Selling by auction is also an Exclusive Agency agreement and is therefore also subject to the 60-calendar day agreement period.  The auction process requires the seller to pay the agent to arrange effective marketing and advertising plans to maximise exposure of the property and the auction date to potential buyers.

The same conditions that apply to the auction process will also apply to the tender process.

Advantages of Auction:

• An auction is a three pronged marketing push.  The vendor has the option to sell their property before auction, on the day of auction or in the event the property is passed in, directly after auction.
• There is an ability to set a reserve price and a settlement date to suite the vendor.
• As the reserve price is not disclosed it gives the vendor a chance to test the market.
• A written marketing plan with pre agreed appointment times enables the vendors to arrange their lives during the lead up period.
• The auction process by its very nature creates a sense of urgency; buyers have a definite time frame in which they must act.  Buyers see the purchasers as competition rather than the vendor.
• Auction creates a competitive environment.
• With sale by auction all contracts are unconditional and no cooling off period applies, in Queensland.
• When your auctioneer is a member of the Real Estate Institute of Queensland you have the additional  benefit of dealing with an auctioneer who is bound by the high ethical standards of the Institute as well as of their profession.

Promotion:

• This is considered by many to be the key to a successful auction, creating interest.  The auctioneer with their team has experience in planning and arranging the marketing of property including advertising.  The extent of the marketing campaign will depend on the amount the vendor is prepared to spend.  There is a legal obligation to clearly explain to the vendor where and how monies will be spent and will show examples of the advertising mix.  At this stage the vendor’s input is very important to help identify the probable market.

 Arriving at a Reserve Price

• It is the vendors right to set the reserve price, below which the auctioneer is not permitted to sell.  Consult with your agents when setting the reserve price, as they will be familiar with recent sales of similar property in the area.  Remember to be realistic when making your appraisal, bearing in mind supply and demand in the area as well as other general market considerations.

 Selling Before the Day of the Auction

• It is not uncommon for interested buyers to make offers on properties prior to auction day.  Some will be on fishing expeditions of course, to try and find out the reserve.  However, most will be genuine, in such cases the agent will discuss the offer with the seller, and a decision can be made to either consider the offer, or continue with the auction as planned.

• It is not unheard of for the vendor to sell the property prior to going to auction, in this case the agent will generally, on the vendor’s instructions, invite all potential buyers to also make an offer.  The seller then accepts the most appropriate offer, and contracts are signed prior to the auction date.

Auction Day

There are a number of possible outcomes at an auction:

• Should the highest bidder reach or exceed the reserve price – the property is sold and the auctioneer will conclude a binding contract between the buyer and seller.  The auctioneer may sign the contract on behalf of either or both parties if instructed to do so.  In the event that the highest bid falls short of the reserve price the auctioneer will usually ask for the seller’s instructions before passing the property in.  This means the vendor has the opportunity to accept the last bid, by placing the property “on the market’” so that it may definitely be sold “under the hammer”.  This factor often creates more excitement, which can encourage further bidding, and a better price may be achieved. 
• It can be that the highest bid does not reach the reserve price and the property is passed in – the highest bidder is generally informed of the reserve price and may be given the initial opportunity to purchase.  Failing this, the property is placed on the market for sale by private treaty, at which time anyone may negotiate with the sole agent.

OPEN LISTING

• An open listing is where the seller lists their property with a number of real estate agents in the local area.

• Under an open listing agreement, each agent can sell the property individually or work with another agent to sell the property.

 Only the agent that introduces the buyer to the property will receive the commission from the seller.

From Ray White Toowong’s experience this method:

• Has a lower success rate
• Reduces security due multiple keys out
• No single agent is committed to the responsibility to sell the property