Why would you sell by auction, when properties are selling like hotcakes anyway?

Auctions have long been touted as the fastest way to sell a property, but with homes selling in just over a week these days, is it worth going to auction?

The answer is a resounding yes, according to REIWA’s Auction Network Committee. Here’s why.

It’s about getting the best price, not the first

This is the big one. Yes, you are likely to get an offer quickly in this market, but the competitive nature of auctions gives you the best price the market is willing to pay.

Why would you deprive yourself of that opportunity?

Auctions bring interested buyers together and encourage them to make their best offer. If another buyer offers more, they have the chance to increase their offer. This competition results in the best price.

It is very likely you will get several offers in a standard sale in a heated market, but can you be sure that’s the best price? While agents may inform buyers they need to increase their offer if they want to buy the property, they don’t know what other buyers are offering and how much they need to increase their offer by.

In addition, the auction campaign gives you several weeks to reach as many buyers as possible in the lead up to the big day. With buyers swooping on new listings as soon as they go live and properties selling within days, the property is only seen by a limited number of buyers and you might be missing out on finding the best buyer for your home.

It’s on your terms

When you sell by auction you set the terms of the sale, such as the settlement date and deposit. In addition, all conditions, such as inspections, must be met before the auction.

If the home doesn’t sell under the hammer and you accept a conditional offer post auction, you can add additional conditions, such as the right to continue marketing the property until finance is approved.

In a standard sale, the buyer is in the driver’s seat, adding conditions like subject to finance or sale, or subject to building and pest inspections.

More than one chance to sell

The auction process gives you multiple chances to sell.

Before: Some buyers may not want to risk letting the property go to auction so they may make a strong offer beforehand. You can choose to accept it if you wish.

On the day: You have the auction itself. If the property is passed in you have the opportunity to negotiate with the bidders. Often there are also buyers who weren’t in a position to bid but would like to make an offer. This is their chance to buy the home.

After: If no sale is made on auction day or shortly after, the property goes to market with a price.

Sold, not under offer

You have certainty with an auction. If the property sells under the hammer it is sold, not under offer.

This is because buyers have to be unconditional to buy at the auction. You’re not waiting for the buyer’s home to sell or for them to hopefully get their finance approved.

It’s transparent

You might not think it, but auctions actually benefit buyers too. The bidding process lets them see what other buyers are offering and lets them know how much they need to increase their bid in order to be competitive. If they are the successful buyer they will know they’ve paid a fair market price.

In a standard sale they have no idea what the other buyers are paying, only that they may have to increase their offer to be in the running. Buyers often say “if I knew they wanted that I’d have offered more” when they miss out on a property.

And if the home is passed in, potential buyers know what they are likely to have to offer in order to secure the property.