Clark Real Estate takes pride in the ethical standards that our customers and clients tell us separates us in an industry that relies on trust and best practice.
One of the methods of selling that our Principal, Mario Lattanzi promotes to specific clients is called the Silent Auction. I sat down with Mario for a chat about this methodology. I started by asking him exactly what is a Silent Auction?
A Silent Auction is an auction without the open comparative bidding which exists in a public auction. In essence it is a one-on-one negotiation between the agent and the buyer in which the buyer submits their highest offer to the seller for them to decide on which proposal is more equitable for them.
When and how did you discover this method of selling?
The method has adapted and evolved over the years. It provides a real alternative to those who are wanting to auction without the drama and intense pressure that can be applied at Public Auction.
Buyers have one thing they must consider before entering this type of negotiation. ‘What price am I willing to lose the property for?’ This will form the highest price they are prepared to pay and the basis for their offer.
Are all properties suited to this method of selling or is there a need for competition for it to succeed?
All auctions work on the ‘pretence’ of having more than one buyer. An auction cannot operate with only one bidder. The auction clearance rate in Queensland has been tracking below fifty percent for over twelve months. A public auction is a costly risk for a vendor. Not only are there additional dollars in marketing and hosting, there is also the cost of losing control of the negotiating process. Once a public auction property is passed in, the buyer community is fully aware of this fact and also the last bid made. Another benefit of a Silent Auction is that, if the property is passed in, there is no footprint to cap the sale of the property when it reverts to a Private Treaty sale. All offers made in a Silent Auction remain confidential.
What was the best example of a Silent Auction that you can recall? How much more do you think you received for the vendor, using Silent Auction over Private Treaty?
It was a property we sold in Hendra. There were two offers. One for $690,000 and one for $650,000. We made the vendor six percent extra. This result would have been mathematically impossible in a public auction as the next bid would have been at $651,000 or $655,000
How do you think buyers feel about Silent Auctions? What can you tell them that might make them feel more at ease about the process?
Initially I think they’re a bit confused. I had one buyer say to me she did not like the process because it focused on her highest price rather than what the other person was bidding. When I explained to her about her putting her best foot forward and to ask herself the question ‘At what price am I willing to lose the property?’. She was then comfortable as felt she was in control without any heavy pressure tactics.
Do you think this method of selling is particularly suited to the Brisbane Property Market? And, if so, how so?
Absolutely. The method is designed to help buyers pay what they see as the highest price they are willing to pay for the property without pressure of a public auction. It’s beneficial for sellers and easier for buyers.
Do you think this method is less stressful for the vendor than Public Auction?
Yes. Patrick Bright, Buyer’s Advocate and best selling author of The Insiders Guide to Buying Real Estate discusses the intense pressure sellers are put under on Auction Day to lower their reserve to get a result. The agent wants a result on the day.
If a client is convinced that a public auction is the best way to achieve a maximum price for their property, are you happy to take that path?
NO. Clark Real Estate would prefer to walk away from the business rather than employ selling methods which are designed to get a sale rather than a sale at the buyers highest price.
If you were to sell your own home, would you use the Silent Auction method?
YES. It is a proven method to get the highest price from the market.
Do you think this will become a more popular method of selling?
Yes I do, as people become more aware and comfortable with it. Auction Agents hate it as it removes their opportunity to chest beat and back slap each other on Auction Day.