There was a recent auction campaign that had more than 60 groups through the property and four written offers beforehand.

That level of interest is the ideal auction campaign, because our research shows that if you have three or more written offers prior to auction you have a 96 per cent of chance of selling under the hammer. 

The thing is, in this example, the market feedback was indicating a price in the $800,000s, however, the seller still believed they could achieve hundreds of thousands of dollars more than that. 

Their reasoning why was that a bank valuation had been higher previously.

However, market feedback is the always the best barometer in price, yet, they simply wouldn’t accept it. 

This was this especially the case for this property since 60 groups had inspected it and four had made offers.

Unfortunately, the vendor continued to stubbornly stick to a price that had no bearing to market reality.

So, the only thing that stopped that property from selling at auction was the vendor, which is the number one reason why auctions fail. 

Market truth 

It always frustrates me when agents have done a fantastic job collecting such authentic market feedback, but the vendor still chooses to completely disregard it.

Usually that’s because they simply want or need more so they can go on holiday or they’ve already bought another higher-priced property and need more money to complete the transaction.

Regardless of a vendor’s needs and wants, the market never lies. 

Just because you paid a certain amount for a property at a certain time, or you spent a certain amount on renovations, that doesn’t guarantee the market will pay the price that you think it is worth. 

As I often say, shares are only worth what they are worth on the day that you buy or sell them, yet that situation seems to be quite well accepted when property is not.

We seem to have this inherent belief that property prices always rise but that line of thinking is flawed. 

Heads in the property clouds

In my experience, vendors refusing to accept market feedback on price is very common.

In fact, the average price expectation adjustment for a seller is usually about 11 per cent and the average adjustment from the reserve to the final sale price is six per cent. 

The sellers who still cling to an unrealistic price are left to withdraw the property from sale or negotiate under private treaty conditions post-auction.

The latter turn of events brings with it more risk because it will be a conditional contract that might fall over for myriad reasons.

In a lot of cases we see sellers with overly optimistic price expectations who believe that re-offering the property to the market after the auction will somehow get them $250,000 more, which of course is absurd.

The only way they may be able to achieve that is taking it off the market and waiting for probably five years for the market to strengthen in a big way. 

At the end of the day, we often simply say to vendors that the agent and auctioneer’s role is to try to get the best price as possible and their role is to say yes or no to it. 

If they accept all the information on price, but it doesn’t work for them financially, then that’s understandable.

However, if they don’t accept the information and still push forward with the auction process when there is no chance of success, then it really is a waste of time – and money – for all concerned.

More from this contributor:

The number one mistake vendors make when selling by auction

Why perception is never market reality

Brisbane auction market comes of age