RealEstateMythbusting: Doauctionsdeliver

Rod Parkinson DIRECTOR,RAYWHITE WHANGAREI

Manyofushave heardthe traditional thinkingthatauctionsare best suited to whatis oftenreferredtoasa sellers market. Thisincorrect beliefisdue largelytoaperceptionthatauctionsare allabout sellingunder the hammer.However,for highlyskilled sales consultants runningeffective auction campaigns, itisaboutexposingtheir client’s property to asmany buyers as possible, gatheringmarketintelligence and creating adeadline foractionfromall parties.

Auctionmarketing ofproperty allowssales consultants to deal with both conditionaland unconditional buyers throughoutthe time of the campaign,thereby notdiscountinganypossible potentialinterest. This givesthe consultant time to collectfeedbackofperceived marketvaluefrom the prospective purchasers (and potentiallypre-auction offers).

Auctionday givesthe vendora dateand time, or “lineinthesand”,thereby creatingmaximum suggeststhe gapbetweenbuyers andsellers priceexpectationsis closingat afair rate.The numberofproperties forsaleis returning to amorenormal trend, whichoffersbuyers agreater choice,andthe declineinmarket values opensupnew opportunities forfirst home buyers inthelowerprice range. We have alsoseen more barelandsectionsand new developmentscometothemarket, dueto thenewdistrict plan zoning enabling growth nodes. Althoughthe cost ofbuildingcreates cautionfor the conservativebudget,there is agood levelofactivity atthehigherend for qualityland whereless borrowingis required. competitionon thedaytoprovide the vendorthe best unconditionalcash offeravailableatthat time.

Regardless of the peaksand troughs,the annual averageasking priceinWhangareihas increased120% over thepast10 years. There arepockets of growthhappeningallaround Whangarei, withanincreasedconfidence in Northland’scommercialandindustrialsectors that reflect an overallpositiveoutlook for the future.

If itisnecessary, thesales consultant will negotiate withthehighestunconditional offer first,andthen, by multioffer withthe conditional buyers.These negotiationsusually takeplace atthe time of the auction,orwithin24 to 48hoursgivingthe vendorsa clearand accurateunderstanding of their position.

In effect,this processprovidesavendor access to more than onemethodofsellingtheir property,all within onedefined campaign. Theauctionitselfis simplythefirststageofthis process. Whilsttheideal scenariois to sell the property “under thehammer” thisisnotthe onlysuccessfuloutcome.

Recentstatistics revealthatless propertiesare selling “under thehammer”than12monthsago. However, our propertiesmarketedusingtheauction processaresellingmore oftenand well under the REINZ Whangarei and Northland averages of 85days. Myth busted.