Selling at Auction: Here’s what you need to know before the big day
In the first week of December alone 3,353 auctions occurred in Australia’s capital cities. CoreLogic’s analysis shows that there’s a reason so many properties are sold this way – in hot markets auctioned homes sell for hundreds of thousands more on average than those sold by private treaty.
Despite that it’s completely normal to be nervous and unsure before you sell your property at auction. Put your mind at ease by making sure you’ve done all you can to achieve a good result.
Understand the market when setting your reserve price
When choosing interview at least three agents and don’t be afraid to ask hard questions.
One of the first things you should do before going to auction is to decide what price you’d be happy to sell at – the reserve price. The level at which you set this can seriously affect the outcome of the auction, to high and you mightn’t sell, to low and you could miss out on thousands of dollars.
To set yours, look at comparable properties in the area and find out what price they’ve sold for recently. Research the market in the area, find out which way prices are trending and if demand is high. You should also consider getting an independent valuation done.
Throughout the marketing campaign take note of how many people are viewing your home, how interested they are, and how many people are likely to turn up on auction day. If interest is extremely low or very high, it may be smart to revise your reserve price to reflect that. Always ask your agent and auctioneer for advice when setting your reserve but don’t rely solely on their opinion – do your own research as well.
Have the best possible agent representing you
When looking for an agent to sell your home don’t just pick the first person you meet. Look for someone local with:
- A market value estimate that seems accurate after doing your own research.
- Evidence of success selling at auction in your area.
- A thorough marketing plan.
- A clear and fair commission and fee structure.
When choosing, interview at least three agents and don’t be afraid to ask hard questions. Compare their valuations of your property, the answers to your questions and their commissions and pick whomever stands out. Taking the time to make sure you’ve made the right decision could be the difference between success and failure at auction.
Insist that your agent regularly check in throughout the auction campaign.
Make sure you have clear communication
There’s nothing worse than being in the dark when selling your home. That’s why you should insist that your agent regularly check in throughout the auction campaign, every week via phone or email if possible.
Ask them how many buyers are interested, who the prospective buyers are and what they’re willing to pay. Have them ensure that all serious prospective buyers are fully prepared with finance and a deposit ready to go. If you’re fully informed, come auction day you should have a fair idea of how it’s going to go, which can help you prepare for the result.
Know the real estate terminology
Before you go to auction it’s essential you know basic terminology – otherwise you’re at risk of being completely lost on the big day. The following are the essentials:
- Reserve Price: the price at which you are willing to sell the property.
- Vendor Bid: a bid made by you or your agent which occurs when you’re not happy with the price buyers have reached.
- I will accept raises of $1,000: when you hear the auctioneer say this the bidding is slowing and the final sale price may be near.
- Passed in: if your reserve price isn’t met the property is passed in giving you the chance to negotiate with the highest bidders.
When you attend the auction your real estate agent should accompany you, and if you have any questions or concerns you should feel free to ask for clarification. It’s important to know that if your property is passed in at auction it may still sell.
It’s important to know that if your property is passed in at auction it may still sell.
Insist on a professional auctioneer
Successful auctioneers emotionally charge buyers by ramping up the perceived competition for the property, and creating an electric atmosphere. They create an urgency in the room, building momentum towards the result you want.
Being a successful auctioneer is harder than it looks, and it takes considerable skill and experience to consistently get results. For that reason you should insist on hiring a professional for your auction – it could be the difference between a successful sale and disappointment.
Auctions can be stressful and difficult for sellers. By doing all you can to be ready, you’ll enjoy yourself more on the day, and you’ll be more likely to get the result you want.