If you’ve decided to put your house on the market, one of the big decisions you’ll need to make is the mode of sale.
Getting this decision right could be the difference between getting the price you want or losing money.
The demand for home auctions as the primary mode of sale has been steadily rising, particularly for metro markets. The process is straightforward. Appoint an auction agent and follow their advice on marketing, setting a reserve price, and hosting open days. Then select a date for potential buyers to bid on the property.
Unfortunately, the actual results of this method can be uncertain and, at times, quite negative. If you’re considering taking your home to auction, these 4 drawbacks may change your mind.
1. They’re Slower Than Metro Markets
Homes in regional auctions tend to take longer to sell due to the lower population and lesser demand for real estate. This can make things difficult for those hoping to sell their home quickly, especially for their original asking price.
This is a stark contrast to the speed of metro auction markets. Metro auctions usually draw a strong crowd of buyers due to the denser population in metro areas.
2. Success Depends on the Seller’s Market
Success in an auction needs a seller’s market. A seller’s market is when the seller has the advantage, as there’s a lack of competition and they can sell their goods for higher prices. The buyer’s market is when the buyer has the advantage, as supply exceeds demand and buyers can purchase goods for less.
Though a seller’s market will likely result in bidders competing against each other and driving up the price, in a depressed or flat housing market, the opposite will occur. Of course, the seller has no control over the kind of market they are working with, and this level of unpredictability makes the decision to auction even riskier.
3. Auctions Require a High Amount of Buyers
A large pool of buyers is key to a successful auction for the seller. Unfortunately, the reduced population in regional areas results in a smaller pool of buyers, and typically a lower selling price as a result.
This is one of the major issues with auctions: unpredictability. Both you and your auction agent have very little control over how many people you’ll be able to gather for auction day. There are alternative modes of sale that provide you with more control and consistency.
4. There’s Temptation to Sell Under Pressure
An auction is a high-pressure environment, but that sense of urgency and immediacy often works against the seller. There may be added pressure on the seller to reduce the original asking price in order to sell. Regrettable decisions can be made during intense moments, and are best avoided if possible. For example, when one is in a highly emotional state, they may sell the house for much cheaper than it’s worth just to escape the conversation.
By opting out of auctions and working with a real estate agent, you can rest easy knowing that you have a professional on your side, making critical decisions on your behalf.
With an experienced agent, you won’t have to worry about the high-pressure environment, the potentially low pool of buyers, or the inconsistencies of a regional market. You will be able to get a great price for your property. while benefiting from the guidance of an expert in the market. This will save you a lot of time, and will reduce your stress in the long run.
