A no reserve auction has yielded a vendor around $100,000 more than he expected, with his house selling for $431,000, his agent has reported.
"We thought with $350,000 we’d be over the moon," Dave Hardman, principal of Ray White Capalaba, in Brisbane, told Real Estate Business.
"But the seller would have been happy at $300,000. We had two valuations by the bank before the auction, and both said between $350,000 and $370,000.”
In what Ray White described as an unusual and rare method of sale, the property, in Capalaba, attracted 37 registered bidders and sold for $431,000. It sold on Saturday March 17.
“Over 100 groups of buyers came through the house to inspect it and then more than 160 turned up for the auction itself on Saturday,” Mr Hardman said. “37 bidders registered on the day and the sale price was well over expected.”
According to the agent, the owner bought the house for his son-in-law who allowed the house to fall into disrepair and failed to make repayments. “The council was going to take it and auction it anyway, so he put an injunction on it and looked to auction it himself,” Mr Hardman said.
The house, which sits on a 882m2 block of land, was originally bought in 2004 for $365,000. And after spending $20,000 on renovations and $15,000 on advertising the no-reserve auction, the seller was “stoked” at the result.
Mr Hardman believed the auction had a lot going for it. He added that the biggest reason auctions might not work is the reserve is set too high, a flaw which this auction obviously didn’t have.
“The reason for auctions not selling under the hammer is the sellers are expecting too much money.” The most recent auction clearance rate for Brisbane, based on last Saturday, was 34 per cent, according to Australian Property Monitors (APM).
He also described the seller as financially “well off”, and wouldn’t have been left in ruin if the house sold for anything too abysmal.
“He did this on purpose,” Mr Hardman told Real Estate Business. “He was hoping that something like this would happen. But he took a gamble. He didn’t know us from a bar of soap, and with market conditions a little shaky, we were just hoping it didn’t sell for $50,000."
Bidding began at $95,000, jumping up to $200,000 within minutes. Around four bidders remained after breaking the $400,000 mark.
Mr Hardman said no-reserve sales were usually used for charity auctions.
RE/MAX in Bardon, Queensland, told Real Estate Business that they had also used a no-reserve auction in October last year. A court order demanded the property be sold by a certain date.
The property sold for $525,000 after being valued at about $510,000. However the agent claimed it should have sold for around $550,000.