Understanding how the auction will run and considering all the possible outcomes will help to reduce stress and achieve the best possible result on auction day. Our Director of Sales and Chief Auctioneer, Thomas McGlynn, shares his top five tips on selling your house by auction for vendors leading into the spring selling season.
1. Why you should consider an auction sale
There are a number of advantages to selling your property at auction.
In a market where there are more competing listings – particularly during September to November – the best way to show prospective buyers that you are a serious and committed seller is through an auction campaign. Over the course of a three to five-week period, you will have the opportunity to gather market information and develop an understanding of price accordingly.
We have now entered a ‘heartbeat’ market, where results can vary greatly. But the benefit of an auction campaign is that it creates a sense of urgency and a competitive buying environment, which may help to increase a home’s value and achieve a premium price.
There are clear statistics that indicate that properties have significantly less days on market in an auction campaign when compared to properties listed through private treaty. It also can provide structure, allowing you to prepare for open houses and continue to live your life with limited disruption.
Finally, come auction time, you are getting an immediate, unconditional contract. Once the hammer falls, a buyer is bound to the contract, giving you as the seller clarity with regards to the sale.
2. Pay attention to market feedback
As a vendor, you need to understand you are not operating in isolation, you are in competition. Not only with what is currently on the market, but with recent comparable sales. The price of a property is largely dependent on what has recently sold in the surrounding area.
When working with your agent to develop a pricing strategy, assessing the general market conditions is crucial. Consider comparable homes that have sold within the last six months, but also look at what properties are currently on the market that are more and less desirable than your own.
3. Meet regularly with your agent
Throughout the auction campaign, owners should be receiving weekly feedback from their agent. At The Agency, we provide this in the form of a weekly written report. Market feedback will help sellers to understand the positive attributes of their home, as well as the limitations and how this may affect sale price.
Vendors should work with their agents to get a pricing strategy right, prior to the property going live to market. If you go to market with a price that’s too high, you risk alienating potential buyers and may struggle to get people through the doors. However, if you price the property too low, you are going to be attracting the wrong buyers who may not have the appropriate budget.
It is during the initial meetings with your agent that you should discuss all possible scenarios that could unfold during the course of the auction campaign, and then work to finalise a pricing strategy. Each week throughout the campaign, you should meet via phone or face-to-face to discuss the progress. For example, who are the interested parties? What factors could impact the sale price? etc.
In the week leading up to auction, your agent should arrange a meeting to discuss the reserve price. I highly recommend you have this meeting prior to auction day, when you aren’t pressed for time and can really have a proper conversation about it. This will help the auction day run seamlessly.
4. Action on auction day
A realistic reserve price is the key to a successful auction. It is important to set a reserve that is in line with your expectations and market feedback but remember the reserve can be adjusted during the course of the auction.
When setting the reserve, you should have three prices in mind:
1. The ‘Champagne’ price – this is the figure that would have you doing cartwheels down the street if you achieved it.
2. A price that you think is fair for all parties involved – based on the feedback you have received.
3. The price that may hurt today, it may hurt tomorrow – but in six months’ time you’ll be happy you’ve moved on to the next stage in your life.
If you have these three figures in mind come auction day, you will have greater clarity as to what you are prepared to sell for.
5. What to do if your property passes in?
In the current market, there is a possibility that you may not sell at auction. While this can be disappointing, it doesn’t necessarily have the negative impact many perceive it to have. A good real estate agent will have a strategy in mind to achieve a successful sale post-auction.
When a property passes in, often the agent will negotiate with the highest bidder in the first instance. If a price can’t be agreed upon, the agent may begin negotiations with other potential buyers. Keep in mind that there are fresh buyers coming into the market every week.
In this instance, there are a number of questions to consider: Do you price the property where market feedback has been? Do you convert the property to private treaty with an advertised price? Do you ‘rest’ your property for a few weeks? Or, if the current expectation is not being met in the market, should you keep the property and rent it out?
In most instances, properties that pass in at auction will sell within 14 days. Discuss all the variables with your agent, stay positive, and listen to their advice.
Written By Ellie Schneider @ The Agency | 29 September 2018