Monthly Archives: February 2015
Selling at auction – Your guide to preparing for auction day
When selling your property, there are quite a few different modes of sale you can opt for. When it comes to the choice of selling your home through the auction process, the choice will be largely dependent on your country, and the type of property you have.
Higher end and luxury properties are often sold through auction due to the nature of Australian and New Zealand auctions focusing on the quality of the property, with price being the secondary concern. In this environment, keen bidders can drive the price of the property above market expectations in some cases, with no pressure to sell if the property fetches a lower than expected bid.
Another benefit to selling at auction, is that you will attract genuinely interested buyers. In Australia and New Zealand, those bidding at auction must do their due diligence before bidding. This means the contract of sale is not subject to inspections or finance – as these must be organised before auction day and ensures only serious buyers will show up to bid.
Once you’ve decided on auction for your property, how can you ensure you’re best prepared for the day? To help you, we’ve gathered a list of considerations and frequently asked questions from Harcourts top auctioneers.
Before the auction
Auctioning your property is about so much more than simply showing up on auction day. There’s a lot that goes into it before-hand to ensure you achieve the best result possible for your property. Marketing your property well is chief among the things you’ll need to do.
Your agent should walk you through your marketing plan in detail, from the images that’ll be selected and advertised, the copy that will be included, to where the property will be advertised (online, papers, brochures, in office).
Before you go to auction, you should expect to hear from your agent on a daily basis and a face-to-face meeting around once a week. Ideally, you’d receive a written report which summarises all of these activities as well as the interest in your property.
Your agent should also be keeping you well-informed of the market, so that you can make the best decision come auction day.
What is your role on the day?
If you’re in the country, the best recommendation is to attend your auction. It’s great to have you there if there are any last minute questions. Some common ones buyers ask are:
“Can we vary the deposit amount?” or “Can we vary the settlement date?”
Your auctioneer will also want to confer with you depending on how the auction is going. If bidding stops below your reserve price for example, your auctioneer will want to discuss next steps with you.
Getting to know your property
The auctioneer should be introduced to your property, much as your agent has been. They should walk through the property, understand the features of the home, and really understand why a buyer would fall in love with it. That way they’ll be able to better represent your home to buyers.
Your auctioneer will also want to know all about the interest the property has received. They’ll ask your real estate agent detailed questions about it. How many inspections have there been? What kind of interest has the home received? Have any valuations been done? Any building/pest inspections?
Marketing
When it comes to marketing your property before auction, the rule seems to be more is more. The success of your auction can be largely dependent on your marketing campaign. The latest research from Harcourts Group Australia, showed a direct correlation between the amount spent on marketing versus how much interest was generated for a property, and what price it sold for. On average, properties that sold in the shortest timeframe invested a further AUD$1,913 in marketing than those that did not see a sale in the 45 day period.
The reserve price
It’s important for you to understand and be clear on what your reserve price is, and how it’s used during the auction. Your auctioneer should be able to explain this to you in detail. You will need to discuss your reserve price with your auctioneer. They should be working to ensure you get the best price possible for your property.
That being said, try to avoid openly discussing price with others, to reduce the risk of price leaking out into the market. The auction should focus on the product (your home), and price should become secondary.
Harcourts Auctioneer, Chris Kennedy believes there are three types of figures to consider before the day:
- Your happy price – The figure you’d be very happy to accept.
- Your ok price – The figure you’d be ok with based on the feedback you’ve received, you don’t see a win but you don’t see a loss.
- Your grumpy price – This last figure is basically the one you wouldn’t be thrilled with, but given market conditions, you’re prepared to unhappily sell at that price.
Remember, at all times during an auction, you’re in control. If a bid is high enough take it. If not, don’t. But the reason for not taking the offer needs to be greater than the reason the home is on the market in the first place.
Chris discusses the auction process in New Zealand in the following clip.
Frequently Asked Questions
- What if no one registers for/turns up to the auction?
Harcourts Auctioneer, Andrew North says, in reality, this isn’t something that happens very often. Both you and your agent will know well before auction day how much attention your property has received and how much interest there is, giving you a good indication of how many bidders are likely to show on the day. - What if nobody bids?
