To Auction or to Not Auction

Selling property under the hammer is nerve-wracking. But if you’re prepared to hang in there and keep calm, you’re likely to end up with more in your back pocket. We’re not talking just a little bit more; we’re talking figures to the tune of 12 – 14% more!

The discussion around whether it’s best to take properties to auction or not, continues to be a hot one. And while auctions remain a popular method of sale across the city, the uncertainty of the current pandemic environment is tempting some Melbournians to accept offers prior to auction.

At any stage of the sales campaign, a prospective buyer can put in a written offer to purchase the property. The decision to accept or decline the offer is entirely up to the vendor.

But the burning question is, is it in their best interest? By accepting an offer prior to the big day, is there any certainty that you have actually maximised your return and got everything you possibly could for your property?

There is no right or wrong as such when it comes to how you choose to sell your property but to make your decision a little bit easier, today we’re going to zoom in on the pros and cons of selling properties at auction in Melbourne in 2021:

Pros of Selling at Auction

Competition: creating competition between genuine buyers can have a very positive outcome for the vendor, with the properties often selling at a price much higher than market expectation
Shorter sales campaign and quick sale: the property is usually advertised for about 3 – 4 weeks prior to auction. The strategy is high intensity marketing to a wide audience, then Hey Presto, onto the big day.
Urgency: the shorter timeframe creates an undeniable urgency with buyers – act quickly or miss out. For this reason, homes with unique design features often do especially well at auction
Encourage a decision: auctions are a great way to force potential buyers to a decision – it’s now or never!
Vendor protection: the reserve price (which is not disclosed to buyers) ensures that there’s no chance of selling out at a price that’s too low
Ts & Cs: the bidders are buying with the terms and conditions that suit you
Unconditional sale: properties sold at auction are generally considered unconditional sales, meaning that you won’t be held up waiting for your buyer to come up with finance etc.

In the event that your property doesn’t sell at auction, your real estate agent will be able to put you in touch with the most likely buyer/s and you may have the opportunity to negotiate a sale after auction. Let’s look at the cons of selling at auction:

Atmosphere: auctions create a lot of hype and competition, and some buyers simply aren’t comfortable with that atmosphere. This may result in genuine buyers turning away from your property.
Quick, but no guarantee: auction advertising campaigns are noticeably quicker than other methods of sale and this may suit you better if you’re in a hurry to sell, but there’s no guarantee that your property will sell or that you’ll get the price you are hoping for.
Registration: although it’s not compulsory for bidders to register in Victoria, it is in many states of Australia, and this regulation may well come into force here at some stage. If folks aren’t comfortable with the registration process, this may put them off altogether.
Price: because buyers only need to bid marginally higher than their competitors to secure the property, you have no way of knowing whether you’ll get the maximum they are prepared to pay – if they had to submit an offer, would they offer more?
The process can be temperamental: when D-day comes, the auction process can be a bit fickle and if it starts slow, this may convey the wrong message to bidders about the value of the home.

When deciding on a method of sale for your property, it’s important to involve the experts from the get-go. Your Love & Co agent will be able to offer advice about the best way to take your home to market, based on the type of property, previous sales in the area, and current buyer demand.

What Other Selling Options are Available to Me?

There is also another less stressful way to achieve the highest price:

EOI (Expression of Interest): sale by EOI means that interested parties submit their best price in writing before a specific date. The benefit of this type of sale is that no buyer knows what anyone else has offered, so they’ll put their best foot forward from the start.
If time is on your side:
Private Sale: you and your agent decide on a selling price for your property and once it is listed on the open market, buyers can inspect and make offers without the level of competition from buyers. Your agent will negotiate with buyers to get the best possible selling price for your property.

How is the Melbourne Market looking for 2022?

As the spring selling season has unfolded, the market has seen a rise in houses listed for sale, however, buyer demand is very high, and the market is predicted to remain strong as we enter 2022.

The demand for detached housing is still noticeably stronger than for units, a trend which has been typical of the COVID-19 period.

Larger family homes, particularly in the outer regions and suburbia continue to be popular. For many Melbournians, the last 18 months have been the catalyst for a lifestyle change, and properties that offer more space and better work-from-home options are in high demand.

The team at Love & Co can help you decide which method of sale is best for you and your property. Talk to your local team today and let us take the headache out of selling your home.