Full disclosure right upfront here: I'm not a fan of auctions. The bottom line for me is that a buyer only has to bid more than the 2nd highest bidder in order to win, no matter how much they might have been willing to pay. So as a seller I can potentially miss out on a much higher purchase price.

Having said that, sometimes there are situations where an auction may get you the best bang for your buck when you're selling, and it would be a mistake not to go down that path.

So let's dive deeper into the mistakes far too many sellers make when it comes to auctions.

Choosing To Sell With An Auction

As I said, I think there are far too many properties sold at auction just because the real estate agents like them, rather than because they're best for the seller. They're very time efficient for agents, and there's all the fun and theatre of the auction day.

As a seller, you need to be very clear headed about whether an auction is the right choice. The first question you should ask yourself is how unique your property is. This comes down to basic supply and demand.

If you have a very unique property, something that comes up for sale once in a blue moon, which is also highly desirable, then the demand is likely to be high. And along with that demand comes competition, and that's what will drive the price up at an auction.

But if your house is basically the same as every other house up for sale in the area, forget it. There's nothing to push buyers into paying more for your property, if they can buy the identical house two doors away at a lower price. An auction is not going to magically produce a high sale amount.

Because the bottom line if you're going to get a really good price for your property is you need emotional buyers. Buyers who are so in love with your property that they'll mortgage their very souls to buy it. For that to happen you need a situation where demand massively outstrips supply.

It's demand that's crucial. And unless you're likely to have many, many emotional buyers all bidding, it won't happen. So if your property is hugely unique and amazing, but doesn't match the needs of people wanting to buy in the area, then the demand isn't there.

To sum up - if you have a unique property and plenty of interested buyers, then an auction may work for you. Otherwise, say no to the agent.

Be Open To Prior Offers

If you have gone ahead with an auction, be open to prior offers. As a developer, I almost never have all my ducks lined up in a row to buy at auction. But if I can get an offer accepted, then I have time to sort out finance. I also have the opportunity to negotiate terms which may be more beneficial to both of us.

So stay flexible - don't get fixated on having to go to auction to get the best price. A lot of the time you're better off engaging with a genuine buyer before the auction in order to get the result you want.

Make Your Property Easy To Buy

There's an old saying: "if you want to make your product easy to sell, make it easy to buy". Sounds logical, right? But one of the biggest mistakes sellers make with auctions is not making their property easy to buy when it comes to due diligence.

You probably already know how important I think due diligence is. But put yourselves in the shoes of a potential buyer for a minute. They're potentially looking at multiple properties, and if they're a developer, there's a lot of things they need to know before being willing to buy.

As a minimum, most buyers want to see a building and pest report, and developers may want soil tests and more. So now as a buyer, you're shelling out hard cash for due diligence that potentially will disappear down the drain if they don't win the auction. And, if they're looking at multiple properties, those costs start to add up.

If you want to make your property easy to buy, spend the money to get one or more of these reports done, then offer them to potential buyers. For a regular property, building and pest is a minimum. If it's a development site, then consider things like a soil report, an arborist report, town planning assessment and more.

It may not be cheap, but if it means more buyers become engaged with the property, leading to the kind of demand at auction that will drive the price up, it's worth it.

And There's More

Setting An Unrealistic Reserve Price: Setting a reserve price (the minimum price you're willing to sell at) too high can deter potential bidders. If buyers perceive the price as unrealistic, they might not participate, leading to the property remaining unsold. Your reserve should be based on market analysis, not your financial needs or emotional attachment to the property.

Choosing the Wrong Auction Date: Scheduling an auction during periods of low buyer interest, such as holidays or major local events, can lead to reduced attendance and bidding activity. It’s essential to choose a date and time when potential buyers are likely to be available and engaged.

Not Holding a Professional Auction: Being professional includes things like choosing a professional auctioneer, having a clear plan for auction day and your agent conducting a solid marketing campaign to their list of potential buyers. They will also monitor buyer feedback and suggest ways to improve your outcome.

By avoiding these common mistakes, if you choose to go to auction (and I still don't like them!) you will enhance the effectiveness of the property auction strategy and increase the chances of achieving a successful sale.