Auction is the antidote to distrust in the industry
Let’s face it, while the real estate industry has evolved in recent years, it continues to largely operate in an environment of distrust. The best way to mitigate this is to sell in an open, completely transparent manner: at auction.
Of course, you’d expect a specialist auctioneer to argue that. But it’s true.
It’s been a known truth in many other industries for a long time, in particular art and livestock, yet for some reason not entirely adopted in the real estate market.
And despite the increased professionalisation of the industry, the distrust persists:
Buyers don’t always trust what agents are telling them regarding the vendor’s price expectations.
Agents don’t always trust vendors to fully disclose their price expectations throughout the sales process.
Vendors don’t always trust agents to communicate accurately what buyers are saying they’re willing to pay.
And nor do vendors always trust that a buyer’s best offer made behind closed doors, is actually their best offer.
Yet somehow, we’re supposed to come to an agreed view of value in order to conduct a transaction.
Legislators in some states have attempted to remove the grey area that inevitably arises when discussing the value of a real estate asset by implementing various measures and manipulations.
In Victoria, for example, the vendor’s reserve must lie within 10% of the advertised price range. However, requiring agents and vendors to take a position on value without having tested the market amounts to nothing more than manufactured transparency. Certainly, it achieves nothing when it comes to reassuring buyers that they’re in the hunt for a property, because the only way to truly ascertain this is to turn up at auction and put forward their best price.
The fact is that auction is the best way to conduct a fair and completely transparent property sale for all parties. Throughout the auction process, all parties have the opportunity to put forward their opinion of value in an open, public manner.
This works to ascertain whether or not there is a gap between the vendor’s view of market value, and that of the buyer. If there’s no gap, there will be a sale under the hammer. If there is a gap and the property passes-in, we’ll work between the two parties to close that gap and make a sale soon after. In either scenario, the auction process works to reveal the truest opinion of the value of the asset.
The auction process also works to stimulate competition, potentially extracting multiple opinions of value from the market in a public, transparent way.
Much of the distrust that exists between vendors, buyers and agents, exists because each is suspicious of the other’s motives, tactics and intentions. When we bring those things into the open through a fully transparent public auction, there’s no longer anything to distrust.
So if you’re a vendor considering selling, a bidder considering buying, or an agent considering how to sell, remember that auction is the only completely transparent way. Contact our specialist auctioneers today.
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