What if a property doesn’t sell at auction

It is a misconception that auctions have always been the favoured method for selling properties in Australia.

The trend for auctions varies state-by-state, with it much more common to come across an auction on a Saturday in Melbourne than it might be in rural Victoria or other capital cities.

Yet the countrywide interest in the auction as a method for selling a home has grown over the past two decades.

When a property is passed in at auction

As much as an auctioneer might try to employ some of their auction strategies to secure the best price for their client, the vendor, there are occasions where the level of interest in a property on the day falls short of the vendor’s reserve price.

In Victoria, the number of times an auctioneer can make a ‘vendor bid’ on behalf of their client to help drive up the price has no limit – even though this rarely exceeds a single vendor bid in an auction as it risks putting off bidders.

If bidding fails to meet the vendor’s reserve price or no bids are placed at all, the auctioneer will temporarily pause the auction and consult with the vendor to decide the next step.

If no bids are placed, the property must be passed in.

However, if some bids have been received but they do not meet the reserve, the vendor has the option to lower their reserve and make this information publicly available in hopes of stimulating further bidding or to choose to pass the property in.

If a property doesn’t sell at auction

If your property doesn’t sell at auction, as up to a third of properties fail to do, you have three alternative options to consider:

1. Put the house back on the market.

It’s important to note that there can be numerous reasons why a house may not sell at auction, many of which may have little to do with the property itself. However, if you decide to relist your home for sale, there are several factors to keep in mind.

Remember that when choosing a real estate agent to sell your property, there are a number of questions you can ask them. If your property hasn’t sold, look back on some of these questions and see how the agent has performed against their answers and your expectations.

While market conditions can be a factor, it’s still worth evaluating your agent’s performance if your home doesn’t sell at auction.

Analyse the market and the performance of similar properties in your local area to gauge whether you are being realistic or not in your expected selling price. Consider whether or not lowering your reserve will end up being better than any costs you may incur from not selling your home a second time around.

Staging your home can be a great way to invite potential buyers to imagine themselves in your home, with less of your own styling imposing on their experience of the property.

2. Private sale only

You may want to consider putting it up for private sale only. This means you will only incur the costs of marketing your home, rather than also having the costs of holding property inspections.

Weigh up the pros and cons of using an agent vs selling your home privately, and consult those you know who have sold homes in your area.

You may live in an area where auctions are less common, so that a private sale will cost less and may see the property staying on the market for longer, but with you inevitably finding the price you are after.

3. Take your property off the market

It can be hard to accept that selling a property quickly isn’t always feasible, especially when you are at the mercy of the market and state of the economy.

It may be your best bet to take the property off the market and wait until conditions are better.

It is possible to still get the price you are looking for in a buyer’s market, but you might do better to wait (if you can afford to do so) and sell your home in a seller’s market.

– BY REALESTATEVIEW.COM.AU