Going, going gone – to auction or not
Over the past couple of years auctions have enjoyed increased popularity when it comes to selling property.
But are auctions the right sales method for just any home? Do they suit some property markets better than others? And what advantage does the auction method of sale offer over private treaty?
Let’s take a look at how to decide whether your home should be sold under the hammer and whether to auction or not.
What’s involved
Auctions are a sales method that’s all about creating competition. Often involving a short, sharp marketing campaign, the aim is to drum up as much interest in the property as possible and then have people bid against each other on auction day.
Once those bids reach the reserve level determined by you as the seller, the property is officially on the market and will be sold on auction day.
Auctions are different to private treaty sales in that all those bidding are expected to front the deposit either immediately or within a couple of days, then settle within 28 days.
The sale is also unconditional, meaning it’s not subject to finance, pest and building inspections, or other special conditions.
Instead, the potential buyers are expected to secure finance and complete any due diligence prior to auction day.
Auction advantages
The key advantage of an auction is that it can be an incredibly efficient way to sell your home and may also see the property achieve a price above your expectations.
Even if the property doesn’t sell on auction day, the process provides a clear market guide of what people are willing to pay.
And if the property is passed in, as the vendor you can negotiate with the highest bidder immediately after the auction or proceed to a private treaty sales campaign where you advertise the property for sale for a set price.
When to go to auction
Auctions suit a broad array of properties, but that doesn’t mean they’re the best way to sell every single home.
Instead, they tend to suit properties that:
- Are in demand
- Are located in a popular suburb or area
- Have development potential
- Are unique
- Are in the high-end or luxury market
Auctions also suit some property cycles better than others. For example, in a market where properties are in high demand and buyers outnumber the volume of homes on offer, auctions are a great way to ensure a property receives the best price possible as competition tends to be high.
On the flipside, in a market where properties are slow to sell and sellers outnumber buyers, auctions may not be the best sales method available.
Is an auction right for you?
Auctions are just one of a number of different sales methods available when it comes to selling your property, and it’s important to weigh up the options when deciding whether it’s right for you.
In terms of advantages, auctions can help you achieve a high price and also sell your home quickly, but not every home is suited to auction and for some people the prospect of having people ‘bid’ on your home is stressful.
Either way, it’s important to discuss all available sales options with your agent to determine which one is right for you and your home.
