Whether you are a buyer or a seller, understanding scenarios that may affect the value of a home that has been put up for auction is important. Wet weather may drive people indoors in recreational situations, but does rain have an impact on the selling price of a property on auction day?
Rainy days drive prices down
Unfortunately for sellers, adverse weather conditions tend to thin out the crowd at auctions and fewer people could mean a lower selling price.
Indeed, a lack of competition during the bidding process can cause selling prices to fall below the expected result that sellers are hoping to see on auction day.
According to a study completed by University of Berkeley using data from Melbourne, cloudy days drive prices down by an average of 2.8 per cent. If it actually starts to rain, prices are driven down by an average of 5 per cent.
The reduction in price associated with rainy weather tends to be most prominent when there is at least 4mm of rain. While a 5 per cent reduction in selling price may not seem significant, consider the fact that this means that a home selling for $1 million on a sunny day would sell for $950,000 on a rainy day.
What does this mean?
The fact that can rain can potentially drive down the value of a home come auction day, it may be a good idea for buyers to prioritise auctions that occur when rain is in the forecast. There are certainly some deals to be had if buyers are proactive about attending these auctions.
Sellers don't have the luxury of scheduling around the rain. It takes time to get a property submitted for sale at auction, so the only choice that sellers have is to hope that it doesn't rain when the big day comes. Putting a property up for auction during the time of year that is least likely to be rainy in a specific region can help to alleviate some of the risk of running into bad weather on auction day.
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