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Would the REAL Clearance Rate Please Stand Up

Call me stupid but I would consider an auction sale is one where the property sale occurs on the fall of the hammer, right? Well, with this concept in mind let’s analyse a typical auction and the weekly sales report.

Scenario 1

Properties offered for auction   1025

Properties sold                             627

= 61.7% clearance rate yippee!!

Scenario 2

Same weekend

Properties offered for auction                                 1025

Properties sold under the hammer                          509

Properties sold before auction (private sale)           116

Properties sold after auction (private sale)                 2

The real clearance rate under the hammer is 49.65% because 11.3% were sold before the auction and 2% sold after the auction.

The discrepancy between the reported clearance rate of 61.17% and the actual clearance rate of 49.65% is 11.52, which equals an 18.8% discrepancy.

At least we know one thing’s for sure, that the numbers don’t lie.

  1. The clearance rate is even worse, because in my experience many failed auctions aren’t even reported due to vendor request, avert embarrassment or both. There’s an old saying that “Good news knocks the loudest”.

 

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Would the REAL Clearance Rate Please Stand Up