It’s understandable that buyers might be nervous during the excitement and pressure of an auction. This is why it’s not uncommon for an auctioneer to be met with silence when asking for an opening bid. Most people are waiting to see what others at the auction might bid. In the event that no one calls out an opening bid, the auctioneer will nominate a starting bid to get the ball rolling. - What if the reserve price is not reached?
In this event, your auctioneer can pause the auction and come and speak to you, the seller. They will go back to the current highest bidder, and ask if they’re prepared to increase their offer to a price at which you’re prepared to sell. If the bidder is not prepared to do that, your auctioneer will then see if you’re prepared to lower your reserve price. That’s why it’s important for you to have a price in mind that whilst you wouldn’t be entirely happy with, you are prepared to sell at. If neither of these scenarios happen, then a sale cannot occur, and your home will be what is called ‘passed in’. - What happens when the property sells?
After the sale, it’s time to focus on the buyer. Your auctioneer should take them aside to start looking at the paperwork and get the contract signed straight-away. It’s also time to look at how the deposit is going to be paid. As the current owner, you’ll then sign the paperwork, and the sale has concluded.
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Fly a Friend Home Competition Brings Family Back Together
At Harcourts, we strive to put people first in all that we do, so it was with this in mind when in 2013, we launched the Fly a Friend Home competition.
The campaign was about bringing families and friends back together, and that’s just what we did for Vivienne McCormack and her brother, Michael Fuller.
Vivienne had wanted to fly her brother Michael, who now lives in Atlanta, Georgia, in the United States, home for Christmas in 2013, as the pair hadn’t seen each other in 10 years.
We recently heard from Vivienne, after her brother finally got to make his way back to Australia in 2014.
“Michael [and his kids] Mackenzie and Alexis visited us here in Fishermans Paradise, our parents weekend home since 1964, to celebrate an Aussie Christmas,” Vivienne said.
It was an exciting time for the family, with cousins seeing each other again for the first time in years.
“We were all so excited, it was fantastic! Michael took his girls to as many places as he could and caught up with old friends. It’s been years, so the girls didn’t remember anything or anybody.
“The Harcourts competition has allowed our girls to meet as young women, not the babies they were the last time they met. A bond has formed, a new generation of family love and interaction has been born,” Vivienne said.
Michael too was thrilled his girls were finally able to see their cousins again, saying it was great for the girls to connect with his side of the family, after they had spent so much time with their US relatives on their mother’s side.
“For me, that’s absolute gold to have that Australian connection,” Michael said.
The family’s Aussie Christmas included spending New Year’s Eve on a ferry at Circular Quay, enjoying fish and chips on the beach, and paddle-boarding at Narrawallee Inlet.
Michael revealed his love of Aussie beaches, saying they were much prettier and more beautiful than in the US, but have relatively few people.
However, Michael was surprised by how much things had changed since he was last in Australia, especially in real estate.
“I can’t believe how much Milton has changed and how incredibly expensive the real estate is,” Michael said.
The McCormacks and Fullers were thrilled to be able to see each other after all of this time, with Vivienne confident their girls would see each other again.
How to avoid a bidding war and why
When the property market is “hot” as it is at the moment, and the supply of quality homes for sale in your preferred area is dwindling, a competitive offer from another buyer can quickly result in the dream home you’ve just found becoming nothing more than a mirage.
“Of course most buyers prefer a home that is ready to move into, and many are willing to pay a premium for this advantage – which can translate into a full-price offer from a competing buyer, and perhaps even one that exceeds the seller’s asking price,” says Richard Gray, CEO of the national Harcourts Real Estate group.
“Alternatively, delaying your decision to make an offer while you think things over may create the opportunity for another buyer to jump in and snap up your perfect home.”
However, he notes, serious buyers can do much to ensure that their offers are successful, starting with home loan pre-approval that is documented and can be produced for the seller, and a sizeable cash deposit.
“It also helps to be honest with the seller about your serious interest in the property, and third, you should make it clear that while you are prepared to negotiate the terms of your own offer, you are not willing to be thrust into a bidding war with other potential buyers.
