They may not be popular in WA but auctions offer benefits to both vendors and buyers, as Tracey Cook reports.
They may not be popular in WA but auctions offer benefits to both vendors and buyers, as Tracey Cook reports.
IT’S a common misconception in Perth that most properties auctioned are found at the top end of the market. The reality, however, is that all kinds of properties go under the hammer, and many vendors are reaping the benefits.
Most property in WA is sold by private treaty, with only around 5 per cent of properties going to auction.
This figure is in stark contrast to the east coast market, where around 80 per cent of all properties are auctioned.
REIWA auctioneering chapter chairman Peter Lawrance said bad press about the conduct of certain east coast auctioneers had been wrongly applied to the WA market.
Mr Lawrance said activities such as underquoting and unethical use of vendor bidding were not a problem in WA.
“According to the REIWA rules vendor bids can be only used up to the reserve price and no more than 10 bids are allowed,” he said.
“Vendor bids that are used properly, legally and openly are not designed for con purposes but are there to maintain a balance.”
Mr Lawrance said the reserve price was key to the process as it set the platform for the lowest price the vendor was willing to receive, whereas an asking price was generally set higher than what the market was prepared to pay.
“The vendor is more likely to realise a premium price if a realistic reserve is set,” he said.
Auctions were more popular in the middle market, he said, and with premium properties that were difficult to put a price on.
Druitt First National principal Robert Druitt said any property was a good candidate for auction, particularly if it was unique and was likely to generate competitive interest.
“Any property can be auctioned; it doesn’t have to be super unique,” he said. “Each property works on its own merits, how it is marketed and if it is the right sort of property for the buyers around.
“An auction has a more intensive lead-up marketing program and is more likely to bring out the intrinsic value of the property than may have been achieved if a price was put on it.”
Mr Druitt said auctioning was a different means of marketing property, with benefits for both the seller and the buyer.
Advantages for the seller included that: higher prices were often achieved; there is less disruption due to set home open times; and, upon a vendor accepting an offer, it was a cash unconditional contract.
For buyers an auction provides an open process of buying property, while the normal four-week lead up time period to auction allows plenty of time to sort out finance approval and the required deposit.
Buyers still have to be aware however that, as properties sold by auction have an unconditional contract, buyers have to make their own enquires about building inspections and the like before auction.
Mr Druitt said he had never found vendor bids to be a problem, nor had he received a negative reaction to their use.
“Vendor bids are used to get an auction going to a point where a vendor is prepared to negotiate,” he said.
