ADVANTAGES OF SELLING BY AUCTION
RATHER THAN BY FOR SALE
1.RESTRICTION OF A CEILING PRICE
House & land buying is often based on emotional issues and it is difficult to always predict price thresholds accurately. Properties in demand locations should be made available in an open, competitive environment in order to solicit feedback on price (by the way of offers and bids) without the ceiling of a set asking figure.
If an asking price is too high you will still get people to inspect the property, however, they will expect more for their money (e.g., more land, newer kitchen and bathroom, better position or a larger home) and therefore the inspections are “wasted” and valuable selling time is lost whilst the property is still “fresh”.
If a property becomes stale in the eyes / minds of prospective purchasers, even obtaining ‘market value” can be an enormous challenge at this point.
2.HEALTHIER LEVEL OF ENQUIRY / INSPECTIONS
Purchasers are more inclined to enquire/inspect properties scheduled for Auction as they believe the Vendors are more motivated to sell. On many occasions they suspect that people attempting to sell privately are only prepared to sell if they get “their price” which is frequently above market value and in addition the vendor is looking to achieve a sale with little contribution to any form of advertising or promotion. A vendor who makes a firm commitment to thoroughly promote their property is normally making a very clear statement to the market place about their genuine desire to sell!
Importantly, as a price is not quoted in an advertisement for a property being sold by auction, the level of phone enquiry and inspections generated should be far superior. It is distinctly possible that a buyer enquiring on a property worth $330,000 to $350,000 may only have $280,000 to $300,000 to spend, however, with good referral skills the sales person may be able to sell them an alternative property. This thorough use of every phone enquiry can only benefit every single one of our vendors clients.
3.DEFINED TIME FRAME
By adopting a time frame (as you do with an Auction), there is a given day and time in which prospective purchasers must “perform” if they are sufficiently interested in a property or risk missing out altogether.
This pressure is vital as many purchasers tend to procrastinate when looking at properties for sale privately.
Another crucial strength in favour of the system is the unconditional nature of the sale. It is highly likely with a private sale that a buyer will impose conditions such as subject to their solicitor approving the documentation or (subject to) finance or a satisfactory builders / architects report. Whilst these things might eventually sort themselves out, it slows the selling process down and it can result in frustrating time delays for both the vendor and company handling the sale.
With an auction, unconditional contracts are signed and exchanged immediately upon the fall of the hammer and a 10% deposit paid by the purchaser. There is no opportunity for your purchaser to have “buyer remorse” and use their 5 working day allowance to “cool off”! Unless a property has been misrepresented by the salesperson / company it will not allow the purchaser to withdraw from the contract.
To create competition by fully publicising the property and so allowing interested parties to compete (bid) against each other, which often results in a much higher price being obtained than the reserve fixed by the vendor and salesperson in consultation. Obviously this cannot occur with a private sale. A competent auctioneer can take full advantage of people’s natural vanity and determination not to be “beaten” in a public forum.
With vendors normally spending between 1.25-1.5% of the actual value of their property on advertising, they are able to inform a considerable number of people that their property is available for sale.
Also, the fact that there is a board on the property allows neighbours and anyone who passes, to become unpaid salespeople by “spreading the word” to people e.g., friends or relatives who may be interested in purchasing that particular property (I appreciate this last point applies to a private sale board as well).
7.MORE SELLING OPPORTUNITIES
An auction offers three opportunities to sell. Firstly, if a satisfactory offer is made prior to auction, a sale may be affected. The greatest chance should present itself on auction day. If the auction is not successful, most properties usually sell within a very short period after the auction.