Have you ever wondered why real estate agents can’t give price indications for an auction property?

For many home buyers on the Hibiscus Coast, not knowing a price indication for a property is a very frustrating situation indeed especially when the property is being sold by auction.  However, there is a reason as to why we can’t or shouldn’t give a price indication… let me explain.

As a real estate agent, when I talk to my sellers about the different methods of sale and how each method may benefit them, we talk about whether to go with a price or a no price strategy.

Auction is a “No Price” method of marketing and often, sellers who auction their property are serious about selling with high motivation.  They may have an offer on another property, are moving overseas, and/or they may have to sell within a specific deadline.

There are many different benefits to the seller on why to sell their property by auction, however the most prominent one is that it gives cash, unconditional buyers the first opportunity to buy the property.  For the seller, that means certainty.  Certainty that their house has sold!

If the seller has opted for a no price marketing strategy such as auction, then throughout the marketing campaign we are unable to give a price indication.  Our Real Estate Agent’s Authority Code of Conduct Rules state:

9.1 A licensee must act in the best interests of a client and act in accordance with the client’s instructions unless to do so would be contrary to the law.

Therefore, if we give a prospective buyer a price indication when our sellers have instructed us to market their property with a “no price” method, we would be in breach of our duty of care to our client.

The code also states:

9.4 A licensee must not mislead customers as to the price expectations of the client.

Likewise, if we gave a price indication to our buyers throughout the campaign and the sellers (client) price expectations change or if the property sells at auction for more or less than what we originally thought, we would be in breach of our duty of care to our customers (or buyers).

So how can you get an indication as to whether the property you are looking at might be in the ballpark for you? Here are a few tips:

• Get to know the area. If you have been searching for a while then you will have a fair idea of what range a certain type of property may be.  For example, in Stanmore Bay a three-bedroom property typically sits in the $650,000 – $800,000 depending on the location, property size, condition etc.  There are exceptions to this however so it is good to do your research.  What is currently on the market?  Ask the agent for a list of recent sales in the area and drive past these properties.
• Visit Trade Me Property Insights or Homes.co.nz and see what the computer-generated estimates come up as (keep in mind that these are only computer generated)

I hope this gives you some insight as to why we can’t give you an indication, but also helps you build your own idea of what you think the property may be worth.  If you get stuck, please give me a call on 021337093 or send me an email at anita.dobson@harcourts.co.nz and I’ll be happy to help!