5 ways to improve your chances of selling by auction in a soft market
With Justin Nickerson
A recent media story was a tale of auction woe and “helpfully” outlined the worst performing suburbs in Australia.
The list featured suburbs in our three biggest capital cities with clearance rates of between 23 to 35 per cent.
Thankfully, it also outlined the best performing suburbs, which were mostly in our two biggest capital cities, which were recording auction clearance rates of 71 to 85 per cent.
I’ve written before about auction clearance rates being more about seller sentiment than anything else.
However, these disparate results show that even in one capital city, there is no single market, and the most desirable locations tend to not give a jot about what it’s doing anyway with demand from buyers still strong.
Of course, not everyone is lucky enough to own a property in Bondi or Fitzroy, however, that doesn’t mean that you should settle for a poor auction result.
In fact, there are plenty of ways that you can improve your chances of selling by auction in a soft market.
Research the market
Vendors do need to take responsibility for undertaking their own research on the market, including going to open homes and auctions in their local area before they select an agent.
This will provide information about comparable properties as well as comparable local agents – almost like mystery shopping – so you can assess the agent’s skills and attributes.
Talk to multiple agents
When it comes time to select someone to sell and market your property, make sure you speak to multiple agents.
This will allow you to assess each one against an informal selection criterion that only you know about.
What I mean is that your perfect agent might have five years’ experience and have sold off a minimum of 12 properties in the local area within the past 12 months.
Of course, you should never select an agent based solely on the price that they say they can achieve for you.
The vendor-agent relationship needs to be much more robust than that, plus you need to like them as well.
It’s vital that agents have some experience in the local market, but they don’t necessarily have to have the most out of everyone that you speak with.
Having runs on the board over the past five years shows they know what they’re doing.
Plus, if they’ve had successful results over the past 12 months, they also are experienced in the current market conditions.
When it comes to assessing the commission, again, cheap is as cheap does, meaning anyone offering cut-price fees should be given a wide berth.
While some naysayers might scoff at that notion because clearly, an agent would say that, at the end of the day, agents are supposed to be superior negotiators that the average Joe or Jocelyn.
If they can’t even negotiate a reasonable commission to sell your property, how do you think they will fare when faced with a hard-nosed buyer who wants to pay peanuts?
They are also supposed to be professionals who deserve to be paid accordingly, not a tick and flick volume operator.
The final way that vendors can improve their chances of selling at auction is to ensure their appointed agent has a great team behind them.
The agent should have a strong team with access to various resources as well as a plan that is set out and followed to the tee.
Perhaps one of the team helps with organising property styling or suggests tradesmen help with minor renovations before auction day.
They can also provide advice on advertising options as well as copywriting to target the ideal buyer demographic for the property.
Stories like the one I mentioned don’t do much to inspire vendors to sell by auction in soft market conditions, however, I’d still bet the results are better than private treaty properties in the same location.
If a vendor is considering selling by auction, I would suggest they go to a private treaty open for inspection and then compare the number of people there to a property that is up for auction.
Also, while days on market are ballooning in many locations, selling by auction usually involves a 30-day campaign.
So, even with a 30 per cent auction clearance rate, that means that three in 10 sellers are receiving a cash unconditional contract with the terms they want, the price they want, and on the day that they nominated from the start of the campaign.
I’m pretty sure most private treaty sellers today would be happy with those apples.