A guide to auctioning your home
Mon September 04, 2017
There's a lot to think about when selling your home, and one of the most important factors is how you're going to do it: Private treaty or auction? In this article, we're going to look at the benefits of selling your home via auction and how to do it.
Auction or private treaty?
The first thing you'll need to do is to weigh up the pros and cons of different sale methods, as the one you choose will play a big role in how much you'll end up getting from the sale, as well as the time it takes to sell your property.
Private treaty involves listing your property at a certain price, which can be negotiated with potential buyers. One advantage to selling by private treaty is that you'll have time to consider each offer as it comes through. However, selling your property via auction has a host of benefits that could make it the right option for you.
What are the advantages of selling your home via auction?
There are plenty of advantages to selling via auction that in many cases outweigh those of private treaty sales:
- An end date: When you sell by private treaty, you can't be sure how long it'll take for your property to sell. It could be on the market for a single weekend, or perhaps for several weeks. This can create some stress, particularly if you've already bought a new property and want to move in as soon as possible. When you sell via auction, you have the certainty of knowing that at the end of the event, you'll have sold you home.
- More enquiries: Selling your home via auction will result in more enquiries coming through for your property, as Jesse Davidson from auctionWORKS pointed out when speaking to Laing+Simmons' Managing Director Leanne Pilkington. This is because there's no price advertised, so it incites more curiosity in prospective buyers.
- Higher selling price: While this isn't guaranteed, the sense of urgency that the competitive auction atmosphere tends to encourage means that buyers are more likely to bid higher and ultimately land you a better sale price.
- The buyer is bound to an unconditional contract: When you sell via auction, the buyer must provide a deposit on the spot and sign an unconditional contract. This is in contrast to selling via private treaty, where there is a cooling-off period of five working days after the contract is signed. With no cooling-off period, the buyer isn't able to change their mind at the last minute, so as a seller you've got more security.
How do I go about auctioning my home?
The first thing to do if you've decided to auction your home is talk to a sales agent. They'll be able to walk you through the process with expert guidance, from organising your marketing campaign to arranging a licensed auctioneer to conduct the auction.
Because an auction is held on a single day, you need to ensure that all interested buyers have an opportunity to know about it so they'll turn up on the day. Typically, you can expect around four weeks of advertising in the lead-up to the auction. During this time, you'll also need to open up your home for inspection.
Your sales agent will also be able to help you set a reserve price for the auction. A reserve price is the minimum you are prepared to sell your property for and is not disclosed to prospective buyers prior to the auction taking place.
What happens on auction day?
On the day of the auction, prospective buyers will register and bid for your home. The property will be sold under the auctioneer's hammer to the person who makes the highest bid (once reserve has been met). Once you have a winner, they will hand over a deposit (usually 10 per cent of the sale price) on the spot and then sign the contract.
In some instances, the highest bid may fall below your reserve price. In this case, the property will be passed in and you'll need to discuss with your agent whether to negotiate on price with the buyer who made the highest bid or put your property back on the market.
Organising an auction for your home can be a great way to maximise your sale price, however you'll need expert help and professional guidance to do it right. Talk to the team at Laing+Simmons about how we can help you auction your property.