A commercial property being sold via a ‘reverse auction’ method failed to sell over the weekend, after the vendor refused to go lower than $1.5 million.
Gary Harding announced last month that he was selling his cafe, based in the NSW Southern Highlands, via the unconventional 'reverse auction' method.
Independent auctioneer Damien Cooley, from Sydney-based Cooley Auctions, conducted the auction.
Mr Cooley estimated that around 150 people showed up to watch the event, however, Mr Harding believed the crowd reached at least 200 people.
“We had a huge crowd, but not as many registered bidders as we expected,” Mr Harding told Real Estate Business. “I expected more people to register, just in case the price kept going down.”
Bidding began at $1.68 million and went down in increments until Mr Harding stopped the auction at $1.5 million.
“Because there were so few registered bidders, I didn’t want to keep letting the price slip lower just in case I ended up giving it away," Mr Harding said. "I couldn’t afford to do that.”
However, both parties labelled the experiment a success, despite not achieving a sale.
“We have brought some interested parties out into the open, and we’re currently negotiating around the $1.5 million mark,” said Mr Cooley.
However, using the reverse auction to sell a residential rather than a commercial property might prove to be more successful, according to Mr Harding.
“If it was a two bedroom apartment in the city, and you can get as many people to show up on the day, I believe this style of auction would work perfectly,” he claimed.
Mr Cooley said the effectiveness of the reverse auction is tied to how emotionally attached potential buyers become.
“If you can create that emotional connection between the property and the buyers in the crowd then yes, it could work," he said.
“But I still believe in the traditional auction method,” Mr Cooley admitted.
However, Mr Harding said if he were to go to auction again he’d use the same style as this time.