Why would people consider auctioning their property as opposed to other methods of selling?
The most obvious consideration for auction sellers is speed. While the average property sits on the market for a lengthy period, auctions can takes less than 15 working days from date of instruction to date of final completion. Auctions are the “real deal”, meaning they are non-suspensive and, once knocked down, there are no deal breakers, which is a great advantage to a seller.
Auctions are more high-profile than standard methods of sale and, by their very nature, place a property in the public eye. In a buoyant market, competitive bidding increases prices and many auctions produce prices that exceed sellers’ expectations. An auction sends a strong message to the market that the seller is serious about selling and buyers are fuelled by this message.
Auctions represent sellers on their terms whereas estate agents wear two alternating hats by initially representing sellers but then switching to negotiating for buyers.
Finally, auctions are far easier for sellers as they hand over their sale, discuss the terms and conditions up-front and are presented with a deposit cheque within a short period.
How does the fluctuating interest rate affect the selling of property through an auction?
When interest rates are high and the property market is down, insolvency, repossession and forced auctions dominate. Conversely when interest rates are down and business confidence is up, auctions are of a voluntary nature and prices are very strong.
Auctions are the truest determination and_ barometer of the property market. They are thus very sensitive to market conditions, interest rate fluctuations and business confidence. They are true “demand and supply” vehicles, and are very much like stock markets, where _value is determined instantaneously.
Written by Michelle Swart, in conjunction with Rael Levitt, CEO of Auction Alliance
Reprinted with permission from Home Front, November 2003
