Is it best to take your property to auction or advertise with an asking price (private treaty).

It generally depends on a range of factors including motivation of the owner, the type of property and the stage of the market cycle. A recent case study of two adjoining properties sold within 2 weeks of one another having similar attributes, is an interesting contrast of these two methods of sale.

Property A – Advertised with a list price of “Offers Over” with inspections by appointment. Property was under contract after 4 weeks on the market and sold for $700,000 subject to building and pest inspection.

Property B – Advertised for a 4 week marketing period with an open house campaign having a well attended auction held off site. No formal price guide was provided but the marketing agent indicated strongly to prospective buyers that that the property would be sold at auction. Property sold for $616,000.

Both properties had the same land area and had buildings of a similar era which required renovation. The purchasers of Property A were completely aware of their competative bid at auction. The purchaser of Property B felt compelled to make an offer in accordance with the marketing guide provided by the selling agent and had to make their best offer up front.

Questions….Did the purchasers of Property B put in their best bid, or just enough to secure the property on the night of the auction. Were there other purchasers interested in Property B that were not able to arrange finance in time for a unconditional purchase on auction night?

At the end of the day, both owners achieved a result, however we suspect that one would have been more satisfied with the selling process than the other!

Outside Sydney & Melbourne, which are markets that are well reported on in the media, we have now moved into in the “strong recovery phase” of the economic cycle. In an environment of falling interest rates and less restrictive lending, there has been wide media coverage of a strong property market recovery across many parts of the country, led mostly by investors and owner occupiers upgrading their existing home.

In markets where there is limited supply of available housing, investors have competed aggressively in recent months for housing stock, which has pushed up prices in these localities. In this phase of the market, capital gains by suburb are typically “patchy”. In previous market cycles as values climb in these more sought after areas, rental yields (annual rent as a proportion of the purchase price) typically fall and purchasers begin to seek out other nearby locations exhibiting stronger rental yields.

Property Investors…Are you missing out on making the most of your Tax Depreciation Deductions? Asset Advisory are Registered Company Tax Agents with the Tax Practitioners Board and provide ATO compliant Tax Depreciation Schedules for all types of income producing properties. Older properties are also able to be depreciated. Additions & renovations made to properties by previous owners are also able to be claimed. An inspection of the property by our quantity surveyor will assist in maximising depreciation claims and overall return from your property investment.

A 5 year summary extract from 20 year Tax Depreciation & Capital Allowances Schedule: