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The critical day arrives. Probably second only to a wedding or other significant event is the day your home finally sells. In the case of our home, that day was the day of the auction on that Wednesday afternoon. Nerves were evident, as were the usual questions:
- Would the prospective bidders our agent had identified be there?
- Would there be sufficient interest to generate a bidding war?
- Would bidding exceed our reserve?
- Would anyone turn up?
These are the common questions asked by anyone about to sell their house by auction or in fact almost any forms of sale.
But before detailing the outcome of the sale let me recap. As chronicled in previous articles I have, over a series of four posts, detailed the processes and decisions we had gone through in identifying the method of sale, choosing the agent and establishing the marketing plan for our house. Overall, a carefully planned programme designed to ensure that our property was presented to potential buyers in the most appealing manner to generate interest and stimulate demand, and ultimately sell our home.
One aspect of the whole process that most impressed me and strangely (given my experience in the industry) surprised and delighted me, was the very detailed and intimate understanding we gained through our agent as to the prospective buyers. I do not know if this degree of detail is common practice but as a seller it was vital to a sense of connection to the process.
At each meeting with Blair in de-briefing the weekly open homes as well as interim meetings and chats, he shared insights and feedback on each of the key prospects he had identified from enquiry and open home visits. He referred to these prospective buyers by name. He provided insight as to their personal situation, where they lived, what they were looking for, what their expectations of price were and what aspects of the house they most liked and disliked.
Over the three weeks of the campaign leading up to the auction we saw insight into a total of five couples. The insight was not intrusive nor in any way a breach of privacy or personal confidences but provided us with a great ability to manage our expectation and I believe added credibility and professionalism to the role Blair played. As I say, if this is common amongst agents, then these smart agents in my view do themselves a disservice in not highlighting this value they bring to the process. In my opinion it is vital and truly valuable part of the real estate process.
Through the three weeks of the campaign we had what amounted to a virtual leaderboard ranking of prospective buyers with some surprising movements. Barely seven days into the campaign we had what both Blair and we thought were the perfect couple as buyers. Cashed up from selling a property in the South Island and frustrated at living in rented accommodation, this couple "fell in love with our house." They visited a couple of times and Blair talked to them about making a pre-auction offer and they were engaged with the idea. We even were able to verify their seriousness as we witnessed them bidding at an on-site auction at another very similar property in the neighbourhood. Then things went quiet with them for five days, only to discover that in those intervening days they had not only found another very different style of property but had actually attended and bought it at auction! It just goes to show how little you can tell of people’s real interest or intent.
We were heading into the last seven days leading up to the auction with what Blair believed were two strong potential buyers. The property ticked all the boxes for them and they had both seen the house a couple of times. They appeared to have done their due diligence. Based on this and the belief that you have to take the market for what it is, we sat down with Blair coming up to the final weekend of open homes. Our question was ‘why do we need to do these final weekend open home viewings?’ It seemed to make no sense – who would suddenly appear out of left-field three days before the auction? Blair convinced us against our better judgment to go ahead, so dutifully we tidied up and prepped the house again for what we thought would be a quiet viewing.
How wrong could we have been. A new buyer appeared or at least a relative of a prospective buyer. They loved the house and wanted their relatives to view the house when they came up to Auckland on the Tuesday (the day before the auction) – not a problem we thought, can’t do any harm. Little did we know that this prospective buyer would go on to buy the property!
A key step before the auction was the setting of the reserve with Blair. Naturally, we had developed our own view of the expectation of price and what we would be prepared to accept. As a point of note, I choose not to reveal the reserve or the selling price – this is not the essence of this article. This is a matter we as sellers choose to remain confidential. The reserve we agreed on was surprisingly aligned with Blair's recommendation, or maybe it is not surprising as through the three-week campaign he had provided a clear view of the expectations of the prospective buyers, accepting as always that buyers never want to truly show their hand when it comes to price.
The reserve price was set at a level where we would be satisfied. Like all sellers we would wish to be blown away by frenzied, manic bidding, with a stunning resultant price, way above the reserve but you have to be realistic. At the end of the day the difference between our reserve and Blair’s recommendation was less than 5% – naturally we were higher!
An unusual set of circumstances arose in relation to the actual auction day and time which meant that my wife could not attend. This troubled us as to how we would cope if we could not both be there as joint owners of the house. Our immediate thought was how to facilitate the signing of the Sale and Purchase Agreement – would we have to get a power of attorney for me to sign for both of us?
Again, this is where you can be surprised about how little you know of the process. In an auction you as the seller completely sign over the sale to the auctioneer who through a right of representation acts legally on your behalf to transact the sale at a price at or above the reserve. This document was signed the day before the auction, effectively leaving us both out of the process.
This is a very interesting situation and something I sought advice on from an independent and experienced agent. His advice (somewhat surprising) was that you as sellers should not attend the auction! The logic being that in this way you insulate yourself and thereby avoid the pressure coming from the auctioneer and agent trying to encourage you to compromise on the reserve if the bidding fails to reach reserve. This is a very interesting strategy and something I had never considered. If the role of the auctioneer is to sell the property at or above the reserve, and this is your wish, then not being present has its merits (and some degree of risk as I am sure many agents will tell you).
So the auction time duly arrived and I was alone at the auction rooms with my wife on standby via text message (she was actually doing a presentation!)
Blair had told me in a pre-meeting that he knew that there were definitely two serious buyers in the room.
I won't take you through the chapter and verse of the actual auction. Suffice it to say that the auction lasted five minutes and 24 seconds – I know that because I recorded it on my iPhone – captured for posterity! There were, as anticipated, two genuine bidders. One of the bidders clearly had a threshold he stuck to staunchly despite the best skills of the auctioneer. The property reached a final bid just below the reserve. So, with a pause in proceedings, the auctioneer began a somewhat lengthy and protracted process of negotiation with the highest bidder, with a clear instruction staunchly adhered to from me that the reserve was fixed and not up for negotiation. The end result was that the auction was recommenced and called and the property sold "under the hammer!"
In my opinion the outcomes was a satisfactory conclusion, whereby as I have often said the price expectations of us as sellers was met by the preparedness of the buyers to pay that price – I felt that the outcome was fair and open; and neither party should have any reason to feel aggrieved nor triumphant.
So, after a number of weeks of tense anticipation and nervous expectation, we sat back at a well deserved celebratory dinner (actually pizza and a beer at 4 in the afternoon!) and reflected over the process. We had in our hand a signed unconditional agreement for the sale of the our house, with the deposit already transferred from the buyer to the agency trust account; thereby allowing us to move on with our lives and to close a chapter on both the ownership of this house and the selling process.
When it came to reflecting on the cost / benefit analysis of the process we did not (as is universally accepted in the process) physically write a cheque for the commission fees paid to the agency company. We did not feel the "pain" of that large amount of money leaving our bank account – it was seamlessly deducted from the balance of the deposit paid by the buyers. However, we have reflected often on our decisions and the process, and we do not in any way begrudge the fee we paid for the services provided by Blair. We thought that we were professionally guided through the process without undue stress. We discovered great insight from the process and were delighted with the outcome. That chapter of our lives is over and a new chapter begins.
Former realestate.co.nz CEO Alistair Helm is founder of Properazzi.