Auctions in a tanking market?

Just noticed a raft of new auctions in Darwin.

Any idea why you'd put your place up for auction in a dropping market?

Is it a seller thing or a tool the agents are using to condition the sellers?

 

I'd say it's a selling tactic as much as anything, try and get people to compete a bit, a lot of people tend to go harder than they mean to at an auction so if you've had a few offers under what you want maybe you go to auction hoping they all show up and one of them finally bids what you want.

I guess with a reserve in place like they all seem to do (totally defeats the point of an auction to me but whatever...) there isn't really any risk.

 

Are auctions the norm in Darwin??? I thought it was similar to Perth, auctions are not popular, very rare even in a hot market.

Generally speaking auctions do not work very well in a falling market.

 

The reason Re Agents love auctions is that pressure can be applied to Buyers AND sellers. Typically during the 4 weeks they condition the buyers up and the sellers down, then on the big day if things go well they say to the seller "see how well I did for you!" If things don't they say "that's what the market has told us through the whole campaign, today you'll get unconditional conditions and it may be the best price you'll see." They may be right to!

 

An agent who was doing an auction down here told me they're doing them to get feedback from the market.

I would have thought a conversation with the people going through home opens would have been a decent gauge but apparently not.

 

Code for market is severely depressed...and they need to condition sellers quickly to accept a much lower price. Very good buy into market if you take the longer term view.

 

@sash I agree - there's a few properties I'm keeping my eye on around here.

 

I reckon Darwin still has a long way to go. The $36B inpex project is still powering on. This project employs 8000 people in a town of 150 000. If the market is like this when a project like that is on...imagine what is going to happen in 2017 when they stop construction.... If you put an ear to Darwin you can hear it ticking.

 

Conditioning the sellers I'd say - I've had an auctioneer admit to me that they normally sell less than 30% of the properties in the auctions they do - but they manage to sell 70% in the week after the auction. That auctioneer probably shouldnt have gone drinking right after an auction....

 

You might be right. About half of the auctions are properties that I've seen before.

 

I agreed too. Sounds like classic tactic by the agents. Unless unique properties are coming onto the market..

 

Maybe he should if he's somehow selling every last property that he puts to auction within a week of doing it, that's an incredible success rate!