Selling your home at auction could be the best way to quickly achieve a stunning financial result.
We’ve all seen the images on TV. A quiet street in suburban Australia is brought to a standstill by big crowds and multiple bidders. The air is full of excitement and emotion as people compete to outbid each other on the day, driving values beyond the seller’s wildest dreams.
Away from the TV cameras and swinging gavels, selling a house at auction is actually a well-constructed strategy with a very deliberate focus on a planned goal, within a specific time frame.
For the right property in the right market conditions, the advantages of using this type of strategy are many.
So why in some cases can an auction be the best sales strategy and what results can be achieved?
Let’s find out.
Here are some key reasons why taking a property to auction makes perfect sense.
The power of now
When it comes to getting a decision, sometimes selling by private treaty is like herding cats – especially if trying to identify genuine buyers from ‘tyre kickers’.
Your sales strategy requires concentrated effort and should not be allowed to drift.
An auction deadline creates a sense of urgency amongst motivated buyers and compels them to make a decision – before it’s too late.
Within a few short weeks, interested parties must inspect a property, make a decision, organise their finances and perform at auction.
Set dates will also keep a seller and real estate agent on their toes and focused on getting market advantage for a property. An auction strategy should have structure, clarity, goals and timelines. A well-executed auction plan delivered on time, means achieving a great result before, at or even after an auction.
Related Reading: 'Hot or not - is your home suitable for auction?'
The cost of time
A number of factors associated with an auction sales strategy can save you time and money.
Marketing
Powerful marketing is critical to attracting as many interested buyers to a property, as quickly as possible.
But it comes at a cost and these costs should not be allowed to drag on.
An auction strategy can help keep control of the amount spent on promoting your property and provide a good return on investment – especially if the sale price achieved exceeds expectations.
A high-impact and concise first impression also adds to the sense of urgency that encourages interested buyers to connect with a property.
Early offers
Thanks to great marketing, potential buyers may feel that competition will be fierce on auction day.
Not wanting to be outbid, they may decide to make an early offer. One of these offers might be what you’re looking for, resulting in a quick sale.
Unconditional sale
Quick to settle, auctions are a very transparent process with registered bidders and no cooling-off periods subject to any time-consuming additional conditions.
Once the hammer falls, a sale is concluded there and then – end of matter. The buyer is bound to the contract of purchase, as per the conditions of registering as a bidder.
Auction fail
Properties that are passed-in at auction usually sell shortly afterwards.
If the reserve price is not reached at auction, all is not lost. You may immediately speak to and begin private negotiations with the highest bidders to find a likely buyer.
Sale O! Sale O!
Auctions are 80% emotion resulting in ‘buyer stretch’.
Firstly, it’s harder for buyers to determine the true value of a property, as the seller’s price expectation is not known, making it difficult to compare the market.
Secondly, a strong sales strategy should create an emotional connection between your property and a broad range of interested buyers accessed over the previous weeks. When people arrive on the day and see other bidders, their perception of value increases and there is a sense of urgency to ‘win’ the sale.
Auctions do not have a price ceiling. Increased competition and spirited bidding can push people to spend more, maximising the sale price to levels higher than anticipated. If not, the seller is protected by their reserve price and the property will not sell until this is reached.
Recruiting the right bidders
Is it better to have a competitive process determine the price for your house?
Despite representing the minority of house sales in Australia, auctions are becoming increasingly popular.
At the heart of an auction strategy is the ability to make time work to your advantage. If your property suits and the markets are active, a well-executed sales process should attract enough attention to provide the impetus and sense-of-urgency needed from a buyer’s perspective that is carried through to auction day.
Work to your timelines. Present and market your property effectively. Engage lots of potential buyers. Keep them guessing on price and availability. Have them believe your house won’t be available for long.
Gain maximum interest in minimum time and your house could sell for a premium before, at or after auction.
Related Reading: 'Surviving auction day'
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