Why Auctions are good for agents?
I am still disenchanted by the tactics of especially the larger real estate groups, when it comes to pushing Auctions on their clients. The whole focus from these companies is to get paid faster. If you sell your home by Auction, it costs you more for the auctioneer and you pay that fee if you sell under the hammer or not, the fee is typically around $1000 plus GST. If you do sell under the hammer its classed as an unconditional sale, meaning there is no waiting time for confirmation , you are in fact sold and yes that is the goal, but at what cost? have you actually created a fair playing field for ALL buyers to compete ? or have those buyers who have come late to the sale process been excluded because they had not had time for due diligence. The agents will tell you that you are better to be unconditional because you can move on to the next stage with confidence and this is true somewhat, but in 30 years I have only met a few desperate sellers (for whatever reason) most sellers are happy to be patient with the offer process. The main reason that your agent wants you to go to Auction is that an unconditional sale means they can expect their commission with in 10 days sometimes even faster if both buyer and seller agree to disperse the deposit.
Remember this is your agent you have chosen to work the best for you and to make sure you get the best price possible from any market. If they are excluding buyers from your property because of an Auction process, then how is that working the best for you? Deadline sale or even Tender , lets every buyer have a chance at competing for your property It’s a lot more work for your agent with multiple written offers to collect and then once there is a contract they may wait up to 31 days to be paid ( 21 days for confirmation of your offer and then the 10 days of holding the deposit) , if it goes unconditional.
Which system do you think your agent wants to use? bidders in the room, one contract and fast payment of commission or multiple offers, a due diligence process and then payment if it all confirms. I know I would choose all buyers for my clients over a few who can bid.
I have proof of Auction not being the best for sellers. A true story I will share in my next blog of a buyer who would have paid more on deadline than they did at the auction.