“Auctions always bring the best price.”
Really?! This is a long-held myth that does not hold up against reality. Whenever you have the fortunate situation of more than one buyer trying to buy your residential property, the worst thing a real estate agent can do is disclose competing offers to each of the interested buyers – which is exactly what happens at a public auction.
When this happens, the respective buyers’ focus becomes outbidding the competing buyers by $1,000… as opposed to offering their highest price for the property, which could have been $20,000 more (…or more!)
When you’re selling your home, you want the eventual buyer to have paid their maximum price for it. To win an auction, the buyer does not need to pay their maximum price – they just need to be the highest bidder. This is a BIG difference and that difference could mean tens of thousands of dollars to you.
Selling to the highest bidder as opposed to the buyer who offers the highest price is why auctions fail to achieve the best price for home sellers.
If one buyer is prepared to pay $1million to buy your home and the other bidder is only prepared to pay $895,000, it is mathematically impossible that a public auction will attain the best price. In this case, the property would most likely to sell for around $900,000.
Another Auction Myth…
Home sellers are often told that the auction deadline pressures the buyers. As the auction deadline draws closer, the pressure is often transferred to the seller to come down in price. Agents call it “meeting the market” or “conditioning”.
It is all too common for a property to be passed in at auction and then sell for a higher price after the auction during a private negotiation process.
The reality is, it damages the price of your home if your property is passed in to bargain hunters on auction day. Any chance of a high price is destroyed when your home passes in for a low price at the auction in front of a big crowd and then that failure is advertised in the papers and all over the internet, instilling doubt in buyers’ minds… “What is wrong with the home if it failed at auction?!”
The home is often not the problem; it’s the selling process that failed the owner.