Puzzle Finance Blog
If you don't sell at auction, what next?
THERE is a common misconception that if you fail to sell under the hammer, it must be a disaster.
All that pointless marketing money spent, all those open homes, all those people rummaging through your house.
And then there is the shame of hearing neighbours discussing how you clearly got so many things wrong in the renovation and the tedium and drama of keeping the place clean for open for inspections.
Obviously it was a complete and total waste of time and naturally you wish you hadn't listened to the agent who just recommended that path just to get more advertising out of you. Then there is there the public humiliation of it all, as the failed auction tells indicates no one liked your home.
To a certain extent some of these factors are true, depending on how melodramatic you are feeling on the day. And auctions are well known causes of stress which can cause melodrama.
But if you do not sell under the hammer, let me put this into some kind of perspective. What the weekly auction clearance rates fail to cover and illustrate is just how many of these failed auction properties are actually sold within say 30 days after the event. This is one of the key questions to discuss with an agent before you consider selling using the auction method.
The key to deciding with confidence that an auction is the right way to sell your home, is to question your agent carefully. Ask them how many auction sales have they conducted with homes in a similar price and value category to yours. An agent randomly quoting data about his last 10 sales that all sold under the hammer can be potentially misleading; if all the sales were for freestanding homes around $700,000 and you have a $400,000 townhouse to sell. You need to know the true results of their most recent five to 10 sales of similar properties; how many sold under the hammer; how many sold within the following month and let that be the focus your consideration.
In life, it is a good strategy to hope for the best, but be prepared for the worst, and that's often a good way to approach an auction. You need to know prior to the auction what your game plan is: at what point will you pass in; when will you announce your vendor bid - just in case the buyer of your home does so after the auction, not on the day.
Due to the fact that bidders must register before bidding, the registered number is a guide to the level of interest on the day, but it is only a guide.
There is always the possibility some buyer may be really keen but may not be able to bid under auction conditions, perhaps because they don't have the deposit as they have only just realised they want to buy your home and weren't expecting that to happen when they popped down the street to buy a coffee. This is quite a common situation for typical trade-up homes where people having fallen unexpectedly in love with a home, then realise they can't afford it unless they sell their own place first.
But by the time auction day comes around, both you and your agent should understand what the chances are of you selling under the hammer. If it is not strong, discuss your "passed in" figure before hand - even if it is a bit lower than you would have wished for as this can be the starting point for your ongoing marketing campaign. Remember it does have to be realistic.
Should you fail to sell on the day, find out from your agent - or look it up online - what the typical days on market is for your area and for homes like yours. If three bedroom homes are currently taking 89 days to sell and yours has only been on the market for 43, it would be unwise to panic immediately post auction.
This information will help you decide whether to continue marketing your home, but remember even this decision is only for a set period of time. That could be another month, in other markets it could be three months or more. Don't go too long. No matter how keen you are to sell, take a break a listing becomes tired and tired listings do not attract strong sale prices.
The break could be just two, or three weeks, or six months depending on your market conditions and vitally your personal circumstances. Then think about a totally fresh campaign, maybe change agents, change pictures, change write ups, your print advert style, your online presence, revive everything.
Let a new set of buyers see your home, you may even find a buyer from the previous campaign comes forward this time in a stronger position than before, especially after getting worried the home was no longer for sale. It is true that your house can be more attractive to some buyers when it plays hard to get.
Posted by Andrew Winter - News Limited Newspapers on 5th September, 2012 | Comments | Trackbacks
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