When the time comes to selling a property in Queensland here on the Sunshine Coast Qld you have many choices on the sales method for your property. The two most common are either selling a property in Queensland with an advertised price for example $795,000 or an auction.
MAIN BENEFITS OF AN AUCTION ARE:
1. 3 OPPORTUNITIES TO SELL
PRIOR TO THE AUCTION
Leading up to the auction date, a good sales agent should get offers. An auction stopper is an offer so good that the seller takes it and doesn’t proceed to auction. We had one of these last year. Where the offer was around $45,000 above expectations.
THE AUCTION DAY
The idea is with multiple registered bidders, they compete with bids pushing the price up. We recently had an auction where the seller would sell for over $600k. The main buyer would not pay over $650k but ended up paying $681k due to competitive bidding.
But what if only one person registers to bid? This happens all the time. Years ago we sold a town house to 1 registered bidder who was based in Sydney and bid over the phone. There were no dummy bids but there were vendor bids and the 1 registered buyer bought the property under the hammer. Similar thing happened about a year ago but the 1 registered bidder was on site at the property and bought it under the hammer under auction conditions.
AFTER THE AUCTION
If at the auction there are no registered bidders, or the reserve is not met the sale moves into stage 3, where the property is then priced and buyers can make conditional offers. It’s common, due to the large interest the auction has generated, many offers are put forward and the property usually sells soon afterwards.
2. UNCONDITIONAL OFFERS
Prior to the auction and at the auction. A sale must be cash without any conditions. This means the sales contract can’t be subject to a building and pest report, subject to a sale of another property, subject to finance, or subject to due diligence. It’s also not subject to the 5 days cooling off. Conditional offers can only be consider after the auction if the property is not sold.
3. HOW CAN AUCTIONS COST LESS
I mentioned before that often auctions can cost less. But how can that be when you have to invest $770 in an Auctioneer? I’m referring to time on the market, cost of additional marketing of the property if on the market for too long and the hidden cost of the property being sold for a cheaper price if it was not auctioned. Which an auction, the seller gets to hear from the entire market, buyers with a very low budget and buyers with a much higher budget. This process ensures that the property is not sold below the market value where potentially the seller could lose tens of thousands of dollars.
4. THE SELLERS RESERVE PRICE
Because the sales agent can’t legally disclose the sellers reserve price, the seller has all the control. Buyers need to bid to get the price to at least the sellers reserve price before the property is on the market. If the reserve price is not met the property is not sold. This reserve price protects the sellers and ensures they are in control of the sale price not the buyers. What’s important though is sellers need to listen to buyer feedback on price and be prepared to meet the market by setting a realistic reserve based on the price feedback they have been given by the interested buyers.
5. REDUCED TIME ON THE MARKET
We do 3 or 4 week auction campaigns. If selling a property in Queensland at auction, the sales is finish. It’s not subject to finance or a building and pest report. It is sold. Because an auction date is set buyers are forced to act or miss out. When selling a property in Queensland with a price, a sale can take longer because offers will be subject to conditional that need to be met, often 21 days finance that sometimes needs to get extended or worse the contract is terminated and the sales process has to start all over again.
6. QUALIFIED BUYERS
With an auction we deal with buyers who are qualified to buy. Ones that either have a pre approval on finance or can get a pre approval prior to the auction date. With the buyers that do not have finance approved, they are welcome to make conditional offers after the auction, but then the seller is risking accepting an offer the buyer may not even get finance approved on.
So as you can see the only real down side of an auction is the auctioneer fee, which is still payable even if the property is sold prior to auction.
But what about Building & Pest Reports? For years now I have been recommending to all my sellers they invest in a B&P report. Regardless if they are marketing with a price or auction.
Sellers who invest in their own building and pest report can fix concerns on the report. Then get the report update, so the report looks much cleaner. With this done it can appear to the buyers and give them confidence to make a good offer. When the property is being sold with a price this is optional, as the buyer can always make an offer subject to their own B&P. With an auction it’s essential. If the seller does not have a B&P done for the auction buyers will not have the confidence to register to bid and also will not be prepared to pay for their own in case they are not the successful bidder on the day.
