Many suburban areas across Australia have a long-established love affair with auctions, as they offer the advantages of potentially higher sale prices, transparency, and quick settlements. However, it pays to remember that auctions are not a magic wand that agents can wave over properties to achieve outstanding results every time.
Matt McCann, chief executive officer of LocalAgentFinder, said that vendors should take great care when choosing a real estate agent.
“The most suitable agent can develop the best sales strategy, and can be the difference between a property achieving maximum price and being passed in at auction. We can make the process of comparing agents much easier to ensure vendors are making a level-headed, well-considered decision,” he said.
Listed here are three auction considerations and pitfalls around hammer time, and how to address them when selling over the summer.
1. Receiving multiple offers before auction.
In highly sought-after suburbs, it can be common for vendors to receive multiple offers prior to auction. As the vendor, accepting such an offer means you’re denying any chance for competing buyers to force the sale price up. However, there’s always the risk that your property will be sold for less than your initial asking price on auction day.
Offers made prior to auction must be exceptional in price and favourable in all conditions, as buyers aren’t just purchasing your property; they’re also purchasing the right not to compete in the market.
A great agent will negotiate with all potential buyers throughout the marketing period to reach the best possible price for your property. In some cases, this could mean that you accept an offer early to prevent a potential buyer from purchasing the house for lower than their original offer on auction day.
2. No bids on auction day.
A good agent will monitor buyer interest and carefully gauge buyer sentiment to determine if it’s shaping up to be a hot auction. Auctions thrive when there is competition among buyers for your property and fail when an agent has misread how your property sits on the market.
A well-run marketing campaign should convince prospective buyers to spend more on a property on auction day through competition and FOMO (fear of missing out). Your agent should also be in consistent communication with you, and will advise you not to proceed with an auction sales method if buyer interest is lower than anticipated.
3. The buyer walks away from the deal.
If your property is sold at auction, that doesn’t mean the transaction is set in stone. Sometimes, buyers will walk away from their contract, and the main reason for this is financial constraints. To reduce this risk, you need to ensure that your agent is thoroughly screening each potential buyer. “Agents screen potential tyre-kickers early in the process to ensure that only capable bidders put their hand up on auction day.”