Why go to auction? As one Hawke’s Bay vendor recently discovered, going to auction was exactly what was required to get the result they were looking for, and quickly.
The 100 ha flat and irrigated bare land block was initially put up for tender, but the tenders received were unsatisfactory to the vendor. Harcourts Rural in Hawke’s Bay was confident that they had genuine interest in the block and proposed a four week auction campaign to turn that interest into action.
“Rural properties that are for sale by tender can stay on the market for months,” says Harcourts National Auction Manager, Aaron Davis. “As time goes on, the price generally drops. Tenders also transfer the risk to the vendors by placing conditions on the sale.”
“An auction campaign has a fixed timeframe and is backed by a strong marketing campaign,” continues Davis. “It cuts out the noise in the marketplace and gets all the serious buyers in the room at one time.”
Even if the property doesn’t sell at auction, explains Davis, it shows the vendor what the market is for the property. The vendor can still choose to sell with conditions if the property doesn’t sell at auction, or they can walk away – but they walk away knowing what the market value is.
In the case of the Hawke’s Bay vendor, they were rewarded on auction day with a result that was $500,000 above what they had received in tenders, and without any conditions or delays.
“Farmers understand the auction system because they’ve been buying livestock at auction for years,” says Harcourts Hawke’s Bay Rural Specialist, Paul Evans. “We gave our vendors regular feedback on the property from buyers and recent sales data so that a realistic reserve price was set.”
“Auctions also appeal to buyers,” says Evans. “It’s a very transparent process. There’s no guesswork involved – they can see who and what they are bidding against.”
This article is featured in Harcourts' Lifestyle & Rural Property Focus Issue 3 , 2020.