How to choose your property sales method

Auction is one of the most popular ways to sell a property in Aotearoa, and is particularly popular in times when the market is running hot.

Among the pros of selling a home at auction are:

• Speed: Auctions are among the fastest ways to sell property in New Zealand. Typically following a three-week intensive marketing campaign, sales are usually finalized within a week after the auction, even if there are negotiations post-auction if the property is passed in.
• Buyers focus on what they can afford: Instead of negotiating for a lower price, buyers at auctions typically consider the maximum amount they are willing to pay.
• Buyers are unaware of the reserve price: Unlike standard sales where high asking prices might deter potential buyers, not having a fixed price in an auction can attract a larger buyer pool.
• Bids are unconditional: Buyers submit bids without conditions, which eliminates the need for lengthy negotiations or meeting additional requirements. If the auction is "passed in" (where the highest bid doesn’t meet the reserve), buyers may still approach with conditional offers afterward.
• The potential for a bidding war: If multiple buyers are interested in your property, competitive bidding can drive the final sale price well above its market value.
• It’s legally binding: Once the auctioneer’s gavel falls and contracts are exchanged, the buyer is legally committed to completing the purchase, with no room for renegotiating the price.

Selling by tender involves inviting buyers to submit formal written offers by a specified date, plus a 10% deposit. This deposit is refunded to unsuccessful would-be buyers. You normally open all the offers together, one day after the deadline.

After the deadline closes, you’ll have five working days to decide which offer, if any, to accept.

Pros of a tender sale include:

• Flexibility: you’re free to choose the best offer based on price and terms, without being obligated to accept any offer.
• Offer confidentiality: as all bids are totally confidential, potential buyers can’t know what others have offered, and simply go for marginally more. This can lead to the winning tender being significantly higher in price than other offers.
• Control over timing: in tender sales, you set a specific deadline for receiving offers, this can create urgency among buyers and potentially encourage quicker decisions on their part. Having a specific closing date also means that sales and marketing campaigns don’t go on forever, which saves both time and money.

Cons of selling by tender include:

• Bid confidentiality can backfire: with lower bids than expected due to buyers not knowing the property’s true market value.
• It can drag on: while not negotiating on price in the first instance may be attractive, it can make the process longer overall. If the submitted tenders are unsatisfactory, there may be an opportunity to negotiate with interested buyers. But this can be lengthy and draining.
• Less awareness: tender campaigns are typically shorter than, for example, a private sale, meaning that fewer potential buyers may become aware of the property.
• Pressure on you as well: the five-day window to decide on which (if any) offer to accept can make some sellers feel rushed.

Selling a property by negotiation is where you establish an asking price or price range and invite buyers to submit offers at any time. You can include conditions in the sale, such as a preferred settlement date, but there’s no set deadline for receiving offers.

The pros of selling by negotiation include:

• Selling in an uncertain market: selling by negotiation can be a great offer if you’re finding it difficult to price your property as there’s wiggle room for negotiation.
• Potential for a higher sale price: with no set upper limit, a sale by negotiation allows for the possibility of achieving a great price without the risk of over-pricing your property at the outset.
• Attracts a wider range of buyers: the absence of an advertised price can appeal to a broader pool of potential buyers.
• Flexibility for both conditional and unconditional buyers: unlike an auction, a sale by negotiation can attract buyers who may want to include conditions in their offer, as well as those making unconditional bids.

The cons of selling by negotiation include:

• Negotiations: negotiation itself is an art form, and if it’s not your strong suit, you might end up with less than you hoped. Of course, if you sell with a real estate agent, good ones will be able to help out here.
• Lack of urgency: selling by negotiation doesn’t create the same sense of urgency as an auction or deadline sale, which may result in slower decision-making from buyers.
• Prolonged market time: this can mean your property may stay on the market longer, which itself can make it less attractive to potential buyers.
• Need for price reconsideration: if there’s minimal buyer interest at the desired price, you might have to reassess what you’re willing to accept.

Selling by deadline sale is where you list a home for a specific period, with a public end date and no set price. Unlike most tenders, you don’t have to wait until the deadline to consider offers.

The pros of deadline sales include:

• Broad buyer appeal: with no set price, this method can attract a wider variety of buyers, from first-time homeowners to investors. This wider appeal can create more competition, potentially driving up the final sale price.
• Suitable for various property types: whether selling a residential home, investment property, or development site, a deadline sale works well for a range of property types, offering an effective way to market the property to the right audience.
• Flexibility: because you see the offers as you get them (unlike most tender sales) you have greater flexibility and a chance to get the sale completed quicker.
• Urgency: knowing that an offer can be accepted at any time might make buyers act more decisively to avoid being pipped at the post. On the other hand (and this is a con) some buyers might feel relaxed that they can wait up until the last moment to submit an offer.

The cons of deadline sales include:

• Time in market: this method of selling a home is typically slower than some of the others described here, particularly auctions.
• Choosing an offer can be tough: because these offers can come with conditions attached (unlike auctions), you’ll have to make your decision based on more than offer value alone.
• Lack of advertised price: deadline sale listings don’t usually advertise a price, which some buyers can find intimidating.