Selling your home can be a daunting process, especially when deciding between auctioning or setting a deadline sale for offers. In this blog, we will explore the nuances of both methods, helping you make an informed decision to maximise your property's value.
Selling your home is a significant decision that requires careful consideration. The method of sale you choose for selling can greatly influence the outcome of your sale, including the final price and the speed of the transaction. Two popular methods in New Zealand are auctioning and setting a deadline sale for offers. Understanding these options can help you maximise your home's value while ensuring a smooth selling process.
At its core, an auction is a public sale where potential buyers place bids on a property, with the highest bidder typically winning. This method can create excitement and urgency among buyers, potentially driving up the price. In contrast, a deadline sale allows buyers to submit offers by a specified date. This method can attract a broader range of buyers, including those who may not be comfortable participating in an auction.
Opting for an auction is particularly beneficial when you have a unique property that stands out in the market. Properties with high emotional appeal, such as those in prime locations or with distinctive features, often perform well at auction. Additionally, if you are not in a hurry to sell and can withstand the auction process, this can be an effective strategy.
While auctions can be advantageous, they also come with drawbacks. One significant concern is the limited pool of buyers; not everyone is willing or able to participate in an auction. Additionally, if the property does not attract sufficient interest, it may not sell at all, which can be disheartening for sellers.
Choosing a deadline sale can be ideal for various types of properties, from first homes to high-end home properties. This method allows for flexibility and can attract a wider range of buyers, including those who may need to secure financing or complete due diligence before making an offer. It also provides time for buyers to consider their options without the pressure of a live auction.
Despite their advantages, deadline sales are not without challenges. One potential downside is that if the deadline passes without receiving a satisfactory offer, the seller may need to extend the deadline or reconsider their strategy. This can lead to frustration, especially if the seller is under time constraints.
When deciding between an auction or deadline sale for your home, it's essential to consider your property's specific characteristics. Let's look at recent examples that show why we chose different sales methods:
Ultimately, the choice between auction and deadline depends on various factors, including market conditions, property type, and your personal circumstances. Consulting with a knowledgeable real estate agent can provide valuable insights tailored to your situation.
There is a proven science to getting a premium price—but how does it work?
The formula is simple: attract more buyers and get them emotionally invested in the home. When you create competitive tension among buyers, premium prices naturally follow. That’s why it’s crucial to choose the right method.
Auctions can create excitement but may limit your buyer pool, while deadline sales offer flexibility and broader appeal.
If you require help in choosing the best method of sale, feel free to contact us and we would be more than happy to help.
In our opinion, too many homes are being sent to auction inappropriately. When a home fails to sell at auction, it damages the property's market reputation and creates a disadvantageous selling situation for the vendors.
What many vendors don't realise is that agencies generate revenue from auctions—it's a direct income stream for their business. This explains why agencies might proceed with auctions even without confirmed bidders. From a business perspective, it makes financial sense for agencies to favour auctions: with 50 auctions per week and approximately 25% of the homes selling, both the auctioneers and the business generate steady revenue.
At Najib Real Estate, we rarely use auctions since, as demonstrated by the examples above, deadline sales consistently achieve excellent prices for homes.
With high supply levels in the market, we're seeing many agencies list properties for auction despite having no confirmed bidders. Our strategy is simple: we recommend auctions only for unique, standout properties. In our current market of lower house prices and reduced demand, a deadline sale is a vital strategy to attract more buyers and still achieve a good price for your home.
When demand is low and supply is high, you should carefully question your real estate agent if they suggest an auction (more on this in the next question).
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Before choosing an agent to help sell your home, it's important to ask the right questions. This will ensure they understand your needs and can effectively guide you through the selling process.
The deadline sale process involves setting a specific date by which all offers on the property must be submitted. This method allows buyers to present their best offers, often with conditions attached, such as financing or inspections.
Once the deadline arrives, the seller reviews all offers and can choose to accept, reject, or negotiate. This process can lead to competitive bidding, as buyers may feel motivated to submit stronger offers to secure the property.
Steps in the Deadline Process
The auction process is a public sale where interested buyers place bids on a property. The highest bid at the end of the auction wins, and the sale is usually unconditional, meaning the buyer must complete the purchase without any contingencies.
Preparation for an auction includes marketing the property effectively, setting a reserve price, and conducting open homes to generate interest. On auction day, buyers compete, which can lead to a higher final sale price if multiple bidders are present.
Steps in the Auction Process
What if my property doesn't sell at auction?
If your property doesn't sell at auction, you can choose to relist it, adjust the price, or consider alternative selling methods, such as a deadline sale.
Can I auction my property if I have a mortgage?
Yes, you can auction a property with a mortgage. However, it's crucial to understand your financial obligations and ensure you can cover any outstanding amounts after the sale.
How long does the auction process take?
The auction process can vary, but generally, it takes several weeks to prepare and market the property before the actual auction day.
Are auctions only for high-end properties?
No, auctions can be used for various property types, including residential homes, commercial properties, and land. The suitability of an auction depends more on the property’s unique features and market conditions than its price point.
What happens after the auction?
After the auction, if your property is sold, the buyer will typically pay a deposit, and the sale will be unconditional. If it doesn't sell, you may need to reassess your strategy or relist the property.
How to Bid at an Auction
Research the property, secure pre-approval, and set a clear budget. Register to bid, arrive early, and review the terms. Bid confidently and stick to your limit. Auctions are unconditional—ensure all due diligence is completed beforehand. Be ready to sign and pay the deposit if you win.
Watch our latest video on How to Win at Auction.
What is a Deadline Sale in NZ?
A deadline sale allows buyers to submit offers by a set date. Offers can include conditions like finance or inspections. Sellers review all offers at the deadline and may accept, reject, or negotiate. It’s a flexible method suitable for first-home buyers and investors.
How to Win a Deadline Sale
Complete due diligence, secure finance, and submit a strong, conditional or unconditional offer before the deadline. Use competitive terms and communicate with the agent to stay informed. Be ready to negotiate if required.
Difference Between Deadline Sale and Tender
A deadline sale allows conditional offers and negotiation after the deadline. A tender involves sealed, usually unconditional offers with no visibility of competitors. Deadline sales are more flexible; tenders are more formal and competitive.
The ultimate goal when choosing Auction or Deadline sale is to maximise your property's value while making the selling process smooth and transparent for both sellers and buyers. By working with a knowledgeable and honest real estate agent, you can ensure your home is marketed effectively and positioned to achieve the best possible result.
If you're unsure which method is right for your property, contact us today. We're here to provide personalised guidance and help you make an informed decision to maximise your home's value.