It’s no surprise that Australian homeowners have a long-established love affair with auctions.
They offer a number of advantages when it comes to selling your home, including: quick settlement terms, a transparent sale method and the immediate payment of a deposit.
However, as the number of properties sold via auction increases, there has been a rise in disgruntled vendors.
The following auction nightmares could have easily been avoided with the right choice of real estate agent.
LocalAgentFinder allows vendors to compare real estate agents in their area on the basis of commission rate and selling strategy before deciding who to list their property with.
There were no bids on auction day
It’s a nightmare scenario. You’ve invested thousands in advertising, the street is blocked is off and the auctioneer has commenced proceedings. Then, silence.
In your own mind, you’ve done everything right. But if your home doesn’t attract a single bid on auction day, then something has gone horribly wrong.
First consider whether the agent’s advice was correct for your home. Were there multiple parties interested in your property in the lead-up to your auction? Were you marketing a particularly unique home that was difficult to value?
If the answer is no, then you shouldn’t have brought your property to auction.
A well-run auction should convince prospective buyers to spend more on a property via pageantry and fear of loss. Put simply, auctions thrive when there is competition for your property and they fail when an agent misreads your market.
You chose a terrible date
If your auction clashes with a major sporting event or the Christmas holidays this can seriously reduce the number of prospective buyers in attendance.
For example, AFL Grand Final weekend is a virtual black hole for Melbourne’s busy auction calendar. The number of homes auctioned across Australia halved on Grand Final Day in 2014 compared to the week before.
Additionally, homes that appeal to families should not be auctioned over the Christmas period, because buyers will traditionally book their holidays months in advance prior to the start of your auction campaign.
You chose not to sell
Launching an auction campaign demands a serious investment in advertising and agency fees. That’s why if your home doesn’t reach its reserve price on auction day, you may choose not to sell.
If you don’t sell your property at auction, then it’s possible to re-list your home. However this is not a decision to be taken lightly.
Re-listing your home after a failed auction campaign provides a huge amount of information to prospective buyers.
The key problem is that prospective buyers will be aware of how much your property passed in for. They know that you’re not going to accept anything under the highest bid and it shows that you’re potentially not open to negotiation.
When your home hits the market again it will also appear stale in buyers’ eyes so you may wish to rethink your marketing strategy.
Launching a new sales campaign will also require further investment in advertising to reach the previously untapped pool of buyers you think may buy your property.
You accept an offer prior to auction
Offers made prior to auction represent a major conundrum for vendors. If you accept a prior offer you are denying any chance for competing buyers to force up the value of your home.
It’s important to consider why a buyer would be making a prior offer. Don’t be afraid to ask them why they have chosen to do so. Nine times out of ten, it’s possible that they’re feeling disgruntled after narrowly missing out on similar homes.
If you do proceed with the auction they may not participate or worse still, they may buy your home for less than what was originally offered.
You need to have the best agent representation to negotiate with buyers prior to auction. With LocalAgentFinder you can choose the most experienced agent to represent you at the negotiating table.
I was forced to lower my reserve to ‘meet the market’
Your home’s reserve price should be set to accurately reflect market conditions.
It is the agent’s responsibility to provide an appropriate price estimate that will guide your reserve. If an agent has over-quoted in order to win your listing then this may come back to haunt you on auction day.
A high reserve price, or poorly timed vendor bid has the potential to blow your auction out of the water, particularly for prestige homes. That’s why if you want to sell on auction day you need to be receptive to the market.
There’s nothing worse than heading into an auction campaign with an assurance that you will achieve a decent price for your home only to be disappointed on the day. Given the amount of money you’ve spent in getting your property to this point, it’s common that you will have to lower your reserve or declare your property ‘on the market’ in the hope that the auction will achieve a sale.
The buyer walks away from the deal
It’s not unheard of for a buyer to walk away from an auction contract. One of the key reasons that buyers renege on a deal is that finance is not in order.
In some circumstances you can be liable for an agent’s full commission payment, even though it was the buyer that walked away from the deal.
Your agent should have screened potential tyre-kickers early on in the process to ensure that only motivated and capable bidders put up their hands on auction day.
What happens next?
LocalAgentFinder allows you to compare the selling strategies of multiple local agents in your area before choosing who to list your property with. Agents recommend the best sales method for your property (auction, private treaty and tender) and provide commission rates for the transaction.