We sat down (virtually) with Josh Hommelhoff, Partner and Sales Consultant at Ray White Carnegie to hear how his team has quickly adapted their auction-heavy business admin the second lockdown in Victoria.
Why do you recommend auctioning to your clients?
It provides a clear closing date for both the vendor and the buyer. The sale is unconditional for the vendor (no cooling-off & no clauses). In my view, it is the best way to create a higher level of emotional competition. As humans, we’re all typically driven by emotions on different levels. Buying a home is typically the largest emotional purchase any of us will make in our lives (possibly 2-3 times maximum). There is no ‘ceiling price’ it is up to the buyers to determine how much they will pay once a property meets the vendors reserve price.
I have seen many, many situations where a buyer has missed out on a property through a Private Sale method and when asked if they would have paid more given the opportunity, the answer is commonly a resounding yes. On auction day, buyers are not driven by price or what the vendors want. They/We are typically driven by social proof. Being able to see what other people are bidding to, automatically establishes the value and proof to answer the number one question ‘are we paying too much?”
What are the steps you have taken to adapt your auctions during the pandemic?
From the very first lockdown in March right through to the current lockdown, we have continued to run auctions online all the way through. The vast majority of our competitors have stopped doing auctions and reverted to EOI’s or Private Sales. Feedback from buyers and vendors is that they’re very comfortable with bidding online in the comfort of their own home. As long as buyers have confidence in the process (namely, being able to see the other buyers) then they’re fine with it. In a private sale scenario, there is absolutely no transparency. The key to a successful online auction is to make sure that buyers are able to see each other in the room. You do not want the buyers ‘bidding blind’ and not able to see what is actually going on.
Why is the perfect type of property to take to auction?
Any. As long as the presentation, marketing and process is all done right.
What changes have you noticed in sellers / buyers over the last couple of months?
We have seen a large amount of confidence with buyers and sellers alike who have gone through and experienced the online auction process. We make sure that buyers have the opportunity to experience our auctions in real time prior to the property they are bidding on/selling is up for auction. If you’re making a life decision opposed to a market decision, it doesn’t really matter what the climate is like as it’s all relative.
What methods of marketing are you finding effective at the moment?
Premium online exposure combined with strong social media presence. Together with our current database we are able to target the already existing/active buyers with the passive buyers.
Do you have an auction story from the thick of the COVID-19 period that stands out?
I recently sold a property at 32 Elimatta Rd, Carnegie via an online auction. Another agency had sold a mirror image property just two doors away about a month or so prior using the private sale method (so all during the same climate/in fact you could ascertain that earlier this year was better).
Below are the numbers as a comparison:
32 Elimatta Rd, Carnegie (under lockdown conditions)
Statement of Information Range: $1,200,000 - $1,250,000
Inspection numbers: 46
On the market price: $1,250,000
Registered bidders: 7
Active bidders: 4
Days on market: 26 days - sold at auction
Sold Price: $1,356,000
36 Elimatta Rd, Carnegie (under lockdown conditions)
Statement of Information Range:
23/03 - $1,370,000 - $1,400,000
24/03 - $1,390,000
10/04 - $1,350,000
17/04 - $1,300,000
Days on market: 32
Sold price: $1,250,000
Literally the same properties, in the same market with each having a different method.
One process driven and the other market driven.
The other agency was interviewed for 32 Elimatta Rd and subsequently, when it came time to make a decision on the to select, the other agency was almost $10,000 cheaper than us if we both sold it for $1,250,000 (the same price achieved by the other agency at 36 Elimatta Rd).
On auction day, my vendor laughed and said it was the best $10,000 she had ever spent!
What is your outlook on the real estate market in (Melbourne) over the next couple of months?
Buyer confidence is still high. There are plenty of people looking for property. We don’t know what financial implications lay ahead as we come out of the COVID-19 restrictions. There is a large amount of speculation that early next year things will change a bit. Right now, if I was looking at selling, I would be making the move sooner rather than later.
Why is it more important than ever for sellers to choose auction as their method of sale?
Transparency, high levels of emotional competition, social proof help to dictate buyers responses, and unconditional outcome.
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Ray White Carnegie
josh.hommelhoff@raywhite.com
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Nina Clarke
Ray White Media Team
nclarke@raywhite.com
