New research shows what both real estate agents and property owners see as the major causes of a property being passed in at auction.
The number one factor that agents and property owners both believe causes property to pass at auction is unrealistic sales prices, according to a survey commissioned by Gavl and conducted in conjunction with Pureprofile.
While unrealistic prices were the most agreed upon factor influencing property passes, agents were more likely to believe it at 82 per cent, as opposed to 61 per cent of property owners.
The second most commonly-held belief causing properties to pass, with 16 per cent of home owners and 9 per cent of agents, is a lack of bidder turnout.
In third was the belief that the auction did not attract the right potential buyer, with property owners at 16 per cent again and agents at 8 per cent.
Wrong timing in the market, wrong timing in the calendar year and the weather on auction day were all beliefs held exclusively by property owners at 5 per cent, 1 per cent and 1 per cent, respectively, while agents believed none of these three factors were reasons why properties pass at auction.
Auctioneer James Pratt of James Pratt Auctions agreed with the results, but said that there are other factors that the survey did not consider, such as the conditions of the market favouring buyers rather than sellers and, whether the agent and auctioneer are doing their job correctly.
“Regardless of the number of people at auction, it’s important that the agent and auctioneer still do their job and try and negotiate on the floor rather whether you’ve got one registered or you’ve got 15 registered, you still got an opportunity to get a deal done on the day,” Mr Pratt said to Smart Property Investment.
To illustrate his point, Mr Pratt used the example of a property going for $3.9 million with a reserve of $4 million.
“Rather than just going like, ‘Passing the property and we’ll negotiate the property straight after’, a good agent will go back to the owner and say, ‘Do you want to adjust your reserve?’ [and] go back to the buyer, ‘You can buy it for $3,950,000, so just give me $50[,000] more,’ so basically, it’s an agent who’s doing their job.
“Rather than letting it pass and negotiate, they’re going to try and do it under the hammer.”
He also agreed with the results of agents not believing weather as a factor, as auctions can be held indoors.
Speaking on the results, Justin Nickerson, Gavl spokesperson and auctioneer, said that agents and vendors should both agree on a realistic sales price before the auction.
“From an economic point of view, the final price at auction, whether it rises above vendors’ expectations or even passes in, is the most accurate estimation of the market value of the property – if it is marketed correctly,” Mr Nickerson said.
“Trusting the experts and finding the right price for a property is essential as it can mean the difference between a property selling and passing in.
“The benefit of auctions for vendors is that they bring the market together in one place, and for agents – it allows their clients to see the property unfold in an accurate and highly transparent way.
The research consisted of two surveys. The first asked 1,001 Australians who were looking to buy or sell property why they thought properties would pass at auction, while the second asked 118 real estate agents.