Should I sell my house by auction?
If you’re thinking about selling your home or investment property, chances are you’re wondering, “Should I sell by auction or private sale?”
There are plenty of advantages and disadvantages to both approaches, and the best solution for you depends on a number of factors. We’ve created a quick guide, as well as things to consider when weighing up your options, to help you make the right decision for your circumstances.
Advantages
Some of the big upsides include:
Encourages competition between buyers
Bidding amongst potential buyers creates a sense of competition, and can mean that the selling price exceeds the expected value of the property – resulting in more lucrative returns for you.
Creates a sense of urgency
Because the event takes place on a set date, potential buyers could feel compelled to make a faster decision about bidding on a property. Potential buyers could also decide to make early offers if they’re especially interested in the property.
The reserve price offers protection
Knowing that your house isn’t going to sell unless it meets a predetermined price means you can put it to auction without breaking a sweat, and you might even end up achieving a price well above the reserve. Remember that you won’t have a price cap on the property, as you would with an advertised price. Setting a formal advertised price can potentially eliminate buyers who might otherwise be interesting in surpassing their budget if it means they can get their dream home.
The terms of sale are set by the seller
You’re really in charge when it comes to selling your property, so you can choose terms such as having an unconditional sale (where there’s no cooling off period) or other settlement terms that work in your favour.
Disadvantages
As with all property sales approaches, there are potential downsides. Some of the common disadvantages include:
Additional costs
Often, going to auction can incur additional costs such as hiring a specialist auctioneer and intensive marketing costs before the big day. It’s worth noting, though, that selling your home with Upside covers all the expected costs of selling a house. If you want your house to go to auction, Upside simply passes on the auctioneer cost ($400-$700 depending on location and auctioneer) which is payable at settlement.
No guarantee of sale
If you’re in a rush to sell, setting a date may seem like the smartest option, but don’t forget that there’s no guarantee it will reach the reserve price on the day. If demand happens to be low on the day, you’ll be back to the drawing board.
Special conditions of sale
Because bids are typically unconditional, selling at an auction usually isn’t suited to buyers who wish to purchase subject to financing – and this could reduce the level of interest in the property.
How to decide
When you’re weighing up the options, consider the following:
- How urgently you need to sell – Going to auction offers a more concrete sale date, but keep in mind that it’s not guaranteed the reserve price will be met on the day.
- How much demand there is for your home – Location, land size, growth potential, etc. will all impact your chances of securing a high price on auction day. If demand is fairly low, you may want to wait for the right buyer with a private sale.
- Your desired level of privacy – If you’re not comfortable with the sale price of your property being public knowledge, you might prefer a private sale.
