I’m an advocate for the auction process as a method of sale for a number of reasons. It’s the most transparent selling process with all buyers able to see competing buyers, and the auctioneer is bound by an ethical REIWA code of conduct that brings fairness to the process. Buyers also usually have time (unless the seller accepts an offer prior to auction) to view the property several times, undertake all necessary due diligence and be ready to buy on auction day.
The benefits to sellers include a cash, unconditional contract, a settlement period that suits their needs, a healthy deposit and the delivery of a price that is the definition of fair market value. The “no price” marketing strategy in the lead up to the auction day is also beneficial as it captures all possible buyers, including those who may not otherwise consider the property if it were on the market at a fixed price by private treaty.
In short, the auction process ‘shakes the buyer tree’ and reveals all possible buyers. And if the property is being sold under an executorship arrangement, or the market price is difficult to determine, then auction is the most appropriate method
And of course, let’s not overlook the X factor an auction brings which, through fierce competition, sometimes delivers an amazing result well above expectations, one hard to replicate with other methods of sale.
It is not essential, however, to offer a property to market via the auction process time for each and every property.
Sellers can sometimes feel under pressure to ‘meet the market’ on the day of auction even if the highest bid is below their original reserve price. The lead up to the auction day can be stressful too with multiple home opens and inspections during the weeks prior.
Some buyers remain deterred by the auction process too; either too nervous to bid or unprepared to buy without certain conditions being met, such as finance approval for example.
In the event the property is passed in or no bids are received, all the seller benefits of the auction process are partially handed to the buyers, who may feel empowered to offer below market price.
Be sure to ask your agent about all of the options when coming to market, as there’s benefits with all methods of sale. It’s a matter of choosing one that suits your needs and circumstances, and agents should offer you that choice and confidently explain your options.
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