Auctions deliver 9% more under hammer

Ray White’s auction data shows that despite the tight COVID-19 restrictions, sellers still received nine per cent more than their highest offer prior by selling under the hammer.

From 1 March to today, the group conducted 2707 auctions in Australia alone, many of them were online auctions at the height of the isolation period.

On average, the prices achieved for sellers were nine per cent more than any offers received prior to their auction. There were 3.9 average registered bidders (up 1.1 on a year ago) and 53 per cent of all stock sold under the hammer. These metrics are all considerable higher than the same time last year.

Ray White Group Managing Director Dan White said the group believed the auction method was the proven way to maximise competition for its customers.

“Our statistics support what our instincts have told us for generations. The best results come when we take the campaign right through, and achieve an unconditional sale under the hammer. On average Ray White sellers receive 9-10 per cent more for their property by going to auction,” Mr White said.

“Auctions create competition like no other. Right now our data shows our sellers had 5.2 registered bidders per lot last Saturday alone (up 3 on a year ago) and 2.7 active bidders per lot. These are great numbers in any market.

“We have bidding on 90 per cent of every auction lot which gives our sellers an opportunity to sell.

“In all markets, it's the right method. The only way for buyers to be confident to lift their bid is to see someone else bid the same amount for it, and that is the essence of the auction method.”

The most extreme example of an iso sale which resulted in a huge result under the hammer was in the Goulburn Valley, where this two bedroom cottage near the waterways at 15 River St, Nagambie, Victoria sold for $405,000 under the hammer with seven registered bidders and three of them active in the auction.

The price was 47.4 per cent higher than the higher offer prior. Ray White Nagambie Principal Mark Boyer said there was no doubt that by creating competition at auction the result was achieved.

“We ran an online auction and we were really happy with the result as the price achieved was well above expectations,” Mr Boyer said. “It was an exciting auction.”

Another example was this block of five units at 1-5/35 Park Ave, Westmead, in western Sydney, which sold under the hammer for $3.855 million on May 9, some 42.6 per cent higher than the highest offer prior and $1 million over its reserve.

With 15 registered bidders and 12 of them active in the auction the outcome was nothing short of tremendous for its owners.

Ray White Commercial Western Sydney Principal Peter Vines said offers that come prior to auction can often be “low and a bit cheeky”.

“So that’s also the beauty of auctioning as it makes buyers commit. There’s a finality to an auction as it gives buyers and sellers a date to focus on,” Mr Vines said.

“We find there are a number of opportunistic purchasers out there sniffing for bargains but still a number of premium buyers which is why we are pushing through to auction when there is strong interest as we are finding it producing good competition.”

Ray White Sherwood sales executive Lisette Schults-Rand said her own personal clearance rate was 85 per cent so far in 2020.

“There is a real process to auctioning and I rarely sell a property prior. It would have to be a record price, and it would also need to be completely unconditional too,” said the Brisbane-based agent.

“If I had an owner who was about to accept a prior offer I would ring everyone who had been through the property and let them know it was about to be sold, and to submit an offer if they wanted. It would be like an auction but it’s not transparent and it’s messy.

“Auctions work as they create an equal playing field - the date and time is set and every single person is there with their finances approved. Four week campaigns are the sweet spot for us as it allows our buyers to get finance sorted to be a position to buy under the hammer.”

In country NSW, Ray Tumut of Ray White Tumut said there was no doubt that sellers often received a much better deal under the hammer.

“Brymay’s result was 35.21 per cent higher than the best offer prior, and later that week we had a similar result - more than 30 per cent.”