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Another bitter truth of public property auctions

by  Neil Jenman

Article written and provided by Neil Jenman from Jenman.com.au . To see the original source of this article please click here. https://jenman.com.au/auction-lemons/. Neil Jenman is Australia’s trusted consumer crusader. He can support you, all the way, from choosing an agent who will get you the highest price guaranteed to when your removalist comes! You get an unprecedented level of total support. All for free. To find out more visit jenman.com.au

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Last week, 1,559 properties were listed for auction across Australia. Of these, 690 were sold.

As any school-child will attest, this is a clearance rate of 44 per cent.

The official (fake) clearance rate released to the public was 62 per cent – at least.

In Victoria, there were 801 properties listed for auction with 393 being sold, a clearance rate of 49 percent. According to the REIV the clearance rate was 79 per cent.

Anyone who knows anything about the Australian real estate industry knows that auction rates are deliberately inflated to make them appear successful. Such misinformation continues week after week in every capital city where auctions are held.

Most home sellers are blissfully unaware that selling by public auction is the worst way to sell – especially if their home fails to sell at the auction.


If you are considering selling by auction, consider this: With auction, you will, at best, have a 50 per cent chance of selling your home. Most homes listed for auction fail at auction. They become auction lemons.

There is nothing more damaging to a home’s value than the ‘lemon’ label. When buyers know that a home has failed to sell at auction, two thoughts can enter their minds: ‘What is wrong with the home?’ And: ‘It must be over-priced.’

Both thoughts lead to the home being devalued. The sellers, who now appear desperate, will likely be under huge stress. As an auction lemon, low offers will pour in. Buyers sense desperation and act accordingly.

Meanwhile agents look on gleefully. They know the formula for selling real estate: “The lower the price, the easier the sale”. They also know that, regardless of whether a home sells for a high price or a low price, their commission is always high.


If home-sellers were privy to how agents talk behind their backs, they would never sign-up to sell by public auction.

Contrary to what the public is told, auctions are not about selling for the best price, they are about selling at any price. And, of course, the lower the price, the easier a home is to sell.

The challenge for agents is convincing sellers to lower the price of their homes. This is done by a process called “conditioning” – which means hitting sellers with a barrage of bad (and often fake) news – under the guise of “market feedback”. As real estate institute training states, “Auction is the fastest and best conditioning method”.

Recently, a bloke who calls himself “Australia’s number one real estate trainer” (but some call “the foul-mouthed real estate trainer”) was boasting to his “students” how auctions get sellers down in price.

At the conclusion of a failed auction – when a home had just been turned into an auction lemon, the foul-mouthed trainer-cum-auctioneer, said to the highest bidder: “I want to thank you a lot; our vendors, they were up in the clouds until you came along. Your negotiation has got them down a hundred grand.

As his audience of agents chuckle at the sellers’ plight, the foul-mouthed trainer snaps his fingers at how easily the home will now be sold.

And presto, the agents get paid.

And that’s what agents call “success”.

But success for agents often means a monumental loss for home-sellers, most of whom have no idea just how deliberately and callously they have been manipulated.

Auctions are the best way for agents to get the biggest commission. They are the worst way for sellers to get the biggest price.

Especially – as happens more than half the time – when homes become auction lemons.