Auction vs Private Treaty | Underquoting Risks, Transparency, and Seller Outcomes
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What is the main topic discussed in this episode?
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Hey, it's the Real Estate Breakfast, talking your property news from Cairns to Sydney, Perth to Melbourne, including all of the regional areas, and streaming on your favourite platforms like Spotify and Apple Podcasts. It is a Friday, working our way into another weekend, January the 23rd. and reaction to Donald Trump's speech in Davos was pretty quick to be condemned from people around the world. Californian Governor Gavin Newsom dismissed it as insignificant. He said the market reaction showed how unsettling the speech was, and former Vice President Al Gore was more blunt and to the point, saying that Trump was taking a wrecking ball to long-standing alliances... and that any suggestion that this approach strengthens NATO is ridiculous.
At least for now, Trump said that he is not going to use force to acquire Greenland. And from a real estate point of view, I found this part of his speech really interesting.
In recent years, Wall Street giants and institutional investment firms, you've driven up housing prices by purchasing hundreds of thousands of single-family homes, and it's been a great investment for them. You know, the crazy thing is a person can't get depreciation on a house. But when a corporation buys it, they get depreciation. Okay, that's something we're going to have to think about too. They buy 500 houses, they can take depreciation. A person sweats and works and buys one house, they can't. But homes are built for people, not for corporations. And America will not become a nation of renters. We're not going to do that. That's why I have signed an executive order banning large institutional investors from buying single family homes.
It's just not fair to the public. They're not able to buy a house. And I'm calling on Congress to pass that ban into permanent law, and I think they will.
And there's going to be a huge part of American homeowners that are going to welcome this, but it has to get passed first through Congress. So let's see whether anything, in fact, changes. Well, let's go back into our time tunnel this morning. Yes, it is time for more of our Reflection Points with the summer series, which is next.
You're listening to the Summer Series on The Real Estate Podcast.
Now, we are talking auctions. So, what do you think with regard to people going down the EOI or auction track? What is kind of transpiring between those two?
Definitely, it should be property dependent. There are some properties that should just would be more suited to an EOI campaign. And that may be situated on a main road, compromised location, those factors where it may limit competition are considerations for, well, should we actually start as an EOI? Because I think being dynamic and being able to adjust, if you have a busy campaign that started as an EOI or a private sale, there's no reason why you can't convert that to an auction. I think the marketplace sees that as positive change. But if you start as an auction and you cancel it or it passes in, the market views that as a negative. So I don't think there's any harm sometimes just starting it as a private sale or an EOI if you're not sure and then feeling out the first seven days of the campaign and making that decision, do we convert to an auction or do we keep going as an EOI private sale?
OK, let's go back to you, Jeff, because I want to talk about underquoting. And that is a real thing in both main markets of Melbourne and Sydney in particular. How are you finding that at the moment?
Oh, it's disgusting. I won't hold back on it. I talk to 250 agents a month right across Melbourne. I buy between 15 and 20 properties a month across Melbourne. 80% of agents out there are completely, completely aware that they are underquoting. You'd lose your mind if I actually told you some recent weeks where properties in the 1 to 1.1 range for houses have gone on to sell for 1.5%. And they're not even on the market at 1.3. They break and consult with the vendor for instructions.
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Chapters
4 chapters
1
What is the main topic discussed in this episode?
0:02–12:39
2
What market factors determine whether to sell by auction or private treaty?
12:39–13:48
3
When should a seller start with an Expression of Interest (EOI) instead of an auction?
13:48–17:18
4
How prevalent is underquoting in Melbourne and Sydney and what are examples?
17:18–17:46
Speakers
8 identified
Hazard (guest) - Unknown full name 3 min
Research/Market Analyst (granny flats) - Unknown 2 min
Luke (Melbourne agent) - Unknown 2 min
Jeff (Melbourne buyer/agent commentator) - Unknown 2 min
Andrea (Adelaide guest) - Unknown 2 min
Regional WA guest (Gingin) - Unknown 1 min
Donald Trump 1 min
Station Announcer (ANZ Home Loans station ID) 1 min
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