To Auction or Not to Auction?
Selling privately doesn’t limit you if you want to sell by auction.
If you’re sitting on the fence on whether to sell by auction, there are a few things you should consider before making a decision. These include your motives for selling, your time constraints, if any, and whether auctions work well in your suburb. Before we get into weighing up the pros and cons of auctions, let’s take a closer look at how they work.
What’s involved in the process of going to Auction?
The process of selling by auction is quite straightforward. Once you appoint your professional auctioneer, you’ll need to choose your auction date. It’s best to give yourself enough time to prepare your property and advertise it effectively. Since most people are 9-5 workers, consider hosting your auction over the weekend, Saturdays tend to work best.
Next, you’ll need to spread the word. Traditionally, auction campaigns last 4-6 weeks, giving you ample opportunity to create a buzz. Don’t be afraid to get creative and use a variety of advertising streams (online listings, brochures, newspaper ads, mailbox drops etc.) Remember, when selling privately, you have total control to do this your way, so don’t shy away from thinking big.
In tandem with marketing your property, you will need to create your contract of sale. Work with your auctioneer and conveyancer of choice to complete all required documentation in advance.
When the big day comes around, you’ll host one last inspection before the auction begins. We may be stating the obvious, but how you present your home on auction day can have quite the influence on buyers. Auction day is the day to go above and beyond and it doesn’t have to cost a fortune.
Before your auction finally ensues, you’ll reveal your reserve price to the auctioneer. Their expertise will drive buyers past your reserve to the best possible sale outcome. Once you hear “going, going, gone!” everything will be said and done.
Is Going to Auction Right for You?
1 – Marketing Costs
Advertising an auction can be more costly than a regular sale due to a heightened sense of urgency. With a fixed auction date, you’ll want to give it your all to drive as much buyer interest as possible before the big day. However, since selling privately allows you to save on commission, these funds can be used to create a powerful and effective marketing campaign.
2 – Pressure to Reduce Your Reserve
Since you’re in total control when selling privately, there’s no outside pressure to reduce your reserve price. However, some vendors feel an internal pressure to reduce their price in order to secure a sale. When selling privately, it’s possible to mitigate this pressure and justify reducing your price due to the funds you’re saving on commission. Ultimately, as long as you do your due diligence and set a fair and reasonable sale price this shouldn’t intimidate you.
3- Buyer Registration
In some states, buyers are required to formally register their bidding interest. This may be unappealing to some buyers, which could deter interest. This holds true for all states except Victoria and Western Australia.
4 – Not Across the Board
Unfortunately, auctions simply don’t work in some regions. Traditionally, buyer volume and interest aren’t enough in rural areas. This leads to high rates of passed-in properties – that is, properties that are unsuccessful at auction due to a failure to reach the reserve price. Whereas, metro-based properties have the best chance of successfully selling by auction, especially those in capital city areas.
1 – Meeting a Deadline
Auctions are great for speeding up the sale of your property, which is handy if you’re on a strict deadline. Buyers who attend the auction are extremely motivated because they’re well aware you are committed to an immediate sale. If all goes to plan, the sale will be finalised when the auctioneer yells “going, going, gone!”
2 – No Cooling Off Period
The great thing about auctions is if your property is successfully sold on auction day, the sale is unconditional. This means you, the vendor, get to set the terms of sale without any negotiation. As such, there is no settlement period, no final inspection and you can avoid the sale being dependent on financing.
3 – Arguably Higher Prices
You can take comfort in knowing you’re protected by your reserve price, as the property will not sell for less. Once your reserve price is met and the bidding continues, there is no cut-off price. Due to the competitive nature of bidding, your final sale price could be substantially more than expected.
4 – Multiple Avenues to Sell
Auctions present you with additional avenues to sell, other than simply on auction day. During your 4-6 week marketing campaign, a buyer may make an acceptable offer to avoid the competitive pressure of bidding at auction. On the off-chance your property is passed-in, the highest bidder will have first rights to negotiate a sale, which could also result in a fantastic outcome.
Have questions about selling by auction or selling privately? Let’s chat. Give us a call on 1300 289 697, we’re more than happy to help.