Traditionally, Brisbane is a landscape that favours selling via private treaty over taking a property to auction. However, recent developments have shaken the norm.
Why has private treaty dominated the Brisbane market?
There are four main reasons that Brisbane property has leant towards private treaty:
- Stress minimisation – Auction day can be quite stressful and intimidating. As client service providers, agents generally prefer to minimise the amount of stress felt by the people they represent.
- Lack of urgency – auctions are great because they set a deadline. However, if there is no urgency to sell, a hard, do-or-die deadline may add unnecessary stress to a seller.
- Expense minimisation – as a private treaty campaign often does not include large marketing campaigns.
- Privacy – the reasons someone would want to sell a property are varied, and may be sensitive in nature. Privacy may be a chief concern. In this case, an agent would be unwilling to generate an auction campaign and turn an unwanted spotlight on their client.
Auction clearance rates in Brisbane are again on the rise (nudging 49 percent in the week beginning on the 4th November, according to Domain, after being at 33 percent at the end of October) and the question is raised; should I sell at auction or via private treaty?
Here are some reasons why you might want to consider an auction campaign:
- There is no ceiling on the price – competition will drive the price as high as bidders are willing to go. In fact, currently, we are seeing properties selling over reserve by up to 15 percent.
- Transparent bidding environment – At an auction, all buyers are in full view of each other. This creates urgency, and feeds into point 1.
- Strong marketing campaign – An auction demands this, as you want bidders to be as excited as possible on the day. An auction breeds the most interest.
- Vendor sets reserve – This protects the vendor from underselling.
- There is a deadline for the property to be sold
- Opportunity to sell beforehand – In fact, many properties at Avnu are sold prior to auction.
- Opportunity to sell after auction – If no bidder was successful on the day, post-auction negotiations can often yield a settlement, giving the vendor one more option for selling.
That sounds good. But why?
An explanation for this phenomenon can be seen in the recovering market, the interest rate cuts, and the warm Spring rush before Christmas, which are allowing buyers to become a lot more confident when it comes to bidding. According to Brisbane Avnu Centre Sales Leader Roger Carr;
“They are enjoying the transparency of the auction process, knowing where the other offers are, more so than flying blind behind closed door negotiations.”
Sellers can also be confident that every potential buyer exhausted their bidding, having had the opportunity to put their maximum price forward at auction, through open competition.
The mood amongst property professionals in the current climate is particularly optimistic towards auction as a strategy. The following example depicts why:
On Saturday, Brisbane-south Avnu sales agent Karen Chappell sold two properties which were situated right next to each other.
That’s correct – over the weekend, Karen took both number 2 – for which there were 6 bidders – and number 6 – with five bidders registered – Bay Terrace, Wynnum to auction. On the same day.
The decision to bring both properties under the hammer on the same day came about due to the whims of that most fickle of gods – the weather.
Late in the week, Brisbane was forecasted to receive rain, so Karen and the auctioneer changed strategies. To minimise the potential of bad weather driving away auction-goers, both were scheduled for the same time, effectively allowing for a sharing of attendees.
This boost to turnout allowed for heightened competition, resulting in a sale price of $820,000 for number two, and $456,000 for number six, which was bought for its potential as an investment property.
Karen recalls that both auctions had a flying start and there was no delay as soon as the auctioneer called for the opening bid – maintaining the crowd’s energy throughout, and working up the prices to finish high.
What Karen was able to do was utilise unpredictable variables to magnify the competitive nature of an auction to benefit both sales, cross-pollinating crowds and introducing ideas to people who otherwise may not have had them. Not bad for a rainy day.