Saturday, February 25, 2012

Melbourne house auction results not accurate

Yesterday, I visited few house auctions with a friend. In Australia, for those reading this from overseas, houses are typically sold in an auction where people bid for it openly. Auctions are held on a Saturday and the results are reported on Sunday.

Out of the 5 places we visited, 4 were not sold on the spot. Three had a bid from one person in each case, and were quickly "passed in" (i.e. vendor rejects the offer, but is open to further negotiations with the bidder). In the fifth place, we missed the auction but the signboard outside indicated the auction was unsuccessful.

Here's the result. In the widely published Domain circulation for yesterday's auction, only one of the four "passed in" properties was reportedly sold in the after-auction negotiation. The other four were not even included in the report. Quite likely they were not sold. If this is the case, the auction success rate has been inflated, intentionally or not intentionally. It gives a impression that the market is more vibrant than it actually is. I am only talking aboout 4 out of the 224 reported auction results I saw. Goodness knows how many unsold auctions go unreported. Caveat emptor! 

Generally, I do not trust statistics on face value. Unless I know the intention of the organization creating the statistics, many statistics are just distorted truths. Figures are juggled, and graphs are prepared in a way that gives the reader an intended impression at first glance. While statistics are meant to inform, many should be banned from publication because they are actually mis-information.

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