Friday, August 6, 2010

Real Estate for Sale in New Zealand? Auctions May be Way To Go. What Constitutes a Successful Auction?

If you have a house for sale in New Zealand, or indeed anywhere, you may be wondering what is the best method of sale for me and my property in the current economic market? The answer is simple. Auctions.
There is a common misconception amongst the public regarding auctions. If a property goes to auction, has multiple bidders, and sells above the reserve price then that auction is deemed a huge success, and rightfully so. However, many people assume the opposite, that if a property goes to auction, has few or no bidders, and is passed in to the auctioneer, then that auction has failed. But in fact nothing could be further from the truth.
In a buoyant housing market the transparent auction process works perfectly, placing buyers in direct competition with one another raising the price that the top bidder ultimately pays. Then again, in a buoyant market with many prospective buyers for a single property almost any method of sale will be successful. The question is, what do you do in a questionable market?
It is at this point that auctions really come into their own.
During times of uncertainty, when markets are poor, it can be difficult to set a price on a property. Auctions are a fantastic way of figuring out just how much a property is worth. In fact, some of the most successful auctions for real estate in New Zealand are those where purchasers assume that the price will be higher than they are willing to pay.
When a property is first listed as an auction, both vendor and salesperson are unsure of the market price for that particular property. It is the salespersons job during the three week marketing process leading up to the auction, to question potential buyers to determine where they value the property. Sometimes this process yields one or more extremely motivated buyers leading up to the auction but not always.
If you have ever been to a real estate auction in New Zealand you may be curious as to what it means when a property is passed in. When an auctioneer passes a property in on behalf of the vendor it is a public statement of where the salesperson, after three weeks of research and education, genuinely believes that there will be at least one genuine buyer.
Thus this indicates to the market two things:
1) There is no point in a buyer thinking they can purchase the property for less.
2) More importantly, it indicates to the market the lowest starting point for genuine negotiations.
If the salesperson has accurately determined the value for a property, then that property often sells within a short period after an auction for a price slightly higher than the pass in figure. However if it does not sell at auction or soon after, it gives the salesperson a starting point for discussions with the vendor to accurately price the property.
As a vendor with property for sale in New Zealand, it feels great to see multiple bidders compete against one another and raise the price of your property above your reserve. Yet a clever salesperson can pass a property in through auction and still wind up with one genuine buyer only a short while after auction willing to pay a fair price.
Unfortunately, for various reasons, usually based on a bad past experience salesperson or based upon misconception and misunderstanding, not every vendor is comfortable with the auction process. In such cases, one may need to look at other methods of sale. The overriding principle being that the relationship between salesperson and vendor is a critical one and must be based upon mutual trust.
Every property in any market can be auctioned given a skilled salesperson. The only variable in the equation that needs to be checked is the vendor. If he or she is comfortable with the process than there is no better method of sale one can utilize when trying to sell real estate here in New Zealand or abroad.
(ArticlesBase SC #1080833)
Simon Damerell - About the Author:
Simon Damerell is one of the co-principals at Ray White Ponsonby, Auckland New Zealand. Having lived in the greater Ponsonby area, on and off, for the past 40 years, Simon's respect, dedication, and knowledge of the area is unparalleled.