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An insider’s look at the Friendly Auction system

When Chasse Ede walks a client through the Friendly Auction process he’s speaking from experience – as an agent and as a buyer and seller that’s been immersed in the system.

As an agent with Presence, covering the Newcastle and Lake Macquarie areas of NSW, Mr Ede predominantly sells multi-million dollar properties using the Friendly Auction process.

Then, two years ago, he and his wife found themselves on the other side of the equation, using the Friendly Auction system to sell two of their properties and buy a dream family home.

Created by Presence Founder and Director, Mark Kentwell, specifically for the Newcastle market, Mr Ede said the Friendly Auctions system was all about transparency, accessibility, flexibility and removing many of the traditional barriers that stop buyers engaging in, and buying at, auction.

“Mark designed the Friendly Auctions system based on his own, extensive, research into what prevents buyers from fully engaging with the auction process,” he said.

“We’ve long known auctions were a great way for vendors to sell, but buyers weren’t having the same experience, so Friendly Auctions has changed that.”

Mr Ede said there were five key pain points Friendly Auctions alleviated for buyers, starting with fully compliant price guides based on a combination of market research, past sales and a live dataset from showings in the first two-week, off-market period of the auction campaign.

He said before Friendly Auctions, buyers would automatically rule themselves out of buying a property based on the fact there was no price guide, a price guide that seemed higher than the traditional private treaty method or simply presume a seller would only accept the upper end of the bracket.

“The price guide might have been $700,000 to $770,000 and the buyer would think, ‘We’ll pay $700,000 but we know they want $770,000, so we won’t offer on it’,” Mr Ede said.

Mr Ede said the Friendly Auction system also removed the upfront cost and hassle of organising building and pest inspections for each property a buyer was interested in. 

“Buyers knew they had to get their own building and pest reports and then they’d miss out on  six, seven, or eight properties and every time the building and pest were between $500 and $900,” he said.

“In the end they were saying, ‘We would like to come to your auction, but we aren’t going to come because we’re running into all of these expenses’.

“So with Friendly Auctions, we said we could commission the reports, the owners could pay for them and the building and pest providers, we have a panel of about 10, they then reassign them (the reports) into the purchaser’s name after the property is exchanged.

“So all of the warranties and everything all goes across.”

Mr Ede said if the building and pest reports turned up any issues, there was time to complete the works or, if it was a larger problem, to get quotes to rectify the problem and present those to the potential buyers.

“It helps with the transparency of the process,” he said.

“And we use our time and the buyer’s time wisely and have those reports done, as opposed to the traditional private treaty method of sale when it’s put on the market.”

Mr Ede said getting the building and pest reports done saved time, money and also helped move the contract stage along faster as it didn’t need to be ‘subject to building and pest’.

He said the Friendly Auction system also simplified the financing process by coordinating with lenders, and offered flexible deposit and settlement terms. 

“It might be that we can get them an extra 5 per cent or 10 per cent on the price, but they might need to consider extending the settlement terms for the purchaser on the other end if they can’t get bridging finance, but they can sell their home if there’s a six month settlement,” Mr Ede said. 

Chasse Ede with his family after buying their dream home with the Friendly Auction system.

He said the Friendly Auction process also meant they had a panel of solicitors and conveyancers that would look at a contract for a buyer free of charge.

Mr Ede said he saw just how well the process worked from a vendor’s and buyer’s perspective when he and his wife sold two of their properties and bought their dream family home about two years ago.

The home he bought was listed with two of his Presence colleagues and when it hit the market, he knew it was the right home for his family but they hadn’t yet prepared to sell their own homes. 

Mr Ede said they did end up buying the property at auction and they were able to do that because of the flexible settlement terms negotiated. 

He said the agent, Nathan, also walked him through the process explaining the rareness of the opportunity, the price per square metre, how the last property like this was for sale more than two years earlier.

“He really nurtured us through the whole process,” Mr Ede said.

“In the end, the process is about giving buyers every opportunity to buy. Flexibility is the key.”

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Kylie Dulhunty

Kylie Dulhunty is the Editor at Elite Agent.

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