as to what is a real price, what is a market price and what is an agent price – the market is saying just give me an opportunity to have a go.
“Auctions are very transparent, very honest, aligned with what the market wants and they do bring urgency not only for the buyer but the seller… to make the best decision in a shorter period of time.
“I think agents in WA need to get in tune with the current market. The market is evolving, the landscape is changing, technology is assisting buyers to gain information in a much shorter period of time so I think we give our sellers the option to consider auctions,” Gilbert says.
But CoreLogic head of research Cameron Kusher says with declining values in Perth it is unlikely that auctions will become more popular in the short-term.
“Auction volumes were a little higher last year than they were in 2015 for Perth, however, auction sales still represent a very small proportion of the overall market.
“Although selling by private sale in Perth is tough, a lot of vendors probably feel as if it is not worth the additional expense to sell at auction, particularly when the success rates have typically been well below 50% this year,” Kusher says.
07 February 2017
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01 December 2016
Have a look at an In House Auction Event with Porter Matthews Metro.
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