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Nobody buys at auction anymore.

  • 12th Mar 2023

Nobody buys at auction anymore

This headline, or close cousin “there are no cash buyers around” is often heard in conversations involving real estate auctions. After all, we’ve been hearing for months in the media, from economists and even agents that buyers no longer have FOMO (Fear Of Missing Out) in the current market. If we read or hear this in the media often enough, it must be true, right? And there it is: The trap in plain sight!

It would be a significant error to assume that there are no cash buyers around anymore. There are, and we meet more every week. Some have higher motivation to buy than those still waiting for another property to sell, for example. Additionally, many active buyers, who aren’t quite cash ready yet, could become so with the right motivation. What is the right motivation? Finding a home they LOVE, or in the case of the commercial buyer, finding a property that makes for a good investment.

The biggest and potentially costliest mistake is to act on assumption without asking some key questions.

When it comes to deciding on how to market a property, one of the first questions is “who will buy it?” A large part of consulting a real estate salesperson/agent and the advice they should focus on is not just who, but also how your potential buyers might buy the property.

There is no one fool-proof, 100% guaranteed silver bullet method of sale in any market. It is however possible to measure the relative success rates of each method of sale at any given moment in time, and any agent that is consulted should be familiar with the facts and stats relevant for their area. The right method to sell a home, commercial property, lifestyle or farm is influenced by many factors. Auctions, tenders, deadline sales, priced, by negotiation, they all have a place and each method has its own pros and cons. Exploring each of these is outside the scope of this article, but I aim to encourage each reader to not just blindly follow perception, hearsay or sensationalism about what does and doesn’t work. It’s about finding the ‘right way’ for you and your property. Our New Zealand Sotheby’s International Realty Sales Associates have the experience to advise what method of sale is most likely to garner the best result specific to your property.

It must be said though, auctions inherently do have an edge on finding cash buyers in the market, even if we think they’re not out there. And yes, those cash or ‘nearly’ cash buyers absolutely do show up to bid and buy at auctions. Granted, there are more occurrences presently of auctions with one bidder – yes, you can have very successful auctions with one bidder! Indeed, some have no bidders but even those often have other buyers waiting in the wings and are sold swiftly afterwards. The same trends apply for tenders or deadline sales. In this market, it’s more common for closing dates to come and go and it’s taking a little longer sometimes to find the right buyer. This is where the three phases of an auction campaign suit wonderfully to provide more options for sellers. They can firstly look to treat with the best (cash) buyers in the market, but then revert to a robust Plan B if the cash buyer(s) don’t surface.

The market dynamics at any given time, the expertise of the real estate salesperson /company running the campaign, in the case of auctions – the auctioneer – and last, but ultimately most importantly, the unique circumstances and inclination of the seller, all influence the choice.

With over 20 years experience in the real estate industry, I and many of my colleagues have been tracking the success rates of the various methods of sale. Throughout both buyers and sellers markets, I have found that auctions almost always outperform, on average, other methods of sale and that fact endures today. Is it the only way to successfully to sell? No, of course not, but I strongly recommend putting media noise, chatter and myths aside, consider facts and the experienced advice of those of us who are real estate professionals, then make a decision that is right for your circumstances accordingly.

Sabine Davison

Sabine Davison

Regional Manager - Sales & Operations, Central Region