Q: Are auctions still working?
A: With the ‘softening’ of the market we are often asked if auctions are still working. Or actually, people are often saying to us “auctions aren’t working now so we want to sell by negotiation, or with a price.”
This is absolutely not true. In our current market, an auction is still THE BEST WAY to sell your property.
There are several reasons for this, but let’s start with the facts: In Ray White NZ 82% of properties taken to auction sell, while only 34% of properties sold by private treaty (priced, by negotiation, tender etc.). In other words, you have twice the chance of selling when you go to auction as you do if you sell any other way.
Why is this? When a property is listed with a price or by negotiation, and a potential buyer sees it and quite likes it, there is no reason for them to take any action. With the slower market right now they know there is unlikely to be a queue of people lining up to make an offer. So they say to the agent “let me know if anyone is going to make an offer” and off they go to the next open home.
An auction, on the other hand, forces all interested parties to take action because there is a deadline.
At the end of the day, an auction still provides the vendor with all the benefits: you stay in control, there is a strong call to action/deadline, all bids are unconditional and the sale is final on the drop of the hammer and payment of the deposit.
If buyers are conditional (e.g. have to sell their home before buying) they will be at the auction hoping it won’t sell and ready to put in a conditional offer if the property doesn’t sell under the hammer.
Interestingly when the market turns from a seller’s market to a buyer’s market there are plenty of agents who just find auctions too much work, and too scary. After all, if it doesn’t sell under the hammer the agent is the one who gets the blame. It’s so much easier to hide behind a By Negotiation sale, hold endless open homes and blame the lack of activity on ‘the market’.
So, there you have it: Auctions are still working and working better than any other method of sale, regardless of the market.