Are you considering selling property by auction, private treaty, sell privately, real estate agent, for sale by owner? Not 100% sure how to go about it? Not sure which way to go? Maybe you have seen some agents already and are receiving conflicting and confusing advice? Looking for some straight real estate selling tips? RECNZ is an independent body set up to provide independent and impartial real estate advice to home sellers. The team at RECNZ have over 30 years hands on experience in real estate and have assisted people with thousands of property sales and purchases.
Auctions... opinions vary from it's the only way to sell to would never do it. Everybody's situation is different, and you as a seller need to consider what your needs are, and how your needs will best be met.
An auction will get your property sold on the day, under the hammer, as long as at least one buyer turns up and you are prepared to say yes to the highest bid, whatever that may be. This may suit you if you are in a difficult situation or have time constraints. You will know that your property will be sold at 11am on the given day. Finished.
The successful buyer is locked into the sale on the fall of the hammer and there is no cooling off period to worry about. The timing issue of when the sale will occur is now fixed!
But what about the price... most agents who promote sale by auction suggest that the competition between buyers will drive the price up, and indeed that may be the case as long as there are enough buyers there on the day with the right money.
Some other important factors to consider with the auction selling system is;
1. to have an auction you need more than one buyer
2. If the property doesn't sell on the auction day it can be labelled as a failure
3. In the majority of cases you will not receive the successful bidders highest prepared to pay price
Let's look at the highest price a little deeper, and you need to read this slowly so you absorb what is being said... the successful bidder only has to make a single bid above that of the under-bidder to win. You may never know how much the successful bidder was really prepared to pay. The only person you definitely know that was prepared to pay their maximum was the under bidder, the one who missed out.
An example of how the auction system works...
Mary has $380,000 to spend at the auction
Peter has $350,000
Mark has $335,000
These are the maximum dollars that Mary, Peter and Mark are prepared to spend and each one of them is prepared to go as high as their maximum to get the property.
Bidding starts and gets to $330,000, Mark places his bid of $335,000, Peter bids $340,000 that takes Mark out of the game. Now as soon as Peter reaches his limit of $350,000, Mary is going to bid $355,000 or perhaps if she is playing it really clever $351,000. Let's assume the best case scenario. Mary bids $355,000. She is now the highest bidder and there is nobody else there. But remember Mary has the capacity to spend, and is willing to spend, $380,000. Mary walks away very happy as she has just saved herself $25,000.
Now imagine 3 months later you bump into Mary down the street, you ask how she's going, if she has settled in ok and she tells you that she absolutely loves it there, the home is her dream and you jokingly say... well you should paid us more! And she says innocently... to be honest I was prepared to go as high as $380,000. Instant deflation. You can't ask for it now.
You get one shot at negotiating with your buyer, and it needs to be the best shot. This can be one of the worst pit-falls associated with auctions.
Buyers may also be wary of auctions, as there is an air of uncertainty with regard to what price the property may sell for. They would like to be certain they are in with a chance before spending money on building & pest inspections etc. Imagine if they have been interested in other properties, had all the inspections done and missed out. They've probably lost a couple of thousand dollars, how keen would they be to do it again with the uncertainty?
Price Range Selling
Get The Agent
Preparing Your Home For Sale
Playing With The Price
What Is It Really Worth?
Getting The Buyer To Pay Their Best Price