Selling your Home by AUCTION
AUCTION: Derived from the Latin word auctionem (which means “an increase, especially in the bidding at a sale”)
- Auctions produce an unconditional sale – no waiting for buyers to order a LIM report, carry out a building inspection, organise finance, sell their home or any other due diligence.
- Buyers may make offers before the advertised auction date
- As the seller, you can set the settlement date, the amount of the deposit (usually 10% of the purchase price) and the reserve price
- The auction process creates a sense of urgency and a feeling of competition between potential buyers
- There is no asking price, so the property may sell for a premium
There is a three-stage process to selling a house by auction
- on auction day
- post auction
AUCTION EQUALS CHOICE AND CONTROL
When you are selling a property, there are many things to consider including the method you use.
Harcourts CEO Chris Kennedy says he advocates auction as the best option for vendors, as it gives more choice and control.
Auctions start with an intensive three to four-week marketing campaign, designed to discover as many potential buyers as possible, Kennedy says.
“It’s short and high impact, meaning your new-to-the-market property is viewed by as many people as possible over a limited period. Busy open homes start building the competitive way potential buyers view your property.”
And during the campaign, no price is mentioned, which means buyers naturally start to consider the maximum amount they would be prepared to pay.
“After observing buyer behaviour for over 25 years in the real estate industry, I can tell you with certainty that 100% of buyers will attend an auction with their maximum price firmly in mind,” Kennedy says.
By contrast, set a price on your property and you have set a limit. Buyers enter negotiations with the goal of buying the property for as far below that price as possible.
“It’s a no-brainer to create a situation in which your potential buyers are focused on their maximum price, not achieving the lowest price possible.”
Also remember, during the auction campaign, you, as the vendor, are in complete control.
You set the reserve. If the bidding comes in below that reserve, you decide what to do next. There is no obligation to sell or negotiate.
Equally, you set the terms of sale and an auction sale is always unconditional. If your property doesn’t sell on the day and you enter negotiations, you are in a very strong position.
There is no pressure to make a hurried decision and no fixed price to come down from.
“Auctions are designed to maximise competition and if the property sells, it sells at the price the market has determined. Without limitations.
“The method of sale is always solely the choice of the vendor. However, I believe it is in the very best interests of our clients that we offer the opportunity to benefit from an auction campaign,” Kennedy says.
Gary and Elizabeth Hansen will guide you through the choices for selling your home.