Should You Sell via Auction

Should You Sell via Auction?

There are three main property selling strategies that you can use to sell your home: auction, tender, or private sale. So, should you sell via Auction? 

Nowadays, auctions are becoming more and more common.  They are a very efficient way to sell your house because the buying community is aware that you are determined to sell. Furthermore, Auctions are no longer associated with sellers who are in desperate need of a sale, as was once thought.

So when should you choose an auction over alternative sale options for your property?

 Here are five important factors to think about:

1. Your Situation (in terms of timeframe and needs)

If you have a firm timeline for your sale or a move out date you are needing to stick to, Auction provides that certainty of timing. It follows a schedule and provides you control over the circumstance. Additionally, it saves you from having to decide on offers that were made in the early stages of the marketing campaign. 

However, be aware that Auctions are usually a four or three week campaign, so they do have a higher number of buyer inspections than some other methods. So if you have young children, or your schedule means you don’t have time to prepare your home for six to eight inspections over three to four weeks then Auction might not be the right way forward for you.

2. Type of Property

Understanding the buyer demand for your property is a crucial factor when deciding whether to go to auction, regardless of whether you have a home that is heritage listed or a unit in a complex. Does the buyer demand outrun supply for homes similar to yours? Are potential buyers prepared to pay more for your house because of its location or position in a neighbourhood? Does your house have a standout selling point, such as a prime location or a lovely view? For instance, putting your property up for auction might not always generate much buyer interest or produce the outcome you desire on the auction day if your unit is part of a development with 50 units and there are already 7 properties up for sale and yours is similar to or identical to others. 

You must also consider the demographic and type of buyer for your property. Medium to high range properties usually perform well at Auctions as the buyers are more experienced at real estate transactions. Whereas entry level properties often don’t perform as well due to the higher number of first home buyers, who typically don’t have the confidence to bid strongly at Auctions.

3. Your Property’s Current Real Estate Market Conditions

The choice to put your property up for auction could be influenced by whether you are in a buyers’ or sellers’ market. Since they can foster a sense of competitiveness and excitement, auctions are well recognised to be advantageous for a seller’s market. 

Whereas when the market is neutral or has shifted more towards a buyers market, the competition at auction may not be strong enough to push the price as high as it can possibly go.

4. Finance Conditions

Finance plays a critical part in the success or failure of Auctions. When finance conditions are strong the number of registered bidders and active bidders at Auctions provide for excellent competition. The more buyers with finance fully approved, the more bidders, and the higher the price will go.

However if finance conditions are tight, many buyers may only be “conditionally approved” for finance meaning they can’t or won’t bid at auction, because of the risks associated. If they do secure the home, they aren’t sure if their finance will be approved or not. This can result in an Auction with many registered bidders who don’t actually participate in the auction. Effectively, the majority of the buyers wanting to buy the home are excluded from buying it under auction conditions and are waiting for it to be passed in, then the auction can often depend on competition between only one or two bidders, or possibly a negotiated outcome with only one buyer.

5. Your Own Preference

Ultimately the choice is yours. If the excitement and certainty of an auction sounds great to you then an Auction might be just the thing. However if the pressure of an auction sounds like it might be too much stress for you then there are many private treaty methods that might suit you better.

If you would like to discuss the particulars of your property and your own circumstances then please contact us.