It is incredible how quickly an industry can evolve. If you asked property investors ten years ago if they were confident in selling real-estate via the auction mechanism, the answer would have been a very abrupt ‘Absolutely not.’ They may have considered the prospect, but then contacted their local estate agent instead. That is of course how their parents did it, and theirs and maybe even theirs. But times they are a-changing, and purchase and sale by auction is taking the property market by storm. Today, auctions have become a preferred method, especially in the commercial sector.
Property auctions are on the increase due to the fact that the price of property achieved at auctions is a real-time and true barometer of current market values. In London there are auction companies selling up to 500 houses a day, while in the USA, auction companies can sell up to 5 000 houses at one mammoth auction sale. The sales are quick and efficient. And Australia is no different; it has been reported that a staggering 85% of real estate property is sold by auction down under. Even Monopoly has latched onto the auction mechanism and the latest version includes auction features as part of the game.
In the last couple of years there has been an increase in the number of large property companies and commercial clients selling their assets through auction.
What makes the auction mechanism so attractive and successful? Sale by auction is not only a fascinating event, often filled with drama and excitement, but it also provides a transparent trading platform and investors realise the numerous benefits and advantages this brings. Deals are done in the open on the auction floor. It’s a quick, efficient, and uncomplicated means of buying and selling property and there are no back and forth negotiations or deal breakers. The auction mechanism provides a quick turn-around from instruction to sale to final transfer. In some instances this process has been completed within eight to ten weeks, making auctions one of the best places to sell property fast. The reason auctions are growing throughout the world is because they are the real deal for serious sellers.
A property auction takes place transparently, at Auction Alliance we even stream our auctions live on the internet, with all terms and conditions available for public scrutiny. The reserve mechanism means there will always be a minimum price, which will protect you as the seller and ensure your requirements are met.
The reason why auctions are fast becoming the preferred method of transaction in bull or bear markets is that auctions, much like the stock market, are the point where supply and demand meet. Auctions determine the real market value of a property and most importantly all sales are non-suspensive. Over recent years there has been a sharp increase in the number of commercial properties sold on auction where major institutions, property funds and sellers utilise the method as a means of sale. Recently, even the country’s largest commercial properties have been coming under the auctioneer’s gavel – unheard of six years ago.