What Determine the Selling Price at Auction?

We all know the selling price at auctions is primarily determined by competitive bidding between potential buyers. The highest bid, provided it meets or exceeds the seller's reserve price, ultimately determines the final sale price. But do we know what influence how much a buyer will pay for the property?

This is one of the most frequently asked question by our home and investment property buyers. While we love to be definitive with our answers, this is unfortunately a question where there is no straight forward answers. The selling price at auction depends on too many factors. However, from experience, a few key factors seems to influence the direction of an auction results. And one surprising factor will negatively affect the auction price.

In this article, we will discuss our observations from our experience. We've been running our buyers advocacy business for 10 years, and from observation, we've identified some significant factors which determines the direction of the auction. For ease of reading, we'll split these factors in positive factors which can push the price upwards, and negative factors which drags the price down.

Of course, all of these factors should be considered in conjunction with understanding the value of the property, which is the price buyers will pay for the house.

What Determine The Selling Price at Auctions?

We started this interesting statistics collection exercise about 5 years ago, but due to the pandemic disruptions, we are unable to collect sufficient data. Post pandemic, we managed to start collecting meaningful statistics from 2023. Over the past 2 years, our buyers agents have attended close to 500 auctions throughout Melbourne, and have collectively noted and classified factors that can affect the auction price. T

How Were Our Studies Conducted?

To keep our findings both precise and unbiased, we began by establishing a realistic price appraisal—what informed buyers were likely to pay for each property. From there, we logged every variable of the sales campaign: open-for-inspection schedule and metadata, agent presentation and rapport, auctioneer performance, as well as auction metadata such as date, time, weather and location. Finally, we recorded whether the property sold under the hammer and, if so, the exact price achieved. This rigorous dataset allowed us to isolate the impact of each factor on the eventual sale result.

One Common Sales Campaign Practice is Costing Sellers $100k

From our pool of data, we noted some interesting findings. While most findings are within expectations, one major finding surprised us. And this is a practice that is getting more common in Metropolitan Melbourne, especially in the eastern and south eastern Melbourne suburbs. It is a common practice that can cause the seller to lose a hundred thousand in selling price. Yes, a big $100k drop in selling price.

Let's start dissecting our findings. While this study is based on Auction campaigns, many of these factors are applicable to other campaigns, such as private sale, best and final offers, expressions of interests, etc, as well, as it affects the buyers interest and impression of the property.

Factors Which Can Positively Affect the Auction Price:

Let us start with some of factors which can positively influence the price, in no particular order:

1. Well Staged Home

Meticulously styled rooms help bidders visualise an aspirational lifestyle, turning a house into a “must-have” home rather than a negotiable asset. While it might cost between $3k to $30+k for a professional to stage the property, the fresh paint, curated furnishings, and strategic lighting, help the buyer visualise the house as a warm, welcoming home that they would want to live in. As experienced buyers advocates in Melbourne, we see staged properties in South-East Melbourne suburbs like Glen Waverley routinely fetch 5–10 percent above comparable, un-styled listings.

2. Well run Auction Campaign

A well-run multi-channel marketing campaign—professional photography, social media reels, print ads, and targeted buyer databases—builds momentum long before auction day. High enquiry volumes and high traffic during inspections create social proof, signalling to onlookers that the property is hot and justifying more assertive bidding. In our study, our team assesses South-East Melbourne property campaigns, measure campaign reach as a lead indicator of how high the reserve is likely to be pushed.

3. Clear Articulation of Price Expectations

Transparent, honest and realistic pricing range and well-explained vendor instructions and reserves give buyers confidence that the agents are honest and not being sneaky. That trust increases the active bidder pool, which statistically drives a stronger final price than a guarded, secret-reserve approach. An experienced buyers agent reads these signals early, helps you understand the real situation and helps you determine a series of realistic auction prices, ensuring you enter the auction with confidence that you are not overpaying, rather than second-guessing the seller’s reserve and intent.

4. Weather

It does not matter how well a sales campaign has been run. The weather on the day of auction can play a significant role in determining the auction prices. Blue skies and mild temperatures encourage casual onlookers and neighbours to attend, swelling crowd size and lifting competitive tension. A warm (not hot), bright sunny day also help cast a good light on the property and help create that "FEEL" in buyers and bidders, usually resulting in better sales performance. Smart investors, or their buyers advocates Melbourne-wide, do adjust bidding tactics on the day in line with the forecast.

5. Day and time of the Auction

Saturday late-morning slots to early afternoon is the Goldilocks time for property auctions. This period tend to draw the largest audiences, as families finish sport commitments and start their property inspections. Twilight weekday auctions can feel exclusive, but they also filter out casual bidders, and usually reduces the final auction price. Knowing these dynamics guides buyers agents in selecting which auctions to prioritise and how aggressive to bid.

