Unsold! Surge in homes listed for sale at auction but seller expectations too high

[steve99]

10 hours ago, 17 Year Veteran said:

Auction is the Australian system. 
 

if there’s no interest (bearing in mind bidder typically have to be pre vetted for KYC etc) then the property is withdrawn. 
 

Pointless having the auction with zero or one registered bidder. At that point it normally becomes a private sale, is taken off the market or the agent negotiates  with any interested but not registered parties. 
 

Sold prior to auction would be easy to check. In Australia it is listed as such.  Not sure about these guys mind. 

Australian housing auctions are a disgusting scam. Used to be just posh suburb properties but now covers the majority in Sydney and Melbourne. They will advertise with a price range of say $800k to $900k but have a reserve in mind of say $950k then sell for $1 mill++, such is the mania. There will be real and fake phone bidders too as well as dummy bidders in the fk-wit buyers pit. One French visitor said  "They sell ordinary boring houses in remote boring suburbs like we sell fine art in Paris"  I would add to that "and at the same silly prices too"

[EnglishinWales]

We may be on the edge of a hpc in Wales, seems half of property for sale now is listed for auction. Landlords running for exit because of legislation changes since Dec 2022 and getting desperate?

[staintunerider]

On 24/09/2023 at 11:40, steve99 said:

Australian housing auctions are a disgusting scam. Used to be just posh suburb properties but now covers the majority in Sydney and Melbourne. They will advertise with a price range of say $800k to $900k but have a reserve in mind of say $950k then sell for $1 mill++, such is the mania. There will be real and fake phone bidders too as well as dummy bidders in the fk-wit buyers pit. One French visitor said  "They sell ordinary boring houses in remote boring suburbs like we sell fine art in Paris"  I would add to that "and at the same silly prices too"

yes on another thread there was something about a bunch of Thai's arrested for fakering in real estate with paid actors etc...reminded me exactly of Oz house sales....who is to say they haven;t been using actors to create a frenzy ?

I used to buy cars at auction and used to watch the room like a hawk right from the back on one side so i could see clearly....it was quite obvious when they were just picking bids as it is known "off the wall" i always waited to snipe at the end so i could see who was really interested beforehand...if it was a load of old baloney i'd let it go unless it was a good price....usually you;d see the car back in the next auction because surprisingly it hadn;t sold if they said it had or they literally even with fake bids hadn;t taken it to the reserve...

Then they brought in telephone bidding the perfect way to generate false bids with no chance of detection.

I actually said this to an auctioneer he just smiled and didnt even reply!

[Flat Bear]

On 22/09/2023 at 12:52, fellow said:

Unsold! Surge in homes listed for sale at auction but seller expectations too high

https://propertyindustryeye.com/unsold-surge-in-homes-listed-for-sale-at-auction-but-seller-expectations-too-high/

 

We are going through a price discovery phase. It is in no way surprising that properties are not reaching reserve as sellers are still discovering what these new prices are and the trajectory.

Auctioneers take a fee so if expectations are too high they get to do it all over again.

I have noticed a few more auctions taking place, they seem to be online most of the time in contrast to the auctions I attended in the 1990s. It seems the guide prices are mostly slightly down on the normal advertised selling price but remember the reserve price is more likely to be at percieved market expectations. The vast majority of lots at this time are BTL sell ups with many including sitting tenants. There are still the power of attorney lots but these seem constant. It seems the trick is to give a temptingly low guide price with a much higher reserve which is naughty but quite legal.

So we are currently seeing vendors looking at different ways to sell their properties quickly. Gimmicks?

Why would anyone buy a property at auction under these cicumstances? You have to do a lot of homework and make a lot of inquiries getting finance approvals etc and you then have to make a decision within a short timescale. Then, even if you do "win" the auction you may well be under reserve and the vendor may then offer you to buy at the "reserve" which would be a market value or even higher depending on who is assessing the "market" value.

In the 1990s there were what I would describe as "real auctions". Every lot was a fire sale. ON BEHALF OF COURT APPOINTED RECEIVER: or similar. There were many lots without reserve! The fact lots did not have a reserve instantly peaked interest because everyone wants a bargain right? I am keeping an eye open to local auctions but I would suggest we are unlikely to see any "real auction" for at least a year or so depending on events, interest rates, unemployment etc etc

 

On 22/09/2023 at 14:11, Stewy said:

It's a stand-off at the moment (that does no one any good) until rates fall from these higher levels. It's not a healthy market right now. 

@Stewy It all comes down to interest rates. I agree 100%.

I think the BOE base rate will be over 8% by the end of 2024 and you think it will be sub 2% and here is the crux.

If I am right house prices will fall. If you are right house prices will rise. Either way the stand off will end.

Do you agree with this?

Just edited to add

The reserve price is not revealed until after the auction. The agents will not pass this on but may be allowed to say "close to" guide or above guide etc

Edited October 1, 2023 by Flat Bear

[scottbeard]

4 hours ago, Flat Bear said:

@Stewy It all comes down to interest rates. I agree 100%.

I think the BOE base rate will be over 8% by the end of 2024 and you think it will be sub 2% and here is the crux.

If I am right house prices will fall. If you are right house prices will rise. Either way the stand off will end.

Do you agree with this?

 

I realise this was to stewy but what if neither of those things happen and interest rates stay in the 4-6% range for 10 years, as I expect them to.

What then....?

[Smith]

12 hours ago, Flat Bear said:

It seems the trick is to give a temptingly low guide price with a much higher reserve which is naughty but quite legal.

If you look at the small print for most established, traditional auctioneers you'll see that their reserve prices are set at "no more than 10% above the guide price". They're obviously still hoping for more. In my experience most auction properties that generate interest (many don't at the moment) sell for 20-30% above the guide price.

That said, companies listing properties for sale "by the modern method of auction" are not traditional auctioneers and seem to play all sorts of tricks in terms of fees and a lack of transparency. Personally I wouldn't go near one of these fake auctioneers unless it was a unique property I desperately wanted. I assume sellers get hoodwinked into listing their property in this way, and most probably don't understand it's a scam.

[Stewy]

8 hours ago, scottbeard said:

I realise this was to stewy but what if neither of those things happen and interest rates stay in the 4-6% range for 10 years, as I expect them to.

What then....?

Houses will just be passed between Boomers and their offspring while the market waits for interest rates to fall from their highs.

There is no chance of 8% rates or even the current highs persisting. Cheaper energy will flow into all goods and rates will be cut pre-election to avert deflation. 

@Flat Bear

[Flat Bear]

10 hours ago, Stewy said:

Houses will just be passed between Boomers and their offspring while the market waits for interest rates to fall from their highs.

There is no chance of 8% rates or even the current highs persisting. Cheaper energy will flow into all goods and rates will be cut pre-election to avert deflation. 

@Flat Bear

I would say there is no chance interest rates are going back to anywhere near the 0.1% we had over the last few years. I think it is very, very unlikely we will see the base rate drop below 2% within the next generation. This is clown land hopium.

Is it possible that the base rate could stay within the range 4% to 6% over the next decade as @scottbeard predicts ? There is a possibility but I can not see this happening although this view is also the current consensus. IF the base rate were to stay at 5.25% for a decade this would certainly put a damper on house price falls and prices would likely stagnate with the real price of houses falling back to previous levels whilst nominal prices stagnate. This is the hope of the BOE and what they are advocating, or more precisely, hoping and praying will happen. They are wrong IMHO.