IF YOUR HOUSE FAILS TO SELL AT AUCTION THERE are other options, but GET THE FACTS first
So your house was handed in at auction. Is this a bad thing to happen? Read on and find out more about how house auctions work in New Zealand.
Real Estate companies measure and quote auction success rates to sellers through their marketing material.
It's important to know that auction success rates include auctions that were passed in, but resulted in a sale secured before 5pm on the first working day following the auction - as allowed under the Fair Trading Act.
For properties passed in at auction, the extra working day may have allowed for more negotiation or included conditions which weren't possible during the auction process.
A conditional sale allows time, regardless of the method you choose
A conditional sale and purchase agreement allows for the buyer to do due diligence.
If you choose your agent wisely, make a strong first impression and use professional photography to market your property to buyers, you are more likely to get a high level of buyer response as soon as your property goes to market, regardless of the method of sale you use.
It is not uncommon for properties like this to attract multiple offers within the first week of going live.
Discuss the options with your agent.
If your property is unsold after auction
If your property doesn't meet your reserve price and you choose to pass it in rather than reducing your reserve price, you may still get a buyer out of the bidder(s) afterwards.
Real estate agents will try to negotiate a sale with bidders post auction, so the actual auction moment is not the be all and end all.
You might want to consider the auction process as a period of opportunity rather than a day of opportunity.
This thinking may end up helping you to get the sale price you're happy with rather than succumbing to the hammer.
You might want to ask your agent about some examples of sales after auction.
Risks of passing it in at auction
Home buyers walk
- While agents will continue working with you and any buyers to negotiate a sale after the auction, you do risk the bidder walking away after the adrenaline of the auction room has calmed down.
Unrealistic price = no sale
- Vendors over-valuing their properties is one of the main reasons properties don't sell at all. So you need to be really sure about your reserve price rather than relying on a figure in your head. To help reassure you, it might be worth obtaining an independent property valuation so you have some form of professional opinion to rely on.
Sale conditions to meet
- Post-auction negotiations will often include conditions of sale which take time, and sometimes more money is required to meet any conditions.
Money down the drain
- You've invested money in the auction process so think carefully - it can be a costly affair.
Property auction success rates
When interviewing agents who use the auction process, they are likely to use their auction (or their company's) success rate as a marketing tactic which is fine. It is good to know this information.
In addition, it is important to know that if the real estate company was able to secure a sale more than one working day after the auction, it is possible they will include sales achieved up to two to three weeks after an auction in their quoted auction success rates.
We understand there are no rules about this time frame and each company may have different measures.
The campaign marketing and auction process could very well have attributed to the later sale so this is not unreasonable, but it's fair that you understand exactly what statistics they are quoting to you.
You should ask the real estate agent how many days post auction are included in their 'auction success rate' as this may be one reason why you list with them instead of someone else.
Do auctions make the most money?
While some auctions fly off the radar price wise, opinions vary considerably about whether auctions get the best price.
Consumers often say that once you only have one person left bidding, the auctioneer can't optimise the sale price because there is no more competition. How much higher would the top bidder have paid otherwise?
You'll never really know.
Regardless of method of sale, there are pros, cons and risks associated with each of them.
When trying to decide what method is best for you, Wise Up, get informed and consider your property sale in the context of the local property market.
Unsure whether to sell your house by auction? Help is available
If you need help deciding whether an auction is right for your property, and wanting to find the right agent for the job, Agent Finder NZ can give you the guidance you need. Agent Finder is a free service, independent of all selling brands.
They specialise in finding the very best agents in the industry who will explain all the different options for you.
Agent Finder NZ will also provide you with a list of questions to ask agents, which helps take the pressure off you at a time when you have so much to think about.
Whatever way you sway on the auction question, there are numerous methods of sale available to sellers, and informing yourself before you meet with an agent can only help you.
Find out more about auctions.