Are Real Estate Auctions in The Past?

Scroll through property news lately, and you will find no shortage of headlines declaring the auction system might be in dire straits. Reportedly, clearance rates are down, buyer confidence is shaky, and commentators are quick to write the obituary for the Saturday auction. With 28 Wilshire Avenue, Cronulla, heading to auction, it felt like the right time to ask the question directly: Are auctions actually a thing of the past? The short answer? No. Clearance rates across Sydney have softened this year; that part is true. Interest rate movements, tax changes, and general buyer caution have all played a role in more properties passing in or selling after the fall of the hammer rather than under it. It is easy to read this trend and believe buyer interest has dwindled. But a falling clearance rate does not mean auctions do not work. It means a growing number of properties are being taken to auction with pricing expectations that no longer match where the market actually sits. For a few years during and beyond COVID, almost anything listed would sell above expectation: multiple bidders, fast timelines, and sellers dictating terms. It was an unusual period, and understandably, it shaped how a lot of agents set vendor expectations. The issue is that some of those agents’ habits have not moved on, even though the market has. Setting a reserve based on what a similar home sold for eighteen months ago, or on what a vendor hopes to achieve rather than what current buyer activity supports, sets an auction up to fail before a single bid is placed. That is not an inherent flaw in the auction process; it is a pricing decision made without reference to today’s conditions, effectively playing by old rules. An auction only works when it is priced to attract genuine competition. Get the reserve right, and you still see strong results, multiple bidders and clear, transparent outcomes; buyers are not gone. Get it wrong, and the auction becomes a passed-in listing that then gets blamed on the method and market conditions rather than the pricing strategy behind it. Our recent sale at 28 Wilshire Avenue, Cronulla, is an example of this. As an agency based in Picton, we stepped into a market outside our immediate area and achieved a successful auction result. That was not because we knew Cronulla better than local agents. It was because we approached the campaign with a clear understanding of the market conditions buyers are operating in today, rather than relying on expectations formed in a very different market. One of the biggest mistakes sellers can make in a declining market is believing that simply waiting or extending the marketing campaign will somehow produce a better result. In many cases, the opposite is true. If the market continues to soften while a property sits unsold, buyers become even more cautious, new competing stock enters the market, and sellers often end up accepting less than they could have achieved by acting decisively earlier. The trick in today’s market is to act swiftly, price realistically and move forward. Property decisions have rarely been just about the price alone; they are about the reason people are moving. Whether it is upsizing, downsizing, relocating or financial pressure, delaying the inevitable rarely changes the underlying reason. If the motivation is financial, it is often better to make the decision now rather than risk larger losses if the market continues to weaken. To put it simply, this is a buyers’ market, not a sellers’ market. If you do not need to sell, there is certainly an argument for holding until market conditions improve. But if you do need to sell, pricing your property correctly from day one gives you the best opportunity to achieve a strong result and move on with confidence. Likewise, if you are a buyer waiting for prices to fall further, remember that today’s market also presents opportunities. Good homes are available, competition has eased compared with previous years, and buyers generally have greater negotiating power than they have enjoyed for quite some time. If you have been waiting to buy the right property, now may well be the time to act. The auction process itself is not outdated. What is outdated is applying yesterday’s price expectations to today’s buyers. When pricing reflects the current market rather than the memory of a stronger one, the auction remains one of the most effective ways to achieve a genuine market result. If you are considering selling and want an honest assessment of where your property sits in today’s market, we would rather have that conversation upfront than watch a mispriced campaign struggle. For more information on 28 Wilshire Avenue, Cronulla, and how we achieved an auction result during a period of declining clearance rates, or to discuss whether an auction campaign is right for your property, contact Daniel Montes de Oca on 0405 293 384