Property auctions are becoming more popular with homeowners throughout Australia as a way of successfully marketing their home.
The growing popularity of property auctions is underlined by the fact that a large number of homes are now being auctioned in traditional mortgage belt suburbs rather than premium suburbs.
More sellers are adopting the auctioning system because there is defined marketing period for the home and this can be particularly important if they need to sell their home quickly.
Home auctions are particularly effective in a rising buoyant property market where prices are rising and there is greater competition amongst buyers.
A home auction forces interested buyers to make a decision rather than ‘sitting on the fence’.
At the same time, the buyers have confidence that they are paying the correct market price for a property because the can see the other buyers on auction day.
Anyone who is considering auctioning their home should consider a number of key points.
Firstly, they will be more successful if the auction is their first choice as a marketing tool rather than as a last resort after trying to sell the property by private treaty. If the property is exposed to the market over a long period of time through private treaty then it may have become ‘over exposed’ to homebuyers.
Homeowners who have already tried to sell their home through private treaty and wish to use an auction should wait for an interim period of time before beginning their marketing campaign to promote the auction.
When promoting the auction, the homeowner should ensure that their agent undertakes an aggressive promotion in the local area. Research shows that more than 70% of people tend to buy an established home within 15 kilometres of their current location. Therefore, the local area represents the greatest pool of potential buyers.
An effective promotion campaign leading up to the auction means that the home dominates the market and attracts the highest potential number of homebuyers. As a result some properties sell prior to auction, however if unsuccessful on the day, they will generally sell shortly after, as some buyers may not have had time to get their finances together and make conditional offers after.
That’s why it’s worth considering having a lending consultant onsite on the day of the auction. The real estate agent organising the auction should organise this facility to allow potential buyers to correctly ascertain their borrowing capacity.
The homeowner should also ensure that the real estate agent they select to hold the auction chooses a suitable Auctioneer. It’s important to check their past experience and success in this field. Home auctions are a specialised area within the real estate industry and homeowners should seek out Auctioneers with a proven track record in holding auctions.
Finally homeowners should select a realistic reserve price and also be flexible on pricing on the day of the auction to maximise the selling opportunities. A properly promoted and managed auction should assist the homeowner to determine the true market value of a property. If this is done, then there are no unsuccessful auctions, for the property will either sell on the day or if it doesn’t, it simply means there was no buyer, for this property, on this day, for that price. The homeowner and agent can then make the necessary adjustments to increase the likelihood of selling shortly afterwards.