When you’re looking to sell, one of the big questions that often comes up, especially if you’re selling in an active market, is whether or not going to auction would be a better option than a private treaty.
With conditions turning around at the end of last year and continuing to improve into this year, you might also be wondering how market conditions affect auctions.
How is the Melbourne property market looking?
In February, Melbourne saw a +1.2% increase in overall dwelling values.
The month also saw Melbourne moving back into double-digit annual growth rates with the annual change in dwelling values now sitting at +10.7%.
The market has also surpassed it’s last peak in September 2017, highlighting the recovery from the downturn.
Many areas around Melbourne have seen activity picking up significantly.
Aaron Clarke, Partner and Sales Consultant form Ray White in Ferntree Gully, explains how his local area compares to last year.
He said, “What’s driving the market right now is the decrease in the number of properties for sale. There’s about 500 fewer homes on the market in the city of Knox during the same time last year. We have the same number of buyers. We’re recording up to 60 groups at open homes within half an hour. Supply and demand is working really well to give the area premium prices”.
What has the auction market been like?
In the most recent week, the auction clearance rate for Melbourne was at 66.1%.
Though this is lower than a couple weeks before when it was at 74.8%, 66.1% is still significantly higher than it was this time last year.
Plus, volumes were down last week, potentially because of the long weekend.
Should you go to auction?
There are a few types of property that are usually recommended to go to auction over a private treaty.
This includes properties that are hard to put a price on because they’re unique, development sites, higher end properties that don’t target first home buyers, and properties in hot markets.
In Melbourne at the moment, many of the areas could be considered a hot market.
Aaron Clarke said, “We’re massive on auction at the moment since we’re getting such crazy prices. It’s less of a demographic question and more of a market question. With the amount of buyers and the competition we can create, it’s an auction market. We can sell both houses and apartments at auction. There’s no right type of property.”
Going to auction allows you to create competition, ideally encouraging people to bid higher.
You’re also able to set a reserve price meaning your home won’t sell unless bidding goes above your set reserve price.
However, this could mean if your property doesn’t generate enough interest, your property won’t sell.
There are also concerns about not being able to reach all potential buyers when you have an auction.
For example, if your property’s target market is first home buyers, there might not be enough people who are confident enough or financially ready to bid at an auction.
Of course, there are many other factors involved and it will depend on your local market.
If you’ve never sold before or at least have never sold through an auction, the process can definitely sound daunting.
However, speaking to multiple agents might be able to give you a better understanding of what’s best for your property.
Remember that an agent should be able to give concrete evidence to back up any reasons they have for you to go to auction or to not.
Guest author: Ellen Orton is the Head of Business Operations at OpenAgent.com.au, an online agent comparison website helping Australians to sell, buy and own property.