When you are searching for a new property, it can be very confusing trying to understand what the different methods of sale mean when a property is marketed i.e. Fixed Price, Auction, Tender, Deadline Sale and By Negotiation.
I have compiled a list below for your reference.
A Fixed price is where the property is offered at a price determined by the seller.
For Sale by Negotiation
This method of sale offers a property to the market with no price. The buyers with an interest in the property are encouraged to make an offer and negotiate.
For Sale by “Negotiation” or “Offers” Over a Price
This method of sale offers a property to the market with a price indication. The buyers with an interest in the property are encouraged to make an offer over the stated price and negotiate.
The Auction method creates a situation where buyers have to compete with other buyers, rather than competing with the Vendor.
Auction means that prospective buyers will bid against one another at a date and time set by the vendor. The venue for the auction is either held at the property or another location, which is usually at the agents offices.
Sometimes during an auction, the auctioneer or some other person working on behalf of the seller (such as the real estate agent), may make a bid on behalf of the seller. This is called vendor bidding.
Vendor bidding is sometimes used by the auctioneer as a way of starting off the bidding or trying to move bidding towards the reserve price.
Vendor bidding is only allowed if all three of the following conditions are met:
- the property being auctioned has a reserve price
- the reserve price has not been met
- the auctioneer makes it clear that the bid being made is a vendor bid.
Auction does require you to be cash unconditional when you bid at Auction, which means you will have to undertake all due diligence prior to purchasing. Therefore you will possibly be taking on the cost of building inspections, lawyers cost, L.I.M. reports and more without knowing if you will be able to secure the property.
*Auction excludes all conditional buyers.
- If the settlement date set is not suitable to you, this may be negotiable and you can discuss this prior to the auction.
- If you are the successful bidder, a 10% deposit is required on the day, unless alternative arrangements have been agreed to by the vendor prior to the auction (a personal cheque is acceptable).
- Decide before the day in whose name the property will be purchased and have that person in attendance (absentee bidders can be accommodated – in this case ask for advice well before the auction).
- Check that you are in a position to bid on an unconditional basis.
- Arrive at the Auction Rooms in time for the auction and register if you are going to be bidding. You will need to have received a copy of the New Zealand Residential Property Sale & Purchase Agreements Guide.
- Position yourself so you can clearly see and hear the Auctioneer.
- Bid positively – either by hand movement or call out your bids.
- Remember – when the hammer goes down, the highest bidder has purchased the property.
Deadline Sale or Deadline Treaty