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One of the biggest fears for vendors is that their property will be passed in on auction day. We asked real estate expert John McGrath for his thoughts and advice on this subject.
It’s important to remember that the auction itself is not the be-all and end-all of this particular method of sale. In fact, there are several opportunities for a property to be sold during an auction marketing campaign. It can be sold prior to auction, on the auction day under the hammer, on auction day after it’s been passed in (often to the highest bidder who usually receives the courtesy of first right to negotiate), or in the days after the auction if it’s not sold on the day.
Having sold thousands of properties at auction myself, obviously I’ve had to pass in a number of those. But I’ve never found selling a property after auction to be an issue. From my experience, most properties passed in at auction usually sell by private treaty within 7-10 days (hence within less than 38 days of going on the market. At McGrath, our current average days on market for auction properties is 26.)
The auction unearths the best buyers in the market at that point in time, and a good agent will negotiate over the next few days with one or more of those buyers. If you are realistic about your price expectations, you can hope to sell promptly.
Some vendors are uncomfortable with auctions because they believe that if their property is passed in at a low price, it will create a bad impression with buyers and make it hard to sell later. I disagree because you have some influence on the passed-in bid.
You have the right to make one vendor bid at the auction, so you can place that bid at a price you’re comfortable with. Or, if there’s no bidding, you have the choice to ‘no bid’ the auction, or place a vendor bid and pass in the property on your vendor bid.
Many of the buyers who don’t buy your property at auction will go onto something else. But fresh buyers are coming into the market every week. So if you pass in your property on your vendor bid, you can give them a clear indication of your price.
It’s also worth noting that some of your best buyers may not bid at your auction simply because their own homes are scheduled to auction after yours – sometimes on the same day! Most buyers want to sell before they buy and this is definitely smart. If your property passes in, these buyers are likely to compete strongly for your home once their own properties have sold.
The whole purpose of an auction is to create sufficient buyer interest to create a competitive bidding situation. Now, there’s no point having an auction if you’re going to keep it a secret. It’s imperative to do an effective marketing campaign to reach the maximum number of potential buyers in the allotted time. An effective marketing campaign, along with realistic price expectations, will greatly increase the likelihood of a sale prior to the auction or on the auction day itself.
Click here for John’s property marketing tips.
For more information and advice, please visit www.mcgrath.com.au
