Written by incub8admin on March 5, 2019. Posted in Real Estate News.
Auctions are a very popular method of selling property in the eastern states, however, their offer and acceptance contracts are quite different to what we have in Western Australia which has led to their popularity in those markets.
Traditionally, property sales in the Western Suburbs have predominantly been by private treaty. The increase in the number of properties in the area being offered for sale by auction over the last 5 – 10 years has been an interesting development. Whether or not it has increased the likelihood of properties being sold is arguable.
I have long believed that the best way to sell your property is by private treaty. Auctions require an unconditional offer being made at the time of auction and for the prospective buyer to have the required deposit on hand. This immediately eliminates a large proportion of prospective buyers.
In my experience, the diversity of properties within the Western suburbs plus the diversity of buyers needs and wants means that it can often take some time for properties to sell. It is a fallacy that the best offer will be made within the first few weeks of marketing a property. You might entice buyers who have been actively looking for some time, but they are not necessarily the ones who will make the best offer. Often selling property in the Western Suburbs takes time and patience.
There are a few occasions when auctions can be beneficial. There is a high demand for land value blocks in good locations and often these are good properties to auction, particularly if they also have development potential.
Some agents suggest auctioning to vendors who may be unrealistic about the value of their property. They use the auction as an indicator of what the market is willing to pay. Not only is it an expensive way to try and convince vendors to reduce their price, but it is also not a true representation of what buyers are willing to purchase a property for. They may be willing to pay more if the settlement time was longer, or the offer could be made conditional to suit their situation at the time.
So, to auction or not? In my opinion, in most cases not. Except if you have a land value property, development potential or a property that has appeal to a wide range of buyers.