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The debate: Are auctions the best method of sale?

23 June 2014

We ask REINSW members which side of the debate they fall on.


Laura McKay
Group Auctioneer & Sales Manager at Highland Property Agents

There are a  number of benefits for a vendor when selecting auction as the method of sale for their home. Setting an auction date essentially gives the seller a defined date to work towards to achieve the sale. Without a set date, buyers may be prevented from committing to the purchase.

From an agent’s point of view, the auction date can be used as leverage to encourage buyers to make a decision to purchase (either at auction or prior).

Love of auctions

When a person chooses to sell their home through the auction method, there is usually a four-week tailored marketing plan designed to expose the property to the widest pool of buyers in the marketplace. What I love most about auctions is the lead up to the actual auction itself and the information the seller should be provided with in terms of the feedback and price. This enables them to make an informed decision without all the pressure of deciding on a set asking price.

In my experience, I have found that in many cases, especially in a changing marketplace, it is a difficult challenge for any agent or seller to set an asking price that is both competitive and realistic. In a market like the one we are currently experiencing, the comparable sale data (which is only three months old) can sometimes be out of date and not reliable. In my view the beauty about the auction process is that essentially we are allowing the market to determine the eventual sale price, making it a fair process for both buyers and sellers to transact. It also reduces time on the market and the process is a win for everybody.

Securing the dream

A well-executed auction campaign can also be a benefit to a buyer, as the process is a very open way to establish your competition, understand the market and compete fairly for a property. In some cases, your bid may only need to be $500 stronger than your competition to put you in a position to secure your dream home.



Oliver Stier
Director at OH Property Group

In recent months, the media has reported many stories about properties that have smashed reserves at auctions. This leads many to think that auction is automatically the best way to secure the best result. However, there are many circumstances where sale by auction may not yield the best result.


Prestige properties may be exceptional and unique, but it may take a while to find the right buyer. It may well take several months to find such interest, but waiting could result in a final price, which may be hundreds of thousands, if not millions, more.

Properties with obvious flaws – on a very busy road, near power lines or substation etc – may take a long time to find even one buyer. Taking it to an auction likely to fail will just tarnish the property going forward.

Buyers’ market

In some instances, the vendor may have a reason for an urgent sale despite it not being the ideal period during which to sell (such as between Christmas and New Year). When the auction campaign fails to generate at least 2–3 very interested parties, the vendor may be best served by negotiating privately with the parties prior to the auction and cancelling the auction. This way the prospective purchasers remain uncertain about the actual level of competition.

Preferred option

Elderly buyers tend to be more conservative and the stress of an auction can often put them off a property. Likewise, many clients initially come to us and tell us they refuse to even inspect properties that are for auction. They don’t trust that the process is fair or simply don’t like the competitive nature of auction and feel that they are likely to overpay.

As a buyers’ agent, in some situations we do advise our client to wait for an auction because a better result may be achieved there than by private treaty negotiations beforehand. The flip-side of this is that the vendor might do better by selling private treaty.