Sunday, May 13, 2007

Going, going, not…

Today our neighbours tried to sell their house by auction. It didn’t sell when the hammer fell.

Trying to sell houses by auction is common in Australia, much less so here in New Zealand. Realtors love it because they get a fee whether the house sells or not. The seller benefits only when there are many people who desperately want their house. This doesn’t happen very commonly.

More often than not, New Zealanders who attend a real estate auction are looking for a bargain and won’t pay what the house is worth (again, except when a house is wanted by lots of people). So, more often than not, it’s a very bad deal for the seller.

When a house fails to sell at auction, the highest bidder has the first right to negotiate with the seller. Sometimes this works, sometimes it doesn’t. When it doesn’t work, the house is then usually marketed in a conventional way, and the seller often pays more fees to the realtor for ads and other marketing, and probably a commission if the house sells.

We would never consider selling at auction. Not only is it a bad idea for the seller more often than not, it’s also incredibly nerve-wracking—and pointlessly so when it fails to achieve a sale.

Our neighbours’ auction was the first one I’d ever been to. There were roughly 22 adults there, of whom three people placed bids, but only two actually bid until the end. The auction started late, then took maybe 15 minutes before the lack of result.

I’m sorry for our neighbours, and—let’s be honest here—if it had sold for lots of money that would have been good for all the neighbour’s property values, too. But it was interesting to see, especially since I’m unlikely to go to one again.


lost in france said...

Auctions are real rushes -- Tonton introduced me to them!

Arthur Schenck said...

I like auctions for stuff—those I can find exciting. But auctions for property don't, because usually nothing much happens. To me, real estate auctions are FAR more interesting on TV, and barely so even then.

lost in france said...

I've never been to a real estate auction -- only those for, well, art!