Quick Guide to Selling at an Auction
An auction is designed to capture the maximum attention of buyers within a set time frame. The auction process is a great way of extracting the best possible outcome for your property, and you, as the owner, are in control and can set all the conditions of sale.
Auctions work especially well for properties that have a unique set of selling points, or that you as a vendor believe has real appeal. The reason an auction works well for these particular properties is it generates high demand in a pressure situation, which often results in producing the highest possible selling price for you.
As people get caught up in the urgency and excitement of the bidding process, more often than not the competition drives the price higher.
Advantages of selling your property by Auction include:
Auctions attract more buyers to your property because prospective buyers aren't put off by an asking price.
You set the deadline for the sale of your home (usually short). This creates a sense of urgency among buyers and lets them know you are serious about selling.
You are protected by a reserve price. This means your property won't sell unless bidding has reached the reserve price set.
There is no limit to the price a property can reach. Prospective buyers do not know your reserve price; instead, they think in ranges rather than a specific figure. The auction is an environment in which prospective buyers are most likely to stretch to the top end of the price range that they consider they can afford and thereby producing the highest possible selling price for you.
Three separate opportunities to sell your property
Leading up to the auction there will be some high profile marketing to attract as many buyers as possible and this in itself produces lots of enquiries. A pre-auction offer can be made at anytime in the lead up to an auction.
The auction itself is the best opportunity to generate an atmosphere of competition which in turn can produce the best possible price for your property.
If a house does not sell, the auction process generates lots of sales leads and there is a great opportunity to sell with the contacting of any conditional buyers that were present at the auction.
Selling by Auction has become a very popular method of selling houses and property.
Some additional information on the Auction process:
You know what the sale price is the moment the hammer falls, not later as happens with a tender or any other type of offer.
You set the conditions of sale along with Harveys Papakura.
Once the reserve price has been met, you know the property will sell, it is just a matter of how much higher than the reserve price will the property go for. This will be dictated by the market.
Only cash buyers can bid.
Auctions produce an unconditional contract for sale with a set settlement date. You get a commitment to buy and the contract of sale comes into force as soon as the gavel falls.
You know that the buyer will already have finance arranged.
Do I have to pay a fee for selling through an auction?
The negotiation process is the actual auction process which is quick - perhaps 30 minutes in duration and yes, there will be a fee involved in holding an auction, whether the house sells or not.
How is the Auction run?
Usually you as seller will set out the conditions of sale and set a reserve price for the property. Bidders are unlikely to know what the reserve price is and it is up to the seller to determine the reserve before the auction commences.
Once the highest bidder is found, that person becomes the buyer and must sign a contract and pay a deposit (usually 10%). If that person is unable to pay the deposit the auctioneer may re-open the bidding, or take a second highest bid so long as it is above the reserve price.