Auctions — Are They Worth All The Hype?
Auction is a very popular way to market and sell properties, however, the success of auction campaigns are often stylised and romanticised by television programs. It is unlikely that by taking a property to auction, you will be able to achieve hundreds of thousands of dollars above your reserve price but they can still produce very successful results in the right market and for the right property.
An auction creates a deadline for serious Buyers to purchase the property and is accompanied by an accelerated marketing campaign (usually 4–6 weeks). Buyers who bid at an auction must be prepared to meet the conditions of the auction if they are the successful bidder, that means that they must be ready to pay the required deposit upon the fall of the hammer and there isn’t normally clauses allowed in the prepared contract for things such as building and pest inspections, surveys, or even finance approval. There’s no negotiating ability following an auction — the price is the price and the conditions are the conditions.
The nature of an auction is, the property is offered without a price and is an open bidding forum come auction day. Usually, we are able to determine the price of a property pretty accurately, but there are sometimes where you are presented with a property that is so unique and unlike anything else in the market that we can struggle to put a price on it. That’s where auctions can work really effectively as it allows the Buyers to provide us with instant feedback as to what a property is worth. For those Sellers who aren’t quite prepared to commit to an auction, this process can be replicated through an Expressions of Interest campaign.
What often happens when we take a property to auction is Buyers who aren’t quite in a position to bid and meet the contract conditions on the fall of the hammer, but are serious about purchasing the property can look to make a conditional offer prior to the date of the auction. As a Seller, this provides some great options — you can accept an offer prior to the auction and have a contract on your property in a short amount of time, or you can wait and see what the auction brings and then look to go back and negotiate after the fact.
So, all-in-all, auctions work. Auctions can sell properties, there’s no doubt about that. But when it comes to auctions it’s not usually the case that you get to deal with hundreds of cash Buyers ready to throw their highest offer at you. These are just a couple of the factors you should consider if you’re thinking about an auction.
Of course, your real estate agent will be able to advise you and provide you with the relevant facts for your property and whether an auction is right for you.
As always, if you have any questions or would like to learn more, please feel free to get in touch with us.