In real estate, many things are considered uncertain; the market fluctuates, buying patterns change and suburb hot spots vary. What is certain however, it the big question mark on almost all sellers’ minds… should I sell via auction or private treaty?
While we aim to give you unbiased information so that you may make up your own mind, we won’t deny that we are big supporters of the auction process and what it can achieve for sellers (and the transparency it affords buyers).
Here’s a few reasons you may wish to go down an auction path…
A high intensity marketing campaign will be conducted over a 3-4 week time frame, as opposed to a 12 week marketing plan - this is particularly important in a slower market.
Putting the property on a pedestal above other properties, delivers maximum exposure in the first few weeks on the market – the time frame during which a property is most likely to sell.
You take price out of the equation and
limiting the property to a certain price range, it also limits the amount of buyers you will appeal to. By removing the price factor, you are able to better attract a wider range of buyers, and more buyers leads to more competition! Also, when you advertise a price, buyers immediately start to discount and make an offer below your asking price. That means you have to negotiate down to meet them. Without a price, buyers start looking at a property on its merits and price negotiations move upwards.
Control In every other form of marketing that is available, the buyer is in control, not the seller. The buyer will dictate the terms of the contract (e.g. subject to finance, subject to sale, subject to building inspection). The buyer negotiates from a position of strength. When you sell by Auction, you set the settlement date, the terms and conditions and the reserve price. Meaning you control the process.
You get a cash, unconditional contract if the property sells before or on Auction Day.
Auctions create a sense of urgency among buyers, which motivates buyers to make a decision on or before Auction day - couple that with what is already a fast selling market and you have a recipe for success!
You have 3 opportunities to sell with 3 competitive environments:
- Before Auction – buyers can make offers prior to Auction to avoid competition on Auction Day or if they cannot attend.
- Auction Day – Multiple bidders compete in cash unconditional environment, forcing the price upwards.
- After Auction – Conditional buyers (e.g. subject to sale, subject to finance, or cash buyers can now compete for the property)
Auction Day negotiations are conducted in an ethical and transparent environment. Buyers can see what other buyers are offering and have a chance to better their bid.
The seller is able to bid through the auctioneer to keep the price moving upwards (this is called “Vendor Bidding”), providing that Vendor bids are disclosed. A good auctioneer can squeeze every last dollar out of the negotiations.
The Auction process will bring you the highest price the market is prepared to pay and this will occur whether the sale takes place before the Auction, on the day, or afterwards.
Properties sold at Auction are generally on the market for fewer days than those sold using other methods. We're currently sitting at 75 days on market for private treaty!
Are you a buyer getting ready to bid?
During a standard sale process, some buyers who think they have put in a strong offer may miss out on properties only to find out that they were short by a very small amount. They didn’t know where they stood in relation to other buyers. In a auction process, they can see what other buyers are offering so they can offer more if they want to - it's not a case of just shooting in the dark. They can be confident that they are not the only ones willing to pay the market value of the property!