One of the big challenges for those selling — vendor and agent representing — is determining which method of sale will achieve the best result. While different for every campaign, there is a mounting argument that auctions could be the answer to help revive those properties struggling to gain traction through private sale, off-market or expression of interest campaigns.
Marking halfway through 2023, there is a sense of uncertainty across the market as vendors and buyers evaluate their position within it.
So why change direction?
Firstly, auctions provide a transparent environment for buyers. Encouraging potential buyers to actively participate and bid in an open environment creates a competitive atmosphere. This, in turn, often leads to higher sale prices as buyers become emotionally invested in the property and are motivated to make their best offers — whether that’s in small increments or greater price jumps that would not be achieved otherwise. So, by converting a private sale or expression of interest campaign into an auction, sellers can leverage this heightened sense of urgency and competition, and reap the benefits.
Secondly, auctions offer a defined timeline, which can be beneficial for both buyers and sellers. The structured nature of an auction campaign, with set inspection times and a specific auction date, appeals to qualified buyers who are ready to make a decision. As auctions are unconditional upon reaching the reserve, securing a sale is certainly on the cards come auction day. For sellers, this means a condensed timeframe for marketing the property and a clear endpoint to the sales process. By converting to an auction campaign, sellers can efficiently manage their time and resources while ensuring that potential buyers act promptly.
WHITEFOX’s Jesse Jones says vendors need to adapt to the market, set realistic expectations and trust in their agent’s process to achieve positive results. Jones emphasised that shifting away from a fixed price approach in private sales and towards a price range can attract a broader audience and increase their chances of success.
Rising interest rates have created challenges for some buyers in securing pre-approved finance, thereby impacting their ability to make offers under certain conditions. This can disrupt the buying process. However, in the case of auctions, only individuals with pre-approved finance are eligible to bid, mitigating the risk of buyers retracting their offers.
Victoria’s consistently high auction clearance rate reflect robust market demand for this sales method. With clearance rates repeatedly hovering around 80% + sellers can have confidence in the efficacy of the auction process. This success rate supports the competitive benefits of the auction process, including the transparency it offers to buyers, and the likelihood of securing a strong unconditional sale on auction day for vendors.
At WHITEFOX, we have witnessed strong auction clearance rates and an average of three bidders per auction throughout 2023, further demonstrating the effectiveness and appeal of this sales approach.
To see what we mean, watch here: https://www.youtube.com/watch?v=3zDnSzcxWc0
Jones shared a case study involving the property at 248 Barkly St, St Kilda. Initially, a four-week expression of interest campaign, the property attracted busy open homes, significant online engagement, and multiple repeat inspections — but no offers. Subsequently, the property was converted into a private sale campaign. Still, the lack of a closing date caused reserved buyers to hold off.
Recognising the need for a strategic shift, Jones and the WHITEFOX team took proactive measures: re-photographing the house, making a strategic price alignment, and transforming the marketing approach to make the property feel like a new listing. A three-and-a-half-week auction campaign led to the successful sale of the property for $3.2 million on the day of auction. This case serves as a testament to the effectiveness of adjusting sales strategies to achieve favourable outcomes.
And what seals the deal? In the current market, converting a private sale or expression of interest campaign into an auction campaign could be a wise choice for several reasons. The competitive nature of auctions can drive up prices, the defined timeline provides clarity and urgency, and the consistently high clearance rates in Victoria suggest a strong market demand for auctions. By embracing the auction process, sellers can maximise their chances of achieving a successful and lucrative sale, while buyers can experience a transparent and engaging purchasing process.