Clearance rates are dropping, but that doesn’t mean that going to auction shouldn’t be part of your strategy for netting a property’s best price
In this moment of change, auction numbers tell us that the amount of properties sold at Auction has shifted to selling after the auction.
If we change the clearance rate to being on the seventh day after the auction, you’ll find there’s no clearance rate change. It’s exactly the same.
Whether the property cleared on the day or not, hosting an auction was certainly a good strategy for achieving a desirable result.
If you’re a vendor, going to an auction is a very smart and effective way for the following reasons:
- Selling by the auction method involves a highly structured and extensive marketing campaign designed to expose your property to the greatest number of potential buyers, who compete to maximise your sale price and minimise the number of days your property is on the market.
- It says to the whole market, ‘I’m deciding by this date. I’m not coming to the market to win the lottery and sit there for two, three, or more months. I’m making a decision 30 days from today’.
- Auctions in the current climate help eliminate wavering from prospective buyers.
When you sell a property as a private for sale, let’s assume that you come and buy a property through me as an agent. We agree on a price of $1,000,000.
Before you actually put the 10 per cent deposit down, you normally go off and do your due diligence. You speak to your lawyer, and mortgage broker and conduct your building inspection.
That’s around five to seven days when you are out there, ensuring everything’s in line before you become unconditional.
This unconditional period has become extremely risky for the real estate industry because all the friends and family members start advising the buyer and saying:
‘Oh, haven’t you read the paper? Property prices are dropping. We’re hitting recession. Rates are going up.’ So they scare the buyer. And what happens is the sale falls through.
Some agents are going through this process two or three times on a given property, forcing them to repeat the sales process again and again at a time when time is of the essence, and their resources are already stretched.
With auctions, that doesn’t happen. When the hammer drops, it’s done. There is no chance of that property falling through. Even when a property fails to clear, the chance to identify your serious bidders can be invaluable in ultimately making the sale.
The research is clear; about half of properties that go by auction, sell in half the days on market than those by private treaty.
That’s because many properties identify a buyer during the auction. Even if they don’t sell at auction, they’re selling very shortly after the auction date. The buyer is identified because you’ve got this compressed period.
The best way to describe it is, instead of doing a three-year university degree, you’re doing a four-week high-intensity program at Harvard University where you are all in, working all hours, because you know, by this day you want to get to graduation. That is what an auction is.
The cattle-run approach to auction is not our style. We tailor your auction to suit you.
From myself as the salesperson to the Ray White Marketing & Admin teams within Remuera & Orakei, plus our auctioneer; we work as a very tight team throughout the auction process to get the buyers in, get them bidding and get you sold. The auction is carefully strategized prior so that there are no surprises for you, other than a pleasing selling price.
Remember – you set the terms and conditions of your sale, and you are in control of the reserve price. You can withdraw your property anytime lead up to and on Auction day, and we do not get paid unless your home sells.
Reach out if you want to know more about Auctions, your local suburb statistics or require other information.
