When it comes to selling I’m a big believer in no-price marketing strategies – I’ve said it before, when a buyer sees an advertised price they start thinking about how much less they can offer.
More agents are seeing the value of no-price strategies and there are several that are popular at the moment.
You’ve probably seen many of them: set date sale, express sale, offers, contact agent, price on application, expressions of interest, for example. These are all forms of tender, some with a date to encourage buyers to act, some without.
They are all a step up from a price-based strategy, they invite offers, ask the buyers where they see value and those with a closing date encourage action, all of which is good.
However, they don’t have all the advantages of auction.
The similarities are that auction is also a no-price marketing strategy and it has a date that encourages buyers to act.
The differences are that auction creates an open competitive environment. An auction is a transparent environment where buyers can see what others are bidding. They know what they need to offer to outdo the other buyers and will bid more if they want to. With tender the onus is on the agent to encourage the buyer to make a better offer, which is hard to do when they don’t know what other buyers are willing to pay. When buyers are at auction and see what other buyers are bidding they are more likely to make a better offer. With a tender a buyer might decide to offer $800,000 and no more. At auction they could see another bidder offering $805,000 and decide to go higher.
The competitive auction environment is also quite emotionally charged and can drive the price up. This emotional aspect is missing from the tender process.
While some tenders and auctions have closing dates, auction is the only process where the auction day is another opportunity to showcase and exhibit the property. It is an event, a chance to get more people to the property, a day where even bystanders and passers-by can and do become involved in the process, an opportunity that is missed in a tender.
Plus, even if the property is passed in, the auction has been an education process showing the market where they need to be if they want to buy the property. There is also the opportunity to negotiate with unsuccessful bidders and subject to finance and subject to sale buyers who are interested, an opportunity that doesn’t exist with tender.
And finally, an auction gives you the chance to take advantage of having a skilled, third-party negotiator on your side, and extra person working to sell your property. The onus is not just on the agent, you have the auctioneer there to negotiate with buyers as well.
It is true that an auction might cost you a little bit more in terms of marketing and the auctioneer’s fee, but statistics show that auctions get a better price. Isn’t it worth paying a bit more for a better result?