When you’re deciding on a method of sale for your home, there are a lot of factors you need to take into consideration. Naturally, one of those factors is going to be cost. You need to evaluate the costs and benefits of a variety of different things, including real estate agents, solicitors, marketing, maintenance and upgrades to the property.
With so many things to consider, it’s understandable you might feel the urge to tighten your purse strings and attempt to cut costs. One way sellers try to save money is with the method of sale they select. That’s because some people are under the impression that auction campaigns are more expensive, but that’s not actually the case. Here are 4 reasons why auctions don't actually cost more:
1. Expenditure is not the same as cost
The old saying “you can’t sell a secret” and “you’ve got to spend it to make it” have never been truer when marketing a property in Australia. You have to remember that a home is never sold in isolation.
When you put your home up for sale, it has to compete with all the other properties on the market. So you need to do whatever you can to make your home stand out. When you’re preparing to sell, it’s much more effective to weigh up your options based on their benefits, not just the upfront costs.
You might need to pay a few hundred dollars to apply a new coat of paint to your home, but it could end up adding thousands to your final sale price – which more than justifies that initial expenditure. If you look at that another way, not painting your home could cost you thousands of dollars.
It’s the same with your method of sale. The potential benefits of an auction campaign greatly outweigh the initial upfront expenditure.
2. Pricing the home can impact the feedback you receive
Imagine a scenario where you have decided to sell your home by private treaty, and you advertise the property at $500,000. You find a keen buyer who agrees to pay the amount you’ve asked for, but you later discover they would have paid up to $550,000! By showing your cards too early, you’ve cost yourself $50,000.
The reverse could also happen, with feedback revealing the property is actually worth closer to $400,000. No one wants to over pay by $100,000, and the buyers who came to look at your property want a $500,000 home. So, you’ve essentially wasted money on an advertising campaign that hasn’t attracted the right buyers to your property. However, the cost of pricing the property too high isn’t just the marketing expenses, but also the opportunities you missed and the momentum you’ve lost.
By removing price from the equation in an auction campaign, you allow yourself to receive honest, unedited feedback from the marketplace. The increased competition can also help you to achieve the best possible price.
3. Effective advertising pays for itself
These days, there is an endless stream of advertising options available when you are selling your home. If you’re not smart about it, it’s easy to rack up a large bill trying to cover every possibility.
A good agent will help you to design a high impact marketing campaign that will capture the attention of the right buyers. The amount you might need to spend on advertising will vary depending on the type of property, the location and the time of year.
However, the type of buyers you are trying to attract won’t change, so your marketing campaign will be very similar no matter what method of sale you have chosen. This means there should be no additional advertising costs when selling via auction instead of by private treaty.
4. Auctions increase competition
In order to create an atmosphere and excitement around the property, a well-conducted auction can be an event in itself. Your agent might suggest hiring a specialist auctioneer, catering or even live music – all of which can add to the overall experience, but are by no means essential.
Again, it’s important to weigh the expense against the benefits. If the extra energy and ambience help to generate one more $10,000 bid, is it worth spending a few hundred dollars to make the auction special? The answer of course, is yes.
The costs involved with selling a home are all part of the package of home ownership and in real estate, there are no guarantees. I’ve heard stories of people spending tens of thousands on advertising for private treaty campaigns and being no better off, and I’ve seen properties sell for tens of thousands over the reserve price with almost no advertising. It really all comes down to how you way up the costs and benefits and choose the options that will maximise your chances for success.
While there are no magic formulas for success, it is always better to do it properly the first time and know that you achieved the best possible result. If you’d like more advice on selling your home by auction, contact your local Peter Blackshaw Real Estate office today.