Are Auctions Still Effective in a Slower Real Estate Market?
Fundamentally an auction still has the potential to deliver an unconditional sale, in a short period at the best price achievable…
“Is an auction still an effective way to sell my house in this slower real estate market?”
This is a common question I have had from clients recently when discussing the various options for selling their home.
My response to this is a clear “YES!”. Given that the market is slower at present, why wouldn’t it be worth considering a marketing method which creates urgency?
I understand why sellers may be concerned about the auction process and, in my opinion, much of that comes down to media reporting.
Auction clearance rates have ‘eased back’ in recent times, and auction sale results are the easiest statistic to access to create a real estate news article. The reality of the housing market in 2018 is that properties are generally taking longer to sell regardless of the method of sale selected. The super-heated market conditions of pre-2017 are not prevailing anymore, and this has resulted in a noticeable trend away from auctions.
The four most common methods* of sale for an owner to consider are:
• Set an asking price
• By negotiation
*You may know of some alternatives to these, but effectively they are just a variant of these four core methods.
My professional view on assessing the suitability of the various methods of sale has not changed with the slowdown. Each method has pros and cons, and each property should be considered in context with these factors.
What might be the preferred method for a particular property may not be right for the house across the road. Each property and marketing system should be professionally considered and only then can an informed decision be made by the owners.
My concern is that some homeowners may eliminate an auction as a sale method based on general trends and media reporting rather than specific advice relating to their situation. These same owners could well be missing out on achieving the best result possible for their sale.
To wrap this up, I could provide multiple examples of recent successful auction campaigns. Instead, I will just highlight two from the West Harbour area from the past few weeks:
• A home I marketed sold under the hammer for $110,000 above its 2017 CV.
• A house which a colleague of mine marketed had seven bidders, received 54 bids and sold for $191,000 above its 2017 CV of $1,210,000. This sale price was over $100,000 above the reserve price that the owners had set (the amount which they were happy to sell for!)
This is the beauty of the auction process! Both campaigns were concluded with a 3-4 week marketing duration, and both delivered wholly unconditional buyers. The sellers had the security of standard 10% deposit arrangements and got to select their preferred settlement dates. Finally, I am in no doubt that neither of these prices would have been achieved via any marketing method other than auction. It is still the urgency and competition of the auction environment which provides the opportunity to draw out the ‘premium offer’ from buyers.
Auctions aren’t appropriate for every property and every situation. However, it’s best not to disregard auction as an option if you are considering selling. Fundamentally an auction still has the potential to deliver an unconditional sale, in a short period at the best price achievable.
If you would like to have a no-obligation chat about the marketing options for your home, I welcome your call or email.