Are Auctions a Good Idea? 10 Benefits of Property Auctions

10 Benefits of Property Auctions

1. Expediting the Property Sale Process

One of the most important advantages of an auction sale for many sellers is that they can finalise the transaction significantly faster than through any other process. In most cases, a home will be marketed for around three to four weeks, compared to an average of three to four months.

During the auction itself, registered and verified bidders submit offers with a finite end point at which time the auction will close, however, if a bid is made within the last five minutes the timer will extend to five minutes. The highest bidder when the timer reaches zero will be successful – provided the purchase price offered meets or exceeds the seller’s reserve.

From there, the nature of an auction sale means the seller receives the balance of funds from the auctioneer, usually via their solicitor or conveyancer, within as little as 20 days.

2. Marketing to a Diverse Pool of Buyers

Another reason property auctions work so well is that the marketing, managed by the auctioneer, will draw on their expertise in selling property and marketing to both local and national audiences. Rather than advertising a property to a limited range of demographics.

3. Creating Opportunities for Competitive Bidding

The auction environment is exciting and fast-paced, and the sense of urgency this generates, and the competition between bidders who are keen to submit the final price frequently means a property sells for more than the original reserve or guide prices.

Rather than listing a home for a static listing value and expecting to negotiate this down, a seller can set a reserve they are comfortable with and often achieve a higher value – the property will never sell for anything less than the reserve.

High-interest properties can also attract pre-auction offers and post-auction bids, all of which the auctioneer will manage on your behalf. While it is unlikely a home will not sell during the first auction it is listed in, in the rare instances this happens, it does not mean the property won’t subsequently receive an attractive offer.

4. Full Transparency and Control

Auctions are open to all approved participants, including registered bidders, the seller, and the auctioneer. There are no closed or secret bids, and the buyer and seller can see exactly what is happening – such as when the most recent offer was placed, for what value, and whether the highest offer has reached the reserve.

Sellers have control over their transactions and can stipulate the terms of the contract of sale with the auctioneer before the property listing is live. An auction team can also provide guidance about the clauses and terms they believe are important to include, ensuring all the relevant details are covered in the legal pack.

5. Securing a Cash Sale Value

While it is possible to bid at auction with a deposit and pre-agreed financing, there are very few instances where an auction sale will stall due to the lack of funding – and, indeed, a buyer enters into a formal contract when they submit a bid.

The typical process is for the buyer to pay a deposit of around 10% to the auctioneer on the day. They then have 20 working days to submit the full balance, minimising any delays for the seller, who receives their funds normally within one month.

6. Excellent Certainty of Achieving a Sale

Although auctions feature a diverse range of properties and lots, around 75% to 80% of listings sell the first time they are entered into an auction. There is no indefinite waiting period to see if a prospective buyer chooses to submit an offer, and there is a very good likelihood that the home will sell.

7. Options to Adjust Reserve and Guide Prices

Sellers agree on guide and reserve prices before the auction begins with the auctioneer and before the property listing is circulated.

Reserve prices are the lowest the auctioneer will accept, and the guide price is an indication of what the reserve price is.

8. Support and Guidance From an Experienced Auctioneer

Professional auctioneers can be invaluable sources of information and advice, from choosing pricing they feel will generate interest to deciding which marketing approach will be most successful.

Many sellers have never experienced an auction before and can rely on a reputable auctioneer to walk them through the process and handle all the negotiations and communications.

9. Eliminates Guesswork Around Potential Offers

Listing a property for sale on the open market can be tense, without any way to know whether the price will be attractive, under-price the potential value of the property, or leave it languishing for months to come.

Because the auction pricing parameters are agreed upon in advance, a seller has complete oversight of the minimum they will sell for, with input from the auctioneer to ensure they are comfortable with their guide price.

10. Selling a Home at Its True Market Value

Finally, selling at auction is a great way to test the market, irrespective of any other factors that mean the property market is perceived as being strong or weak. The fact that a property will sell for what a buyer is willing to pay is correct – but the broader buyer audience means an auction is a great way to achieve a sale for the highest possible price demonstrating market value.

So is selling a house by auction a good idea? It very much depends on your situation, but in most cases – yes! Tell us some of the details of your property here and we’ll give you a FREE appraisal and discuss whether an auction is a good idea for you in more detail.