PITFALLS OF NOT GETTING A B&P REPORT
So if you are not selling a property in Queensland via auction, a seller has a choice not to get a building and pest report. If they are going to auction they will need one. Most of my sellers choose to invest in a B&P Report, the ones that don’t usually regret it. Just last week we sold a property for $645,000. Owner was ecstatic then the buyer had a building and pest done, they asked for a substantial deduction and then we finally were able to negotiate for the deduction of just $3,000. But it’s still $3,000 the owner lost that probably could have been avoided. That’s just one recent example of many over the years & with stories much worse.
COMPARING THE INVESTMENT OF AUCTIONING VS NOT
The sellers investment for marketing an auction would typically look like this
$1,400 realestate.com.au ad
$550 Building and Pest
The sellers investment for marketing with a price would typically look like this
$1,400 realestate.com.au ad
$550 Building and Pest (optional but recommended)
WHAT IF YOU ARE NOT READY TO INVEST IN ANY MARKETING?
If you plan to not spend a cent on marketing then sure an auction certainly is not for you. Yes there are sales agents that offer the ability to selling a property in Queensland through them where the owner pays for no marketing. If that’s what you are looking for that’s fine. The thing with this is I’m sure your property will still be sold, but for how much? Probably far less than what’s possible. You would be better off over marketing your property with an investment of around $3,000 than under marketing it, considering what’s at stake. We’ve recently sold over 15 properties where the owner had tried to sell with other agents and failed. Most of these owners assume the price was too high had organise to reduce the price by up to $50,000. Instead they moved to us and some we sold for far more than they expected. The marketing played a big part in this.
What I find interesting is a seller might invest $5,000 painting the home and fixing up the gardens to maximise the sale price. When possibly instead they should have left it and invested in the correct marketing. It’s easy to find the first buyer, but you want to find the best buyer, who will pay the best price and usually for this you need the best marketing.
I’ve learnt that people who don’t invest in marketing that say they can’t afford it, can afford it they just don’t believe in it.
When a property is advertised on realestaste.com.au an owner can invest in 4 different ad spaces. For over 10 years now we’ve only ever invested in their largest ad space available. We do this mainly because it’s the only ad space that if a buyer searches Sunshine Coast your property will be found. Or even if a buyer searches Qld, your property will be found. We sell a lot of properties to buyers who say they weren’t even looking in this suburb, for the same reason we are selling a property in Queensland to a lot of interstate buyers too.
MARKETING WITHOUT A PRICE THAT’S NOT AN AUCTION
Some of the appeal of an auction is there is no advertised price. You have a few other choices with advertising with no price that is not an auction.
I personally hate this. It’s realestate.com.au’s default wording for a property with no advertised price, which is why it’s so common. What it does for the sales agent is leave the price open, and makes buyers have to contact the agent for a price guide. But it also means that some buyers who could afford the property may not enquire as they assume it’s “over priced” and that the agent has chosen not to choose a price at all.
MAKE AN OFFER, ALL OFFERS CONSIDERED, PRICE ON APPLICATION
All these are similar to contact agent. They leave the price open and welcome buyers to make offers. This is a sensible strategy for 7 to 14 days but after that buyers expect to see a price to give them some guidance. If a seller chooses to market like this it’s important for them price the property soon based on buyer feedback.
You’ll see Offers over $650,000. The agent is telling buyers you need to make an offer over this. Buyers often joke “I’ll pay $1,000 over”. Interestingly some buyers end up paying less. This pricing is still just a way of guiding buyers without putting a ceiling on the final price that’s possible.
WHY NOT AUCTION
Most people tell me they do not like auctions because they had a friend who had a bad experience, or auctions are only for fire sales or auctions are only for certain properties, or as buyers they don’t like auctions. Here’s the truth. If a friend had a bad experience, it’s because they chose a bad sales agent. Auctions are complex and they need to be run by a skilled sales agent. These auctions are ideal for every single property but not every single owner. Auctions are stressful. So if you are the sort of person who is nervous or would be stressed then yes, do not auction. Your nerves and health are more important. Of course if you also have no money at all then certainly don’t auction either.
In 2021 on the Sunshine Coast with the market moving how it is, every seller wants the opportunity to maximise their sale price. An auction is the ideal platform to get multiple buyers bidding to push the sale price the highest it can go but if you have no money or would be stressed then putting a price on the property will still get you a sale.