The auction option
Auctions are often a great way to sell a house but there are pros and cons. Rachael Cone of Total Realty explains.
With spring fast approaching and many homeowners contemplating putting their property on the market, we are currently being asked about the different sale methods available and the main differences between them.
It is important to discuss and understand the different sales methods with your chosen sales agent so that you select the one that best suits your needs and wants, and has the biggest chance of delivering a favourable outcome for you.
Auctions are often seen as daunting to buyers and sellers so we thought we would break down this sales method and give you an honest account of its pros and cons.
In Aotearoa New Zealand, auctions remain a popular method of sale. Properties are marketed with a set auction date. On that date interested buyers gather, either on-site or in rooms, to bid unconditionally on the property.
No price is advertised, and the property is sold to the highest bidder once the reserve price is met. The auctioneer will say words to the effect of “the property is now on the market” or “we are selling now”, indicating to all in the room that the reserve has been met.
The highest bidder will soon own the property. Because the bidding is unconditional, it is standard for the seller to make a builder’s report and LIM available to buyers in advance of the auction. This, as well as auctioneer fees, can make an auction more expensive than other sale methods. Sellers will also be encouraged to invest in premium marketing during the weeks leading up to auction day.
Auctions can create a real sense of urgency and competition among buyers. If successful, the seller can celebrate an unconditional sale on the day. This is especially the case if there are multiple bidders competing on the day. At times this can result in a premium price achieved for the seller.
However it can also be risky for sellers if the property doesn’t attract sufficient interest. In this case it is vital to have a contingency plan in place to allow for a swift transition after the auction. This will typically involve moving to negotiations with conditional buyers who were not in a position to bid at auction.
The requirement for buyers to be in an unconditional position is usually the most significant disadvantage with auctions. It can mean you are marketing to a smaller buyer pool. This is especially the case in a market where many buyers are waiting to sell their own home and are making offers subject to the sale of their property. It can also be difficult for first-home buyers to have all their ducks in a line before auction day. Many buyers find the process unnerving and some, but not all, will hold back on bidding as a result.
At Total Realty we have a highly experienced auctioneer, Roger Dawson. Roger, or any one of our friendly team of agents, will be happy to discuss the auction process further with you. Our policy at Total Realty is not to push any one method of sale, but to allow you to choose the method best suited to your needs and wants once we have discussed the advantages and disadvantages of each method with you.
In the next issue of abode we will discuss the deadline sale method and hopefully answer any questions you have around this. Until then, keep warm and keep in touch if we can help in any way.
