An auction is a terrific choice when absolute transparency is required. Some examples of this are: deceased estates with multiple beneficiaries; marriage or partnership breakdowns; and receivers or bank sales. Auctions work best with the property is reasonably uncomplicated—a simple freehold title, for example, with no business attached. When we recommend an auction campaign, it’s because we think that the property will attract lots of interest, is reasonably generic and has strong street exposure (a high-street shop, for example) with little due diligence required. Auctions are terrific for creating heat under the campaign, for bringing all the buyers together to force the best price, and for a fast result if the vendor’s in a hurry.
One downside of an auction campaign is the strict adherence to the vendor’s terms of sale. Not only can this dissuade some buyers, it removes terms of sale as a negotiating tool. (We’ve often negotiated a better price for a vendor by leveraging flexible terms.) Anything complicated, anything that includes a business, anything that requires due diligence or lots of legal advice is usually not suited to an auction campaign. Another problem is that interstate buyers are practically excluded. (I often sell properties in Queensland or New South Wales to Victorian buyers.) Auction campaigns are also expensive. Because it’s a broad, non-targeted approach, there’s a lot of advertising required, as well as the cost of the auction itself.