6. Quality Auctioneer

The role of the auctioneer is more than the emcee of the auction event. An engaging auctioneer paces bids, creates a sense of urgency, controls pauses, and leverages vendor bids to maintain urgency—often extracting tens of thousands more than a monotone caller could. Their charisma also keeps bidders emotionally invested long enough to stretch past pre-set "walk-away" prices. Something which DIY bidders always fall for. When our buyers agents prepare clients for auctions, we factor the auctioneer's reputation into our risk assessments before committing to a bidding strategy.

As a third party licenced buyers agents, we are not vested in the purchase, we are the neutral buyer advisor and gate keeper, we help pace the auctions to our buyers benefit and provide our buyers with instantaneous advice on the spot, giving our buyers the confidence to stay on track, thus preventing over bidding and over paying for their properties.

7. Support from other Sales Agents

When multiple agents from the same agency attend, they help encourage buyers and bidder bids, amplifying competition. As much as they try to deny, the role of these agents are not there to "help you bid". They are there to encourage hesitant bidders to re-engage, impose more pressure on the buyers to help they stretch their budget and offers. We understand their real intent and role during the auctions. Thus, when we attend auctions, we would politely request that they stay away from our buyers. Or for sticky agents, we would only use them as we see need. Recognising this orchestrated energy helps our buyers advocates decide on the appropriate bidding strategy DURING the auction. Yes, we adopt and change our strategy depending on our observations throughout the auction.

Factors Which Can Negatively Affect the Auction Price:

1. Poorly Run Sales Campaign

While it might be expensive to engage a professional real estate photographer (yes, not any photographer), poor quality photos, minimal digital reach, and last-minute advertising, buyer awareness never reaches critical mass. With low inspection numbers, the property loses momentum and does not attract enough bidder to create a frenzy. Our buyers advocates in Melbourne rarely see such campaigns across South-East Melbourne property corridors.

2. Confusing Messaging from the other Sales Agents

While most agents in and around south east Melbourne believe a low advertised price range can attract more buyers, they often ended up attracting the wrong buyers with misguided expectations. We know the practice of underquoting is illegal in Victoria, and official narratives from the sales agents are always "the quoted price range is realistic, it is what the we believe in". So, while intentional underquoting is illegal, the sales agent can be "bad at appraising" the property legally. Underquoting and keeping the reserve price secretive, or multiple agents give conflicting campaign strategy, causes buyers to lose trust and retreat to the sidelines. That uncertainty thins out serious bidders, usually leaving only cautious token offers from buyers with the wrong budget expectations on auction day. An experienced advocate independently appraises the property, and matched it with the buyers. We decipher mixed signals early, sets a disciplined ceiling price, and sets our strategy to capitalises on the confusing messaging.

3. Unfavourable Weather - gloomy, rainy, cold

If good weather can help achieve better auction prices, rain, wind, or extreme heat on the other hand, can literally dampen the auction turnout and the final auction price. Fewer bidders often equate to a softer results, and auctions being passed in, even if the reserve price is reasonable. Savvy buyers and investors, or their buyers advocates Melbourne-wide, adjust bidding tactics on the day in line with the forecast.

4. Location of the Auction

When the weather turns bad, auctions are usually moved indoors and held at the property's lounge / dining room. When this happens, the double whammy of bad weather, and enclosed space often results in lower auction prices.

5. "Shoes-Off" During Open for Inspections

Asking visitors to remove footwear can feel intrusive, extending wait times at the door and dampening emotional connection to the home. Our buyers agents are at the forefront of receiving these unfiltered feedback. The number of times our buyer clients complained or refused to attend open for inspections if there is a "Shoes-off" policy tells us that this is really a crowd dampener. The crowded mess of shoes at open for inspections is hardly the way to greet visitors. The mess often cause confusion, frustration and anxiety right before the guest enters the property. Crowds that should be buzzing turn impatient, shortening tempers, inspection durations and lowering perceived value. Our buyers agents know a shoes-off rule often signals a poor auction and sales results and a chance to pick up good deals for our clients.

The Surprising Factor that Can Reduce a Property Price

The above study confirmed what many buyers advocates believed in. Location, day, time, weather, agent's presentation effort, etc, will all affect the outcome of the sales and auction campaign.

What surprised us, is the "SHOE" factor. Our hypothesis that a "shoes-off" campaign hurts prices, seems to be true! Open for inspections where the buyers need to remove their shoes usually results in a lower selling price. To help us understand why, we did a follow up survey, asked a few agents to understand why is there a need to remove shoes and interviewed a few buyers on how they feel about removing their shoes. The results are not unexpected.

We discussed this factor in our other article. We try to understand the impact of "shoes-off" campaign and its effect on property prices. A few real estate agents were asked why they believe in the need for a "shoes-off" open for inspection campaign. We also interviewed some buyers, as well, on their thoughts of walking into a "shoes-off" inspection. The results are equally eye-opening. Read the article for more information.

Conclusion

So, now you know. On top of what other auction spruikers have taught you, these are the real factors affecting the auction prices. If you are attending an auction, get in touch to explore if our buyers advocates can help you understand the mechanics of an auction, and discuss the strategy we may adopt for the auction.