Benefits of selling by Auction
We’ve all seen the drama of an auction on TV – but what is an auction and what are the key benefits?
What is an Auction?
An auction is a public sale, usually conducted by an auctioneer or a qualified real estate agent and is governed by strict rules. It is advertised for a specific place, time and date and prospective buyers bid for the property with the property being sold to the highest bidder.
There are a number of benefits to selling by auction – lets take a look below:
1. Create competition
Auctions create a competitive bidding environment and have the ability to establish an emotional connection between the property and the purchaser in a short period of time.
If more than one person wants to buy your property, the competitive nature of an auction can cause people to bid higher than they originally wanted to, often leading to a much higher sales price.
2. Have a set end date
Having a set date creates the urgency for a prospective purchaser to be organised for auction day. If a buyer inspects the property seven days prior to auction day then they have seven days to be ready to perform and make a bid.
Setting a date also creates a structured selling plan in which to achieve a sale either prior to auction, at auction or post auction.
It gives the vendor and agency clarity on their roles in the selling process and also ensures they are prepared for all inspections and the auction.
3. Attract more potential buyers
Taking a home to auction can help you attract more buyers through the open for inspections and more bidders registering at the auction.
Interested buyers may stretch themselves under a competitive environment to buy their dream property.
4. Shorter marketing campaign
When selling your home there will always be an investment in marketing.
A typical auction campaign runs for 3-4 weeks and consists of a high intensity marketing strategy focused on reaching the most amount of people in a short period of time
It also gives buyers more of a chance to see the advertisement, recognize it, and develop an immediate emotional connection between the property and themselves as a buyer.
You never get a second chance to make a first impression.
5. Reduce days on market
Auction ultimately reduces days on market and creates a quicker sale.
This means your property is sold before it becomes “yesterdays news”.
6. Unconditional contract
Auction gives you an immediate unconditional contract.
Once the hammer falls a buyer is bound to the contract and an immediate exchange then takes place.
It gives you as the seller clarity in regards to the sale. Auction is the most transparent way to sell real estate.
Buyers can see who they’re competing with and sellers can see first hand what the market is prepared to pay for their home.
With no cooling-off period, an auction is a fast and efficient way to sell your home and the buyer is legally obliged to buy your property.
7. The most transparent way of selling
The fact that an auction is happening in real time gives buyers piece of mind that the bidding and sales process is 100% transparent and that the sales price reflects true market value.
8. Vendors are protected by the reserve price.
You set the reserve together with your real estate agent and you don’t sell unless the reserve is met or you are happy with the highest bid.
9. High chance of an early sale
When competition is high, buyers often feel the urgency to put a pre-auction offer in, which can mean you sell for a great price without even getting to auction.
10. Easy negotiation after auction if the property passes in
If the property doesn’t sell at the auction – don’t worry as your agent is an expert at negotiating successful sales after auction. In my experience nearly all properties sell at, or immediately after an auction.
It is always the sellers decision as to which method of sale they choose and at Southwell Property, we have sold properties using every method available. However, with all of the benefits above, it is no wonder many choose and succeed at Auction.