When Selling At Auction Works

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When Selling At Auction Works

Why an auction can be a big advantage when selling your home.

23 Bittern Dromana Road Balnarring
Reserve $1,270,000
Sold $1,850,000

Recently I’ve noticed a very small, count on two fingers, number of properties where the vendors reserve is advertised prior to auction.  We all know the statement of information which came into law on May 1st this year; giving prospective buyers a chance of securing a property with qualified information of expected value. When selling by private treaty this system works; the buyer knows where the vendor sits on price and can make an offer that generally concludes in a win/win for both parties.

It can be a different story at auction.  The vendors have their reserve price, sure the statement of information gives an indication; but competition, emotion and pressure brings out the best and worst in potential buyers. Whilst going through a set of statistics from May until now around 60% of properties sold at auction exceed the EPR in the Statement of Information.

On Saturday our team visited the auction of 23 Bittern Dromana Road Balnarring. The reserve price was pre-advertised $1,270,000.

Not sure what to expect, a good crowd of around 50 people mingled and surveyed the home and surroundings. The advertised price did appear to be on the short side; however, it was the vendors reserve, transparent and genuine.  The auctioneer opened the bidding and a first up bid of $1.4M exceeded even his expectations, further quick bidding took off and within less than 45sec the home was at $1.55M’ $280,000 above the vendors reserve or close to 10%.

 One of the two competing parties dropped out and a third party stepped in with a $1000 increase. The bids again came quickly and it was evident that the original bidder was in for the fight.  $1.6M, $1.65M, then a jump to $1.7M. Still it was on with the second bidder on the phone. Further bids came in $2,000 rises from bidder 2 counted with $5K and $10K rises from bidder 1.  The property was racing, and it was quick, $1.8M and it was still going before eventually being knocked down to the first bidder for a staggering $1.85M; $580,000 above reserve.  Sold at private treaty the home sells at reserve; sold at auction and the vendors earn over ½ Million dollars additional tax free coin.  Try and save that much over a lifetime.

There is always risk selling at auction but at least you know what the outcome is, a bit like ripping off a band aid.  When results like this show up it does vindicate the auction process.


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