Selling a home by auction can be both exciting and nerve-wracking but it's a process that is often misunderstood.
That’s according to LJ Hooker National auctioneer Robert Tulp, who says that auctions are one of the simplest processes available to transact a sale, including property.
“Yet unfortunately many people get stressed, avoid it or complicate it due to lack of knowledge or experience with the auction process,” he says.
Auctions are a quick way to sell a property, and as simple as these few steps:
- List a property for sale, which is usually advertised up to a month before auction day
- Put a deadline in place for owners to deal with unconditional buyers (before moving to conditional buyers if need be)
- Buyers register interest in advance and attend on auction day to bid on the property which can be on-site or in the real estate company auction room. Absent bidders use their own agents to represent them using auction apps or phone
- Get a skilled auctioneer to “work their magic” and give all bidders the chance to vie for ownership
- If bidding reaches the owners’ reserve or acceptable price (which only the owner, agent and auctioneer know), then the property can transact unconditionally and the sale is legally binding. If not, then the listing agent will simply move on to the next stage of the process
- Besides real estate commission and fees and marketing costs, there is also the auctioneer’s fee.
LJ Hooker National Auctioneer Robert Tulp
“A sale at auction gives sellers certainty – once it’s sold, it’s sold!” Robert says.
And during times of restrictions due to Covid-19, properties are still being sold via online auctions.
In fact Real Estate Institute figures shows selling by auction is increasing in popularity – more than a quarter (26.9 percent) of properties were sold by auction in June, the highest percentage of auctions for a June month since records began in September 2005.
“With most regional areas experiencing a shortage of property stock coupled with low interest rates, the auction process is proving ever increasingly popular,” Robert says.
Having been an auctioneer both in New Zealand and Australia for more than 20 years, Robert has plenty of success stories to tell.
He gives one example of an elderly couple – he was 94 and his wife was 101.
“They were unfamiliar with the auction process and often the process may be considered to be ‘too stressful’ for a couple of their ages.
“They trusted the agents and we conducted the auction. They were able to watch the auction via our live streaming service (from the comfort of their new retirement home) with the support of their family members.”
“We had three active bidders in our auction room and sold the property unconditionally and above their ‘happy’ reserve price.”
It’s one of the main benefits of auctions – owners can find out what a buyer will pay before they tell the market what they are willing to accept.
“In a moving market, as we’re in now, you are following a process that doesn’t ‘cap’ what the market will pay for a property,” Robert explains.
“Valuations tend to be based on past price results, whereas savvy buyers will pay future or higher prices and the auction process enables buyers to bid and compete to a level that may be higher than past prices achieved.”
For buyers, auctions are also beneficial – they are on a level playing field, they can bid in a transparent environment and they’ll never miss out on an auction unless they choose to stop bidding.
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