I watched with interest a story that aired last night on TV3’s Campbell Live. Journalist Rebecca Wright took a look at an ‘extreme auction’ and asked the question: Can you really buy or sell a house in 48 hours?
The focus of her story was the sale of a Point Chevalier house that came onto the market on Tuesday last week, by Thursday it was sold – at auction – after just one open home.
This kind of sale is perfectly legal, but is it good for a vendor or purchasers? It’s an interesting question. In this market I believe it is possible to sell a house very quickly, and for a good price. Most purchasers are well researched and come prepared to an open home, ready to act quickly if they find a property they want to purchase. However, 48 hours to finalise an unconditional purchase doesn’t leave much time for purchasers to undertake due diligence, or to arrange finance.
Campbell Live interviewed property commentator Alistair Helm, who claims this kind of ‘extreme auction’ is putting undue pressure on an already fraught process, squeezing people out of the property market. Arguably, because of the truncated timeframe, many of the people who attended the auction for the Point Chevalier property weren’t prepared to bid at auction, potentially impacting on the final sale price.
When looking at a situation like this the question I inevitably ask is one of motives. What causes a real estate agent to recommend a particular method of sale to sell a property? And is an auction always the best option?
Auction is seen as a faster way to sell (particularly in a ‘hot’ market) and guarantees an unconditional sale. In recognition of this often agencies will pay their salespeople a higher rate of commission if the agent sells a property by auction. Don’t get me wrong, I think that auction can be an extremely effective way to sell your house, however it is not the best approach for every situation. Sellers do need to be aware that their agent may stand to gain financially by recommending an auction.
You can take some comfort from the fact that real estate agents are legally required to disclose if they are being incentivised to recommend a particular method of sale, but it does pay to ask a few questions!
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