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Talking price during auction recipe for failure

Talking price during auction recipe for failure

by Simon Parker 8 comments

Simon Parker

Agents who talk price during an auction campaign not only serve to attract the attention of regulators targeting underquoting and, at the other extreme, may also scare potential buyers away with overblown price estimates.

Will Hampson, an independent auctioneer at myauctioneer.com.au, told Real Estate Business that agents shouldn’t talk price with potential buyers prior to an auction.

Mr Hampson’s comments come as the NSW and South Australian governments launch crackdowns on alleged instances of underquoting by some agents during auction campaigns.

“My advice to agents in relation to … auction - don’t talk price,” Mr Hampson said.

“Bring the focus back to the motivation and destination [of the vendor]. So, why the owner is selling, and where are they moving to. Permission-based, so always have that conversation with your vendor client.”

If pushed hard by a potential buyer, agents should only refer to recent sales, and not ‘comparable’ sales.

“So, what we sold recently, many of the agents have a couple of those on hand, if they’re really pressing for price,” the 17-year industry veteran and auction trainer said.

“Ideally, we don’t have to go down that track because most of the buyers are pretty savvy these days with the internet. They know what’s for sale, they know other private treaty sales are on the market. They’re able to do their own due diligence, their own research in relation to this.

“They know values in the area. Usually they’re pressing the agent, challenging and testing the agent.”

Mr Hampson’s comments mirror the advice provided by former Australasian Auctioneering Champion Jason Andrew, who told Real Estate Business earlier this year that agents shouldn’t pretend they know the value of a property.

Mr Andrew stressed that agents shouldn’t be estimating the value of a property, nor should they attempt to force a price on a vendor. Instead, agents should see themselves as the conduit for the market, giving the vendor “an overwhelming tide of information” to help them gauge the true value of their property.

Mr Hampson added that setting a price estimate early in the auction marketing campaign could also backfire when a vendor changed their mind on what their property was worth.

“We just don’t know how much the owners might, over a four-week campaign, amend their thoughts on price because, whilst they might have an initial expectation from the outset, that could alter significantly during a four-week campaign based on market feedback.”

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