To Auction or Not to Auction

When you are selling your home, there are many decisions to be made, not least of which is the method you will use to sell, that is, to auction or not to auction.

Generally within the industry we have agents that are proponents of one or the other method. For me, I am more confident of achieving the best results for my clients using the private treaty method and advertising the property with a price.

Proponents of the “to auction” will use the following arguments as the advantages,

  1. Auction sales create competition and thus drive up the price.

  2. Auction sales gives you a sale that is unconditional and the buyer cannot get out of the contract if there is an unfavourable building or pest inspection or if the buyer does not get finance.

  3. Auction sales are good for properties that are unique and difficult to put a price on.

First lets lay out the facts of clearance rates for auctioned properties. The following is the clearance rate for auctioned properties in QLD for the week ending on the 22nd of July 2018 as shown on


If you drill down into the actual numbers above, there were only 38 out of the 142 homes that went to auction that actually sold. For me these are not good odds at all and they would not instil much confidence if I was the vendor.

In reply to the “advantages” as listed above for auction sales, my thoughts are as follows-

  1. Competition can be created with a private treaty sale when you have more than one interested party in the property and the number of potential buyers for a private treaty is usually greater.

  2. Private treaty does allow for the buyer to get out of the purchase should there be an unfavourable building and pest inspection or they cannot get finance, however, these risk can be mitigated to a degree by a good agent. It has been my experience, that the highest offer on a property usually comes from a buyer that wants to do building and pest inspections and needs finance.

  3. An experienced agent should be able to put a price on a very unique property. My approach is to put a premium price on a unique property and then one can always adjust if needed.

It is often thought that an auction sale will drive prices up, but the reality is that the exact opposite can occur. The nature of the auction sale is that it is public and buyers compete openly against each other, but it is this exact fact that can cost you a lot of money. In a private treaty, if you have three buyers interested in the property, you can get an offer from each buyer and inform them that they will only have one opportunity to buy the property and so they must put their best offer forward. They often ask what they should offer, and I inform them that if they do not want to lose the property, they should offer the highest amount they are willing to pay so that they do not regret losing the property should someone else offer more. I do not disclose any of the offers being made to any of the buyers.

The reality is that often the highest price can be tens of thousands apart from the second highest. This means that if this was done in a public forum such as an auction sale, the highest price achieved would be one bid higher than the second highest offer. The vendor could be losing out on thousands of dollars.

In my opinion there are some circumstances in which an auction sale can be advantageous, however, I feel that in general I will get a better result for my clients using the private treaty method.

If you do choose to go the auction sale route, it is very important that you use an agent who is skilled in the process.