The Coast property panic
Auctions are fantastic in a hot, rising market fuelled by FOMO. But now we’re in a FOOP epidemic – Fear Of Over-payin’
IT’S meant to be the fairest way to buy and sell a property. But are auctions officially over? Look, it’s no secret that our real estate market is in a state of flux. After three years of property prices surging far beyond expectations or affordability, followed by interest rates seemingly rising along the same trajectory, market predictions are anything but safe as houses.
Cost of living, inflation and rate rises would indicate a buyer’s market, while continued population growth and lack of supply could mean sellers are still in the driver’s seat.
These opposing pressures are precisely why no one is moving in this market.
Literally.
As this paper reported just last week: “While a crowd of hundreds packed into The Langham’s conference centre for Amir Prestige’s Grand Summer Auction Event last week, the atmosphere shifted as bidders stayed silent and several homes were passed in.”
In fact, just three of the 37 listed properties sold under the hammer.
Five more went under contract shortly after the event, a further three houses already sold prior to the auction, and another three deals were closed within 24 hours.
Still, that’s a total clearance rate of 38 per cent.
And that’s actually a good result.
Proptrack data from the end of January showed a clearance rate of 34 per cent for auctions across the Gold Coast region in the prior week.
As Amir Prestige director Amir Mian said after the event: “What we can see from tonight is the buyers are here, they want to bid but they are hesitant.
“There is still a gap between what the sellers want and what the buyers can now pay, and that is where we are seeing more negotiation needed to get the property sold.” Absolutely spot on. Although that does beg the question: why is anyone going to auction right now?
Auctions are fantastic in a hot, rising market fuelled by FOMO.
But right now we’re in the midst of a FOOP epidemic … Fear Of OverPaying.
Unless you really need to sell immediately or are just looking to buy a home, any home, within your pre-approved price point, auctions in 2023 feel like an exercise in futility and frustration.
Now, the comments from Amir Mian certainly show an understanding of where the market is at right now, and his agents’ ability to negotiate outside the auction is to be commended.
But unfortunately, not every other agency is operating in a similar fashion.
Take, for example, this message sent by a local agent the day before an auction to a friend, a qualified buyer with a $1.5 million preapproved loan in desperate need of a home:
“Since meeting with the owners this morning there has been a
MASSIVE shift with their price expectations.
“Due to the circumstances behind the sale, they have confirmed the property will be sold under the hammer to the highest bidder.
“This is the property that everyone will say if I had known it would sell for that I would have been there.”
So my friend and her husband attended the sale, they bid right up to $1.5m – which the agent knew was their limit – and they won the auction.
But they did not win the house.
Despite knowing their limit, despite desperately encouraging their attendance, the agent instead listed the home two days later at $1.68m.
It was the same situation for a home in Elanora.
The property went to auction, they were encouraged to offer anything north of $1.4 million, it was passed in and then it was listed at $1.69 million.
What was the point of these auctions and pressure tactics?
Both sellers and potential buyers were absolutely gutted and felt deceived.
Negotiation is one thing, a gap of $200,000 is another.
While these property practices might be legal, are they ethical?
As we enter the next stage of this volatile real estate market, it’s a case of buyer and seller beware.
There are so many great agents out there, just make sure you’re the one applying the pressure … rather than doing someone else’s bidding.
There is still a gap between what the sellers want and what the buyers can now pay, and that is where we are seeing more negotiation needed to get the property sold
AMIR PRESTIGE DIRECTOR AMIR MIAN