Many sellers don’t fully understand the auction process. They don’t want to go to auction because it’s high pressure with all the expectation that the property will sell on the day. They also don’t realise that the property can be sold any day before an auction occurs and the power is always in their hands, to keep it simple, think of an auction as a private treaty with an end date. The only question is whether selling prior to an auction is the best choice.
The pros of selling prior to auction are straight forward. So long as you have exhausted a market place and have multiple people wanting to purchase your property, then it is worth going this route. The best way in my opinion, is to sell the property using an expressions of interest style sale, by asking for best and final offers from all buyers with a closing date no longer than forty-eight hours. Your agent needs to explain that the only offers that will be looked at will have to be unconditional offers, this means the buyer should not add subject to ‘anything’, if there are conditions and they draw out for more than three days (ie. finance is usually a two-week process) then I would not look at the offer, unless your agent is one hundred percent confident it will go through. If you’re looking at offers in the final week prior to auction, make sure your agent does not sign any up until the Wednesday, cooling off does not apply three business days before and after the suggested date of an auction, so if they sign off on a Tuesday, you’ll have to wait until Friday before you can put your sold sticker up.
So, things to look out for are minimal, but can undo all the work of a campaign. Firstly, once you start this process, you will most likely lose all the buyers who participated prior to the auction. This means, that if you do not sell to the highest offer prior to auction, there is a very high chance that most buyers who put in an offer will not show up at the auction. You may sacrifice a week or two of new buyers coming on the market, though in most cases, you sell prior because you’re expecting a strong offer. You are subject to cooling off, unless the offer is signed up within three business days of an auction. But, I guess the worst part though, is your agent won’t be able to meet more people, stand up in front of a big crowd and promote themselves and their agency, if you really care about that.
If conducted in the right manner, choosing an auction campaign with the intention to sell prior can be beneficial in capturing the best price achievable for your property. It’s not the next best bid, which is all an auction is. The best buyers for a property are usually met in the first two weeks of a campaign, having them endure another two weeks may see some of them drop off. It promotes unconditional offers, even if they are subject to cooling off and finally, most buyers like to purchase prior to auction, right up until the point they must write up the best and final offer. If the opportunity is there to sell prior, I would suggest that you have your agent explore your options.
The following advice is of a general nature and intended as an opinion and broad guide. For all legal, financial or real estate advice you should obtain independent professional advice to do with the specific nature of your circumstances before making any legal, financial or real estate decisions.