You’ve decided to sell by auction, but as you get closer to the big day, nothing seems to be happening. The buyers aren’t coming out of the woodwork, so should you cancel the auction?
This is the last thing you want to do, and there are many reasons why.
A quiet campaign doesn’t mean there is no interest
These days, with the internet, a lot of information is readily available for buyers. They don’t need to contact the agent, and they may not feel the need to visit the property. If your campaign is quiet is doesn’t necessarily mean there is no interest in the property and there won’t be buyers at the auction. A lot of buyers do their research beforehand but will still turn up on the day.
You might miss out on unexpected opportunities
Auction day can be incredible, and you can get many new buyers attend the auction because of the spectacle and end up buying the property.
We have called many auctions where buyers have turned up out of the blue on the day and the property has sold. They’ve been walking or driving past and the auction catches their eye. While this does not happen in every case, you will miss this potential opportunity if you cancel the auction.
You don’t create competitive environments
The benefit of selling buy auction is that you create several competitive environments among buyers.
Before the auction interested buyers can make an offer. These generally have to be cash unconditional offers, which is preferable for the seller. The chance of missing out to another buyer at the auction encourages them to make their pre-auction offer very attractive.
If you decide to continue on to the auction you may then have competition between cash buyers to buy under the hammer. These days you may also have competition between subject to finance buyers. This competitive environment again encourages them to make their bids better if they want to buy the property.
Should the property be passed in, you will again have competition between unsuccessful bidders and also any potential buyers who weren’t in a position to bid. They may be subject to finance or subject to sale buyers. Again they will want to present their best offer in order to outdo the other buyers.
Without this competition, there is no motivation for buyers to present their strongest offer, they can offer what they want, often this is well below the asking price in the hope of getting a cheeky bargain.
You have nothing to lose
You have already invested money in the marketing campaign and in the auctioneer, why would you waste that? You have nothing to lose by seeing the campaign through to the end.
If you are worried that the property won’t sell, what are you expecting will happen if you cancel?
You are sending the wrong message to potential buyers
Cancelling an auction tells buyers that you don’t expect the property to sell, that there are no buyers. The aim of an auction is to get the seller the best price the market will pay, but when you cancel you give the control back to the buyer. They may still be interested in your property, but they won’t be offering you their best price, they’ll be expecting to get a bargain from a seller who is desperate.
You will lose momentum
It takes time to build momentum during a marketing campaign. Cancelling your auction and then putting the property on the market by private treaty effectively puts you back at step one. You will also have lost any sense of urgency created having an auction date creates.
You are losing a valuable resource
Perhaps there aren’t a lot of bidders at the auction, maybe there is only one, and their bid is low. There is no need to panic, your auctioneer is effectively a third party negotiator, someone who is there to promote the property and protect its integrity.
They can use vendor bids to show potential buyers where the property sits. Should it be passed in, any bidders and other buyers waiting for the property to make an offer in will know what is expected.
Overall, it’s important to remember that selling by auction is a process, and is not just about the auction day.
The benefit of selling by auction is that you are using a short, sharp marketing campaign with a deadline to get more people to the property and create competitive environments before, during and after the auction. The auction itself is only one part of a several-week strategy.
While it is easy to get caught up in the hype about high clearance rates from the Eastern States, and panic that your property might not sell under the hammer, the reality is that here in WA most properties do not sell on the day. Some sell before, some sell under the hammer and most sell after.
Unless you have decided accept a fantastic offer in the lead up to the auction, cancelling the auction is not in your best interests and may harm your chances of getting the best price the market will pay in a reasonable time frame.