Today, auctions as a means of selling property, are becoming increasingly popular in WA after years of success throughout the eastern states. Many believe that auctions are the best way to secure a high price for a property, given the competitive nature of buyers, and the high pressure environment of an auction. Yet, naturally there are pros and cons to everything, auctions included.
- Competitive Bidding
There is no sale price limit when it comes to auctions. Your property is worth what buyers are prepared to pay for it on the day. This is often well received by the seller!
- Complete Control
The seller sets the terms and conditions of the sale for an auction so they are always in control.
- Protection for the seller
The seller is protected by the reserve price. This means that your property will not sell unless bidding reaches a pre-agreed level. This figure is determined carefully between the seller and Agent and the property will not be sold for less.
- Sense of urgency
Auctions generate a sense of urgency amongst buyers. Typically, a set ‘end date’ for the sale of the property will be made and this encourages any potential buyers to make a decision on the day. Genuine buyers will also have typically viewed the house within the first 2 weeks of marketing. As auctions have a strict timeline, interested buyers are forced to take prompt action.
- Exposure through Marketing
The property is usually held exclusively by one Real Estate Agent for a fixed period of time during which marketing of the property is intense and very effective in attracting interest.
- Not 1, but 3 chances to sell your property
- Before the auction- buyers have the opportunity to approach the Real Estate Agent prior to auction day with an expression of interest.
- On auction day- if the reserve price is reached.
- After auction- if the reserve price is not met, the Real Estate Agent will contact the highest bidder for further negotiations.
There may be additional costs involved to sell a property via auction. This usually is used to cover the cost of hiring a specialist auctioneer. It is important to discuss and compare the costs to sell via auction with your agent.
- Sales Evidence
In some cases, an auction isn’t the right way to sell a particular property. For example, for a large block of identical units which are all of a similar specification, everyone would be aware of the sale price of other units, thus private sale could result in a higher sale price per property. To discuss find out whether auctions is right for your property, consult your agent.
- Special Conditions of Sale
Generally, auctions are not suited to buyers who wish to purchase subject to finance as often bids are unconditional. Alternatively, some potential buyers could be anxious at the thought of bidding for a property at auction. Both situations limit the potential number of buyers that your property could appeal to.