Selling isn’t a certainty at auction. In New South Wales and Victoria, for example, around a quarter of all auctioned properties are passed in (1). What does it mean for the vendor and prospective buyers when no one makes a bid?
After the auction
An auction campaign puts a property into the public eye, but not all interested parties will attend the auction or 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 if 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 hopes that one of them will make an offer.
Vendors: Research and regroup
If your property didn’t sell because your price was unrealistic, you might need to lower your expectations. Find out how many days similar homes in the same area are typically on the market. Houses left on the market for too long tend to attract lower sale prices, so if your campaign has stalled, it might be wise to take a break. You may want to consider launching a fresh campaign at another time with different photos, a new write-up and perhaps a new agent.
Buyers: Get ready to bargain
For prospective buyers, an unsuccessful auction can be an opportunity to nab the property at a lower price. Following a failed auction, the highest bidder earns the first option to negotiate with the seller. If their offer is rejected, the property will be open to all parties. There’s a good chance the vendor will be more motivated to sell if their property is still on the market more than two or three weeks after 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 buyer or the vendor, be prepared to talk numbers.
Source: 1. www.realestate.com.au/auction-results