Many agents have a soft spot for auctions, and rightly so. They offer potentially higher sale prices, transparency and a quick settlement. But auctions can go wrong. Here’s how.
1. Receiving multiple offers before auction
LocalAgentFinder’s CEO Matt McCann says it is not uncommon to receive offers prior to auction, but these offers should be politely declined.
“Accepting an offer means you are denying any chance for competing buyers to force up the sale price,” Mr McCann said.
“At the same time, auction day could mean the property is sold for less than what was offered in the lead-up.”
2. No bids on auction day
Mr McCann said a good agent will keep tabs on buyer interest during the campaign to determine if it’s shaping up to be a ‘hot’ auction.
“Essentially, auctions thrive when there is competition for the property and fail when an agent has misread how it sits within the market.”
“A well-run marketing campaign should convince prospective buyers to spend more on a property at auction through competition and FOMO [fear of missing out].”
3. The buyer walks away from the deal
If the property sells at auction, it doesn’t necessarily mean everything is done and dusted.
“Occasionally, buyers do walk away from their contract and the main reason for this is due to finance,” Mr McCann said.
4. A poorly-timed auction date
Auctions that clash with a major sporting event or public holiday can result in reduced numbers of prospective buyers.
“Great agents understand auction timings based on the type of property looking to be sold,” Mr McCann said.
For example, if the property is a family home, an auction over the Christmas or Easter period would be “ill-advised”.
5. The property doesn’t reach its reserve
Mr McCann said auction campaigns tend to demand a significant investment in advertising and agency fees.
“That’s why if the home doesn’t reach its reserve price on auction day, the vendor may choose not to sell and try a private treaty sale method,” he said.
But he said the decision to re-list should not be taken lightly and the best agents will advise sellers of this early on.