Every Saturday, all around Australia, the hammer is raised and another auction takes place on our streets.
But according to Realestate.com.au and CoreLogic Data, last week only 45% of auctions resulted in a property being sold. The previous week that value was 55%. Odds are not stacked in favour of the Seller.
So if you are only likely to sell your home half of the time at auction – why do people still chose this method of sale? And more importantly, why should you choose to avoid auctions?
Why do people auction?
Auctions are sometimes described as front yard theatre – and with such high stakes and intense emotions it’s easy to see why.
Buyers flock to auctions looking to find their dream home at a bargain price. Whereas sellers are conditioned into the auction option convinced that their property will be fought over by separate buyers and soar well beyond the reserve.
But surely both of these ideals cannot be true?
Therein lies the biggest problem with auctions. Although real estate agents will tell sellers that this is the most transparent way of selling your home at the true market value, in reality the agents hold all the cards at auction – and often both the buyer and the seller are in a lose/lose position.
Do auctions guarantee the best price?
Simply put, No!
The focus of a buyer at auction is to marginally outbid the next highest bidder. This does not always equal the highest or best price they are willing to pay for the property and can result in buyers getting a bargain – but sellers missing out on thousands of dollars.
Whilst some agents will insist that going to auction will enable you to discover the true market value of your home, in reality it’s simply the easiest way for the agent to get a quick sale.
If the property doesn’t sell, it’s easy for the agent to blame the market – and then push down the price when the property goes back on the market.
This very public failure to sell at auction often ends up tainting your property. Future, post- auction buyers know at what price the property was passed at, meaning they will be unlikely to want to pay more than the failed auction price, this could result in you potentially getting a worse price for your property.
Genuine buyers miss out
Before going to auction, potential buyers often have to shell out a significant amount of capital before even bidding such as paying for all due diligence (ie :pest and building inspections, bank valuations etc) before the auction date.
Potential genuine buyers risk a lot just in turning up to an auction so often stay away, and it is impossible to quantify the lost value of a genuine buyer who doesn’t turn up to auction – who may have been willing to put an offer in above the reserve.
Get in touch
An agent’s job is to get the best possible price for your property. If you want expert advice about selling your property, get in touch with Clark Real Estate today!