An advantage of the standard home auctions in Western Australia is transparency, however sealed-bid auctions make for quite a different experience.
LJ Hooker Kalamunda and Foothills Principal and Licensee Grant Winning said sealed-bid auctions were not common in the state and involved people putting their bid in a sealed envelope, with the offer not being made known to the other potential buyers.
“A sealed-bid auction is almost like a private treaty if you think about it, because that’s what happens when there’s multiple offers on a property being sold by private treaty,” he said.
“Potential buyers have to put in their best offer first up, even when there’s multiple offers on the table.”
When looking at it from a buyer’s point of view, Mr Winning said some might feel more comfortable putting forward the amount they would be willing to pay.
“Some buyers, but I do think it would be a minority, would like the idea of sealed-bid auctions because they like to consider themselves as having strong real estate knowledge and the amount that they offer is what they believe it is worth,” he said.
“Buyers that do like it might think they’re going to have limited competition, or other people are going to go in at a ridiculous price because they have no idea what the property is worth.
“If buyers don’t get the property, they are not going to be disappointed because that was the maximum they were prepared to pay.”
From a seller’s point of view, they might also be able to share the same advantages.
“You could argue that a buyer might come in uneducated and there’s no filter on the offer they put in,” Mr Winning said.
“There’s no buyer’s guide and there’s no price guide. You sort of have a rough chance that you might get someone who is prepared to pay more than it’s actually worth.”
Comparing and analysing the differences between sealed-bid auctions and general auctions in WA, Mr Winning said the latter’s transparency was a much better way to go.
“That’s why Openn Negotiation has taken off quite well – they promote 100 per cent transparency and any sort of traditional auction is 100 per cent transparent. I think that’s one of the things that buyers like about it,” he said.
“You know exactly where your competition is on auction day.
“From a seller’s point of view – assuming there is competition – you can be satisfied that when you go to sleep that night, you were able to sell your property at the maximum amount the market was prepared to pay at that very time.”