Tag Archives: selling at auction
In order to have yourself prepared for auction day Harcourts New Zealand CEO, 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 figure – 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.
What happens when the property sells at auction?
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.
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. It varies from country to country, but in Australia and New Zealand, an auction requires a minimum of six people to attend for an auction to legally be called.
What if nobody bids at auction?
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. So to get the auction rolling, the auctioneer will nominate a starting bid – this is called a vendor bid, it basically indicates what price a seller is not prepared to sell for.
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’.
If your home has been passed in at auction because the bidding hasn’t reached your reserve price, there is no need to panic – 90 percent of the time, your property will sell within hours of the auction!
It is generally fairly easy to negotiate your way to a sale either on the day of the auction or shortly afterwards, and your Harcourts agent will usually manage the negotiation process for you!
When a property fails to sell at auction, nine out of 10 times it is sold within half an hour to the buyers who have made the highest bid. Your agent should negotiate the sale with the highest bidder until a mutually agreeable price is reached. If a mutually agreeable price cannot be reached or if the bidding was low during the auction, it may be a sign that your property is priced too high.
However if the price of the property is reasonable and it still didn’t sell on auction day, your agent will generally receive a significant amount of follow-up calls and requests for inspections early in the following week. Although you didn’t receive any worthy bids at the auction, you may receive multiple offers in the days after the auction and could end up with a significantly higher sale price than you originally expected!
Of course there are times when the market is flat and buyers aren’t out in full force, but generally if your property is priced fairly and there are buyers out there, your property will sell at auction or very soon after.
Just be calm, patient and, most importantly, relax.
What is the value in listing your house for auction?
Fewer days on market and a higher rate of success
When it comes the question, “Why auction a home over a traditional sale?”, you can’t look past the facts. Currently in the past 12 months in the USA, Harcourts have seen just over a 90% success rate selling properties through auction. When you look at traditionally selling your home in Southern California you have under 50% chance of getting a result, which makes auction a logical option.
You can also look at the average days on market and compare auction and traditional sale. Obviously this can change from place to place, however if you look at the average days on market for a traditional sale in California over the past few years it has varied from 90-150+ days. Our auction platform has an average of just 33 days on the market which allows everyone involved to understand the true market value in a shorter timeframe.
This is paramount when selling real estate because we often hear from sellers that they don’t have to sell. Taking this approach when listing a property on the market is one of the main reason that sellers do not achieve what they want for their home; they sit and wait, then drop the price, which then becomes a game of chasing the market down.
Auctions allow you to negotiate up, rather than down
Another reason that auctions make a lot of sense is that it allows the agent that listed the property to negotiate up rather than negotiate down like a traditional sale. For example if you were to price a property in a traditional manner at $850,000 you have straight away told people what they are not going to pay. In most cases you would see someone submit an offer well below the asking price and it becomes a negotiation.
When a home is listed through the Harcourts auctions platform we list the property at a bidding-to-start-from price. This price is well below market value and below the seller expectation for the home, however the seller sets a non-disclosed reserve price which safe-guards them and allows us to find out how high the market will go. Think about it like a negotiation up rather than a negotiation down.
Selling through auction will help you to achieve true market value
Another query which we come across often is, “The last agent told me I could get a certain dollar figure”. We call it the promise of a price. When a home goes through our auction platform it is not the promise of a price, it is a process that finds the true market value of that home through feedback and offers that are not influenced by a listed price.
The process gives us a plan A, B and C in that we can sell a property before auction, on the day of auction and also if all else fails we can always revert back to the traditional sale so you have nothing to lose. In fact, you can gain the knowledge needed to price the home accurately to achieve a sale in any event.
A set timeframe drives buyers to make a decision
An easy way to think about the structure of the auction platform is to think of the timeframe between Thanksgiving and Christmas. We have a four week lead-up where people go crazy getting everything ready for one day, having that set date does not allow us to procrastinate, it drives us to make decisions. This is the same principal we employ to get a property sold in the shortest time for the true market value.
Aren’t auctions traditionally for properties which have foreclosed?
The banks still use auction as their primary way to sell foreclosed homes. This is because auction is the only proven way to get the highest price for a property in the shortest timeframe.
This perception can actually work to your advantage
We use the perception of the word ‘auction’ to drive over 45% more people through the front door of a home than we would see with a traditional sale. We get some many more people interested in a property that is going to auction – have you ever met a buyer who wants to pay too much? Getting the buyer to the front door is the hardest part of selling real estate.
It is a very common misconception in real estate that an agent sells your home, when in fact we could not sell a property to someone who did not want it.
It’s our jobs as agents to manage buyer and seller expectations
After thousands of transactions, we have identified that it is our job as listing agents to manage greed on behalf of the buyers and fear on behalf of the sellers. Greed on behalf of the buyers because I have never met a buyer that wants to pay too much and fear on behalf of the sellers because I have never met a seller that was not fearful of leaving money on the table.
Now, as contradicting as it may sound we need to feed the greed of buyers to get them to the front door, so the word auction feeds the greed but then the process manages that greed with our set timeframes and the competition of the other buyers. All the while providing the seller with the information and feedback they need to understand about the true market value of their home is. So in short, we use the stigma that surrounds the word auction to get the volume of people we need.
What kind of success have past clients had using the auction process?
We are very proud of all we have achieved with our auction platform, as over 60% of all our properties that have sold through our process have previously been listed on the market for an extended period of time. To have over a 90% success rate while listing properties where we needed to revitalize the reputation because other agents had promised a price and not a process.
One particular story really does put our platform into perspective. A broker from a real estate office outside Harcourts had his own property listed for almost two years and could not sell it. He had reduced the price several times and had still not been able to get the traffic needed but also lacked the leverage in any of his negotiations, as he could not get people to make a decision.
He saw one of our auctions and saw the property sell in a short timeframe for a great price in the local area where he worked and called us to talk further. We listed the home as an auction and had it sold in two weeks at a price which was higher than previously advertised.
The power of the set auction date drove a buyer to pay more so they could avoid being in competition on auction day.
If you’d like to consider selling your home through the auction process, and live in California, Nevada or Oregon, get in contact with Harcourts Brady & Co Auctions Manager, Ben Brady at firstname.lastname@example.org