Setting the price
When you invited real estate agents around to give an appraisal on your property, you should have gained a good impression of what your property is likely to fetch. Confirm this by checking what other local properties of a similar standard are selling for. Your agent will be able to give you a report that includes recent sales in the area.
These days many homes are sold by auction (especially in Auckland) and you should discuss with your agent whether this method may be suitable for you. The cost factor can be off-putting: because auctions work on a tight time-frame (usually three to four weeks), a full-on marketing campaign is vital to put the property in front of as many people as possible. Marketing costs and the costs of the auction itself are typically borne by you, the vendor, whether or not there is a sale.
Although there’s no guarantee of a sale with auctions, they do tend to generate good results, especially in a heated real estate market. Everything is building up to the auction day; and when the auctioneer’s hammer falls, then as long as the top bid was above your reserve price, you’ve got yourself an unconditional sale. The buyer must pay a deposit of 10% immediately; this will be forfeited to you if they fail to complete the purchase.
In times when property is selling slowly, as many as half of all properties put up for auction may be passed in. Find out what the current pass-in rate is (ask your agent) before deciding whether an auction is the right approach. Even if your home isn’t sold under the hammer, a successful sale often takes place in the auction rooms by the agent negotiating with the highest bidder.
Asking Price or By Negotiation?
Your agent may advise setting a realistic asking price, rather than selling "By Negotiation," especially if the property has failed to sell at auction, but it depends on where you live and your price bracket. Far from making the property attractive to a wide range of people, the uncertainty of what "By Negotiation" means can scare many people off because they might assume it’s out of their financial reach. Similarly, setting a much higher price than you’re willing to accept will often cut down the number of interested parties and can mean your property takes longer to sell. If you’ve already signed up for your next house, or are wanting to move on quickly for other reasons, you might need to make your asking price pretty close to what you’re actually expecting.
You should also know exactly what your bottom dollar is, ie, the minimum you need to walk away with in your pocket (remember to take into account the commission plus GST). Be cautious about telling your agent what that bottom line is – it may, even subconsciously, prevent them from fighting for those extra few thousand on your behalf if they already know you would accept less.