Pros and Cons of Selling at An Auction
There are only two legal options to sell real estate in Australia – selling by Private Treaty or selling through an Auction. Private Treaty sales can also be called ‘selling through negotiation’, ‘expressions of interest’, etc. but are fundamentally the same selling method with a different twist.
While most sellers are relatively familiar with a Private Treaty sale (selling directly to a buyer through negotiation), many others are not so sure about Auctions. This selling option has become very popular in the hot property market so let’s explore the pros and cons of selling through an Auction.
Selling at Auction
Selling at Auction is currently trending as an Agent’s preferred sales approach in ‘hot’ market areas such as Sydney and Canberra’s Inner South. It comes with both its pros and cons, which are described below:
– Current (November 2017) Canberra clearance rates sit at approximately 68%, which signifies the chance of exchanging contracts and sealing the deal on the day of the auction
– Auctions show the true value of a property (as the market sees it) and not just an Agents estimate
– Properties tend to sell in fewer days
– Less time is spent in negotiations between buyer and seller
– Buyers can tend to shy away from auctions due to the pressure that can arise on the day
– Buyers can be fearful that they may pay more than the property is worth
– The absence of a price guide could deter many potential buyers
– The property will only sell for the price the market dictates on the day of the sale (assuming it sells at auction)
– Auction marketing can cost significantly more than private treaty marketing
– Sellers may feel pressure to sell on the day despite the property not reaching reserve