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What’s the difference between ‘Auction’ and ‘For Sale’?

The three most common ways to sell residential property in New Zealand are via private treaty sale, auction, and tender.

Private Treaty Sale
This is the most common method for selling a house in New Zealand. A property will be advertised “For Sale”, with a fixed asking price or explicitly stated price range.
  • Interested parties make offers and negotiate with the seller through the seller’s real estate agent
  • The agent may be negotiating with several parties at once and acts under the instruction of the seller
  • When you commence a negotiation, it’s important to be serious and respond quickly, fairly and decisively
Auction
An auction involves prospective buyers bidding against each other at the same time, with the property being sold to the highest bidder.  Home auctions are becoming increasingly popular in New Zealand, especially in popular cities like Auckland where there is limited house supply and a large number of buyers in the market.
  • The property will be advertised for a set period of time during which potential buyers must complete all of their enquiries (legal, building and any other relevant inspections), arrange their finance & be ready to bid
  • On the day of the auction, buyers (or their agents) put in competing bids until the highest bid is reached and no one is willing to bid any higher
  • Prior to the auction commencing, the seller will have informed the auctioneer of their ‘Reserve Price’. This is the minimum price they are willing to accept.
  • If someone makes a bid that is at or above the reserve price, the auctioneer will declare that the property is 'on the market' and the property will be sold to the highest bidder
  • If the reserve price has not been reached, the seller has the option to lower the reserve price and start the bidding again. Otherwise, the person who put in the highest bid (below the reserve price) will be given the first option to purchase the property at the reserve price
  • It the highest bidder opts not to purchase at the reserve price, the property is considered back on the market and any other buyers may negotiate with the seller (or their real estate agent)
  • If the property has been sold, the successful bidder must sign the Sale and Purchase agreement and pay a deposit (typically 10%) straight away.

Tender
A property sale by tender is a hybrid selling method. It involves a set tender period during which the seller will accept offers.
  • Each buyer submits a confidential offer in writing to the real estate agent.
  • At the end of the tender period (“tender day”) the seller will make their decision.
  • There is no reserve price and the seller is free to accept or reject any offer they wish to.
  • Often a deposit will need to be submitted along with the offer. This is refundable if the offer is rejected.
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