Arnold
CibbuanoBenefits of an Auction
August 9th 2006 00:53
Public auctions are becoming a popular method of sale with property sellers in Australia as it creates a situation where buyers have to compete with other buyers, rather than competing directly with the seller. For a seller, the public auction seems like a win-win situation. The property cannot be sold unless it reaches the reserve price, however it can be sold for well above the reserve price. There is no firm upper limit that is set in the seller and buyer’s valuation. The bidding process is beneficial to the seller as it,
1) Draws attention to the profile of your home with a targeted, intensive advertising campaign. A ending auction creates and aire of excitement and urgency for interested buyers. There’s a fixed time frame within which they have to make decisions about financial and whether they are 100% happy with the property. In a private sale that intensity is lost. Buyers tend to feel like they have more of the balance of power and there is more scope to bargain and hold off on closing a sale.
2) Places a time limit on buyers. If the buyer is seriously interested in purchasing the property it is customaty that they may offer a pre-auction bid. This can encourage them to make a high offer before the auction rather than wait to see what auction day may bring. If the offer is attractive, as a seller you are allowed to terminate the auction before the auction day and sell the property to the pre-auction bidder. The pre-auction offers are a good way of determining public interest in your property and may give an indication as to what you’ll likely achieve at auction if you choose to reject the offer.
3) Allows the seller to set the terms of the sale. The seller decides what the reserve price will be. Essentially you are guaranteed a certain sum for your property and bids beyond the reserve price are a bonus. Some auctions achieve prices well above the reserve price which means that had you put the property on the market at a fixed price, you wouldn’t be eligible for that additional bonus buyers are valuing your property at. If the property doesn’t reach reserve, the auction is passed in and you can try again at a later date.
4) Has no "cooling-off" period. In a fixed sale contract, buyers have a cooling off period of generally one month. In this period a buyer can change their mind and terminate the purchasing contract. In an auction sale this cooling off period is not observed. At the end of a successful auction the property is considered sold.
5) Is not conditional on buyers' finance approvals. Auction bidders are responsible for sorting out their own financial arrangements prior to the auction. In fixed sales often the buyer will have to present financial approve and the property will not be able to trade hands until this criteria is fullfiled.
6) Creates competition between buyers, pushing the price up rather than negotiating it down. In a fixed price sale the buyer will see the advertised price and usually offer a lower amount. The seller and buyer continue this back and forth process of bargaining until some sort of middle ground is reached. The seller ends up trading down on their original expectations. In an auction, the buyers are set loose in competition. This creates the climate of competitive trading up. The seller can achieve a selling price above and beyond their original selling expectations.
1) Draws attention to the profile of your home with a targeted, intensive advertising campaign. A ending auction creates and aire of excitement and urgency for interested buyers. There’s a fixed time frame within which they have to make decisions about financial and whether they are 100% happy with the property. In a private sale that intensity is lost. Buyers tend to feel like they have more of the balance of power and there is more scope to bargain and hold off on closing a sale.
2) Places a time limit on buyers. If the buyer is seriously interested in purchasing the property it is customaty that they may offer a pre-auction bid. This can encourage them to make a high offer before the auction rather than wait to see what auction day may bring. If the offer is attractive, as a seller you are allowed to terminate the auction before the auction day and sell the property to the pre-auction bidder. The pre-auction offers are a good way of determining public interest in your property and may give an indication as to what you’ll likely achieve at auction if you choose to reject the offer.
3) Allows the seller to set the terms of the sale. The seller decides what the reserve price will be. Essentially you are guaranteed a certain sum for your property and bids beyond the reserve price are a bonus. Some auctions achieve prices well above the reserve price which means that had you put the property on the market at a fixed price, you wouldn’t be eligible for that additional bonus buyers are valuing your property at. If the property doesn’t reach reserve, the auction is passed in and you can try again at a later date.
4) Has no "cooling-off" period. In a fixed sale contract, buyers have a cooling off period of generally one month. In this period a buyer can change their mind and terminate the purchasing contract. In an auction sale this cooling off period is not observed. At the end of a successful auction the property is considered sold.
5) Is not conditional on buyers' finance approvals. Auction bidders are responsible for sorting out their own financial arrangements prior to the auction. In fixed sales often the buyer will have to present financial approve and the property will not be able to trade hands until this criteria is fullfiled.
6) Creates competition between buyers, pushing the price up rather than negotiating it down. In a fixed price sale the buyer will see the advertised price and usually offer a lower amount. The seller and buyer continue this back and forth process of bargaining until some sort of middle ground is reached. The seller ends up trading down on their original expectations. In an auction, the buyers are set loose in competition. This creates the climate of competitive trading up. The seller can achieve a selling price above and beyond their original selling expectations.
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