In the early 1980s, auctions in Canberra were almost unheard of. Fast forward 30 years to 2012 when Canberra had 600. Within five years the number of auctions quadrupled with 2,500 auctions held in 2017.
This past weekend alone, 75 auctions were held across the city. It’s expected 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 bring on a feeling of anxiety and nerves. But according to John Warren, Sales Agent at Independent Property Group Inner North & City, under the right circumstance, auctions can offer significant advantages when selling your home, which is why more and more Canberra property owners are getting on board.
What is it that makes auctions so lucrative? John shares his top three benefits to selling at auction:
- 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.
John 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 campaign, 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.”
John believes focussing efforts 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.
- Sell on your terms
John explains that as a seller, you determine the terms and conditions of the sale and can outline settlement terms to suit yourself and your own situation. You can negotiate settlement terms with potential buyers prior to an auction, if the buyer wins than 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 ready to settle, which 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 ready to settle on the specified day. For a seller, the stress of waiting for a property to exchange is eliminated.”
- 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, John 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 exchange happens immediately.”
Sometimes a property doesn’t sell at an auction. According to John, 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, John cautions that auctions are not right for everybody.
“Every property is different, and every seller has varying needs and expectations when selling their property. What may work for one home may not work for another, 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 Property Group and Corelogic 2017, 2018