In the UK the vast majority of homes are offered for sale with a stated asking price. Not so in New Zealand where only about a third of homes are sold this way. This is the land of the auction.
So, how can you best prepare yourself for the ordeal of the auction?
Don’t go in blind
Attend some other auctions to get a feel for the protocols before you turn up to bid for a real live home with real live money.
Go to The Real Estate Institute of New Zealand www.reinz.co.nz and familiarise yourself with the REINZ Auction Code of Practice so you understand the basics of what the auctioneer can and cannot do. If you have specific queries, bring them up with the agent before the auction.
There’s no going back
Auction contracts are unconditional. Make sure you have organised finance, had the contract looked over by your lawyer and done any inspections before the auction.
Take your cheque book, if successful you will need to pay a deposit of 10% of the price.
What’s the ballpark price?
Ask the agent what the seller’s price expectations are. Do they have comparative sales figures for similar homes in the neighbourhood that have sold recently?
Spend $35 on an e-valuer report from Quotable Value www.qv.co.nz, it’s not as accurate as a full valuation but it’s 10 times cheaper and it will give you an approximate estimate of value and details of other sales in the area.
This is not about winners and losers
Don’t be tempted to go beyond your budget just because you think that other bidder has a smug look on his face or because you’ve been unsuccessful at the last five auctions.
The loser is not the party that misses out on buying the house; it’s the one that has paid too much for it.
Know the rules
Know the rules before the auction, get the agent to clarify if any vendor bids may be made and if so how. This is where the auctioneer (or other party) may bid during the auction, up to the reserve, in order to keep the bidding momentum rolling.
The auctioneer won’t necessarily say “by the way, that’s a vendor bid,” but may use the words “the bid is with me” or “I have the bid now,” then state what that bid is.
Sellers hate auctions too
If you are really keen on a property, you can ask if the vendor would consider a pre-auction offer. Your offer will need to be unconditional and the agent will contact other registered buyers to see if they can also be persuaded to make an offer.
However, if your offer is early on in the marketing campaign the vendor might be tempted to save some money and avoid the whole drama of the auction proceedings.
The risk is that if the offer is unsuccessful and the house goes to auction anyway, you’ve revealed your hand about what you’re prepared to pay. The reserve price may be set higher as a result.
Good luck and good bidding!
Stephen Hart
Stephen Hart is the author/publisher of "The Streetwise Home Buyer"and "Where to Live in Auckland" www.wheretoliveinauckland.co.nz. He also offers a home buying service, go to www.aucklandhomefinders.co.nz
More information about housing in New Zealand
- Premium Real Estate's executive rentals team specialises in rental properties from NZ$600 per week upwards.