Auction Clearance Rates
Auction clearance rates are an important indicator of what is happening in the property market. The information can be used to get a general idea of the market in your country, city or the local area where you want to invest.
These rates of clearance are usually given as a percentage of the total number of properties put up for auction.
What do they tell me?
The number of properties clearing at auction can show a number of things:
- If the number of auction clearances is high, it's a fair indication that the market is hot, and people are prepared to pay more for properties.
- There is more chance of buyers getting into a bidding-war for your investment property if auction clearances are high.
- When rates of clearance are high, you may find you do better selling your investment property at auction. Ask your real estate agent what they advise for your needs.
- When rates are low, it's a fair indication that the market is either flat or going backwards. People are not getting the money that they are asking for, even as a reserve price, so the properties on the market aren't selling.
- It's often a bad time to sell your rental property if auctions aren't meeting their reserves. Change your strategy: Buy more properties while the market is low. Hold on to the ones you have.
- If you really must sell a property when clearances are low, make sure you pick the right one, and make sure it is in the best showcase condition you can present it in.
- Moderate clearance rates (around the 50% mark) can give mixed signals to investors. It could be that the market is flat, or it could simply be that people feel that selling for a fixed price is the best way to go. Read plenty, and ask the opinion of plenty of professionals who know the mood in the market, before you decide which way to jump.
Where do I get this data?
Clearance rates data is available from a number of sources. You could try the real estate section of your newspaper, where they sometimes give an overall view of clearances, and also occasionally highlight a particular area or suburb in their features.
If you're trying to invest in rental properties further afield, you could also go online to any of a number of free news services that carry the data, or try getting special information from real estate sites such as RPData
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