The Not So Perfect Side of Auctions - 06-02-09

June 2 - Homeowners desperate to sell their homes in today's property market may believe that the quickest and most effective way to do so is at an auction.

But while nobody is denying that auctions have their place in the property market, many experts are saying that they do not always produce the desired effects.

In fact, some experts even go so far as to say that the best results can be achieved by going 'conventional' - ie. selling properties through negotiations between both sides and in conditions that are far less stressful than those found at auctions.

"Many sellers are being persuaded to put their properties on auction on the premise that this will maximize their price," said Geoffe Stroebel, the General Manager at Pam Golding. "However, this is not necessarily so as since 2007, commercial auction prices have indeed been reducing, and many 'sales' knocked down on the day are unconfirmed - which means that the reserve prices are not necessarily being met. And while there are distressed sales, it's also true that there are not too many 'fire' sales."

Stroebels believes that gone are the days where naive buyers would wander up to an auction stand and buy a house out of the blue. He knows that today's buyers are not only well informed, but also extremely savvy. He says that nobody is going to buy a property, for example, at an inflated value if they see no potential for resale.

"That is why we prefer conventional property sales methods where we can negotiate a deal in a professional and unpressurized manner," said Stroebels. "We always act on behalf of our seller, and as soon as we receive a mandate we can negotiate, and reveal the true, intrinsic value of the property coupled with its investment and/or income potential."