An auction is the rare occasion when a first-time homeowner, investor and tenant will be in the same room, vying for the same goal – to be the last one with their hand raised, followed by the anticipated throw of something impactful, which will signal that against all odds they’ve secured the property.
But whether it’s carried out within the walls of the house that’s up for sale, or in a community hall where the agenda is set by a slideshow that showcases a selection of properties, public auctions have long been admired for their competitive edge.
As Adrian Kelly, the president of the Real Estate Institute of Australia (REIA) puts it: “Auctions have been used as a way of selling not just real estate, but anything since the days of Julius Caesar. So the method works, if it’s been around for that long.”
“Purchasers have time to conduct a couple of inspections, get their finance in place, [and] get a building inspection done if they want to,” Kelly explains.
“So there’s time that you don’t have with normal private treaties. Everyone’s in the same boat, so it’s certainly an equal playing field – apart from the price.”
In response to the worldwide health crisis brought on by COVID-19 and amid a wave of restrictions on gatherings, the Federal Government has called for all public auctions and open houses to temporarily cease.
For the moment, vendors who had planned to publicly auction off their properties but aren’t comfortable with proceeding with an online auction either have to delay selling or shift their properties over to private treaty.
Kelly from REIA supports the Government’s recent decision, and in a statement said, “it wasn’t a shut down of the real estate industry”. He encouraged agents to look to technology as a way forward during this time.
Taking a step back from the often heightened atmosphere that comes with public auctions can also create space to look at them through a fresh, clear lens; unearthing what makes them effective and how best to capitalise on them once the current shield is lifted.
Setting the date: Why are auctions held on weekends?
Holding an auction on a Saturday largely boils down to the convenience it provides to buyers, Kelly from REIA says.
“People generally work Mondays to Fridays. On weekdays, not as many people would turn up, particularly people who want to be there but can’t,” he explains.
“It’s common that we conduct auctions on Fridays as well because a lot of people can get away from work for an hour or so, but it’s much harder from Monday to Thursday.”
However, the magnetic effects and emotional hold of real estate comes into play also. Kelly says that if someone is invested in becoming the owner of a property, “they will be there” no matter what day of the week it’s set to fly off the market.
Setting the mood: Choosing the right venue
Another questionable point of difference rests in the set-up: do you host the auction at the property, or do you line it up with a handful of other properties at an outside location and potentially surround yourself with more buyers?
“I’ve got a personal view that holding an auction outside the front of the actual property you’re selling is more beneficial in terms of atmosphere than sitting in a conference room,” Kelly shares.
But in saying this, he also spotlights the benefits of when larger companies collate multiple properties that will be consecutively auctioned in the one room.
On some occasions this can see up to 20 properties be put on display. It not only means that potential purchasers who miss out on a property can take a swing at the next one, but it also exposes vendors to the concentrated attention of a larger buying pool.
“If you’re a potential purchaser and you have your eye on more than one property, if you miss out on one, then you can just sit tight in the room and wait for the next one to come along,” Kelly explains.
However, he adds that it boils down to quality over quantity and says: “There’s no point having a hundred people turn up to an auction and there’s only two to three bidders.”
Kelly proposes that a seller would instead prefer to have a smaller number of people present, say 10, but all of which are bidders – as would generally be the case if the auction was held on the property’s premises.
Rallying a team: How will a real estate agent help?
Putting a property up for sale – whether through a private deal or public auction – means roping in some professionals who have done it effectively many times before and know what to expect of the process.
But with costs involved in the sale of a property, how should you expect a real estate agent to guide you along the way and increase your chances of sweeping in a profitable outcome?
Cate Bakos, president of the Real Estate Buyers Agents’ Association (REBAA), shares that the real estate or selling agent, along with their team, will “coordinate the marketing, advertising and open for inspections”.
This includes “recommendations for presenting the property in its best light and coordinating the photographers, copywriters, drones, trades, gardeners and [home] stylists”, Bakos shares.
She says that in executing these integral elements, the estate agent will also “adapt or adjust the campaign as it needs to be adjusted to enable the best result on auction day”.
Furthermore, they will have to respond to any instances in which an early offer is submitted, and if the vendor still decides to proceed with an auction, Bakos explains that “the agent will need to manage the contract preparation by the legal professionals, and will need to ensure that the vendors are auction-day-ready”.
Bakos says: “By the time that the auction is days away, the agent should have a good idea about who the likely buyers are, what value they see in the property, which other sale properties in the same area are competing, what expectations the vendors have following their consistent buyer feedback, [as well as] the likely way that the auction is to eventuate and any issues they may need to address.”
In addition to hosting the auction and explaining the selling terms with bidders, the estate agent will also be responsible for “coordinating the signing and execution of contracts”, Bakos adds.