Creating competition

Auctions create a competitive bidding environment and have the ability to establish an emotional connection between the property and the purchaser in a short period of time.

This may increase a home’s value, and help achieve a premium result.

Having a set end date

Having a set date creates the urgency for a prospective purchaser to be organised for auction day. If a buyer inspects the property seven days prior to auction day then they have seven days to be ready to perform and make a bid.

Setting a date also creates a structured selling plan in which to achieve a sale either prior to auction, at auction or post auction.

It gives the vendor and agency clarity on their roles in the selling process and also ensures they are prepared for all open for inspections and the auction.

Attracting more potential buyers

Taking a home to auction can help you attract more buyers through the open for inspections and more bidders registering at the auction.

Interested buyers may stretch themselves under a competitive environment to buy their dream home.

Get the most from your marketing

When selling your home there will always be an investment in marketing.

A high impact marketing campaign, usually condensed between 21 – 28 days, gives you the opportunity to attract the maximum amount of purchasers in a minimum amount of time.

It also gives buyers more of a chance to see the advertisement, recognize it, and develop an immediate emotional connection between the property and themselves as a buyer.

You never get a second chance to make a first impression.

 Reduce days on market

Auction ultimately reduces days on market.

It creates a competitive environment where bidders can compete for your home and as a seller there is no doubt that this is the best way to sell your property.

Unconditional contract

Auction gives you an immediate unconditional contract.

Once the hammer falls a buyer is bound to the contract and an immediate exchange then takes place.

It gives you as the seller clarity in regards to the sale. Auction is the most transparent way to sell real estate.

Buyers can see who they’re competing with and sellers can see first hand what the market is prepared to pay for their home.

When selling your property, there are quite a few different modes of sale you can opt for. When it comes to the choice of selling your home through the auction process, the choice will be largely dependent on the type of property you have.

Higher end and luxury properties are often sold through auction due to the nature of New Zealand auctions focusing on the quality of the property, with price being the secondary concern. In this environment, keen bidders can drive the price of the property above market expectations in some cases, with no pressure to sell if the property fetches a lower than expected bid.

Another benefit to selling at auction, is that you will attract genuinely interested buyers. In New Zealand, those bidding at auction must do their due diligence before bidding. This means the contract of sale is not subject to inspections or finance – as these must be organised before auction day and ensures only serious buyers will show up to bid. Once you’ve decided on auction for your property, how can you ensure you’re best prepared for the day? To help you, we’ve gathered a list of considerations and frequently asked questions from Harcourts top auctioneers.

What the benefits of buying and selling property via auction?

If you’ve been considering buying or selling property at any time in the recent past, it’s almost certain you’ve been introduced to the idea of buying or selling via auction.
For the uninitiated the auction process can seem a little daunting, but there’s a reason they are so often recommended to both buyers and vendors – property auctions offer many advantages to both sides of the sale.

For both buyers and sellers the biggest advantage of an auction is transparency. Everybody knows the terms and conditions of sale before they start, and bidders or their representatives are on site during the auction bidding in the open.

If you’re selling:

  • An auction means you set the terms and conditions of sale, mitigating the chances of any surprises at settlement.
  • Marketing with no fixed price broadens the pool of cash-in-hand buyers who will look at your property.
  • You have a fixed, relatively short marketing period where your Harcourts sales consultant can gauge the level of interest in your property and what prospective buyers might be prepared to pay.
  • The auction itself generates a sense of urgency and competition which brings buyers to a decision.

What you need to do to prepare:

  • Your sales consultant should walk you through a detailed marketing plan from the images that’ll be selected and advertised, the copy that will be included, and the schedule of open homes, to where the property will be advertised. You should have daily updates from your consultant and a face-to-face meeting once a week, to make sure you’re up to date. They should also provide you with a written report on the marketing campaign and interest from prospective buyers.
  • Talk to your sales consultant about what is happening in the market, specifically around your area and with properties similar to yours.
  • Use that market information, and feedback from prospective buyers to set a realistic reserve price. Be clear about your best price, which is the figure you’d be very happy to accept. But also have in mind your “OK” price and your “accepted price” – which is the figure you wouldn’t be thrilled with but given market conditions you’d be prepared to accept.
  • Remember, at all times during an auction, you’re in control as the seller. If a bid is high enough take it. If not, don’t.
  • REMEMBER: the reason for not taking an offer needs to be greater than the reason the home is on the market in the first place.

If You are buying:

  • An auction means you know exactly who your competition is on the day.
  • All buyers are given fair opportunity to buy.
  • Negotiations are open for all to see.
  • You know you are dealing with sellers who want to sell on the day.
  • At the fall of the hammer, the auction is final and your successful bid means the property is yours with no further negotiations, and the contract is signed then and there.

What you need to do to prepare before auction:

  • Have your finances organised by auction date. Know exactly what you can afford to bid. If you’re successful on the day you’ll be asked to sign the sales agreement and pay a deposit. This is normally 10% of the purchase price.
  • It’s also a good idea to have your other affairs sorted by this date, such as the sale of your existing property, organising a check of the property you’re bidding on and familiarising yourself with auction documents.
  • Have your solicitor inspect the property title and all legal matters related to the prospective purchase.
  • Talk to your Harcourts sales consultant to gain a better insight into the local market, so you can accurately assess the market value of the property. You should also consider obtaining an independent property valuation.
  • If you’re new to auctions visit a few before attending the auction of the property you wish to bid on. It will familiarise you with the process.

