After weeks of planning the big day has finally arrived – your home is set to be auctioned! Inspections have been completed, contracts issued and the place has never looked better. With all the work done, it may seem impossible to think that at this point you – as the seller - could inadvertently jeopardise the sale of your property. But there are some definite ‘no-nos’ when selling at auction. The event is by its very nature emotionally charged, so avoid these pitfalls to help navigate a successful sale.
1. Don’t talk about your selling price to anyone - even the neighbours
Disclosing the reserve price or what you would sell the property for to neighbours, family or friends increases the chances of prospective buyers finding out. So, no matter how tempting it may be to get feedback from others, this conversation should strictly be between your agent and yourself. Rumours spread quickly, and you don’t want potential buyers to be one step ahead with this insider knowledge. It can also turn people off if they think the price is too high.
2. Don’t have friends or family interfere with the bidding
Family and friends will show their support by coming to your auction. They may want to help you out further by making a dummy bid to inflate the sale price. Firstly, this is illegal and secondly, it can scare away genuine bidders. It is an offence to place a bid for a property for which the sale can’t be completed. In some States, dummy bidding carries a hefty fine of up to $55,000. If friends and family genuinely want to buy your place, then let them bid away or otherwise, they need to be silent spectators.
3. Don’t set your reserve too high
Setting a reserve price that is too high can turn off buyers who would be willing to pay the market value for your property. Be realistic and informed - the last thing you want is for your property to be languishing on the market. Consider whether you are in a seller’s or buyer’s market. Keep looking at what comparable properties in your suburb have been achieving.
There are some important questions you need to ask yourself before the auction. What is the price you need to achieve as a minimum to be able to make your next move? In a perfect world, what is the dream price you’d like to fetch? Your agent will be able to indicate whether your goals are in line with the market. They will keep you informed on buyer interest throughout your marketing campaign. Importantly, they will have an idea of how many bidders are likely to turn up on auction day and the likelihood of strong competition. This all plays a role in deciding the reserve price.
The market can be constantly changing - even inside a three to four week auction campaign. So, it is important to stay abreast of what is happening in your local area and set your reserve accordingly.
4. Trust the process
Familiarise yourself with what happens on auction day by attending others ahead of your sale. Know the meaning of terminology such as ‘on the market’, ‘passed in’ and ‘absentee bid’. Another important term to know is a ‘vendor's bid’. This strategy is sometimes used to get the ball rolling on offers. Your auctioneer will announce the ‘vendors bid’, which needs to be below the reserve price. Your agent must know legally if you plan on using this strategy – so chat with them ahead of time.
5. Keep up the presentation
Your property needs to look in tip-top shape on auction day – after all this is the very last time you have to impress potential buyers. Beds must be made, the kitchen needs to be spotless and the pool sparkling clean. While this is hard work, the effort can pay off. Presentation may just be enough to convince a buyer who has been sitting on the fence to join in the bidding.
6. Don’t forget to tell the neighbours
Politely inform your neighbours of the date and time of your auction. The last thing you want is for someone to start mowing or playing loud music mid-auction which could deter bidders. Usually, an auction is held in the garden or on the front footpath, however, your agent and auctioneer will be able to guide you. You may find it easier on the nerves to sit indoors but be kept up to date on what is happening by your agent.
7. Don’t panic if your home doesn’t sell during the auction
All is not lost if your property doesn’t sell under the hammer. It is not uncommon for a home to be sold a few hours after going to auction with agents negotiating with the highest bidders. Sometimes this process takes a few days.
Remember selling via auction is a great way to flush out genuine interest. There are many reasons why a home may be passed in even if it is well-presented and attracts a high number of registered bidders. It may be interested parties need a little longer to organise their finance or want to request a longer settlement date.
If the reserve price was set too high, then you need to adjust to meet the market. Your agent will be able to advise. They are also experienced in negotiations and will suggest the next steps to ensure a sale.
DISCLAIMER - The information provided is for guidance and informational purposes only and does not replace independent business, legal and financial advice which we strongly recommend. Whilst the information is considered true and correct at the date of publication, changes in circumstances after the time of publication may impact the accuracy of the information provided. LJ Hooker will not accept responsibility or liability for any reliance on the blog information, including but not limited to, the accuracy, currency or completeness of any information or links.
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