What Happens If Nobody Wins At An Auction?
Selling is not always a certainty at auction. In NSW and VIC for example, around 25% of all auctioned properties are passed in (according to realestate.com.au).
What does this mean for the vendors and prospective buyers if no one wins the auction?
After The Auction
An auction campaign puts a property into the public eye, but not all interested parties will attend the auction to make a bid. This might be because they aren’t in a position to adhere to an auction’s binding sale conditions, or they need more time to consider the purchase. Other parties may see a chance to skip to the negotiating stage of no one is bidding.
In the wake of a failed auction, the agent will likely contact everyone who showed interest in the property during the sales campaign in the hope that one of them will make an offer.
Vendors: Research And Regroup
If you’re the vendor and the property did sell because the price set was unrealistic, you might want to lower your expectation.
Find out how many days similar properties in the area are typically on the market for. Properties that are left on the market for a long time tend to attract lower prices.
If your campaign has stalled, it might be wise to take a break. You always want to be mindful of your timing. For instance, family homes sell during Spring. This is due to the time required for finance to be found and the transaction to settle. The new family is then ready to move in just in time for the start of the new school year.
You may want to consider launching a fresh campaign at another time with different photos, a new write up. Perhaps a new agent.
Buyers: Get Ready To Negotiate
For prospective buyers, an unsuccessful auction is an opportunity to nab the property at a lower price.
Following a failed auction, the highest bidder earns the first option to negotiate with with the vendor. If their offer is rejected, the property will be open to all parties. There’s a good chance the vendor will be motivated to sell if the property is still on the market for more than two or three weeks after the auction.
A failed auction may seem disastrous but many properties that don’t sell under the hammer, sell privately within a few weeks. So whether you’re a vendor or a buyer, be prepared to negotiate.