Sometimes the property may be sold prior to auction day. You can submit a pre-auction offer to the property owner for their consideration – a key step of identifying your interest in the property. If you have let the sales consultant know you are interested in the property and another purchaser submits a pre-auction offer, you’ll be given the opportunity to submit your own offer.

Know Your Auctioneer

Selling your house at auction is often the best way to truly test the market, and get the best price for your property. There are many other benefits as well – you have a pre-set timetable for your marketing campaign and if you reach your reserve your house is sold there and then.

But it can also seem as though a lot of the power over what price you get comes down to your auctioneer, so how do you know you have a good one?

  • Your sales consultant will normally have one or two auctioneers they work with regularly so to make sure you are getting the best auctioneers make sure you hire a real estate company with a strong auction culture.
  • Talk to your sales consultant and your auctioneer about how often their company promotes auctions as a method of sale, how many auctioneers the company has working for it, and what kind of ongoing training their auctioneers receive.
  • Ask your auctioneer how many auctions they have called, how often they’re calling auctions and how many of those reached reserve.
  • If you want to get a clear idea of an auctioneer’s performance attend another auction they are calling. This also has the added benefit of familiarising you with the auction process without the stress of it being your property under the hammer!
  • At auction an auctioneer should demonstrate a clear knowledge of the property for sales as well as legal proceedings around the sale and explain these clearly to those in attendance. They should be able to easily answer any questions from bidders.
  • Most importantly they should be fast and accurate in keeping track of bidders – who’s bidding what, and who holds the current bid.
  • Auctions can be high pressure environments and part of the auctioneer’s role is also to help diffuse some of that tension so potential buyers are relaxed and focused on the auction and their bids.
  • Ahead of the auction your auctioneer should meet with you as the vendor in person to make sure they have a thorough understand ding of the property, and your reserve price.

Harcourts NZ has an incredibly strong auction culture, with our team of auctioneers often dominating the finals and winners’ podiums of national and international auction competitions.

Before the auction

Auctioning your property is about so much more than simply showing up on auction day. There’s a lot that goes into it before-hand to ensure you achieve the best result possible for your property. Marketing your property well is chief among the things you’ll need to do.

Your agent should walk you through your marketing plan in detail, from the images that’ll be selected and advertised, the copy that will be included, to where the property will be advertised (online, papers, brochures, in office).

Before you go to auction, you should expect to hear from your agent on a daily basis and a face-to-face meeting around once a week. Ideally, you’d receive a written report which summarises all of these activities as well as the interest in your property. Your agent should also be keeping you well-informed of the market, so that you can make the best decision come auction day.

What is your role on the day?

If you’re in the country, the best recommendation is to attend your auction. It’s great to have you there if there are any last minute questions. Some common ones buyers ask are: “Can we vary the deposit amount?” or “Can we vary the settlement date?”

Your auctioneer will also want to confer with you depending on how the auction is going. If bidding stops below your reserve price for example, your auctioneer will want to discuss next steps with you.

Getting to know your property

The auctioneer should be introduced to your property, much as your agent has been. They should walk through the property, understand the features of the home, and really understand why a buyer would fall in love with it. That way they’ll be able to better represent your home to buyers.

Your auctioneer will also want to know all about the interest the property has received. They’ll ask your real estate agent detailed questions about it. How many inspections have there been? What kind of interest has the home received? Have any valuations been done? Any building/pest inspections? Does the buildings age suggest a dampness or infra red test for water damage be conducted? Is the property fibre ready?

Marketing

When it comes to marketing your property before auction, the rule seems to be more is more. The success of your auction can be largely dependent on your marketing campaign.

The latest research from Harcourts, showed a direct correlation between the amount spent on marketing versus how much interest was generated for a property, and what price it sold for. On average, properties that sold in the shortest timeframe invested a further $1,913 in marketing than those that did not see a sale in the 45 day period.

Our Harcourts Promise and written marketing plans ensure a smooth marketing campaign and that you recieve feedback on what prices buyers are indicating they are willing to pay for your property.

The reserve price

It’s important for you to understand and be clear on what your reserve price is, and how it’s used during the auction. Your auctioneer should be able to explain this to you in detail. You will need to discuss your reserve price with your auctioneer.  They should be working to ensure you get the best price possible for your property.

That being said, try to avoid openly discussing price with others, to reduce the risk of price leaking out into the market. The auction should focus on the product (your home), and price should become secondary. Harcourts CEO, Chris Kennedy believes there are three types of figures to consider before the day:

  • Your happy price– The figure you’d be very happy to accept.
  • Your ok price– The figure you’d be ok with based on the feedback you’ve received, you don’t see a win but you don’t see a loss.
  • Your grumpy price – This last figure is basically the one you wouldn’t be thrilled with, but given market conditions, you’re prepared to unhappily sell at that price.

Remember, at all times during an auction, you’re in control. If a bid is high enough take it. If not, don’t. But the reason for not taking the offer needs to be greater than the reason the home is on the market in the first place.