It’s interesting to see more Australians choosing to sell via the auction method at the moment. I’m sure John and Neisha from Channel Nine’s The Block would be the first to tell you that auctions work after McGrath Chief Auctioneer Scott Kennedy-Green got them $205,000 more than the reserve at last week’s big event!

Although private treaty remains the most common choice, almost 30 per cent of Sydney properties have been taken to auction this year, which is a long way above the average of around 20 per cent. In Melbourne, the country’s auction capital, it’s even higher at just over 40 per cent compared to an early 30 per cent average.

So what’s going on? I think there are two factors. First, we had a very strong market in 2009 and many of this year’s sellers saw amazing results occur at last year’s auctions so they feel confident in the process. Second, we’re seeing a fair few people put their homes on the internet with high asking prices just to test the market. They’re not serious about selling unless they get a big offer and this is confusing the market. Therefore, serious vendors are choosing the auction method to differentiate themselves to motivated buyers.

There’s one other possibility – have we finally turned a corner whereby more people are getting over the fear factor? Over the 29 years I’ve been in real estate, I’ve seen a lot of great properties, that should have been auction campaigns, go to market via private treaty simply because the owners were scared of the process. Yes, it can be stressful on the day, but can you handle one day of stress if it means an extra $20,000 in your pocket? There will always be exceptions but in my view most properties in the inner and middle rings of major capital cities are suitable for auction, particularly given our vast undersupply.

A new report by independent data house, RP Data rightly points out that clearance rates are currently lower than they were earlier in the year, yet more sellers are choosing the auction method.

As a general rule of thumb, anything above 60 per cent represents a strong market and earlier this year we went as high as 85 per cent in Sydney and Melbourne. We’re now around 55 per cent in these two cities, which are pretty normal market conditions – although clearance rates in the inner city areas remain much stronger.

I actually think it’s fantastic that people are not being put off by lower clearance rates.  When deciding whether to sell via auction or private treaty, the most important factors are the unique selling features of your home and the local market demand for a property like yours. It’s an important decision that you should make in consultation with your agent.  Average clearance rates for your whole city shouldn’t have a bearing.

Also, try not to go into this discussion with preconceived ideas. It’s not uncommon for agents to hear a vendor say they ‘hate auctions’, which is a pretty emotional statement. More often than not, the reason they hate auctions is because they had a stressful experience as a buyer or they know someone whose home was passed in. When selling, it’s important to make decisions based solely on what will get you the best possible price!

In a seller’s mind, a lot of emphasis is placed on the auction day itself. Will it be stressful? How many buyers will turn up? What if it passes in? Try to remember that the auction process provides three opportunities to sell – before, at or after, in a nice neat timeframe of four weeks. The auction day itself is just one day in a 30-day campaign – and if you can change your mindset, you might actually enjoy it!

If you’re thinking of selling and you’re worried about the auction process, I suggest spending the next few weekends attending auctions – ideally conducted by the agency you’re considering hiring, to help you get comfortable.

By the way, it looks like the last big auction day of the year will be Saturday, 11 December.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

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