Pre-auction sales have taken their place as a mainstay across Sydney’s eastern suburbs, complementing the increase in off-market sales.
According to auction clearance rate figures from CoreLogic, almost half of all east Sydney auctions that cleared in the first week of March this year were pre-auction sales. That’s a large number of properties that are being sold pre-auction – and for some very good prices too.
Here’s what sellers need to know about accepting an offer from buyers before auction day.
Two perspectives on increased pre-auction sales
Each pre-auction sale represents a specific negotiation between buyer and seller, but there are some broad conclusions we can draw about the drivers of high pre-auction sales figures in Sydney’s east:
1. Higher supply can make sellers nervous
In suburbs where more properties have come onto the market, buyers know they have a broader range to choose from. If sellers begin to see less enthusiasm at auctions in their neighbourhood, and especially if their property is spending more time on the market than others, this can be a factor in their decision to agree to a pre-auction offer rather than risk missing out on the day.
2. Increased competition can make buyers nervous
While a softer market can contribute to increases in pre-auction sales, it’s important to remember that a competitive market can also prompt buyers to make their offers well before auction day. If sellers are receiving enough attention before their property is scheduled to sell, they may well decide to skip the auction altogether and finalise the process early.
What auction clearance rates really mean
With a new set of auction clearance rates to report on each week, media outlets can be over-enthusiastic in interpreting any slight change as a sign of a broader trend. But a fall in Sydney’s clearance rates only reflects the city-wide average, not necessarily the reality in a particular market segment. In fact, even on a weekend with a lower clearance rate, many suburbs across the east will go against the trend, registering a higher percentage of properties sold or higher bids and sale prices overall.
Pre-auction sales call for careful management
A pre-auction sale takes place after a property is advertised but before the auction itself takes place. This type of transaction requires careful communication and negotiation by the agent with both the seller and potential buyers. An agent’s knowledge of what the market can offer is crucial throughout this process to ensure you don’t accept an offer that is too low or miss out on potential value.
Why your agent should adapt to the campaign
In any successful campaign, your agent should have the knowledge and experience to be able to ‘read the play’ and adapt their strategy to the needs of your particular campaign. They should be able to help you time the market in deciding when to sell and to time each step throughout the negotiation.
The fact is that great results can be achieved before auction and at auction, but the best result will depend on the property itself and the buyers involved. And an agent who is determined to achieve a pre-auction sale at all costs can end up with a result that sacrifices a higher sale price for the satisfaction of a closed deal.
Ultimately it’s about carefully reading the market, and bringing out the best in buyers, through the best sales method for that particular property.
Sydney’s Eastern Suburbs Market Snapshot
A detailed annual assessment of the property market focusing on the Eastern Suburbs of Sydney, Australia.