The word “auction” derives from the Latin word “augere” which means “to increase”. Dating back to Roman times, auction is one of the oldest methods of selling and yet today is the most advanced method of marketing real estate.
Auction marketing involves a high profile structured campaign which ensures full market coverage. The marketing campaign is generally short, sharp and intensive, designed to test the market to see what buyers, in a competitive situation are prepared to pay to become the new owners of that property. The deadline for the sale creates a sense of urgency among buyers and sales consultants alike, and is the very best means of achieving a premium or fair market value for a property within a specified time.
Marketing with a price limits what a keen buyer may pay. Once a listing price has been established for a property, a ceiling has been placed on what a buyer expects to pay for it. Auction, on the other hand, offers a real opportunity to get more for a property than the seller might expect.
Our objective is for the seller to have the highest price possible offered for their property by the end of the auction campaign.
A well-run auction programme may take more time and effort for the consultant but will ensure that the property gets the maximum exposure. It is certainly the method that offers the highest degree of responsibility and control shared between the consultant and seller.
Through auction, buyers are prompted to pay their top price by:
· The deadline.
· Confirmation of value and desirability by other buyers/bidders.
· Fear of loss to a stronger or keener buyer/bidder.
There are three opportunities to sell a property using the auction method.
. In the lead-up period high profile auction marketing will highlight the property, producing the greatest exposure during the period when enquiries are likely to be at the highest level.
. The auction itself is the shortest part of the process but it is the best opportunity to sell during competitive bidding in an open arena.
. Post-auction period - some people believe that if the property does not sell on the auction day then the auction system has failed. This is not true. Stage three provides opportunity to negotiate with those who may need to sell another property or arrange finance before they can commit themselves unconditionally.
· This allows you to give an indication to the market of your expectation without declaring the actual figure.
· This method invites buyers to negotiate with you upwards from a base figure. This figure is one that you believe the market will pay.
· The key to success with this method of marketing is to establish a fair market value.
· It should be realistic enough to attract interest and encourage offers, and be low enough to attract a number of buyers who on becoming emotionally involved with the home, are prepared to negotiate.
· If it is too high, you could overshoot the market and you may have been better to put a price on it.
· No price allows greater flexibility, which can be attractive to some buyers.
· The property is marketed at a price that is acceptable to the seller.
· If priced at fair market value good interest will be shown in the property and will make it easier for potential buyers to determine whether the property is within their reach. It is usual for the buyers to begin negotiating below the listed price.
· As buyers will be comparing the property to others on the market the seller must be particularly careful not to over-price or under-price the property. Your sales consultant will be a useful source of information about properties that are on the market with similar features and those that have recently sold. Some buyers may eliminate the property from consideration based solely on price.
· Buyers may make an offer based on conditions having to be satisfied.
Deadline Private Treaty
· A process very similar to auction employing the same high profile, no price approach within a definite time frame. There is no open bidding however.
· Offers are delivered in sealed envelopes and the vendor can decide to accept, reject, or negotiate with any party depending on the terms and conditions.
· It is possible to have conditional offers in a tender process.
· The confidentiality of tender suits the circumstances of some vendors.
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