One of the greatest fears of anyone considering an auction strategy for their home is “what if it doesn’t sell?”. It is one of the most common and emotionally charged questions we see when discussing the sale of a property.
In tackling this question, it’s always a good start to consider the facts around the success rates of sales and the two types of selling strategies you have to choose from: auction (marketed without a price) or private treaty (marketed with a list price), and what the success rates of sale tell us.
Across our eight offices in the Ray White Coastal Living Network, we regularly share our sales results and statistics for both methods of sale as well as all the relevant buyer inspection numbers.
What we find is that on average, auctions offer a 85-90% success rate of sale as opposed to private treaty sales of around 45% over the first 60 days of a property being on the market. What we also notice is that it’s within this initial 2 months that the most buyers inspections occur as well.
Effectively, selling by way of auction offers you a 2x success rate of sale. The sales success rates of auctions are commonly referred to in two stages:
Prior to Auction and Auction Day – We report this rate of sale as the ‘Clearance Rate’
Post-Auction – We report this as the ‘Success Rate’ which includes the Clearance Rate + Post Auction Sales.
On average, our clearance rates on the Sunshine Coast range between 40-60% and success rates post-auction climb to 90% or better. This means that even though 1 in 2 properties don’t sell on auction day, 9 out of 10 will sell after the auction.
So if you are in the 50% of auction sellers that don’t necessarily sell on auction day, here are our tips for what to do next:
If the hammer comes down with no takers, all is not lost. Remember that you can still sell. Immediately after the auction concludes, as your agents, we will make a beeline for the highest bidder to pinpoint a sale price somewhere between your ideal sum and the potential buyer’s highest bid – and push them as hard as we can. From there it becomes a private treaty negotiation, but under auction conditions. We will aim to negotiate an acceptable price that both parties are happy with and have up to two business days from the auction date to get the contract signed.
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A high number of written offers is a good sign that your auction will be hotly contested. But if you have only a few interested parties, this is a sign that we may need to rethink your strategy. Before auction day, as your agents, we will advise you on the number of bidders and level of interest and the best way to proceed. When interest is low, options include rethinking pricing before the auction, boosting the marketing or considering perhaps the one buyer who made a strong offer.
Your home is still for sale
Even though an auction may have failed to generate the sale of your property, that doesn’t mean your property is no longer for sale. Auction day is a step in the sales process. You have the option of going back on the market with a price that is more in line with where bidding stalled at the auction. As your agents, we will contact the people who came to inspect your property and update them on the situation. In most instances, we find this attracts a sale very soon afterwards.
If you would like to chat more about auction strategies, feel free to fill out the below form and we will get back to you with some more information.