The definition of Auction is somewhat incorrect when it comes to real estate: “a public sale in which goods or property are sold to the highest bidder”. Now, this is true if we were all working on a cash basis, if banks and contract exit clauses didn't exist.
With an auction of property in Australia, it is more about the campaign and the three opportunities to sell your property during the Auction process.
1. Opportunity One
In the lead-up period high profile Auction marketing will highlight your property, producing the greatest exposure when the enquiries are likely to be at the highest level. Offers can be made right up until auction day, however the Buyer must be aware that their offer must be subject to auction conditions prior to auction day.
2. Opportunity Two
The Auction is the shortest part of the process but it is the best opportunity to stimulate competition. Because most people think in a range of values, rather than a specific figure, this is the time when a potential Buyer is most likely to stretch to the upper range of values to secure your property, and therefore produce the highest possible selling price for you.
3. Opportunity Three
Some people believe that if your property has not sold by this stage of the Auction process then the system has failed. This is not so. Stage three can produce a whole new range of buyers, those who may need to sell another property or arrange finance before they can commit themselves unconditionally.
The Benefits of Selling by Auction:
- Your property obtains ‘special project' status.
- No price marketing – attracts a wider range of buyers.
- Deadline Auction Day – creates urgency and a finite selling time.
- An Auction creates potential for a premium price through buyer competition.
- You choose the settlement date.
- Buyers cannot pull out of the contract after the hammer falls
If the reserve price is not reached, the property is passed in to the highest bidder. The highest bidder is then offered the first right to purchase the property immediately after the Auction. If a sale is not completed immediately following the auction, the property will be offered for sale to all other interested parties.