Auctions... opinions vary from it's the only way to sell to would never do it. Everybody's situation is different, and you as a seller need to consider what your needs are, and how your needs will best be met.
Sold at a specific time on a specific day
An auction will get your property sold on the day, under the hammer, as long as at least one buyer turns up and you are prepared to say yes to the highest bid, whatever that may be. This may suit you if you are in a difficult situation or have time constraints. You will know that your property will be sold at 11am on the given day. Finished.
The successful buyer is locked into the sale on the fall of the hammer and there is no cooling off period to worry about. The timing issue of when the sale will occur is now fixed!
But what about the price
Most agents who promote sale by auction suggest that the competition between buyers will drive the price up, and indeed that may be the case as long as there are enough buyers there on the day with the right money.
Important factors to consider
Some other important factors to consider with the auction selling system is;
1. to have an auction you need more than one buyer
2. If the property doesn't sell on the auction day it can be labelled as a failure
3. In the majority of cases you will not receive the successful bidders highest prepared to pay price
Let's dig a little deeper
Let's look at the highest price a little deeper, and you need to read this slowly so you absorb what is being said... the successful bidder only has to make a single bid above that of the under-bidder to win. You may never know how much the successful bidder was really prepared to pay. The only person you definitely know that was prepared to pay their maximum was the under bidder, the one who missed out. You get one shot at negotiating with your buyer, and it needs to be the best shot. This can be one of the worst pitfalls associated with auctions.
An Auction program will generally cost more than a private treaty sale due to the specific manner in which the agents will want it promoted. An Auctioneers booking fee will generally range between approximately $500 -$800.
Setting the Reserve
Warning- be very careful in setting the reserve, real estate agents will always want it low but you need to get the right strategy. Protect yourself and use the 2 reserve strategy.