Concerns about under quoting at auction

My blog last week in which I spoke about my belief in the auction process to deliver optimum returns prompted some interesting feedback. One of the most cutting responses suggested agents advertise the auction guide price as low as possible low to entice potential buyers and they use that falsely generated interest as the excuse to increase the guide price during the marketing campaign.

As far as I’m concerned there are two big things wrong with that assumption.

1. Getting lots of people through the door doesn’t guarantee a sale. It is about getting the right people through the door and setting the right expectation about value and affordability of the property.

2. In the current market buyers are very conscious about sticking to their budget. The days of out-of-control auction day bidding went out with the GFC.

An auction does require a guide price to be set and the agent must be able to clearly explain and justify the estimated selling price they recommend. As I said last week the benefit of an auction is that it allows for some flexibility and therefore promotes negotiation between buyers and vendors.  That process of negotiation is facilitated by a good real estate agent…..it is not manipulated by the real estate agent.