Despite Perth property prices surging at the fastest rate in the country, agents and vendors are still reluctant to sell using the auction process.
According to CoreLogic, Perth property prices have risen 20.8 per cent in the past 12 months, but in a given week, only a handful of sales would typically go under the hammer.
Real Estate Institute of Western Australia (REIWA) President Joe White said auctions had never taken off in the state.
“They’ve never been overly popular in WA for a variety of reasons,” Mr White said.
“I think a lot of it is just the lack of critical mass of people.
“I think auctions are actually a great way to sell, because then if you’ve got lots of competitive bidders, that’s probably the fairest and best way of actually achieving it.”
Western Australia’s auctioneer of the year, from Perth Realty Group, Prash Nayar, said that while auctions were growing in popularity in the current market, there were fundamental reasons why auction volumes weren’t as high as the East Coast.
Mr Nayar said auctions were not too popular in WA because there is no cooling-off period as there is on private treaty sales, so the buyer can’t pull out unless there are conditions attached to it like ‘subject to finance’.
However, on the East Coast, a private treaty sale normally has a cooling-off period so many sellers prefer the security of an auction.
“A buyer can pull out in seven days, whereas with an auction, it’s an unconditional sale period,” Mr Nayar said.
Mr Nayar said he first became interested in selling via auction because he wanted to do more for vendors.
“With the auction process, you’re mitigating risk as a seller,” he said.
“It’s an unconditional sale so it’s a 30-day turnaround for the seller to get a settlement.
“And you’re showcasing where the competition truly stands.”
He said things were slowly starting to change in WA.
“The WA market is changing now, with lower stock levels and higher buyer demands,” he said.
“Buyers usually tend to skip over advertisements that don’t have prices on them, and if there are less options available to them, then instinctively they would click on it and they would be curious about what the property would go for.
“I think that has been a good change for us in the current market.”
He said over the past 12 months, buyers had also been happier to purchase at auction.
“I think that in the last 12 months, there’s been much warmer approach from our sellers and a much better reception from the buyers,” he said.
“And not only from myself, but most of the guys speak from the auction fraternity as well.
“I think, most of us that are on the committee are contract auctioneers and they have been receiving many more requests for auctions.”
Auctioneer from Apollo Auctions, Richard Kerr, said that agents are not that familiar with how to sell with the auction process in WA.
“I think it’s a reluctance of agents here to try something they’re not familiar with,” Mr Kerr said.
“But the other main thing is from auctioneers and especially the bigger corporate teams is that there’s been a lack of training on how to run a decent auction campaign for agents.
“Most of what I do here at WA is going around and just training either individual agents or their office in how to run an auction campaign.”
Mr Kerr said one of the big issues in WA is that agents aren’t trained on the auction process when they begin their careers.
“Quite a few of the agents say to me that they were trained in auctions in Melbourne 10 years ago,” he said.
“And while the advice was probably good back then, you don’t see an athlete training 10 years ago and then say ‘I’m done now, I don’t need to learn anything more’.”
“They’re either open to things or they think they don’t work here.
“It’s quite disheartening to see that attitude of people coming into the industry.”
Mr Kerr said he regularly speaks to different offices around Perth and trains agents but would like to see more principals investing in education.
“I think it needs to be some change are people like myself and a few of the other auctioneers around town, just getting out and doing more training for more agents,” he said.
Mr White said that auctions were very challenging during the previous market downturn, but REIWA does have a comprehensive auction training process for those agents that want to pursue it.
“I can certainly see the merits, particularly in a good market, but in a bad market, I can tell you, there’s no more lonely a thing to do than stand up at an auction with no bidders,” he said.
Mr Kerr said if more agents looked into the process they would quickly see why it is so popular on the East Coast.
“I really just think it’s a matter of having a crack,” he said.
“Surely WA is not right and the rest of the country or Australasia is wrong,
“Success leaves clues.”
