08.11.2020 Selling Advice

Should You Go To Auction In Today’s Market?

Should You Go To Auction In Today’s Market?

Auctions have long been the most popular way to sell property in Sydney’s eastern suburbs.

And for good reason. When done well, an auction can encourage competition, drive fear of missing out and compel buyers to put their best foot forward.

But to be successful, an auction requires multiple interested parties. That’s not something anyone can guarantee when the property market falters. With that in mind, we look at whether now is the right time to sell by auction or whether another sale method is a safer bet.

The current state of the auction market

Before the COVID-19 pandemic became a reality, Sydney’s auction clearance rate was healthy. Over February it sat at 73.7%, according to Domain – the sign of a buyer’s market. Then it suddenly plummeted to 55.7% in March.

Now, the auction clearance rate is back up around 65%, which means that although it’s not as strong as pre-COVID-19, we’d still consider it a neutral market rather than a bad one. In these conditions, quality properties can still usually command a lot of auction interest.

Take, for instance, 365 Edgecliff Road, Woollahra, which sold recently. This elegant five-bedroom home in a prime location had four registered bidders actively competing to secure it. So an auction was certainly the right strategy.

Should you hold an auction during COVID-19?

In today’s unusual market, selling via auction still suits certain properties and certain vendors.

Generally, we advise sellers to consider taking their properties to auction in the following scenarios:

  • When we know there are likely to be several active buyers in the market looking for the same type of property. You can find out more about those active market segments here.
  • When there is little similar stock on the market and few alternatives available to those buyers.
  • When the property is in a desirable location.

The good news about choosing to sell by auction right now is that stock levels are at record lows.

However, vendors need to have realistic expectations about what’s achievable. Prices aren’t rising and this isn’t the kind of market where every single property sells for way above the reserve price.

We also advise vendors selling by auction to be prepared to spend a little to make the property as presentable as possible. While properties that aren’t well presented can sometimes still sell reasonably easily in hot markets, they’ll only sell now if they have other characteristics that buyers demand.

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Alternatives to selling via auction

If your property doesn’t suit an auction or if you don’t want to use this method of sale there are still alternatives you may be able to successfully use, including:

Private treaty. Although auctions tend to be the preferred way to sell property in Sydney’s Eastern Suburbs, a lot of vendors still choose to sell via private treaty. This involves inviting people to make an offer and can be especially effective where you’re not in a rush to sell or buyers have more choice.

Expressions of interest. This sales method involves setting a deadline by which time buyers must submit their best and final offer. It is often the best way to sell a home when it’s hard to determine a property’s real value or gauge buyer interest. Read more about how sales by expressions of interest work here.

Off-market. Off-market sales happen when we don’t advertise property via online property portals but only to our database of potential buyers. This is the most confidential selling process.

Our tip: be realistic but don’t be afraid

We know that the uncertainty COVID-19 has created is causing many people to think twice about selling their home right. However, the reality is that low stock levels mean that this is not the buyer’s market that many forecasts it would be.

That may change later this year when JobKeeper support tails off and the banks end mortgage repayment freezes.

With that in mind, we’d encourage you to think about listing now rather than later this year and even selling before you buy. And one of the ways you should consider listing your property is still a sale via auction. By including a longer-than-usual settlement period in your contract for sale, you can give yourself time to find your next home without any pressure.

If you’d like to know more about buying or selling in Sydney’s eastern suburbs, get in touch with our team today.