The Auction Strategy
In Sydney, and certainly on the Lower North Shore where property is in high demand, auctions are one of the most common ways to sell property. This is largely because of the way an auction day acts as a looming deadline which helps to generate a sense of urgency and excitement among buyers, and tends to deliver a better price for a property, in a shorter amount of time.
The decision to take your property to auction, rather than selling by private treaty or some other sales method is one you should make with your sales agent; your decision also needs to take into consideration a range of factors, including the demand for a property like yours, as well as whether it’s a sales method that suits your individual circumstances.
I say that because auctions move quickly — and not just on the day. The whole process, from the moment you first kickstart your auction campaign right through to the day of the auction – usually between four and six weeks in total — moves very swiftly. If your property is in particularly high demand, you may even have offers on the table before auction that you’ll need to consider.
Consider Your Ideal Reserve Early On
I believe you should be thinking about your ideal reserve early on in the auction campaign. The reserve is the lowest possible amount you will accept on auction day. Because this price is kept confidential — only you, your agent, and the auctioneer are privy to this figure on the day — when bidding reaches the reserve, it announces to buyers that your property is officially on the market.
Although your reserve price is officially set in stone on auction day, you should have a fairly solid figure in mind prior to the day. Realistically, if you and your sales agent have been properly monitoring the buyer activity in the weeks leading up to the auction, you should only be adjusting your reserve price very marginally, based on the people who have registered on the day.
How you come to decide on your reserve price depends on a number of factors, but the main elements to consider when setting your reserve are:
- Recent sales prices in the area
- The buyer feedback on the property
- Have you received any offers — if so, for how much?
- How much you want for the property
The important thing to consider on the third point is that buyers are not terribly concerned with your personal situation. They’re more interested in value based on recent sales, so how the property market has been performing in your local area and the prices properties similar to yours have achieved will serve you well here.
Good Preparation Equals a Smoother Auction Day
But, like I said, it usually isn’t until the actual day of the auction that you need to make a firm decision on your reserve price. If fewer people have registered than you expected or more people have registered, this will help you to determine how to proceed.
The better prepared you are on the day, however, will help guide you to setting a reserve price that’s right for you and the market, rather than one than is selected in haste and isn’t ultimately a price that you’re happy with, or one that the market will stand.
If you would like more information on buying or selling property, you can continue to read my blog or subscribe to my series of educational videos for buyers and vendors. These videos were created to help my clients understand the various aspects of selling property in Sydney’s Lower North Shore that I go through every day; suburbs including Cammeray, Cremorne, Neutral Bay and Mosman. Alternatively, you can request a proposal from me at my website.