Published at: 6/21/2016 3:29:22 PM
Sale by auction can deliver big results but it’s not the right choice for every home.
You’ve probably come across media reports of properties sold at auction sold for considerably more than expected. Owners are described as ‘thrilled’, ‘excited’ or ‘astounded’ at the price their property commanded, and for the rest of us selling by auction can seem like the path to sale success.
What we tend to hear less about is the large number of properties that don’t sell at auction. Instead of excitement, owners may be left out of pocket in terms of auctioneer fees and other costs.
This highlights the need to know if auction will deliver the highest possible sale price for your home. Three key factors determine if your place is a likely candidate to sell under the hammer.
Is your suburb auction-friendly?
Some locations have more of an auction culture than others. Figures from CoreLogic show that in the 12 months to September 2015, around one in three homes in Canberra, Sydney and Melbourne sold at auction. In other state capitals there is considerably less of an auction culture. In Darwin and Hobart for instance, only about 3% of homes were sold at auction, a figure that falls to less than 2% in Perth.
Do you have a high value home?
Even in cities that favour auctions, homes located in expensive, prestige suburbs make better auction candidates. CoreLogic found the median price of houses sold at auction in 2015 was $950,000 (apartments: $680,000) compared to a median value of $530,000 for those sold by private treaty (apartments: $460,000).
Houses more likely to sell under the hammer
You’ve got a better chance of selling at auction if your home is a house rather than an apartment. Around 20% of houses were sold at auction last year compared to only 16% of units.
One reason for this is that auction tends to favour homes with unique qualities. As apartments are typically part of a larger complex, often made up of similar properties, it is easier for buyers to estimate the likely market value so there’s less incentive to engage in a bidding war.
Understanding how your local market works – and seeking the advice of an experienced selling agent, will help you make the right choice between auction and private treaty.