Watch Our Auctions Live
Watch Our Auctions Live
1 February 2016

Why Auctions Work

Just as every property is unique, there is no one market price.


share

‘What does the vendor want?'
‘What do you think its worth?'

These are probably the two most frequently asked questions of real estate agents and it is highly unlikely to elicit a satisfying reply.

There are two things we know from our day to day experience working in the industry. Sellers don’t know what they’ll ultimately achieve or accept and buyers don’t know what they’ll ultimately pay.

As a typical owner, when I put my property on the market, I select anything which reinforces my belief that my property has a high value. Invariably my expectation is well above the real value. For this reason, it is probably going to have a major detrimental effect upon the ultimate sale price if the agent tells people what I want - they will be driven away after realising I am being unreasonable in my expectation. Similarly, if as an agent we speculate on price and that figure turns out to be reasonably above or below the eventual sale price, we are in trouble with regards to the Sale of Goods Act and misrepresentation around sale price.

Our job is to provide the seller with as much information as we can find to assist them to make a decision around whether to sell and what ultimately is the price they will accept on sale day. This information includes properties in the market that are in competition to theirs, recent sales in the area, open home comments and anything else which may affect their ultimate sale price.

Our auctioneer Gavin Croft in action.

Our auctioneer Gavin Croft in action.

Similarly, buyers know what they would like to pay but not what they will ultimately pay if competing with others in an open, transparent process. It is an interesting human trait that we often don’t trust our own judgement, but we trust the judgement of a buyer across the auction room. If they are willing to pay more than we set as our top assessment of value, it must be worth it and we’ll bid higher. To assist buyers assessing value, the agent will provide a selection of actual sales in the area and the buyer can calculate the ‘value of the home to them’. Interest predictions, personal circumstances, world events all play a part and are assessed differently for every buyer.

Just as every property is unique, there is no one market price - there are as many market prices as there are potential buyers.

Ask serious questions of any agent who believes ‘they know value’. The best way to assess what the market will pay is to attract as many potential purchasers within a broad price bracket, place them in a public forum where everything is transparent and ask the question - ‘what is the most each of you is willing to pay’.

This is the auction process and it treats all parties openly, respectfully and fairly. It is then up to the seller to decide whether the top offer is sufficient enough to enable them to achieve what it is that they set when placing their home on the market.

 

share

Return to blog

More recent posts

15 April 2021

All fired up


A guide to installing a wood-burning fireplace in your home

More
8 April 2021

Working comfortably at home.


This time last year, the concept of working from home was either a fantasy or an impossibility for most of us. Now, with some planning and forethought, it can be a reality.

More
25 March 2021

A Growing Interest


Monstera is a store dedicated to indoor plants. Owner Richard DeGrandpre delves into the increasing popularity of the once-humble houseplant and more importantly, looks at how to keep them a…

More
18 March 2021

The Alberton


Introducing Mt Albert’s newest and most charming urban village. A place that honours its past and celebrates its future. The Alberton is a boutique collection of Exclusive Freehold Strata Ti…

More
11 March 2021

Splish Splash!


Three of the country’s top designers share their thoughts on where bathroom design is heading this year.

More
4 March 2021

Change is underfoot


Nothing says summer quite like long, neat rows of bright green, freshly mown lawn. The sweet smell of grass fills the air, and nature’s perfume flows into our nostrils/surrounds us. The rest…

More
18 February 2021

Rainbow Rising


With Ray White’s Fabulous February now in full swing, we take time to focus on one of the driving forces behind our initiative – the support of Rainbow YOUTH.

More
11 February 2021

Climb Every Maunga


The beautiful parks, reserves and open spaces in just about every suburb of Auckland are a vivid legacy of Auckland’s fiery and explosive past.

More
5 February 2021

Food for thought


When dining has a social purpose.

More

Contact Us

Are you interested in knowing more about one of these articles? Please fill out the form below to get in contact with us.