“Our experience is that genuine sellers will respect the fact that you are making a well-considered offer for the property, are open to negotiation and can show that you really do have the financial capacity to buy the property.”
However, Gray says, if the sellers choose not to accept your offer, you should keep calm and remember that the one thing worse than losing your dream home to another buyer is overpaying for the property as a result of a bid and counter-bid battle.
“For a start, overpaying means more money for the deposit, higher transfer costs because these are based on the price and, over the years, thousands of rands of additional interest on a bigger home loan.
“And on top of that, buying at an inflated price means a slower build-up in home equity – which means that if you are forced to sell before the house realises significant appreciation you may even have to pay in more money to clear your home loan.”
How to avoid a bidding war and why
When the property market is “hot” as it is at the moment, and the supply of quality homes for sale in your preferred area is dwindling, a competitive offer from another buyer can quickly result in the dream home you’ve just found becoming nothing more than a mirage.
“Of course most buyers prefer a home that is ready to move into, and many are willing to pay a premium for this advantage – which can translate into a full-price offer from a competing buyer, and perhaps even one that exceeds the seller’s asking price,” says Richard Gray, CEO of the national Harcourts Real Estate group.
“Alternatively, delaying your decision to make an offer while you think things over may create the opportunity for another buyer to jump in and snap up your perfect home.”
However, he notes, serious buyers can do much to ensure that their offers are successful, starting with home loan pre-approval that is documented and can be produced for the seller, and a sizeable cash deposit.
“It also helps to be honest with the seller about your serious interest in the property, and third, you should make it clear that while you are prepared to negotiate the terms of your own offer, you are not willing to be thrust into a bidding war with other potential buyers.
“Our experience is that genuine sellers will respect the fact that you are making a well-considered offer for the property, are open to negotiation and can show that you really do have the financial capacity to buy the property.”
However, Gray says, if the sellers choose not to accept your offer, you should keep calm and remember that the one thing worse than losing your dream home to another buyer is overpaying for the property as a result of a bid and counter-bid battle.
“For a start, overpaying means more money for the deposit, higher transfer costs because these are based on the price and, over the years, thousands of rands of additional interest on a bigger home loan.
“And on top of that, buying at an inflated price means a slower build-up in home equity – which means that if you are forced to sell before the house realises significant appreciation you may even have to pay in more money to clear your home loan.”
How to avoid a bidding war and why
When the property market is “hot” as it is at the moment, and the supply of quality homes for sale in your preferred area is dwindling, a competitive offer from another buyer can quickly result in the dream home you’ve just found becoming nothing more than a mirage.
“Of course most buyers prefer a home that is ready to move into, and many are willing to pay a premium for this advantage – which can translate into a full-price offer from a competing buyer, and perhaps even one that exceeds the seller’s asking price,” says Richard Gray, CEO of the national Harcourts Real Estate group.
“Alternatively, delaying your decision to make an offer while you think things over may create the opportunity for another buyer to jump in and snap up your perfect home.”
However, he notes, serious buyers can do much to ensure that their offers are successful, starting with home loan pre-approval that is documented and can be produced for the seller, and a sizeable cash deposit.
“It also helps to be honest with the seller about your serious interest in the property, and third, you should make it clear that while you are prepared to negotiate the terms of your own offer, you are not willing to be thrust into a bidding war with other potential buyers.
“Our experience is that genuine sellers will respect the fact that you are making a well-considered offer for the property, are open to negotiation and can show that you really do have the financial capacity to buy the property.”
However, Gray says, if the sellers choose not to accept your offer, you should keep calm and remember that the one thing worse than losing your dream home to another buyer is overpaying for the property as a result of a bid and counter-bid battle.
“For a start, overpaying means more money for the deposit, higher transfer costs because these are based on the price and, over the years, thousands of rands of additional interest on a bigger home loan.
“And on top of that, buying at an inflated price means a slower build-up in home equity – which means that if you are forced to sell before the house realises significant appreciation you may even have to pay in more money to clear your home loan.”