Certain properties are better suited to auctions: Those properties which have something unusual or unique about them, or properties which are hard to quantify because there aren’t similar properties to compare them with (ie: no comparable sales evidence upon which to rely). The market sets the price rather than the agent or a valuer.
Where there is plenty of sales evidence and comparable properties by which to assess a selling price, in my opinion private treaty is the best method of selling. However, if there is time pressure on the owner, for example, due to buying another property or relocating to another country, then auction is suitable because there is a specific marketing time and specific auction date and people know that if they want to buy that particular property, they have to organise their affairs to match those dates.
First impressions are very important, so presentation is high on the list. Having the right marketing and auctioneer is also extremely important. Generally, a local agent is best as they know their local area inside out and if they live and work in the area, they also have a vested interest in keeping up the prices in that area.
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READ NOWA common mistake is setting the reserve too high. If buyers know the property comes to a point where the auctioneer says “we are now selling and on the market,” this can draw other buyers into the bidding.
A common misconception is that auctions can bring the highest price. If the house isn’t suited to an auction, the marketing is bad and the property is targeted to the wrong market, the highest price will not be achieved.
Another misconception is that there are secret bidders.
Secret bids are illegal, but the seller can make a limited number of bids up to the reserve price. However, the auctioneer has to declare that the bid is a seller’s bid.
A seller should accept an offer prior to the auction if it is a good offer and the terms and conditions are similar to the auction conditions. In other words, an offer at a price that is acceptable to the seller, is a cash offer with few conditions and the settlement date should be similar to settling a successful auction (ie either 30 or 60 days, whichever is acceptable to the seller). If done properly, an auction can be an exciting, fun and produce a good result.