How auctions can help you anticipate changes in the market
Total Property - Issue 1 2018
“It’s easy to call an auction when there are lots of people bidding in the room,” says Richard Valintine. “It’s a lot more difficult when people start saying no.”
The senior commercial auctioneer at Bayleys Real Estate should know. He has called thousands of auctions and sold hundreds of millions of dollars’ worth of real estate under the hammer.
“A good auctioneer is one who is able to connect with the crowd quite quickly and give it confidence in the property that’s for sale,” Mr Valintine says.
Bayleys is an unabashed champion of auctions – for all asset classes and sectors. Last year, it sold more than $250 million worth of commercial and industrial properties by auction, with a clearance rate of near 70 percent on more than 170 offerings and sale prices ranging from $50,000 to $6 million.
Mr Valintine says momentum in the commercial and industrial property market has undoubtedly made it easier to convince people of the merits of auctions.
“Auctions prove their worth when there is change and uncertainty in the market. For vendors, they are the best route to achieving the maximum possible, unconditional price for their properties.
“For buyers, they offer the most transparent method of purchasing a property. Buyers can see what amount other parties are offering and know they are not going to miss out if they have a strong desire to own something. They also have complete control over what they pay.
“Auctions are also an important barometer for the market and play a vital role in determining values.”
He adds: “In a buoyant market, an auction helps push that price as a result of competition and achieve a premium result. In a market that’s a bit tougher, it concentrates minds and helps facilitate decisions.
“The fact that there is a deadline, a call to action, is a powerful trigger. It creates a sense of urgency. It puts things into a concentrated time frame and on an unconditional basis. Buyers know they have to act if they want to own the property – if they don’t, somebody else is going to own it.
From his position at the rostrum, Mr Valintine has noticed fundamental shifts not just in the market but also in the demographic make-up of auction rooms.
“The market has become much easier to navigate and more accessible. You can see that in the make-up of auction rooms. There is more diversity among buyers and vendors in terms of age, social background and ethnicity. Commercial property is no longer the preserve of the few,” he says.
Attitudes to price have also changed, Mr Valintine says. “There used to be this mindset that anything over a million dollars couldn’t be auctioned. Nowadays most commercial property buyers now don’t bat an eye when a property pushes past the million mark.”
One of the most notable changes he has witnessed has been the role of the auctioneer. “When I first started calling auctions, properties that failed to reach the reserve were passed in and negotiated afterwards. That started to change in the early-2000s, when auctioneers took on the role of a negotiator in order to help close a deal,” Mr Valintine says.
“That’s what’s unique about Bayleys auctions – the auction team is much more hands on. We are involved throughout the entire process. The work we do starts well before the auction day. We research and inspect the property, we compare it to similar properties that have recently sold. We assist the agent and vendor understand where the buyers are.”
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