AUCTIONS – PROS AND CONS
Auctions main strengths are:
1. Auctions are the most successful in selling your property within a set time frame using. It uses a properly formulated marketing program designed to get the best offers from buyers who are looking.
2. Increasing interest from would-be purchases is made easier because an auction date creates a sense of urgency and maximizes marketing effectiveness.
3. Potential buyers are encouraged to enter into pre-auction negotiations. Many properties are sold prior to the auction. This can reduce marketing costs.
4. Disruptions such as inspections can be set and minimized to reduce the impact on you and your family. The seller knows exactly how many open for inspection days to plan for.
5. Auctions are generally held onsite which maximizes the interest and selling potential of your property prior to the competitive bidding process.
6. Auctions are the best way to find out exactly what the market is willing to pay for your property. It avoids the risk of setting the price too high or too low. They encourage the best price the market will pay.
7. Auction contracts are unconditional meaning that if the property is sold on or before the auction date, the contracts are final and can not be subject to finance or inspection (see disadvantages). Selling at auction also means you are assured of a set settlement period.
8. Your property has no “price tag” therefore buyers are not comparing your property on price alone. It also encourages the greatest range of buyers who may otherwise only be looking within certain price ranges.
9. With an auction, you have the benefit of a “reserve price” so you will never
sell your home for less than you want.
10. Auctions are ideal for anyone who must sell within a set time period or for properties with unique characteristics.
Auctions weaknesses are:
1. There is no guarantee your property will sell successfully at auction. Reserve price is not always met.
2. The market value of your property is decided on the spot. You can never be sure of precisely how much you will get.
3. Marketing costs tend to be higher.
4. Auctions concentrate the buying process into a short period of time. This may turn out to not be the ideal time to sell. More interest may be right around the corner.
5. Auction contracts are unconditional and can’t be subject to finance or inspection which may not suit some buyers.
6. Could be more difficult to sell if passed in as potential buyers have a better idea what others are prepared to pay and reduce their offer accordingly.
7. You can set the reserve too low and sell too cheaply or too high and not sell at all.