Selling your house: Auction or by negotiation?

Selling your house: Auction or by negotiation?

Home auctions are a hugely popular way to sell houses in Auckland and Christchurch – but is it right for your house? There are five main methods of sale used in New Zealand: auction; asking price; by negotiation; by tender; and “offers above…”

Different cities, different sales

Each method has its pros and cons, and a lot depends on where you live. The high demand Auckland market relies most heavily on auctions, with around 30% of all houses sold using this method – nearly 70% of all New Zealand auctions in June were in Auckland, according to the latest REINZ data. Auctions are also popular in Christchurch and Waikato/Bay of Plenty with only 6.5% of auctions in June outside of these three regions.

SEE ALSO: What’s your house really worth?

In Wellington and Lower Hutt auctions are unusual. There is a strong trend for sales by closed tender. It’s like a silent auction, where buyers submit an offer on a set date, and sellers can accept the highest ‘bid’ or negotiate further. In Dunedin, its split between auctions and asking prices, says Wendy Bowman, sales consultant at Harcourts Dunedin. She says that in smaller towns with limited buyers, like Balclutha, auctions are rare, and most houses are listed with an asking price.

Should you sell your house at auction?

If you are considering whether or not to have a house auction, ask yourself a few questions:

How long do you want the sales process to go on? An auction sale is unconditional – when the hammer falls, the deal is done. You don’t have to wait on builders’ reports, finance to be approved or other houses to be sold. “An auction encourages buyers to focus on the property first, then the price,” says Campbell Dunoon, auction manager for Barfoot and Thompson.

Are you in a buyers’ market, or a seller’s market? In sellers’ markets like Auckland and Christchurch, auctions can be an excellent choice. As the seller, you can set the settlement date and the reserve price, so you are in the drivers’ seat.

An asking price or negotiation can make the sales process more buyer-friendly. “In small towns and with first-home buyers, an asking price can be better. Buyers may need more time to do reports and get finance approved,” says Bowman, “but in a heated market auctions go really well.”

What would you rather do? Your own preference is important. If the whole idea of an auction fills you with dread, you may be better off choosing another sales method. But if you would like some certainty about when you’ll be able to move, and when the sale will be completed, an auction is probably an excellent solution.

It’s about you, not your property

As for the idea that some houses are more ‘auctionable’ than others, that’s a myth, says Mark Sumich, award-winning auctioneer and director of Sumich Real Estate. “Any property is auctionable and anyone can do it, as long as the owner understands what’s going on and the agent is competent at handling the campaign.”

Besides, adds Bowman, selling methods aren’t really about the property, they’re about the people. “Auctions aren’t for everybody,” she says. “If you don’t want an auction, you can sell your house by listing it ‘by negotiation’ and just put the hook out there. If it’s not working you can put a deadline or an auction on it and that brings everyone out of the woodwork and gets it sold.”

SEE ALSO: What’s your house really worth?

Tags:
, , , , , , ,