When a property passes in at auction, some vendors see it almost as a public humiliation.
But they shouldn’t. We explore why good properties sometimes don’t sell and what you should be doing if yours doesn’t.
The auction that goes nowhere
Everyone has been to at least one auction that goes nowhere – where the auctioneer unsuccessfully tries every trick under the sun to get it up and running.
The auctioneer will talk incessantly about the features, the convenience. He or she offers a free bottle of champagne – maybe even enters a vendor’s bid. But in the end, not a single person puts their paddle in the air. Then, finally, after 10 minutes or torturous silence on the part of the crowd, you hear the dreaded words, “we’re passing in”.
It’s every vendor’s worst nightmare. Even as a curious onlooker, it makes us feel decidedly uncomfortable. And it’s the exact reason many people listing their home are fearful of putting it to auction in the first place.
But should you really be concerned about your property not selling on the day? In a market such as this one, we think the answer is no.
Why people are fearful of bidding at auction
People often don’t bid as strongly as they could at auction because they’re worried about showing their hand and seeming too keen. They’re also worried about having their number out in the public domain when no one else has done so. But most importantly, this all comes down to one thing – they’re worried about paying above the odds.
Paying too much becomes even more of a concern when a market is flat like the current one. When prices are rising, people know they can afford to pay a little too much and they’ll soon make their money back and more.
When prices aren’t rising, they fear that’s not the case. They might end up taking a real loss.
How this affecting the current sales process
This is having a real impact on the sales process today. Auction day comes and frequently, no one is willing to offer what the property is really worth or even what they’d really like to pay.
Even people who really want the property and would be perfectly happy in it, are prepared to let it pass in – often believing they’ll pay a fairer price by negotiating directly with the vendor than if they declared their number publicly at auction.
12 months ago this wasn’t happening. People would even offer pre-auction and, if it was rejected, they would turn up on auction day, sometimes prepared to offer more. Today, they’re happy to sit back and wait and to put pressure back on the vendor.
What this means for you
If your property passes in at auction, we don’t think you should be too concerned – at least not always.
Having your property pass in isn’t necessarily a sign that the property isn’t saleable or that the marketing campaign has failed. It’s simply what buyers are doing right now because they believe it will help their cause.
Sometimes they’re right but, equally, sometimes they’re wrong.
As a vendor, if anyone puts any bid at auction, or if they register to bid but don’t go through with it, it shows there’s some level of active interest in your home.
And even if no one puts in a bid – like in the scenario at the start of this article – changing the approach to listing a property for sale by private treaty can still coax out strong buyers and help you get a decent price.
In a market like this one, many potential buyers want the time to do their research and to make certain they’re doing the right thing.
They’ll eventually come around and make an acceptable offer – this is reflected in the fact that the “auction plus clearance rate”, ie the number of properties that went for sale four weeks ago that are now sold – is significantly higher than the auction clearance rate.
As a vendor, you just need to be more patient and willing to be flexible in your marketing campaign, as well as accepting where the market is at. And you really need an experienced agent who is good at negotiation.
Contact us if you’d more about listing your property for auction or discussing whether another approach would work better in the current market.
Sydney’s Eastern Suburbs Market Snapshot
A detailed annual assessment of the property market focusing on the Eastern Suburbs of Sydney, Australia.