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.
[Video Transcript]
So that age-old question, you know, the benefits of auctions as opposed to selling with a price.
Auction is a definite time frame. So if you got 4, 6 maybe 8 weeks at a maximum you take the
property to auction you know the time frame that the property is going to be on the market for.
You are gonna get it out there to all those genuine buyers in the marketplace. Generally, buyers
that come along to our auctions are pre-approved or they’ve been to the bank and they’re on the
front foot, so they’re ready to make a decision. When they come through our properties that are
on the market with a price, generally they might have just started looking, maybe having a bit of
a look around, maybe haven’t gone to the bank to get their finance or get pre-approval with their
finance. And even once they have pre-approval doesn’t actually mean they are going to get the
loan. It just means that they’ve gone through the paperwork and the bank or broker believes this
is how much they going to be able to get to spend on a property. Another benefit is you are only
dealing with genuine buyers, you don’t do the subject to building, subject to pest, subject to
surveys, subject to electrical inspections, none of that happens with an auction. It’s up to the
buyer to do all their searches and everything that they need to do before the actual auction day.
As auctioneers, we like to build it up to the auction day so we have a fantastic auction day but
also you can sell a property prior to the auction. So if you get a great offer and you’re happy with
that offer and it’s unconditional, just sign the contract and move on. If you have any other great
questions like that, just use the hashtag #askqhp.