Auction rather than fixed price the best strategy

Homes with a price tag are likely to stay on the market for a lot longer and potentially achieve less than they would if the market determined the price, according to Harcourts International managing director Mike Green.

People putting a price on their properties in New Zealand and Australia are not doing themselves any favours in the current climate, where buyers are still cautious and "testing" the market.

"The current real estate market is rapidly changing, very much impacted on by volatile global economic conditions, and the number of properties being listed for sale is lower than usual too so that's adding another dimension, namely a build-up of demand in some areas," Green says.

"Given these circumstances it is particularly difficult for real estate sales professionals to give sellers an accurate appraisal as to what price a home might achieve and so marketing with a price may be unwise."

Therefore, auctions may be the best and most effective choice for sellers in today's market.

"Firstly, auction marketing campaigns mean there is no ceiling put on the price and in the end many sellers are very surprised by what the market is willing to pay for their property at or before auction day."

Auction properties also generally sell faster, Green says, due to the increased exposure provided by typical auction marketing programs, which generally attract a greater number of prospective buyers.

They also create a sense of urgency through their campaigns and auction day deadlines.

"This urgency is not typically felt where a property is marketed with a price with no timeframe within which a buyer needs to act," Green says.

Comments from our readers

On 7 October 2009 at 8:38 am Bill Munro said:

I would be interested to know if there is any difference in Real Estate costs between the two selling methods[ie fixed price and auction]

On 7 October 2009 at 12:02 pm John said:

Must be written by a real estate person. In my experience of selling and buying houses in NZ and Australia, the person that benefits from an auction is the real estate agent. Mainly the auction serves to 'condition' the vendor eg. "well that's all the market says your property is worth". After all the expense and emotional involvement, vendors are heavily pressured to sell.

My advice to vendors is to just put a price on your property. In my view you can make more money. I have bought numerous properties at auctions for a lower price than I was prepared to pay.

On 7 October 2009 at 3:39 pm Christopher Colby said:

Well sure, lets make it easy for Harcourts whose agents, according to Mr Green, apparently have no idea of current values. Bit tricky for the seller to set a reserve if the agency can't come up with an accurate appraisal.I must be one of the rare buyers that prefers a price to an auction. That way you know if it is worthwile paying for a professional valuation and building inspection.

On 9 October 2009 at 5:52 pm Chad Gillespie said:

I am selling privately at the moment and have had numerous agents ring me, most saying that I should put a price on my ad (and sign up with them of course). They don't seem to agree with their International Managing Director.

On 12 October 2009 at 2:13 pm Karen Louise said:

Yes, I also would like to know the cost involved between auction/set price?I have read somewhere that its almost as pricey as selling at set price plus auction/advertising costs.We have had our home on the market at a set price for a month now, lots of interest & have had one offer but fell through.I believe the house sale is only as good as the agents efforts are in selling it.There has to be an element of trust between vendor and agent. Is that possible today? Oh ! to be a fly upon their wall.

Auction rather than fixed price the best strategy

Selling your property at auction may be the way to go in the current market, due to prospective buyers still treading with caution and the uncertainty surrounding property values.

Tuesday, October 6th 2009, 11:37AM 5 Comments

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