At the risk of incurring the wrath of agents who ‘hate’ auctions, I want to address some misconceptions. I must stress that I am not advocating auctions in all situations – far from it. There are plenty of circumstances when they are inappropriate, but don’t be put off for the wrong reasons. These include:
- ‘Auctions don’t work in my area’. They do, provided the property is suitable, the market conditions are good, and you know what you are doing.
- ‘Buyers dislike them’. Actually buyers dislike being pushed to pay more money which is what happens at a successful auction. This is good for the vendor and good for you. It is unusual for a buyer not to compete for a property they want just because it is an auction. It comes down to whether they trust what you are telling them. At worst they will make a pre-auction offer. Most buyers quite like the opportunity to definitely secure a property in a set time frame.
- ‘They undersell’. This is normally a function of how accurately the property is being quoted. One of the silliest things you can do is to deliberately underprice a property to attract buyers. The educated buyer knows you are lying, and the new buyer is induced to come along with too low a budget. It pays to get it right.
- ‘If it doesn’t sell, I can always recommend auction later’. No, no, no! This is a huge mistake! It is difficult to gain marketing traction from a slow start. You have already lost the best early buyers. The market perceives the property as being stale, and there is little possibility of much competition.
Dr Gil Davis is now a university lecturer. For twenty five years, he was one of Australia’s top-selling real estate agents. He wrote Sell for more, available through Harper Collins.