The benefits of selling at auction: Hear from the experts

On an average weekend, about 130 auctions are held across the city. It’s expected that the number of auctions in the ACT will keep growing as local buyers and sellers continue to embrace this method of sale. 

For some, auctions can seem daunting and confusing. But according to Grahame O’Brien, Licensed Agent at Independent, under the right circumstances, auctions can offer significant advantages when selling your home, which is why more and more Canberra property owners are getting on board. 

Auction benefits for sellers

What is it that makes auctions so lucrative? Grahame shares his top benefits of selling property at auction:

1. Create competition

An auction creates a competitive bidding environment. If more than one buyer really wants your property, they will start bidding higher so they don’t miss out. This is especially true if your property has unique or hard-to-find features that buyers are looking for. 

Grahame says the more invested a buyer is in a property, the more competitive they are. When a buyer is competitive, they are willing to bid and ultimately pay more to secure the home. 

“Throughout the auction process, an agent spends a lot of time qualifying buyers. We focus our attention on the buyers who are showing the most interest, communicating with them throughout the campaign and educating them on the sales contract. We provide them with all the information they need so they are prepared to bid come auction day.” 

Grahame believes focusing on these buyers ensures a competitive auction as they become more emotionally connected to a property and willing to bid higher to secure it. Competitive bidding amongst potential buyers means that the selling price often exceeds the expected value of the property, maximising profit for the seller. 

2. Reduce days on the market and attract more buyers

A typical auction campaign consists of a high-intensity marketing strategy leading up to auction day. Your agent and auctioneer want to reach the most amount of people in a short period of time, only targeting audiences that would be most interested in buying the property. This has the potential to reduce the number of days that your property sits on the market.

3. Sell on your terms and dates

Grahame explains that as a seller, you determine the terms and conditions of the sale and can outline settlement terms to suit your own situation. You can negotiate settlement terms with potential buyers prior to an auction, if the buyer wins then those settlement terms are met. 

“You may be relocating and not able to move for another two months or you could be purchasing another property and need an early settlement to help your finances. Auction conditions offer sellers flexibility that you may not get with other sale methods.” 

The terms of the sales contract are unconditional, and contracts are exchanged on the day of the auction or prior to the auction. To bid at an auction, buyers need to be in a position to settle. An exchange at an auction locks buyers into contract and they become liable for completing the sale. This means they will already have financing organised, so you don’t need to wait for them to talk to their lender or conduct more inspections of the property. 

“Once the hammer falls, a buyer is bound to the contract and an immediate exchange takes place. There’s an expectation that a bidder is financially secure and able to settle on the specified day. For a seller, the stress of waiting for a property to exchange is eliminated.” 

4. Professional support during a sale

Real estate agents and auctioneers are the experts. They provide professional support throughout the entire process, from setting the right reserve price to managing the legalities. They can also help with:

• Staging the property; 
• Arranging viewings; 
• Advertising in print and online; 
• Preparing buyers for auction day; and
• Making sure the sale runs smoothly.

5. Selling as is

Auction properties are often sold in their current condition, which can save sellers time and money on repairs or renovations. Many buyers at auctions are prepared to purchase properties "as is", which can be a huge benefit for sellers who want a quick and hassle-free sale.

6. Seller protection

A reserve price in real estate auctions ensures that the seller has a minimum acceptable price, offering protection against low sale prices. The seller, agent and auctioneer decide this price. For buyers, it provides clarity. Potential buyers will know the property's minimum price, and all bidding is done in a transparent manner. This creates confidence for both parties in the sale.

Benefits of auctions for buyers

Auctions aren’t just for sellers. Buyers can benefit from buying a property via auction too.

1. Transparency - bidding process and price

Auctions are public events where participants can see the bidding in real-time. This transparency eliminates any guesswork about what other buyers are willing to pay, creating a fair playing field.

Buyers can see the current highest bid and can decide whether to increase their offer, giving them more information than they might have in a traditional private negotiation process.

2. Streamlined buying process

Unlike private sales, where buyers and sellers may haggle over price or terms, the auction process provides a clear and direct path to closing the deal. On auction day, buyers can see how the bidding is progressing giving them complete transparency of the price and terms are to close the transaction. This avoids complicated back-and-forth negotiations.

3. Guaranteed availability

Properties are typically marketed well in advance of the auction, giving buyers time to prepare before the auction takes place. Once a property is listed in an auction, it is likely to sell on the auction date (unless the reserve price is not met). There is no risk of a listing being withdrawn without the buyer’s knowledge, which can sometimes happen in traditional sales. 

Keep your options open

Selling your home via auction doesn’t mean you can only sell on auction day. If a buyer is interested in a property they can make an offer before the day. This week, Grahame and his team sold a property prior to auction, less than two weeks into the marketing campaign. 

“The buyer had their heart set on the home and offered a price the seller was extremely happy with. Because the property was listed for auction, the terms of the sale are still under auction conditions, which means the contract is immediately unconditionally exchanged.” 

Sometimes a property doesn’t sell at an auction. According to Grahame, this provides an opportunity for the agent, seller and highest bidder to continue negotiations. 

“It’s hard not to feel disappointed of course but it’s important to remember that the selling process doesn’t stop at the auction. If a property passes in, the agent will work with the highest bidder to negotiate a price. Often, this results in the seller securing a result that exceeds their expectations.” 

Choosing to auction your home is a big decision and while this sales method can lead to amazing results, Grahame cautions that auctions are not right for everybody. 

“Every property is different, and every seller has varying needs and expectations when selling their property. It’s important you do your research and speak to an agent that has experience and knowledge in all methods of selling. They will work with you to determine the best way to sell your property and what method will achieve the greatest result”. 

To sell via auction or not is a matter for an individual homeowner and their needs. What we do know for certain is that auctions in Canberra don’t look to be slowing down anytime soon. 

*Auction statistics from Allhomes, Independent, and Corelogic 2017, 2018