These days, we are all accustomed to seeing the headlines in the newspapers of properties selling at auction for well above their reserve prices.
When selling at auction, people assume it only benefits vendors, when in fact, all parties involved can actually reap benefits from the auction process.
It’s no coincidence that the vast majority of leading agents across the country are increasingly moving towards an auction-centric approach.
Agents, buyers and vendors can all come out ahead with the auction process.
Benefits to agents
One of the most overlooked benefits of running an auction campaign is how powerful it can be in building a profile for yourself as an agent.
This is particularly effective when you’re looking to launch yourself into the industry.
While a new, or even established agent, can letterbox drop a suburb, just imagine the impact you can make when you actually invite would-be vendors to an auction and see how well the process goes.
It’s always far more powerful to show people how good you are at your job rather than tell them.
Imagine a potential vendor walking down the street on a Saturday morning and seeing a huge crowd gathered, with multiple bidders fighting for a property.
What are the odds that you could secure their listing after seeing your auction play out?
Arguably the most powerful part of using auction is that it is able to vastly reduce the amount of time you need to spend marketing and selling a property compared to your typical private treaty process.
We know for a fact that with our auction process, we will achieve a sale 87 per cent of the time, within 42 days.
That means that you have a very clear idea of how long it’s going to take from the time you launch your campaign until the property is sold.
This allows you to manage your pipeline, allocate your team and resources more effectively, and ultimately list more properties over the course of a year.
Using the auction process also makes it easier to get your vendors to meet the market.
If a vendor is uncomfortable adjusting their price, after the auction has played out they have a lot of real-time evidence to suggest that their property is worth a certain amount and you might find they are more comfortable accepting that new price.
Benefits to vendors
Clearly, the auction campaign is going to be the most effective process for vendors to achieve a premium price.
When you can bring together multiple buyers at one time, on a set deadline, you are giving yourself the best opportunity to achieve a premium price.
I’m yet to meet a vendor who wants anything less than the best possible price and as an agent, using the auction process is the most effective way of achieving that.
In a private treaty sale, buyers will typically offer just enough to meet the owner’s expectations.
In an auction, we regularly see prices well above reserve on a weekly basis.
For vendors, the fact that they can achieve an unconditional sale in the quickest possible time is something the vast majority want.
It also can’t be overlooked that just because you start marketing the property with auction in mind, doesn’t mean you have to ultimately go to auction.
Should you receive a competitive offer early on, the vendor can certainly accept it and move on with their life.
However, the fact that the auction process puts a deadline on things also makes it easier to negotiate and it can entice buyers to come out of the woodwork quickly.
Benefits for buyers
While buyers might at times prefer to not be buying at auction, what they actually get is 100 per cent transparency.
Quite often, when you’re dealing with an agent and making an offer, or an expression of interest, you’re taking the word of the agent.
Buyers don’t really know just how interested other parties are and this can lead to buyers paying significantly more than the next best offer.
Because there is no transparency, this type of process can actually be very challenging for buyers.
At auction, buyers know exactly what the playing field looks like and whether successful or not, there is no doubt in their mind about whether or not they paid a fair price.
An auction also provides buyers with certainty, as the sale is finalised on auction day.
This is particularly attractive for buyers who are time-poor or have a pressing need to secure a property.
When market conditions slow down, some agents might look to move away from auction, but it’s very clear that they are effective in all environments.
This is, in fact, the most important time for agents to gain exposure, while also sending a clear message to potential buyers that the vendor is serious about selling.
If you’re interested in finding out more about how the auction process can help improve your results, free up more time and boost your profile you can contact the AuctionWORKS team on (02) 9252 8577.