It would be fair to say that I have probably attended more property auctions than most. Over the years, I have picked up some valuable insights into auctions and what makes them such a popular method of sale in New Zealand.
In this blog, I wanted to share my thoughts & observations, and at the same time, address some of the myths around auctions.
I've formatted this article in a simple Q&A style to keep it as concise as possible. That way, you can pick out the bits that interest you the most.
Auctions are not necessarily the best method of sale for every property. There are pros & cons to each form of sale (tenders, asking price, negotiation etc.). A good agent should explain the merits of each approach relative to the property to be marketed before a decision is made.
I researched my sales back as far as 2014 and found that 32.4% of these properties were marketed by auction.
The success rate of auctions may vary with market conditions. As a general guide, the same research of my auction campaigns since 2014 revealed a success rate of 91.3% sold in the auction rooms (under the hammer). The properties that didn't sell under the hammer all sold successfully shortly after, resulting in a 100% selling success.
Here is an overview of the various listing success rates at Barfoot & Thompson for the three months from 18 April 2021 to 18 July 2021 and sold by 16 September 2021.
I can't speak for other companies. However, at Barfoot & Thompson, the only additional fee directly attributable to running a property auction is a documentation fee of NZ$185. The documentation fee covers the preparation of the auction agreement and full use of our auctioneers, auction facilities etc.
Additional marketing investment is still needed to secure high-quality property photos, videos and advertising for the property. The vendor (property owner) can select marketing options suited to their budget via consultation with their agent.
The costs are not necessarily any more than for any other campaign type. The commission rate for an auction is the same as for any other method of sale.
Yes. Barfoot & Thompson has a robust and proven pre-auction offer process.
No. All buyers at a property auction are bidding on a fully unconditional basis. If they hold the highest bid and the hammer falls, they are legally bound to complete the purchase.
Conditional buyers can make an offer on a property after the auction if it is not sold under auction conditions.
Here are the top advantages of selling your home via auction:
Here are the potential downsides of selling your home via auction:
Barfoot & Thompson offers vendors both in-room (at the auction venue) and on-site (at the property address) auction options. Here are the potential advantages and disadvantages.
In-room auction advantages:
In-room auction disadvantages:
On-site auction advantages:
On-site auction disadvantages:
This is a pretty big question to answer quickly. Therefore, I have written a separate blog covering this topic, which you can access here.
Vendor bidding is where the vendor can bid against buyers at their property auction. Vendor bidding is only allowed until the auction reserve price is reached. Barfoot & Thompson does not permit vendor bidding at our auctions. All bids at a Barfoot & Thompson auction are by potential buyers.
Yes, however, changing the deposit amount or settlement date for a property requires the purchaser and the seller's written agreement before the auction.
You don't need to be physically at a property auction venue to bid these days. The simplest remote bidding options are-
No. Once a buyer has bid successfully, they will be required to complete the signing of the auction agreement immediately and pay the deposit.
They are now legally/contractually bound to complete the purchase at the settlement date. An auction purchase is a fully unconditional transaction. Any buyer due diligence must be completed before the auction.
The seller sets the auction reserve. If the bidding doesn't reach that level, the real estate company has no authority to sell the property. However, if the seller decides to adjust their reserve to 'meet the market', they can do this live during the auction call. Thus, the seller maintains control of the process at all times.
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