Home Truths
Issue 63 - Auction Update: The story continues... - June 2010
On talk-back radio, I am told, there has been a real debate going on about the value or otherwise of selling by auction. Unsurprisingly, most consumers (i.e. buyers and sellers) are against the practice with the only a handful of agencies defending their position.
Our own experience has shown that those who have experienced being the seller at an auction, rarely want to go through the experience a second time. Similarly, it seems, with many would-be buyers. In fact it would seem that the only buyers who are happy, are the winners of auctions, many of whom consider that they ‘got a bargain’ – and they are probably right!
I was actually talking to a ‘winner’ the other day and she was ecstatic about her purchase (she was one of the lucky ones, in that her pre-auction, investigation costs resulted in a purchase) and she was amazed that she was able to buy so cheaply.
The most interesting thing of all, however, was an article in the Herald that was basically talking up the desirability of auctions (which the Herald would, of course, seeing that their revenue stream benefits them so greatly from their perpetuation of the myth); but which was effectively unpaid advertising for a major real estate company. A symbiotic relationship of sorts!
Some weeks later and the Herald on Sunday had another piece purporting to show the ‘popularity of auctions’. As an example, they gave pie charts of the percentages of property listings that were for auctions and how the auction listings sector had increased between April 2009 (12%) and April 2010 (21%) figures which the text described as ‘double the figure from April last year’ – which it clearly isn’t.
Tellingly, what wasn’t shown were the results of auctions – the percentage that actually sold. I have already mentioned in previous ‘Home Truths’ the abysmal record for auction sales. Mind you, by the time firms include any sales sold ‘within the auction period’ as well as those sold legitimately under the hammer, ‘sold at auction’ figures become completely meaningless. It is just another way that some real estate firms muddy the waters. If they tell their sales teams often enough that such sales form a legitimate part of ‘auction sales’, the team members will end up believing the nonsense too.
Again, I would urge those who are thinking of selling and considering whether or not to go auction, to visit their local library, take out Neil Jenman’s book ‘Don’t Sign Anything’ and read chapter 7 on Auctions.
Property Management.
Our Property Management people are increasing the number of properties under their care. Despite this, the total managements per manager are always under review as we would not want to emulate some companies whose managers have a huge workload. Such practices can mean that time spent on, for example, tenant selection or timely repairs, is insufficient and ultimately costly for the property owners.
We firmly believe that our economies should be made by spending more time (rather than less) on getting things right, right from the start rather than by taking short-cuts which, in the end, can create problems that take longer to sort out. More stringent tenant selection is showing benefits for both property owners and us; with a reduced number of court proceedings, requiring a lot less wasted time for our managers.
Speaking of court proceedings – some of the biggest delinquent tenants, are those where the property owners have chosen the tenant, despite all our warnings about their bad credit ratings, bad reports from other property owners/managers and our own bad vibes (as a result of years of experience!).
My advice to property owners – if you trust your property manager, let them decide on who shall live in the property but if you don’t respect their advice, employ someone whose advice you do respect and let them get on with the job.
