Agents split on auction viability

Agents split on auction viability

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The industry is split almost evenly over whether auctions can work everywhere, a new survey suggests.

According to the latest Real Estate Business straw poll, 48.2 per cent of the 330 respondents believed that with the correct campaign, auctions can work everywhere.

However, the remaining 166 respondents weren’t as optimistic. A total of 22.1 per cent said auctions don’t work in regional areas, 12.7 per cent said they only work in metro Sydney and Melboune, and 4.8 per cent said they only work in the eastern states.

A total of 10.6 per cent had varying ‘other’ responses.

The survey was conducted in response to a number of readers debating the viability of auctions, and the merits of a newly formed method of sale.

Director and auctioneer of hockingstuart Doncaster Ken Chappell told Real Estate Business that his previous office struggled with auctions in his Melbourne suburb.

“I’m now located in Doncaster, which is a very auction-dominated area and we’re doing really well. But I used to run an office in the outer eastern suburbs,” he said.

“There’s really no reason why they shouldn’t work in all areas, but it seems that once you reach a certain distance out of the CBD, agents are unwilling to try them.”

When agents choose not to use auctions, consumers become unfamiliar with the process and the potential benefits.

“There was a lot of ‘no sale, no charge’ sort of agents who operate in those areas and they go into homes and say auctions don’t work. People are swayed to believe that they don’t because they’re reluctant to pay for the extra advertising," Mr Chappell said.

“Consumers and some agents tend to focus on the negatives about auctions. But they rarely look at the positives. Auctions are unconditional, once it’s sold it’s not subject to finance - no pest and building and no cooling off period.”

However, leading coach and auctioneer Tom Panos said that one of the myths of real estate is that auctions do work everywhere.

“Many will be surprised that even I, as a passionate real estate auctioneer, do not necessarily believe auctions are suitable 100 per cent of the time,” Mr Panos said in his latest Real Estate Business blog.

“Some marketplaces simply do not have the dynamics of auction being the method that buyers and sellers operate in. Auctions, in fact, are only a small percentage of total transactions in Australia.

“They are more pronounced in Sydney and Melbourne and in other markets around Australia that have unique property, high demand/low supply, and areas where it is very difficult to determine the value of a property,” Mr Panos said.

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