The Auction Process Explained Simply
Sometimes called the 'no price' marketing strategy, an auction process provides the seller with three points at which to sell their property - and gives buyers three different opportunities to buy the property of their dreams!
The First Stage: Pre-Auction
At this stage, the property is presented to the market without a price. Buyers are encouraged to make offers based on where they see value. These days, buyers are very savvy with regard to comparable sales, and are often so well researched that they know within a very small margin of error where to put value on a house. Typically, this stage lasts for about 24 days prior to the auction date, and the seller is able to accept any offer where all conditions are able to be met by Auction Day.
The Second Stage: Auction Week
Here, we’re gearing up for Auction Day. All emphasis is on setting a realistic reserve price through discussions between the seller, the auctioneer and the agent. A realistic reserve price is derived from market feedback secured during the previous 24 days (Stage 1). On Auction Day, the property is offered to registered bidders (ie, those buyers who are able to buy under auction conditions). The auction is under the control of a registered auctioneer who will explain the rules of the auction game to all in attendance. Once the bidding reaches the reserve price, the property will be sold to the highest bidder. Should the bidding not reach the reserve, the auctioneer will “pass the property in” unsold.
The Third Stage: Post-Auction
This is the stage we move to should a property not sell on auction day (“under the hammer”). Usually, the property returns to the market with a definite price based upon a combination of the reserve price and the range of bids received on Auction Day. Buyers who were not able to bid under auction conditions and those bidders who missed out on the day are now able to make offers and negotiate for the sale of the property.
Over 90% of the properties I take to the market using an auction strategy are sold within 42 days (6 weeks). If you would like to discuss the auction process further, or have questions about taking your house to the market using a ‘no price strategy’, don’t hesitate to give me a call and we can have a chat over a coffee.