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Auctions this week: Using Market Momentum

Despite hail in Melbourne and snow in Canberra, market conditions are still picking up around the country on the way into spring selling season.

Even though the weather still says winter, auction markets are warming up right around Australia – the only problem is a lack of stock. This week our auctioneers are hinting this might actually be a good thing for potential sellers.

Queensland: Closing the gap
Two-time Australasian Auctioneer Of The Year winner Justin Nickerson of Apollo Auctions feels the past week has been a mixed bag in terms of auction results with some properties selling prior to auction day but others being passed in.

Nickerson notes pre-auction sales have been a common phenomenon in Queensland over recent times, but he also says there have been a few passed in due to stubbornness.

“We had a few with multiple bidders and a fair bit of activity.

“Sellers and buyers are being a bit stubborn about where they think the market is and where they think the market is going; and that’s causing a gap between the two.

“Everyone has a theory on what they think the market is going to do.”

Nickerson says that for agents dealing with buyers and sellers, information is always key, but it’s even more so right now.

“Give sellers some good data and information on where their property sits in the market right now – and not just opinion-based things.

“Also try to give fact-based information to buyers as well.

“Otherwise the gap is going to remain quite large.

Sydney: The market is back, but demand is outweighing supply
The go-to auctioneer for the Hills district of Sydney, Stuart Benson, says similar to last weekend, a handful of his auctions sold prior to the weekend, with three out of four selling under the hammer.

But still, the numbers of both registered bidders and spectators had markedly increased on last week, even though it’s school holidays in NSW.

“There is some curiosity as to what is going on in the market when it comes to actual transactions.”

Benson also checked in with other agents he didn’t represent to get their thoughts and all had the same outcome, high auction crowds with a high curiosity factor.

“Now we’re seven-eight weeks post election, the trend has continued.

“If anything happens often enough, it’s not a fluke; and I think we’re getting to the point now where social proof says the market is pretty much back in Sydney.”

Benson explains now is the time for buyers to take advantage, with spring selling around the corner where there will be greater competition.

He also notes this is a great opportunity for agents to use this as a listing tool.

“Some agents are saying to prospective vendors in the current pipeline to come and see what they are doing at auction; to understand the current thirst for properties in the market place that are well-presented, well-styled and well-priced,” says Benson.

This could be beneficial for some vendors who are sitting on the fence until spring, when they could be taking advantage of a marketplace where there is a lack of stock and an ‘absolute swag of buyers’ who are cashed up and ready to go.

“The current crowds are proving that you can make an event out of it,” Benson says.

Victoria: Trying different things

The weather this weekend was cause for many Victorians to remain indoors and well-priced properties are still being sold prior to auction day.

A theme this week from some of our auctioneers was about knowing when to sell prior, or another alternative put forward by Woodards Blackburn’s Luke Banitsiotis, was to move the auction date forward.

“We didn’t call any this past weekend, but we’ve actually done something different with one that was meant to go this coming weekend.

“We took an offer on it on Saturday, and we’ve actually pulled the auction forward to Tuesday night – which isn’t common practice in Victoria,” says Banitsiotis.

Banitsiotis notes this practice, which is a regular thing in New Zealand, can be a good strategy when you have one solid offer that the vendor will accept and wants to sell quickly while harnessing that increased momentum in the market.

“There’s a really good confidence in Victoria with the clearance rate going to 76 per cent in Melbourne – while it’s on a lower base, that is way more encouraging than 60 per cent three months ago.

“I think we are going into a really exciting time over the next couple of months.”

Sydney: Hold or sell?
BresicWhitney’s in-house auctioneer, Gavin Croft had half his stock sell prior to auction day, with the remaining properties saw a mixed bag of interest and registered bidders.

The ‘sell prior’ rate has increased over the winter period, which he says comes down to the lack of stock on the market and buyers perhaps not being as willing to compete at auction if they can help it.

But despite this, Croft says there was still a lot of interest at open homes.

“Fifty per cent of the stock had 20 groups or more through on the weekend, and that’s not including some off-market opens that were not advertised,” says Croft.

Croft says for agents the key thing is helping owners to understand when to sell prior and when it’s worthwhile proceeding to auction.

“This is actually becoming a really important skillset for agents,” says Croft.

“You have to be able to tell what is the right property to go through the auction based on the levels of interest.”

“Those decisions on whether to sell prior whilst we’ve got limited stock, increased confidence and some of the fear gone; those decisions are really important to the final outcome for the vendor,” concludes Croft.

ACT: Good heating helps

Alec Brown from Ray White Canberra says it was a successful weekend last weekend and hopefully a sign of the positive results to come for the ACT despite the still low volumes and trying weather conditions.

“We had 11 auctions for the week with a total clearance rate of 82 per cent. We were really impressed by the uptake of buyers and a good solid turnout across the auctions.”

With the increase in auctions, Alec says ensuring sales processes are followed will always help the end result on auction day.

And with the cold weather, Brown says those properties that had really good heating and/or solar energy did exceptionally well.

“Despite being in the depths of winter, including sleet across one of the auctions we were calling, interested people were still there; neighbours were still there.”

Adelaide: Getting in early
The highlight of the weekend for independent auctioneer AJ Coleman was a grand and unique property that had only seen one owner.

It was bequeathed to charity, which ended up selling for $50,000 above what they thought it would go for.

“We’re starting to see where we used to average 1.5 bidders per auction that those numbers are up around 3.5 at the moment,” says Coleman.

But Coleman also notes that South Australia, like Sydney and Melbourne, is still very price sensitive and there is less heat in the market than six months ago.

As a result, agents must have the crucial conversations with vendors early on, he says.

“The biggest mistake that especially younger agents are making at the moment is they are going, ‘OK so you want 850 (thousand), let’s give it a try.’ But on recent figures you know it’s going to be 780-790 (thousand).

“So I understand if you have that conversation too early, we run the risk of not getting the listing.

“But at the same time if you want to get a positive result, then it’s really about being honest with the vendor.

And while July has been one of the softest months in a while, Coleman says that August bookings are looking more like a return to normality.

The other thing he says is working for some agents looking to sell extra properties in spring is to extend the length of the agency agreement from 90 to 120 days.

This enables a four-week campaign to commence in August/September with the auction date set for peak selling season in September/October.

“I’m seeing a lot of my agents signing up slightly longer agency agreements and booking auctions now for September and October.

“They won’t start marketing until the last week of August, but the point is they are getting people signed up and ready for spring release.”

 

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