What Happens When A Property Doesn’t Sell At Auction?
With Auction rates clearance now around 43% in Brisbane, what happens when a property doesn’t sell?
In early 2022, Brisbane’s auction clearance rate was booming in the at almost 75%. Now, it’s averaging around 43%, leaving just under half of the properties in Brisbane that are going to Auction are being passed in.
Although, typically those that don’t, sell within the first 14 days post Auction. Compared to the percentage of selling under the hammer, post Auction sales are averaging around 78-80%.
Why are Auctions so popular in Brisbane?
Auctions are easily the most popular way to sell real estate throughout Brisbane’s property market.
Sellers often like them because they usually come with a short, sharp Auction campaign. They also create a competitive environment. Causing buyers to see the competition and the desire to secure the property, encouraging them to put in their best offer.
Many buyers like auctions as the process is very transparent. Buyers know what other buyers are willing to pay and simply just has to be prepared to offer more and meet the reserve price. Meaning buyers often feel there’s less risk of overpaying themselves.
All successful Auctions need competitive tension, this is likely with more than one interested and registered party. Without competitive tension, there is no drive to bring the auction forward.
Buyers also need to have the confidence to put their offers forward in a competitive environment. With buyers being reluctant, it is often hard to get that first auction bid. Once the first bid is out, the next bids likely flow more freely.
118 Reeve Street, Clayfield – Going to Auction Sat 28th Jan 2023
Why don’t properties sell at Auction?
There are numerous reasons properties don’t sell at Auction, and many have nothing to do with the quality of the property itself.
- A Limited Buyer Pool – it only takes one serious buyer for a home to sell but, for an auction to succeed, several interested buyers are needed.
- Market Change – Prices were rising in 2021 but at the moment, prices are stabilising so buyers are more wary of overpaying.
- Lack Of Confidence – Many potential buyers don’t like bidding in public. With the market slowing – the social cues that are needed for a successful auction, such as multiple registered bidders and fast and strong bids, aren’t always there now.
- Strategic Reasons – Some buyers deliberately don’t put in an offer at Auction, in hopes that they’ll get more room for price negotiation after the Auction. Which is not always necessarily the case.
- Unrealistic Expectations – The vendor sets a reserve prior to the Auction, and if the bidding does not reach, the property gets passed in. In a rising market, vendors can sometimes get away with having inflated views of their property’s value. In a slow-moving market, they usually can’t.
What happens after the auction ends and the property hasn’t been sold?
The next steps depend on whether or not anyone has bid of the property. The appointed agent must negotiate wth the highest bidder, prior to negotiating with any other parties. Where there has been no bid (or only aa vendor bid), the real estate agent can negotiate with anyone they like.
So, if you’re interested in a property, it often pays to make an offer at Auction – or prior – even if you don’t think you’ll end up buying it under the hammer.
Good real estate agents will work hard to continue to negotiate during this period to help their vendors achieve the best possible price, and we find that many of our properties, if they don’t sell at auction, sell within the 14 days post Auction.
An Auction campaign is still an extremely effective way to get a good price for a home and if it doesn’t sell under the hammer, it is a great way to find where the market sees value in your property. That’s especially true in a market such as this one, where buyers are more wary about bidding in a public setting and overpaying for a property.