Members of the residential real estate marketing industry have pointed out regularly in the property media that one of their most difficult challenges is persuading sellers to accept market-related prices – but it may surprise people to know that this difficulty has also been experienced by auctioneers.
Rob Whiteley, Rawson Auctions franchisee for Gauteng, said this week that despite ongoing coverage on the tough conditions in the property market, he still finds that those who bring stock to Rawson Auctions all too often have an unjustifiable faith that the property will fetch a higher price than is possible in today’s market.
“If sellers are not prepared to ‘trade’ on their market prices,” said Whiteley, “they will have to accept that they will need to wait a year or two for the market to catch up with their expectations.”
Many sellers, he added, do need a quick sale and this is why they tend to favour auctions. They should, however, bear in mind that, as is often the case, if the sale is to help purchase another property, they are both selling and buying in the same market. What they and other sellers lose on the swings, therefore, they will quite probably gain on the roundabouts.
Unfamiliarity of the auction process, said Whiteley, often leads to people holding back on approaching an auctioneer.
“While certain clients, as indicated, expect the auctioneer to achieve a miracle price, others have the idea that going the auction route means that they may have to accept a rock bottom price. They do not realize that a reserve price can be set and the seller is never obliged to accept any price below reserve unless he so wishes.”
Rawson Auctions, said Whiteley, have shown that they can be highly effective, in certain months achieving a 60% clearance rate on sales or higher – and at peak they have been conducting 20 to 25 on site auctions per month.
The small handful of shrewd buyers who are still looking for distressed properties which can be bought at anything up to a 60% discount on the original prices should, said Whiteley, take note that the banks, having lost heavily on most distressed sales but having nevertheless recouped a fairly large sum of money, are now increasingly reluctant to go the liquidation route. They are, therefore, now more inclined to arrange rescue and debt relief packages of various kinds – and these are proving not only welcome but on the whole successful.
“The popularity of on site auctions, instead of selling via the conventional route, stems from the fact that sellers appreciate that their property will for a specific period be the sole focus of the auctioneer’s attention, who will market and advertise their property to a wide audience through web, print media, roadside boards and exposure to an investor database. This ensures that the seller will get a true market related bid on auction day.”
