By STEPHEN HART

Things have changed in the world of real estate. Houses aren’t selling and buyers are thin on the ground; that means they should be sold to differently if vendors want to successfully sell their homes.

Gone are the days when auctions were the prevalent method of selling a home. Sure, they still exist, but they are far less evident than even a few months ago. That’s because buyers have gone into hibernation mode, sitting-out the market’s current uncertainty. They are unlikely to be tempted out by the daunting prospect of having to buy a home by the ordeal of auction.

Buyers have always disliked auctions, but in the previous frenetic sellers’ market they just had to bite their lips and put up with them. Now they don’t. Think about it. Auctions are:

• Unconditional – there’s no opportunity for buyers to make offers subject to certain key conditions being satisfied. How scary is that?

• Uncomfortable – understandably they usually take place on the agent’s premises. The agent, who is representing the seller, is at ease in their own environment, the buyer on the other hand is not; they are often nervous, self-conscious and unsure of the protocols. They can feel pressured and cajoled.

• Unrewarding – an auction that has three or four motivated bidders is exciting for all concerned; there’s an air of competition and machismo. But in times when serious buyers appear to be an endangered species they can be as dull as dishwater. If an auctioneer can’t elicit an opening bid it makes the home seem unattractive to all in attendance.

• Anticlimactic – auctions are great if buyers and sellers see them reaching successful conclusions. But when the bidding stops and the auctioneer announces that the bid is not high enough and it’s being passed in, everyone is left feeling deflated.

• Expensive – because auctions are unconditional, would-be buyers are forced to complete their due diligence checks before auction day. If there are five interested parties that could mean five building inspections and five valuations. Total cost between them? $5,000+ – conservatively. Only one building inspection and one valuation will have been money well spent. Four of the parties will have wasted their money and lost out; they might not even have had the satisfaction of making a bid. Those four unsuccessful bidders also have to face the fact that they may have to go through the same cost and bother at future auctions with no guarantee they will fare any better.

The other sales method that seems to be falling out of favour is “By Negotiation.” That’s when a house is advertised for sale, but without a set price. Most buyers I speak to can’t understand why it was ever popular in the first place. They can’t fathom how this technique can help the buyer or the seller. Many buyers are simply non-plussed about the whole thing and choose not to include these “mysterious” properties on their open homes list. It’s all too hard.

So, why would a real estate agent choose to mess potential buyers about like this? What’s the story? Well, you might be surprised to learn that many agents are equally uncomfortable with this sales practise; problem is, in some instances, they feel they don’t have a choice. Too often, especially when a market is in a state of flux like this one, sellers have unrealistic expectations of what their house is really worth. They simply want more than the house is worth. It may not be bare-faced greed; they may have already bought their new home and paid too much for it. They feel that they have to sell at this inflated price in order not to make ends meet. The agent is aware that the seller’s price expectation is too high but if they were to advertise the price the seller actually wants, no buyers would be interested, it would scare them away. Marketing the house by negotiation, but without a specified price, seems the lesser of the two evils; there’s always the possibility that some buyer might show up and fall blindly in love with the place. Hardly a sure-fire marketing strategy.

If sellers are serious about wanting to attract offers in this current market, they need to make things easier for buyers, not harder. Here’s how:

• State an asking price that buyers know you will accept for your home.
• Ensure the price has a rationale. Has its value been verified? Do you have a registered valuation that supports the price as being reasonable?
• Provide a LIM report so buyers can be assured everything is above board.
• Provide a building inspection or moisture report. Buyers are paranoid about leaky buildings. The buyer should of course conduct their own checks, but at least this will help.
• Consider the expenses associated with providing these background reports as money well spent and part of the marketing cost of selling your home – don’t expect buyers to pay for them.

Make it easier for them to buy your home rather than someone else’s.

Stephen Hart is the editor of Where to Live in Auckland and author of The Streetwise Homebuyer.

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