Auctions are the real estate industry’s greatest fraud. Thousands of consumers are being cheated. The greatest myth with auctions is that they are “the best way to sell”.
This is not true. Auctions are one of the worst ways to sell your home, no matter what area you are in or no matter what the market conditions are like.
Auctions get lower prices. Agents are the big winners with auctions. Consumers are the big losers, because they are so easily caught by the deceit and the tricks. One of the greatest tricks is the “reserve” price. Agents will say that homes often sell above reserve. But the reserve is your lowest price. It is the minimum you will accept, under pressure. Auction involves extreme pressure to sellers – “crunching” them to accept whatever price is offered at the auction. Agents are taught to use auctions to “condition sellers”.
The Real Estate Institute of Australia published a book describing auctions as “the fastest and best conditioning method” Very few people, other than agents, understand the scale of auction fraud. As one lawyer commented, “The auction system is just one gigantic scam and everyone in the industry, other than consumers, seems to be in on it.”
The best advice is don’t auction. However, if you can’t resist the sales spiel, at least insist that you pay nothing unless your home is sold at the price you want. And do not fall for the “dummy bidding” trick. Agents may say that dummy bidding helps you to get the price up. They also say it is only done below the reserve price. But if agents started the bidding at the reserve price,there would be no need for dummy bidding.
The reason bidding starts below your reserve price is that many agents intend to “crunch” you under extreme pressure to lower your reserve price.If auction agents were compelled by law to offer guarantees to consumers, the typical auction system would cease to exist. Don’t let auctions into your life.
Content Credit: The 18 Worst Mistakes made by Home-Sellers – written by Neil Jenman