Sellers choose auction

In the current hot Sydney market, more vendors are choosing to sell via auction to take full advantage of today’s exceptionally strong demand. Figures reported early in February showed a 40 per cent jump in auction listings compared to the same time last year*.

Most Australians are intimidated by the auction process and it’s easy to understand why. But if you avoid auctions, you’re going to miss a lot of good buying opportunities because it’s usually the best properties that are offered for sale via auction.

I have long advocated the auction process as the fairest and most transparent way to buy property. Many buyers don’t see it this way — they perceive them as stressful events that lead to spur-of-the-moment, emotionally charged decisions.

I see benefits for both sides. Here’s my thinking…

Benefits for buyers

• You know what the competing offer is at all times, unlike private treaty negotiations
• You get an immediate result — unconditional contracts are signed straight after the auction
• You can see your competition and read their body language
• The price is benchmarked in public — it’s comforting to know others have valued the property the same way
• You have the option to make an offer prior (although you risk paying more than you need to)
• You can authorise someone else to bid on your behalf

Benefits for sellers

• Auctions create a transparent forum for committed buyers to battle it out, enabling you to truly flush out the very best price available to you in today’s market
• The competition of an auction naturally heightens buyers’ emotions and their desire to ‘win’
• You get an immediate result
• The normal 3-4 week timeframe of an auction campaign forces buyers to focus and prepare
• You can generally expect a sale within this timeframe, giving you a more secure timeline for your own plans to buy a new home
• A skilled auctioneer can make a big difference to your sale price. They create excitement, confidence and strong competition

Tips for buyers

• If you’re going to start the bidding, start low
• Project confidence — make the other bidders think you have no limit
• Make your bids fast and assertive. Agonising over your next bid is a sign of weakness
• Call out your offer in full (for example, say “$350,000” instead of increments like “$5,000”)
• If it’s going to pass in, make sure you are the highest bidder so you get first right to negotiate
• Stick to your walkaway price. Short-lived disappointment is better than long-lasting remorse
• If you miss out, accept that it wasn’t meant to be and look forward to finding something better soon

Tips for sellers

• Trust your agent and auctioneer
• Choose a realistic reserve price based on market feedback
• On the day, you will be inside listening and/or watching the event. You need to be out of sight so buyers can’t see your reactions
• Have friends and family there to support you

Auctions can be really thrilling for both buyers and sellers, so I say get excited and focus on the positives! The adrenaline on the day is electric, so prepare yourself carefully and then let the day bring what it may. Good luck!

*Australian Property Monitors

In The Ultimate Guide To Real Estate, John McGrath — one of the Australia’s most innovative and successful real estate experts — shares his vast knowledge of the Australian property market. To purchase your copy of his best-selling book, visit the Total Real Estate Training website.