How an Auction Drove Home Price Above Estimates

How an Auction Drove Home Price Above Estimates

Auction market is for the desperate sellers?

In Malaysia, selling via the auction route is seen as selling of the desperate home owners. It is viewed as the selling of properties where the owners are already in a financial crisis. Only the banks do it as they took back those properties from the owners who could no longer pay their monthly repayments. That’s why they are put up for auction mah…

While generally this is the case, it does not necessarily mean every market thinks the same. Let’s look some reports on auctions in both Sydney and Melbourne and then look at a case where due to a bidding frenzy of just 7 minutes, the seller actually received a higher price bid than even their own estimate.

Source: apimagazine.com.au “Agents in Sydney and Melbourne love auctions for ‘in demand’ properties. They bring potential buyers to a decision point with force and can deliver outstanding results for their vendors.” But what do auctions actually tell us about the state of the market in Sydney and Melbourne? But auction data becomes less important as we move to the outer suburbs and in most regional areas is not reliable at all.” Source: apimagazine.com.au

Article in real estate.com.au An Epping couple selling their first home were over the moon when it changed hands for $756,000 over the weekend.

Husband and wife Roger and Angela listed their house at 10 Mottled Ave with $650,000-$690,000 price hopes but five bidders drove it to sell above the range. The auction, conducted by Mr Assaad’s colleague and cousin Mike Assaad, lasted just seven minutes and saw the home placed on the market at the $726,000 mark.

One of the bidders was an interstate-based investor while the four others were from Melbourne. Article in real estate.com.au

How auction benefits the seller, buyer and the property agents?

If we are a seller, we want the highest possible price for our property. Yes, we have our expectations but if our expectations are too high, we will have to wait very long and yet may not be able to get a buyer. If our expectations was too low, the property could be sold for a price which is what we want but is definitely below what people are willing to pay for. Thus, a seller would want to know what is the highest price the market would want to pay for their property.

If we are a buyer, the reason why we view and view and view is also because we are not sure if we have seen the property with the lowest price possible. Maybe the next one could be cheaper? We do not want to pay a price which is too high for fear that no one thinks the same. So, if we are a buyer and we are at an auction, we could see and hear for ourselves whether that property is in high demand or not. When the attention is high, we will feel safe because this meant many also see the home like us.

If we are a property agent, we are always very worried if the potential buyer could not decide and kept asking for more options. Worst still, after they have viewed a few properties, they decided to buy another property from another agent! However, a property agent would love to bring their potential buyers to auctions because it’s a guaranteed sale if their buyer is the bidding winner.

Best price always happen in an auction

No one would be willing to sell unless they know this is already what the market would be willing to pay for. No one would be willing to buy unless they could see the price as attractive and the best way to show them this? Property auction. For properties which are popular, there’s little doubt that property auction is the best versus a one to one negotiation which is usually benefiting the potential buyer and not the seller. For properties which are not popular, selling via agents will take a long time. Property agents will also find it hard to convince the seller that the price they wanted for their home is just impossible… This is why best price always happen in an auction.

Think Sotheby’s, Think Christie’s

Do we believe art pieces would be valuable when it’s a one to one negotiation…? Below tells us about two of the most prominent auction houses in the world.

“Sotheby’s 2024 consolidated sales were US$6 billion, a 23% decrease from the prior year.””Sotheby’s revealed its 2024 earnings in a press call Thursday, with CEO Charles Stewart announcing $6 billion of consolidated sales against what he called “a clearly challenging market backdrop.” The figure was the highest in the industry for last year (in December, Christie’s reported S$5.7 billion for 2024)” Source: artnews.com

There are property agents which does auction bidding for homeowners who prefer to sell via auction. The next time they tell you, maybe can ask them for more information too. Really no harm to know more if they have already done it before and what are their experience. Just another way to sell the property at what the market believes is the right price. Else, if the market does not believe the price, then the seller can keep reiterating but the transaction will not happen.

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