Monday 18 Jun 2018
So, your property got passed in at auction…
You want to sell your property, so you went to auction and as it turns out, things did not go to plan – your property was passed in.
Why, and what next, are the questions you are likely to be asking yourself.
When it comes to the ‘why’, there are typically two core reasons a property might be passed in at auction, says Mint Property Australia Licensee, Paul Errichiello:
- One – the marketing has not been up to scratch.
- Two – the reserve price is too high.
“If no one knows about your property, how can they possibly buy it,” said Paul.
“Conversely, if they know about it but don’t see its value and its potential, why would they choose your property over another?
“The marketing process from advertising to open houses and agent follow-up through to auction day is key in the auction process. If you are being let down here, the odds are certainly not in your favour come auction day.”
But what if your marketing is on-point, but come auction day, there are simply no bids making your reserve.
“Reserves that are too high are the death-knell of auctions,” Paul cautioned.
“We have a market in which many buyers are impacted by tightening lending regulations, and the growth that everyone has become so accustomed to in the last few years just isn’t there in 2018.
“Pricing your reserve too high will see you get passed in at auction, it is just as simple as that.
“What you need to do is make sure your expectations (and your reserve) match the market, and that is objectively, not subjectively!
“Not only will you possibly not get bids at the level you are expecting, but if you have people coming through your property who are shopping at a price-point that is higher than what your property realistically matches, then they are going to be underwhelmed by what your property has to offer. Quite simply, your price-point competition will have more on the table than you and that will make it very hard to compete.
“This is where your agent should come into play – you want an agent who will tell you if what you are asking for isn’t plausible – only then can you make the right decisions for your property for the best possible results.”
So, your property has passed in…what happens now?
“All is not lost,” encourages Paul.
“First, have your agent negotiate with the highest bidder on a price – they have the first right to negotiate. If you can’t come to terms, your agent can then talk to other bidders in the hopes of securing a deal.
“If a deal can’t be found on the day, go away and work out where you went wrong. Make the adjustments you need and then list the property on the market as a private sale.
“Your agent should contact all buyers who have been through the property or registered any interest, to let them know they now have the opportunity to purchase. They should also ‘go hard’ on their marketing – while this isn’t technically a new listing, it should still be treated as such – even more so if the marketing the first time around has been identified as a potential issue in the first place!”
If you are mid-auction and considering lowing your reserve, Mint Property Agents recommend you consult with your agent first.
“Your agent should know your prospective buyer group and have a feel for the odds of a deal being negotiated outside of auction that may be better than lowering the reserve and getting a bid at that lower price,” explains Paul.
“Use caution, but if you have a great agent, electing to pass in rather than lower your reserve in the moment can be beneficial. Just make sure you can trust your agent to know his stuff!”
Mint Property Agents is committed to providing outstanding services encompassing all matters involving real estate to the inner West community. For an obligation-free chat as to how we can help you, contact us today (link this to the contact us page on the website).