How to run a silent auction

The only people who truly enjoy public auctions in Australia are the nosey neighbours living next door. But there is an alternative that may feel more comfortable. It’s called a silent auction.

Leaning to choose between a silent auction, public auction, and private treaty is an important skill to be aware of and the success of these different selling methods depends on having the right agent and the right circumstances.

In the case of the public auction, a property sells to the person with the highest bid once it’s above the reserve price. Because of this, it’s quite common for the highest bidder to win in a public auction just by beating the second highest bid by a mere $1000. This is a tragedy for the seller because they have unknowingly forfeited roughly 5-10% off the sale price. Sadly, this only occurred because the buyer didn’t need to put forward their maximum bid price to win the public auction, therefore extra money the purchaser becomes a silent loss to the seller.

We can avoid this loss to the seller by using the silent auction method because buyers won’t be thinking of their minimum bid but instead the maximum that they willing to pay for the property.

With all this considered, a silent auction is not always the best option so let’s have a look at the most important elements to contemplate when making these decisions.

Market Conditions

During a national industry conference, real estate veteran Bill Malouf made a critic based on his colleagues who went along to market-like auctions, which he believed was not really a non-auction environment. He believed that market was suffering a crisis of confidence, and that real estate agents shouldn’t be listing properties for public auction. The data at the time showed that the clearance rate was a measly 50%.

So weather is it a public or silent auction, the market needs to be able to support a sales campaign of multiple bidders. If the market conditions are flat then it would be preferable to run a normal private treaty rather than a silent auction.


When it comes to marketing a public auction, silent auction or private treaty, they all require the same promotional campaign. The focus should always put your property first and the sale process second. This is because a buyer will be more interested in the property itself and regardless of the sales process you’ve employed if you have a competent agent, buyers will come forth.

Price Guide

Homeowners often all make the same mistake when it comes to private treaty sales. They price their property too high for the market! You might think that by doing this you will end up achieving you desired sale price. However, it actually causes the property to languish. In the case of public auctions the opposite

occurs and the property will often be advertised at 10 – 15% below the owners desired reserve price.

Its not all bad news though, all you really need to do is quote the accurate market value and bidders will flock in. don’t forget that the ‘Market Price’ is not the same as the ‘best and highest price’. When a vendor lists their property to be sold at the ‘best and highest price’ on the open market, it’s completely fair and legal to do so. They aren’t misleading potential buyers in to bidding on a property that they have no chance of winning. What they are doing is making the commercial decision to accept the highest offer.


Having a public auction automatically puts a deadline on the sale of a property and as that deadline looms, the vendors begins to feel the pressure of the sale which should be focused on to the buyer! This becomes very apparent when the market becomes disengaged from the price guide the agent has been quoting. It’s best to avoid public deadlines on a silent auction initially, unless a trustee or court order has enforced the deadline. When you can, keep the question of a deadline open until you’re almost certain you will have a sufficient number of buyers and bidders at auction.

Having a deadline set from day one of a campaign makes for a high-stakes pressure situation. For example both Melbourne and Sydney’s property market sprung into the first week of Spring 2016 with 78% and 80% clearance rate respectively. This is basically as good as the public market gets my friends, and even so this still means one in five auctions failed! Imagine the abysmal clearance rates we’d see in a normal market. But if the owners just allowed themselves more time to find a buyer they could have avoided the public humiliation of failing to sell at auction.

Lower the barriers to entry

You always want the maximum amount of bidders bidding on your property. To do this at a silent auction you need to provide easy access to the relevant information. This means having pre- prepared all your strata and building reports and a straightforward contract on hand. This will ensure that the buyers can draw on communal due diligence reports at a lower cost.

Advising buyers who are highly unlikely to win at a silent auction against spending money on due diligence will garner respect and trust from buyers. Many agents will happily sit buy while buyers waste thousands of dollars, knowing full well that the buyers’ budget will fall short of what’s needed to purchase the property.

Confidential bidding

In its’ essence a silent auction keeps specific offers confidential. But if it is clear the property will sell for more than the original advertised price guide then this should be made known for two reasons. First because it will price some buyers out of the running and second it shows the remaining bidders that they need to be ready to fight, as the property is in hot demand.

To not do this is a missed opportunity to increase final sales and in some states, it is even illegal.


Many people believe that a public auction generates emotion; the battle to win can fuel intense bidding wars. And it can, if buyers are in love with a property they will indeed fight for it. With a silent auction it is crucial that the buyers know that the property will sell and that it is a sought after property. That way we can simulate the same intense emotional reaction buyers feel during a public auction in a silent auction arena.

Binding Contract

Your agent is responsible for ensuring the buyers are in a position to sign the contract by the deadline. The winning bidder must submit their offer on a signed contract and they cannot submit non-binding written offers against contract offers.

Passing In

Not matter how well you plan; both silent and public auctions can fail to meet the vendors’ reserve. If that happens at a public auction everyone will hear about it the following day in the news and data sources like Core Logic keep this info on your property, for life!

In a silent auction when the price fails to meet the reserve there is no public failure noted for the property, the agent or the vendor and the only people who know are the buyer, the owner and the agent. This allows the property to go to market for a second time with no stigma attached like it would in the case of a public auction.

Overall the silent auction method is a superior selling option compared to the public auction, so long as the vendor and agent are working as a team!

Clark Real Estate has run many Silent Auction campaign with outstanding results. If you are wanting to know more about silent auctions or find out how we can help you sell your property, call us on 07 3256 1600 for a confidential discussion.