Michael Campion- 10 Minutes
Buying & Selling At Auction
Harcourts have always had a strong Auction culture and are good at what they do.
Last week our Team Group which consists of 12 offices in the Lower North Island, put 12 properties up for Auction and sold 11 under the hammer. Whether you love the thrill of an Auction or hate the thought of your property being up in lights and down to the wire, auctions have become the preferred selling method in most of the major centres across the country.
Auction is the second oldest profession in the world and is the purest form of selling. As a seller, an auction offers you the opportunity to achieve the best price in the marketplace in the shortest possible time.
Marketing usually takes place over 3 weeks with the Auction on the 4th week, usually on a Thursday afternoon. Predominately they take place in designated Auction rooms, ours being our Palmerston North office. We have auction rooms in our Paraparaumu and Wellington City offices.
Reasons why selling at auction has become so popular:
Marketing without a fixed price, increases cashed up buyer viewings at your property.
Buyers come to an auction with a maximum prove in mind, rather than focussing on how low they can negotiate the price down.
Auctions allow buyers to determine the value of the property rather than solely relying on a sales consultant or values, which can potentially result in a too low price, leaving money on the table or too high – causing it to remain on the market for an extended period of time.
Auctions attract the best buyers in the market, ones that are cashed up and ready to buy on the day without imposing any conditions. Approx. 33% of all conditional contracts fall over which can be very discouraging for the seller and buyer.
Conditional buyers are not excluded from the auction process. There is still the opportunity to talk with conditional buyers afterwards if the property does not sell on the day.
Bidding at auction is transparent unlike putting in Tenders or PBN. Buyers are always aware what level the opposition are bidding at, so they can bid with confidence.
Vendor bids can only occur up to the reserve price and must always be disclosed by the Auctioneer.
Auctions can be sold prior to Auction day. If there is an acceptable written cash offer, all other potential buyers are contacted and told that the Auction has been brought forward to 48 hours time. It starts off at the Offer figure, if no one else bids it is knocked down to that buyer, otherwise if there are increased bids from other parties it is then sold to the highest bidder.
What to expect when you sell at Auction?
Sales consultants will guide your through the pre-auction and auction process.
Market information what is happening, especially in your area and regarding similar properties to your own, agent will provide a current market appraisal.
Taking you through a marketing plan, average spend $2k – 3K – up front on top of commission paid once property is sold.
Keeping you always informed, daily updates and weekly face to face meetings.
Weekly feedback report on the marketing campaign and interest from prospective buyers.
Helping you set a realistic reserve price, in consultation with the Auctioneer. Should be based on Buyer price feedback.
Remember as the seller you are in control, you set the Reserve and decide the settlement date. If bidding does not meet the Reserve, you can consider if you want to enter negotiations with the highest bidder.
Buying at Auction.
To make the process work for your, it is important to do your homework first.
Organise finance prior to Auction date. So, you know exactly what you can bid up to. (Good idea to hold back a fighting fund) If you are successful on the day you will be asked to sign the Sales Agreement and pay a 10% deposit (usually of the purchase price)
Review auction documents with your lawyer – Title
Organise a building inspection and LIM Report. Often sellers provide them up front to encourage buyers (less cost to them)
Research local market to help assess the market value of the property. You may want to obtain independent property valuation (banks may request this)
If you are new to the auction process, attend a few company auctions to experience the process for yourself. Your sales consultant can organise this for you and be with you on the day.
Remember the Auction is a Process. The better the process is followed the more successful the end result.
As a salesman says – Pitch it high watch it die ---- Pitch it low watch it go !!