How much does an auctioneer cost in 2020?

By Craig Gibson

Are you selling your house or investment property and wondering 'how much does an auction cost'? 

A good auctioneer can mean the difference between a successful sale and an OK sale or no sale at all. The best auctioneers can create a lively atmosphere and a real sense of urgency, which encourages buyers to bid above your reserve price. Under the right circumstances, selling at auction could help you realise a higher sale price than a private sale. 

If you have questions like, 'how much does an auctioneer cost?', or 'how much does it cost to auction a house?' then you should be aware that there is no set fee or regulated amount auctioneers charge. Each state does however have different rules and regulations around property auctions, including cooling off periods and requirements to pre-register. 

Let's start by looking at auction fees for selling property, and what you can expect an auctioneer to charge to sell your property.

property auction
Property auction in Canberra | Source: Allhomes

How much do auctioneers charge to sell a house?

You can expect an auctioneer to charge anywhere from $400 to $1,000 to sell your home. The variance in these figures will come down to how experienced your auctioneer is and where you live. $1000 is usually at the top end of the scale - a fee an experienced auctioneer with a record of getting high bids could charge.

"You can expect an auctioneer to charge anywhere from $400 to $1,000 to sell your home."

If you come across an auction service that is described as "free," it will come out of the commission you pay your real estate agent. With that said, if you're thinking of taking your property to auction, it's a good idea to find out from your agent if the service will be free or if it will be an extra charge.

How much do auctioneers make and what is a fair auctioneer fee?

As we have seen, an auctioneer can make anywhere from $400 to $1,000 per auction. You may encounter fees a little lower or higher than this range, depending on where you live and what the market is doing.

This fee is for their service and is seperate from the real estate agents fees, unless it is explicitly bundled into the agent's costs. Make sure you clarify this upfront with your agent if you decide to sell via auction.

How does an auction work?

Auctions are usually held at or just outside the property being sold, where an auctioneer takes bids from prospective buyers. They normally have to pre-register with your real estate agent or auctioneer so they can track who is bidding on your property. 

You will need to inform the auctioneer what your minimum sale price is - this is called the reserve price. If your reserve price is not reached during bidding, the auctioneer will privately ask you if you will accept a lower price.

If you refuse, the property is withdrawn from auction or 'passed in', though the highest bidder can still negotiate with you on the price. However, once bidding goes over your reserve price the property is on the market and any winning bid stands.

Hidden costs of selling at auction

Marketing is the principle "hidden" cost of selling at auction. If you want to attract enough buyers to create a lively and competitive auction, you need to market extensively and well in advance of the auction. Some channels you can use include:

  • Signage
  • Real estate websites
  • Newspaper advertising
  • Flyers
  • Community notice boards
  • Personal invitations
  • Social media

Your goal should be to reach as wide an audience as possible. That can be expensive. According to real estate agents, if you're trying to sell a $700,000 house, your marketing costs can be between $6000 and $9000. That's close to or higher than the upper end of marketing your home if you're selling through an agent.

"An auction is a one day event. You want as many people to be aware of your market date as soon as possible and allow them to set aside the time to attend your auction."

The reason why marketing for an auction can be more expensive is because you have to start marketing well in advance of the auction date and reach as wide a market as you possibly can.

An auction is a one day event. You want as many people to be aware of your market date as soon as possible and allow them to set aside the time to attend your auction.

Buyers won't be interested in attending the auction if you don't create a compelling reason for them to attend. Good photographs are important and your listing description should emphasise the selling points of your house.

 
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Advantages of selling your home at an auction

Before you decide to sell at auction, you need to weigh the advantages versus the disadvantages. There are several advantages to selling via an auction:

  • In a 'hot' market, an auction can deliver a high sale price, especially if you use an experienced auctioneer who can generate a real buzz on the auction day
  • You set a reserve price. Even if you don't meet the reserve price, some buyers may still want to negotiate after the auction.
  • Buyers may not know the market value of your home and bid higher than they might if they had time to study the market.
  • It is possible to sell your property before the auction date. A buyer does have the option to make an offer. Sometimes pre-auction interest can boost the price of your home.
  • Because a sale date is set, buyers are motivated to act quickly.
  • Bidding is competitive. Once your reserve price is passed, a buyer may offer more and another buyer will offer an even higher price.
  • Once a sale is made, it is "unconditional." The sale will take place on the selling date. You won't have to wait for the buyer to get financing or inspect the property.
auction terrace houses sydney
Source: Ray White Belmore

Disadvantages of selling your home at an auction

Homes that have unique features tend to do better at auctions. A home that is like every other home in the suburb attracts less interest. You may be better off selling your home through your real estate agent if it doesn't have unique selling points.

Some other disadvantages to auction selling include:

  • Sometimes a home is "passed in" on auction day and buyers will be disappointed and may not follow up, even though your home is still on the market.
  • Bidding can be slow and may not reflect the true value of your home.
  • There is no guarantee your home will sell at auction. If you are trying to sell in a hurry, you may be disappointed.
  • Most real estate agent contracts stipulate that the agent has sole selling rights until the day of the auction and for a set period of time afterwards. If you are not happy with your real estate agent, you will have to wait until the period passes. You can avoid the worst by negotiating a shorter period of time after the auction.

Understanding auction clearance rates

Auction clearance rates are a key property market indicator, expressed as a percentage, of the number of properties sold at auction over a defined timeframe.

Simply put, it can be used to establish if it is a buyers' or sellers' market. If large numbers of properties are being sold at auction every weekend then this is indicative of a 'hot' or boom market.

"While auction clearance rates can be used to establish whether it's a buyers' or sellers' market, it's important to keep in mind that they fluctuate and often don't tell the whole story."

Keep in mind, however, auction clearance rates fluctuate and are not the whole story. You also need to factor in the volume of properties that go to auction in any given timeframe. So high auction clearance rates may not always necessarily indicate a strong market - especially if it is for a locality where only a small number of properties are sold every week/month/year. 

However, it's hard to determine when the right time to sell at auction may be. While clearance rates can be down when you decide to start marketing, they may recover by the time you hold your auction. On the other hand, clearance rates may dip even more. You have no way of knowing in advance.

 
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Before you go to auction...

If you do decide to sell at auction, the cost of the venue and auctioneer is the least of your costs. Besides finding out auctioneer fees and auction costs, you also need to understand the requirements for your state or territory. Check with your agent what applies where you live so you know what real estate auction fees you can expect to pay. 

Your real estate agent can also make a big difference between success and failure. For more information, read our article How a property auction works and take note of this advice: A good real estate agent will keep all interested parties abreast of developments until the day of auction - a good way of maintaining their interest in a property.

 

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