The Benefits of Selling Your Home via Auction

Tony Buckwell
July 19, 2016

There are several ways to market your home for sale, and each option has pros and cons. However, the fact is that more Auckland home owners are currently choosing to sell by auction than any other method.

Below are some interesting recent statistics on sales results by listing type:

Data from Barfoot & Thompson for properties listed in Auckland and Northland between 16 February 2016 and 16 May 2016 that were sold by 16 July 2016.

As you can see from the above table, more property is listed for auction with Barfoot & Thompson than any alternative marketing method. Also, those owners that do offer their home for sale by auction have a higher success rate than those that select one of the other methods. So, why is this?

There are so many advantages with the auction process. Here are just few:

  • There is a deadline for buyers to act. This creates urgency, and compels buyers to act decisively.
  • There is no price to distract a buyer’s consideration. The marketing campaign simply invites all the potential buyers to view the home & allows them to form their own opinion of the value level.
  • If there is more than one buyer interested in the property, a competitive bidding situation can result in a premium price being achieved. There are no price limitations with an auction.
  • All buyers at an auction are bidding on an unconditional basis. Once the reserve price is met and the hammer falls, your home is sold. No waiting and hoping for purchaser conditions to be satisfied.
  • You can still sell before the auction if an acceptable offer is presented.
  • You are in control. You decide on the reserve price, deposit terms, and a settlement date that suits you.
  • It is an open and transparent process.

I have witnessed some incredible results in our auction rooms over recent years. Although this success has undoubtedly been assisted by the prevailing market conditions (under-supply and strong buyer activity), I am convinced that the other main contributing factor has been the value of the auction process itself. I can recall many times when I have reflected on a sale result with a client, and we have both agreed that if we had put the sold price achieved on the property when they first offered it for sale, we probably wouldn’t have even had a visitor to an open home! It is the competitive environment of a well-managed auction campaign which can draw out the premium bid from the market place.

To be completely fair and balanced with this article, there is one disadvantage with an auction. Conditional buyers are often not in a position to bid. They are not necessarily lost to the seller though. In the unlikely event that the property is still available after the auction, these conditional buyers then get an opportunity to make an offer on the property.

There is also one other ‘perceived disadvantage’ with auctions which I would like to take this opportunity to address. Many home owners are under the impression that selling by auction is far more expensive when compared to other methods of sale. This may be true with some real estate companies, but when working with Barfoot & Thompson the only ‘extra cost’ involved is a one-off auction admin fee of $115 (as at the date of this blog). This covers the preparation of your auction documents, and access to the full services of our team of skilled auctioneers and auction facilities. So, apart from this one small fee, there is no cost difference between an auction campaign and any other type of marketing campaign when selling with Barfoot & Thompson.

I hope that this has answered some of your questions about auctions and why they can work so well for a seller. If there is anything more you would like to ask about the various methods of marketing your home, please give me a call, or send a question via my contact section.

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