Extreme property marketing forces buyer to front-up to auction in 33 hours!
Barely 6 weeks ago I wrote an article
entitled “Auctions getting out of control in Auckland” in which I highlighted
what I saw as a growing trend to shorter selling periods for properties being
marketed as auctions by real estate agents. The examples at the time were of campaigns of just 2 weeks, which I described as “dumb and somewhat illogical” and likely
to exclude potential buyers from buying such properties.
So imagine my reaction when yesterday I was notified of a property just listed (Wednesday 7th August) which held its one and only open home last night and will be auctioned this afternoon at 4pm. So let’s see, listed at 7am on Wednesday and being auctioned at 4pm on Thursday, a grand total of 33 hours of marketing!
I am not sure to be quite honest what to make of this. My first reaction was to check to see if there was a mistake by the agent. No. The dates are genuine.
I contacted the selling agent by email seeking to confirm that the dates were correct and to get more details. I received an automated response email with the sale documents together with the statement “There has been a pre-auction offer at an acceptable level so the auction will open at that figure”.
I am struggling to understand how there can be a pre-auction offer when the property only came onto the market today? Clearly the agent has been marketing the property within a database of buyers prior to its listing. That is perfectly acceptable, but what eludes me is why the agent should imagine that the only buyer should be within the agent’s database of buyers. I might be interested in the property but the agent does not know me?
I do know of properties that are sold by agents that are never listed on the market. This is a decision the vendor makes, however in this situation having listed the property surely the vendor wishes to see the market respond?
I am speechless. How can this auction process be in the best interests of the seller? How can the agent with all good consciousness and professional integrity state and demonstrate that they have fully marketed the property to as wide an audience to be in the best interests of the vendor when they are allowing a marketing period of barely a day when most campaigns are 3 weeks? Vendors deserve the opportunity to see what comes of a reasonable marketing campaign especially in today’s market where we are constantly told that demand is high and supply low.
In my judgment it is almost impossible for a prospective buyer to be able to prepare themselves to front up at the auction having done the necessary due diligence of title search, LIM report as well as finance. After the all the property details speak to the property being a great opportunity for a first time buyer.
Speaking of the property marketing the description reads “First home buyers or those looking for a project should move quickly”!! – “move quickly”! – from viewing an email on Wednesday morning to bidding at auction 30 hours later - how quickly does the agent expect the average buyer to act?!
I reiterate my statement that this marketing campaign cannot be in the best interests of the vendor, yet that is the ethical and professional responsibility of the agent. Certainly the vendor may be delighted to hear that there is on day 1 an offer at or above their reserve but why should that be the only buyer and why should that buyer’s offer be judged to be the value of the property in the market?
The real estate industry needs to take a good hard look at this situation and ask the question of itself – is this really how we want to be seen by our customers? Driving a culture of panic and hype such that property sells before it has been fairly offered to the market, or does the industry believe that marketing is irrelevant and all prospective buyers should be forced to registered with agents so agents can save on mainstream marketing and merely send emails to interested parties of relevant properties?
The auction was held at 4pm at the offices of Barfoot & Thompson Ponsonby. There were around 20 people crammed into the reception area. I would say that of that total there would be 8 Barfoot & Thompson agents, the balance being potential bidders together with myself and reporter from TV3 Campbell Live.
The auctioneer introduced the auction and in referencing the agents handling the listing she made the comment "if you have been to the property over the last couple of days.." - seems hardly likely give the fact that the property was only listed yesterday!
The auctioneer then made the statement "the property was due to go to auction on the 28th August, but there has been an early offer on the property; that offer is at a level that is acceptable to the vendor, so that today will be the opening bid, its also the reserve price. So basically from the opening bid the property is on the market today".
The auctioneer then started the auction proper by stating the offer that she was holding was for $1m, that is the opening bid, that's the reserve price, on the market at $1m.
The auction then ran on for around 5 minutes during which time two parties competed to buy the property. I believe one of those parties was the party who placed the $1m bid and the other couple were unknown. The property sold for $1,050,000 after 6 bids.