Throughout the rural economy auction is a common and centuries-old means of transaction.
If you seek to sell property, whether lifestyle, residential or rural, auction is an efficient and dependable way to bring out the market’s best possible response.
PGG Wrightson Real Estate has a series of auctions in the North Island this spring, particularly in the lifestyle category. With the market in the process of swinging up back into a more positive phase of its cycle for anyone considering buying or selling property, understanding the benefits of auction are as important as ever.
Auctions have a fixed timeframe, focusing on the selling process, which is particularly beneficial for a seller who wants a prompt, definite result.
A concentrated marketing campaign focused on an auction, aiming towards the agreed auction date, establishes a deadline for anyone interested in buying. This enables a more definite plan for the property’s sale and transition.
Sometimes the fact that a date is set will motivate a buyer to commit to a pre-auction offer, which the seller may decide to accept: win-win.
Prior to the auction date, buyers have the opportunity to undertake due diligence on the property, fully assess its merits, and decide what they think it is worth.
Prior to and through the auction, sellers retain a degree of authority and control over the process, setting the sale terms and conditions, including the auction date and the minimum reserve.
Selling in a public forum is transparent, creating competition that encourages prospective purchasers to arrive at a fair though optimum value. Buyers are able to see who they are competing against, bidding up to and just above an amount that others are willing to match or surpass.
An auction generates competition, tending to drive up the final sale price. When bidders are emotionally invested in the process, they are more likely to bid beyond their original intent.
Auction eliminates lengthy negotiations between buyer and seller. Focusing purely on a simple transaction, where the highest bidder wins the property.
Auctions often create a buzz that attracts a wide range of potential buyers, maximising the property's exposure to a larger audience.
Once the hammer falls and the highest bid is accepted, the sale is binding. So long as there is a market, the auction process increases the level of certainty that the property will sell, which may not be the case for a sale when the two parties are in negotiation.
Once auction day arrives, before the auction starts the auctioneer will thank those in attendance, describe the main features of the property and outline any special conditions attached to either the property or the conduct of the auction.
After this preamble, the auctioneer will invite bids and the auction will begin in earnest. Once the reserve has been met, the auctioneer may pause the auction to discuss whether the vendor is ready to accept the offer, a discussion that can take some time.
Auction bidders know that if they succeed a 10 per cent deposit is required immediately after the hammer falls. Once contracts are signed, the purchaser is fully committed and the sale is secured. As a fallback, if a property is passed in at auction, the vendor may choose to enter negotiation with one or more bidders and secure a sale in that way.
While an auction offers many advantages, it may not be suitable for all types of property or sellers. Before deciding to sell your property at auction, carefully consider your goals and circumstances and consult with an auctioneer. When evaluating the potential benefits of this method of sale, take into account that auction fees and costs are also part of the process.
Auctions always have a level of drama and excitement, and more often than not achieve a satisfactory result for the parties.
See you in the auction room.
Sloan Morpeth began working for Wright Stephenson, one of the companies that subsequently merged to become PGG Wrightson, in 1972. After working in livestock and real estate, including for other companies and as a freelance auctioneer, he returned to the company to become PGG Wrightson Real Estate’s North Island auctioneer in May 2014. Since 1989 he has conducted approximately 4500 property auctions.
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