In more recent months, property auctions in Canberra have flowed at a steady pace. But as interest rates continue to climb up and the federal elections come to an end, many are wondering if auctions will remain the preferred method for selling property. The coming weeks will see more than a hundred auctions and agents are not in a hurry to change the status quo just yet. Going under the hammer, as experts put it, allows the market to decide a home's real value. Though seller sentiments differ, there seems to be no problem with buyer activities and everyone's adjusting their expectations accordingly.
Just recently, auction clearance rate in the Australian Capital Territory registered an impressive weekly uptick, going beyond 80 per cent once more after a similar progress in February. Canberra is the only city to reach figures exceeding the 80 per cent mark—a feat other Australian cities have yet to achieve this year. Despite the improvements, the number of properties set to be auctioned out declined right before the federal elections. Experts say the market has merely reverted back to its standard pace after an uphill trajectory. All in all, the Canberra property market has stabilised and this slower and steadier growth may become the new norm.
The volume of properties going under the hammer will gradually return to normal levels now that elections are over. For how long will it remain the one of the most preferred methods of sale, only time will tell. While selling through a real estate agent is far more convenient and less of a hassle, several sellers go out of their way to participate in the bidding process. Beyond the adrenaline rush, selling property at an auction offers the following advantages:
A major draw when it comes to auction selling is that it facilitates a quick sale. There is a clear-cut date where you can take your pick from a pool of buyers who met your reserve price. And the moment the hammer drops, the buyer is required to complete their purchase within a given time frame (usually 30 to 42 days). If the seller already allocated the cash they will soon receive from the sale of the property, this ultimately works to their advantage since there's no need to wait too long for the buyer to pay.
When selling property through the common routes (e.g. real estate agent, broker), you may have to deal with chains. A chain pertains to a situation where purchase of a certain property is dependent on the sale or purchase of another. For instance, some buyers need to sell their own property first before they can purchase the property they're interested in. The waiting period can drag down sales and cause the seller to delay receiving profit. Property auctions, on one hand, only caters to individuals who have sufficient funds to purchase a home, effectively eliminating chains and ensuring more security for both buyer and seller.
As long as the chosen auction house advertises a property properly, competitive bids will come in no time. Once it's up for auction, the sale price could exceed expectations. If there are several prospective buyers showing interest, they will try to outbid each other until a favourable price is reached. This is a great advantage to sellers, although this isn't always the case at auctions.
The seller has the upper hand when they auction out their property. When a sale is agreed upon, there is little room for renegotiations or contract changes. Buyer is also bound by law to comply with the terms and conditions they initially signed up for. Meaning, they cannot back out of the deal at the last minute without financial or legal consequences. Unlike standard selling methods, where buyers attempt to renegotiate through an estate agent before sealing the deal through a contract, sellers have more control and certainty when they turn to auctions.
Run-down properties have better chances of getting sold at auction. Whether it's a property requiring extensive repairs or a total overhaul, auctions provide fair exposure to serious buyers and property investors. The latter is often in search of renovation projects through which they can increase their ROI and profits. Run-down properties are especially attractive to investors who want to increase a property's value through refurbishments and structural makeovers. With a traditional selling route, buyers are likely to pull out once they realise the full scale of the repair work and costs required to renovate a property.
While buying a house at an auction has its fair share of cons, if your goals include security, quick sale, attracting investors, a competitive price and better control over the selling process, it is the best method for selling your property. Note that auctions are influenced by market conditions, so always be in the loop and keep up with recent events. If a sale cannot be guaranteed or you feel like the sale price falls beneath your expectations, be open to other methods and consult an expert. For potential buyers, avoid going to auctions if you are still facing financial constraints or would like more leeway to negotiate terms and conditions. Approach a buyer's agent in Canberra to assist and guide you through the bidding process if you're seriously considering this route for your next property purchase.
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