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Is my property most likely to find a buyer at a public auction, or should I seek a private sale?
According to property industry experts, not every property is an excellent prospect to sell at auction.
However many are prime candidates for auctions because of their age, location, price and/or scarcity.
We’ve identified the key factors that reveal whether your home is auction material:
Is your property in a suburb that strongly favours auctions? If so, beware of selling any other way, says Frank Valentic, Managing Director of Advantage Property Consulting.
Valentic has witnessed thousands of auctions as he lives in the “auction capital of the world” – Melbourne – which hosts hundreds of auctions most weekends.
Melbourne’s biggest weekends can have up to 1400 auctions scheduled.
“Some areas are predominantly sold by way of auction especially in the inner suburbs (so) if they (properties) are put on the market as a private sale often people think there is something wrong with the property or that it has been on the market for a long time,” he says.
If you plan to sell a multi-million-dollar property a public auction is not usually the best way to do it.
Properties at the high end in the $5m-plus price range are normally sold by private sale.
For an auction to work, it must have two or more buyers who bid. And at this price point, you are unlikely to attract enough prospective buyers to achieve a sale under the hammer.
“Properties at the high end in the $5m-plus price range are normally sold by private sale or expressions of interest rather than auction as the buyer pool is smaller and often buyers don’t want to be known,” Valentic says.
Multi-million dollar properties, like this one at 14-14 Hopetoun Avenue Mosman, are usually sold privately.
Equally, properties priced under $300,000, may better suit a private sale because “most of these buyers are less experienced and find the auction format overwhelming”.
Properties that do best at auction usually appeal to the broadest part of the market and will not sit at either end of the price spectrum.
Auction market: What type of properties sell best at auction?
If a property presents poorly it is often best to sell the property by way of private sale rather than auction, Valentic says.
Robert Di Vita, Buyer’s Advocate at National Property Buyers, which has offices in Melbourne, Brisbane and Adelaide, has a different viewpoint.
He thinks properties in a poor state of repair often attract strong bidding from buyers at auction.
“Assuming the location has value, poor condition properties needing a lot of work often produce exceptionally strong auctions because you end up with bidding from handy owner-occupants wanting a foothold in a desirable area and also investors,” Di Vita says.
Get ready: 11 steps to prepare your home for sale
If your home is in good condition and has period features, it’s likely to have strong appeal with owner occupiers.
Few things get buyers competitive like high ceilings and ornate cornices.
34 Arthur St South Yarra has all the ingredients for auction success.
And that screams “go to auction” because few things get buyers competitive like high ceilings, ornate cornices, fireplaces and art deco details.
“If the home is something with a lot of demand for it, it is almost certainly suitable for auction,” Di Vita says.
“Auctions rely on competition and emotion because that will fuel bidding and produce a strong sale result.”
If your type of property is scarce, an auction can quickly bring price clarity and a sale.
“Being a little bit unusual makes a property difficult to value due to limited comparable sales and can mean an auction is the best way to let the market reveal its value,” Di Vita says.
Valentic agrees, citing large acreage properties, cliff-top Portsea properties and Port Phillip Bay’s bathing boxes.
If you are finding it really difficult to sell and cannot wait any longer, you may decide enough is enough.
In such circumstances, an auction may bring the breakthrough you need, Di Vita says.
Perhaps you initially listed your property for private sale but factors including location (it may be a rural property in a remote area), the type of property it is and/or the local economy have deterred buyers.
Now the listing has gone stale, the phone has stopped ringing and you need to set an end date.
“It can work for those properties for which it’s difficult to find buyers as an auction neatly draws the sale process to a head.”