What to do when your house doesn’t sell at auction
Fast pricing will ensure a sale soon after.
Selling your house by auction can be a nailbiting experience. Will any buyers turn up to bid? Will they pay what you’re hoping for, or at the very least will they reach the reserve?
After an unusually hot run, when auction clearance rates were hitting close to 100%, the market has slowed and more and more properties are passing in under the hammer, leaving many homeowners nervous.
But Auckland auction experts have urged vendors not to panic; there are still plenty of houses selling post-auction.
Ray White Mount Eden owner Jared Cooksley told Oneroof: “Just because a property didn’t sell at the auction doesn’t mean it won’t sell.
“An auction is invitation to people to show an interest.”
When a property fails to reach the reserve – the price at which it will sell unconditionally – it is important vendors pinpoint the asking price immediately so agents can start negotiations with bidders in the room and those who have shown interest but didn’t attend the auction. Usually negotiations start with the buyer who has made the highest bid before the property passed in, but agents can cast their net wider if a deal can’t be struck.
“We already know the buyers, and they can make a decision there and then,” Cooksley said. “A good agent will know why some can’t go unconditional in an auction, so they can immediately work with those people.
“It needs confidence from the vendor to accept the new market level price.”
As with any sales transaction, it’s all about price. Ray White chief auctioneer John Bowring told Oneroof that auction campaigns provide sellers with three opportunities to gauge the level of interest in their home: before auction, in the form of pre-auction offers; at the auction itself; and, if the property passes in, after the auction. “Stage three is ‘let’s put a price on it, let’s see who will buy’,” Bowring said.
Unlike a lot of auctioneers, Bowring prefers to set the reserve right before the auction with the sellers, rather than it to the agents.
“I think the reserve is an integral part of the action. We see 50 auctions a week and we know what’s happening right now.”
He added: “If a property passes in and is priced to sell, we’ll get multiple offers that day or within 14 days.”
“Last week we had a property that passed in at 11am and sold for a really good price at 2.30pm.” He said that auctions were taking longer to complete because pauses as buyers and sellers negotiate over stretching the length of an auction from an average of eight minutes last year up to 45 minutes this.
He added: “Vendors should only come to the market if they want to sell. It’s not like last year when people were testing the market. You don’t want to be taking more than 40 days to sell or you’re in a lot of trouble.”
Harcourts New Zealand auction manager Aaron Davis also likes to announce an asking price from the auctioneer’s podium as soon as a property doesn’t sell.
“With an influx of properties, you want to keep the momentum moving in your favour. A skilled agent can bring in multi-offers and leverage that asking price up,” he said.
“You want to beat the question of ‘What’s the price?’ straight away.”
Davis said vendors would need to listen to their agent, who will have the facts, not opinions.
“If you’re still looking in the rear vision mirror, if you don’t need to sell or want to sell or are not here to give it away, we’ll respect that. But be prepared for a market with 40% more stock and people who are prepared to meet the market. They’re selling.”
Barfoot & Thompson auctioneer Murray Smith said that pre-auction offers were still happening, with bidders then beating that price.
Last week a three-bedroom brick and tile house on Guys Road, Huntington Park, near Botany Downs, south east Auckland, sold under the hammer for $1.346m just 10 days after hitting the market, after a pre-auction offer of $1.275m.
Most troubling for sellers is if no buyers show interest in a property.
Then, Smith said, vendors and their agents needed to think hard about whether they’re in the right price bracket.
“There’s a time when the price has to be named, draw a line in the sand and say this is the number. “
Smith doesn’t name the asking price immediately after property passes in, figuring vendors might need a little time to reconcile themselves to the fact they’ve not sold.
They do need to think carefully about their reserve, though. Smith said that in a tighter market the number tends to be set higher as there’s less likely to be the hard bidding that swiftly drives past the reserve, as there was last year.
“Everyone thinks their place is worth more. They see what something sold for up the road and agents are frightened to lower the price,” he said. “A lot will hold out hope that one buyer will give them a surprise with a bit more money.”