7 May 2014
Prepared by Rob Mason, 2012 & 2013 REIWA Champion Auctioneer and Australasian Auctioneering Finalist
What are the advantages of selling by auction?
There are many. The obvious ones are:
- Auction is the true test of the market.
- There is no maximum price set, therefore sellers may find that their price expectations are exceeded.
- The process is truly transparent, therefore buyers can clearly see where their competition is and decide to keep bidding or not depending on their desire to purchase and their budget.
- There are three distinct selling opportunities – prior to auction, at auction, and post auction.
- Days on market are generally much lower (around half) compared to private treaty.
- The terms of the sale are clear and set in advance.
- The sale is unconditional – a major advantage to sellers.
What are the disadvantages of selling by auction?
If you ask me, most of the perceived disadvantages are really myths but here we go:
- You potentially limit your market by only dealing with “cash buyers” (yes, but wouldn’t you want to deal with “cash buyers” first, and only deal with “conditional buyers” if you have to?)
- If it doesn’t sell at auction, then the campaign has failed (this is rubbish, auction is a process, and usually a sale is completed soon after auction day if it hasn’t sold at, or prior to auction)
- It costs more (in my experience most agents charge the same selling fee and marketing regardless – the auctioneer’s fee is usually the only extra and hopefully they are worth it!)
- Its more stress for both sellers and buyers (I would probably agree with this, however, a good agent will help all parties through the process)
Do auction sales only suit certain types of properties?
No, I don’t believe so. I have auctioned all types of properties with all sorts of results. However, some properties maybe more obvious ones to take to auction.
If so, what properties do they suit and what do they not suit and why?
Really any property that is likely to attract any competition is suitable. The most obvious ones are those in the higher price brackets (more cash buyers), very unique properties (harder to price and often highly sought after), and those in highly desirable locations (more buyers). Other considerations that are positive signs for an auction include – a buoyant market, a fairly relaxed financing environment, and the Seller’s situation may mean that a short campaign and unconditional sale is desirable.