I couldn’t help myself: I admit that I was one of the millions who just had to watch the season finale of the TV reality show, “The Block”. Emotions were running high as the tension and rollercoaster results played out.
I noticed that it was great opportunity to get a real ‘fly on the wall’ insight into how auctions can sometimes play out. What I also found interesting was that it reflected the challenges of what we are seeing right now in a changing property market. The basic principles of supply and demand really came into play, ultimately having a huge impact on the final result.
Last weekend saw over 1,700 properties in Melbourne go under the hammer, which is an all-time record number on any given weekend. This influx of choice is allowing buyers to be increasingly selective about what they will bid on. We are still seeing properties in good locations or offering unique qualities having strong demand, whilst others struggle.
This is what we witness on The Block. The most popular of the five properties being offered went under the hammer first. Whilst local property experts did suggest the reserve prices were very conservative in order to ensure exciting television, it resulted in achieving $447k (or 17%) above reserve none-the-less. With the limited number of genuine buyers thinning out as the auctions progressed one after the other, we saw the final auction only achieve $95k (only 3.7%) over reserve.
When you analyse the best and worst results from The Block’s auctions, despite there being five similar properties in the same market, you discover an incredible 13.3% variation in expectations- this is quite a massive discrepancy in the ultimate outcomes.
It was a really good lesson and a reality check for everyone involved in the Real Estate process, as these auctions demonstrated how results can fluctuate significantly. Discrepancies in expectations and final outcomes are influenced by so many factors, many of which are beyond control of agents.
It just goes to show that as the market begins to shift and transactional behaviour changes, it’s important to select the right agent who is able to take control of the forces they can influence, to ensure the best result for you in the end.
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