It might be the best way to take advantage of this season's hot competition for farmland but vendors should think carefully before choosing auction to sell the farm, Elders real estate state manager Mark McNamee says.
"Auction is a great way to sell but is not for the faint hearted," Mr McNamee said.
It was critical to be committed to the process and not be tempted to sell before the auction.
"Don't mention price, just don't ever," he said.
"Even if you're at the pub ... once you give an indication of price, you've just set an expectation as to what buyers can expect to pay and that may exclude some people.
"What we're trying to do in an auction process is get as many people in the room, create the most competitive environment, and let the market do the work."
Vendors also needed to seek objective opinions and keep a cool head when it came to the value of their property well ahead of the auction, Mr McNamee said.
"Any agent worth his salt is going to give you some feedback about what people are expecting to pay as they inspect the property," he said.
"Being really realistic about your reserve prices is very important because, somewhere in the auction, the auctioneer is going to go back to talk to the vendor and confirm whether they're at a place where they can go to market.
"Once that happens, once the auctioneer announces that the property's on the market, that's when the real action starts."
When to choose auction
Although auction can be the best way to find out just how high competition can push the price, it's not always the best choice, Mr McNamee said.
The state of the market was an important consideration. When demand exceeded the supply of farmland, auctions often delivered the best price but, in other circumstances, it was less attractive.
"If the market is at somewhat of an equilibrium or supply is exceeding demand, we tend to have to spend a lot more time finding the right buyer for the right property, so expressions of interest and private treaty are sometimes better suited for that market condition," Mr McNamee said.
Even when competition was heated, he said, the constraints facing likely buyers could also rule out an auction.
"If a potential buyer is a large corporate operation, they're less likely to participate in an auction process because they're not going to stick their hand up to bid on a property without the opportunity to do due diligence on it," Mr McNamee said.
"Fund managers in particular, have some stuff they've got to do before they sign on the dotted line."
Still, there were few hard and fast rules in real estate, Mr McNamee stressed.
"There are different segments in the real estate market and the obvious one is residential versus rural but there are subsets within each of those as well," he said.
"Each of those segments are more inclined to favour one method over the other.
"That's really where the experience of the agent comes in, and their ability to understand the market, the needs of the vendor and buyer, and be able to make a wise decision about the best way to take a particular property to market."