In the current hot Sydney market, more vendors are choosing to sell via auction to take full advantage of today’s exceptionally strong demand. Figures reported early in February show a 40% jump in auction listings compared to the same time last year*.
Most Australians are intimidated by the auction process and it’s easy to understand why. But if you avoid auctions, you’re going to miss a lot of good buying opportunities because it’s usually the best properties that are offered for sale via auction.
I have long advocated the auction process as the fairest and most transparent way to buy property. Many buyers don’t see it this way – they perceive them as stressful events that lead to spur-of-the-moment emotionally-charged decisions.
I see benefits for both sides. Here’s my thinking…
Benefits of Selling by Auction for buyers
- You know what the competing offer is at all times, unlike private treaty negotiations
- You get an immediate result – unconditional contracts are signed straight after the auction
- You can see your competition and read their body language
- The price is benchmarked in public – it’s comforting to know others have valued the property the same way
- You have the option to make an offer prior (although you risk paying more than you need to)
- You can authorise someone else to bid on your behalf
Benefits of Selling by Auction for Sellers
- Auctions create a transparent forum for committed buyers to battle it out, enabling you to truly flush out the very best price available to you in today’s market
- The competition of an auction naturally heightens buyers’ emotions and their desire to ‘win’
- You get an immediate result
- The normal 3-4 week timeframe of an auction campaign forces buyers to focus and prepare
- You can generally expect a sale within this timeframe – giving you a more secure timeline for your own plans to buy a new home
- A skilled auctioneer can make a big difference to your sale price. They create excitement, confidence and strong competition
Tips for buyers
- If you’re going to start the bidding, start low
- Project confidence – make the other bidders think you have no limit
- Make your bids fast and assertive. Agonising over your next bid is a sign of weakness
- If you miss out, accept that it wasn’t meant to be and look forward to finding something better soon
- Call out your offer in full (i.e. say “$350,000” instead of increments like “$5,000”)
- If it’s going to pass in, make sure you are the highest bidder so you get first right to negotiate
- Stick to your walk away price. Short-lived disappointment is better than long-lasting remorse
Tips for sellers
- Trust your agent and auctioneer
- Choose a realistic reserve price based on market feedback
- On the day, you will be inside listening and/or watching the event. You need to be out of sight so buyers can’t see your reactions
- Have friends and family there to support you
Last piece of advice. Auctions can be really thrilling for both buyers and sellers, so I say get excited and focus on the positives! The adrenaline on the day is electric, so prepare yourself carefully and then let the day bring what it may. Good luck!
*Australian Property Monitors
Image Credit: smh.com.au
