What happens if your property passes in?
The biggest fear among vendors going to auction is that their property will be passed in on auction day. With auction clearance rates in both Sydney and Melbourne in the 60% range, this is a very real risk.
The biggest myth about properties that sell after auction is that they go on to sell for a ‘bad’ price. That is not the case. It’s important to remember that fresh buyers are coming into the market every week. We see properties that have passed in go on to sell at their reserve price or better all the time.
It’s important to remember that the auction process unearths the best buyers in the market at a particular point in time. If your property passes in, the first step is your agent following up with these buyers and potentially negotiating a sale that way.
In cooling markets, buyers can be particularly cagey at auctions. They’re finally getting some power back after years in a seller’s market. Sometimes they won’t bid if no one else does – they’ll let it pass in and contact the agent afterwards because they feel more comfortable negotiating privately.
In my experience, most properties passed in at auction will sell within 14 days. If your property still doesn’t sell, you need to take stock of what’s gone wrong. Sit down with your agent and have a look at the variables. In my experience, there are only three reasons why properties don’t sell – unrealistic price expectations, poor presentation and/or poor marketing. If a property struggles, usually one of these are off-track.
In 80% of cases, price is the culprit. This is particularly so in today’s market conditions, with many vendors struggling to accept that boom prices might not be achievable in their suburb anymore.
Review any offers that were made prior to auction. You might have been expecting $1.5M and the offer was $1.45M. You might have been dismissive of this offer at first, but if no one else put an offer forward, then maybe you need to consider if that is today’s true market value for your home.
Another possibility is that the market has shifted since you listed. This is often a factor in markets that are moving (either up or down). A neighbour might have sold for $1.5M six months ago but that’s not necessarily what you can achieve for your own home today because the market has changed.
Ask your agent what else has hit the market since you listed your property for sale. Have any comparable properties sold during this time? Subtle fluctuations in the local market and sales of similar homes during your campaign will influence how buyers value your home.
Once you and your agent have debriefed, you can consider how to move forward. But before you commit to doing anything, it’s a good idea to pause for a breather.
After passing your home in, it’s natural to feel a bit flat due to lost momentum. You need to recover your positive energy or your lack of enthusiasm can negatively impact the sale.
Sometimes after passing in, vendors will choose to immediately convert their campaign to private treaty and remain on the market as is, or with a revised price guide.
Another option is to ‘rest’ your property for a few weeks. Take it off the market altogether while you consider pricing. It’s also worth asking your agent what else you can do to improve your chances of a good sale. For example, were your photos good enough? Should you pay for a few more, or re-do them after some new styling?
If you did online-only marketing in the first campaign, perhaps you might consider some DL cards, print ads and social media to reach more buyers.
When you re-launch your property, you can set another auction date or choose private treaty.
You might feel reluctant to try auction again but I’ve actually had huge success re-auctioning properties myself, so don’t be afraid to try it. Auctions set a deadline for buyers and this can be extremely helpful in bringing about a sale.
Following a failed auction campaign, if you’ve responded to the issues that caused it (price, presentation and/or marketing), there is no reason to think your property won’t sell.
Listen to your agent, take the time to restore your energy and get cracking on that second campaign!
Published: Tuesday, May 08, 2018