The worst has happened. Come auction day, nobody seems to want to bid. What happens next? How can you get this home to sell?
The vendor’s bid
This particular ‘bid’ is made on behalf of the vendor, usually by the auctioneer, often used to start off the bidding if the crowd seem a little shy to begin with. In order for the whole affair to remain transparent, the vendor’s bid must be declared beforehand by the auctioneer, both before the actual bid (e.g. “the bid is with me”) and before the auction actually begins.
It is useful for both the seller and the buyers as it shows where the bidding should start and where the reserve price has been set.
If you find that your auctioned property is languishing just below the reserve price or the crowd simply does not want to begin bidding at all, consider implementing a vendor’s bid to get or keep the ball rolling, as recommended by the Real Estate Agents Authority of New Zealand.
You may be familiar with the term ‘clearance rates’ or ‘passing in’. Clearance rates are an indication of the number of auctions that go to auction and actually sell. If the reserve price is not met, the property ‘passes in’ and is not sold, affecting the clearance rate for the area.
If your property does end up passing in, and does so consistently, there are several factors that might be at play.
Certain places and cities are simply more popular for auction. For example, Melbourne reached 67.8 per cent clearance in December 2015 according to CoreLogic RP Data, while real estate in Perth only reached 35.3 per cent. Where auctions are more common, you are more likely to see your home selling.
Reconsidering your reserve
Another slightly more frustrating option may be that you are simply overvaluing your property at this point in time. If your reserve price is not met, the truth may simply be that it is set too high. Reconsider your reserve price, or wait a little longer until the market and local auction results are a little more in tune with your expectations.
For more information on how you can improve your chances on selling your property, speak to your local real estate agent to take advantage of their expert knowledge and skills.