By Andrew Trim, Managing Director of Johnson Real Estate and author of ‘Real Estate Dangers and How to Avoid Them’
It is an accepted real estate principle that the best offer will often come early in the sales process – possibly on day one. Why don’t agents like a sale prior to auction day? Why not accept a good offer before auction day?
Publicly, auction agents insist that waiting and continuing to advertise will create more interest, more activity at open homes and a higher turnout on auction day – all sure to stimulate bidding and get a better price.
Privately, their motives are different. A complete public auction campaign benefits the agent as a result of ongoing marketing.
Public auctions and expensive vendor-paid advertising programs go hand in hand. Every public auction involves a significant advertising campaign over several weeks – an advertising campaign designed by the agent but paid for by the owner. Agents don’t like an acceptable early offer because their advertising stops when the property is sold. In most real estate advertisements, the agent’s name features prominently and self-promotion paid for by others is a big win for agents. As one agent put it, ‘But if you sell it early, how do you pay for your profile?’
A 30-day public auction program is about educating the seller on price and building an agent’s profile. Don’t be misled into believing anything else.
To avoid the dangers of public auction, sellers can choose to use an alternative method, such as the Smart Sale Strategy or private auction. They both minimise out-of-pocket expenses and encourage competitive offers. The aim of all agents should be to find a buyer’s highest price. When a public auction does find a buyer, it rarely achieves the highest price. With a single buyer or multiple buyers, the skill of the agent is paramount in achieving the best result. Yelling at buyers with a hammer in hand certainly doesn’t pass the skilful negotiator test.