Port Douglas real estate: The pros and cons of auctions
AN auction can be a daunting prospect and there are pros and cons for both buyer and seller. However, there are guidelines which should be followed.
In an extensive interview with Callum Jones, Managing Partner and Licensee, The Pink Company Real Estate, Port Douglas, he says the auction needs to be looked at as a whole process, not just the auction day.
“The process is all about creating a selling date and focusing all your efforts towards achieving a result either before, on the date or following. The marketing is well planned and concentrated from all angles directing all interested parties towards this specific time.
“They need to be ready to purchase on auction terms i.e. cash and unconditionally and therefore carry out due diligence before hand – this creates competition among buyers and creates a situation where in most cases the eventual buyer of the property is found throughout this process,” says Jones.
In terms of the benefits of an auction, Jones says there are many.
“For the buyer, it is a transparent way of purchasing. You clearly know who is bidding against you and who your competition is. You can set your own price limits and the selling price will be the true market price.
“By being a bidder at auction you actually eliminate a lot of competition as well – those who would like to purchase the property but still need finance approval clauses or other conditions which really excludes them from an auction,” he says.
As a seller, Jones says, the process creates a deadline where you have marketed and received feedback on price right up to the auction date.
“From this information, you can set a price based on what potential buyers are telling you what they will pay – you are therefore much more informed as to the correct pricing.
“As a seller you know that if your reserve is exceeded then you have sold the property unconditionally. As a seller no price has been offered out to the market place therefore there is no adverse stigma on price should it not sell at auction – rather a better idea of correct price will be garnished.”
The cost difference between a normal private treaty sale and an auction sale is minimal with just the auctioneer costs, which is typically a set fee, regardless of the result. Auctioneer fees range from $300.00 - $600.00 per property depending on experience and preference of course.
Auctions are recommended for all property types and prices. Especially when there is a clear motivation or reason to sell or when having time parameters will assist a seller in making the next move.
“When you look at some of the more significant recent auction results such as 7 Wharf Street, which sold immediately after the auction at $6.8 million; and 38 Murphy Street, which sold at auction for $3.9 million, it is clear that auctions do work.
“Both properties had been for sale for extended periods leading up to their auctions. Previous to auctioning, there was no urgency among buyers at all. But, by creating an auction date and refreshing marketing campaigns to support these dates, the buyers committed to the process.
“It also depends a lot on the buyers: where they come from and what they are used to. If they are from Melbourne and Sydney and close to city locations, most properties are marketed this way and the process is accepted and understood a lot better. Picking up a newspaper down south it is hard to find a price advertised,” says Jones.
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