Auction, tender, deadline sale or negotiation: how should I sell my Levin home?

The method of sale decides how buyers compete, when a sale becomes binding, and how much control you have over timing and conditions. There is no single best method. The right one depends on your property, how much interest you expect and how certain you want the outcome to be. Here is what each method means in practice, for sellers and for buyers.

What are the main methods of sale in New Zealand?

The main methods are auction, tender, deadline sale, advertised price and price by negotiation. Each is run through your agent and written on the standard sale and purchase agreement, but they differ in how offers arrive and how quickly a sale becomes binding. A multi-offer process can also follow if more than one written offer arrives.

How does an auction work, and when is the sale binding?

An auction is a fast, public sale. The highest bid above your confidential reserve price wins. Registered buyers receive an auction pack with the terms, the sale and purchase agreement and property information before the day.

• When it is binding: once the bid is accepted and the hammer falls, the sale is unconditional and the buyer must complete. Buyers cannot attach conditions on the day, although they can ask to vary terms such as the settlement date.
• Reserve price: you set it with your agent before the auction. It is confidential, and the property only sells if bidding reaches it.
• Pre-auction offers: these are usually unconditional. Accepting one can bring the auction forward or cancel it once an agreement is signed. “Unless sold prior” in the advertising signals that this can happen.
• Vendor bids: allowed only if there is a reserve, it has not been reached and the bid is clearly identified as a vendor bid. Dummy or shill bids are illegal.

What it means for sellers: a fixed date, a competitive setting and a sale that is unconditional on the day. For buyers: do your due diligence, including the LIM and finance, before the auction, because you cannot add conditions once the hammer falls. See how buying at auction works in Levin.

How does a tender work?

Buyers submit written offers to your agent before a closing date. Offers can include conditions such as finance, and you can set conditions of your own, such as the settlement date or chattels.

• Offers are usually considered after the deadline, unless the tender document says otherwise.
• After the tender closes you usually have up to five working days to decide.
• You do not have to accept the highest offer, or any offer, and you can negotiate changes. Both parties must initial any changes.
• Accepting means signing the tender document, which is a type of sale and purchase agreement.

What it means for sellers: you can compare price, conditions and settlement terms side by side. For buyers: you usually get one best offer, so be clear on what you can pay and which conditions you really need.

What is a deadline sale?

A deadline sale markets the property for a set period with an advertised end date. Offers are written on the standard agreement, as with other negotiated sales, and your agent presents them to you.

What it means for sellers: it creates urgency without the unconditional commitment of an auction. For buyers: you know when the decision will be made, so line up finance and advice early.

What is an advertised price sale?

The property is offered at an advertised price with no time limit. Buyers can make conditional or unconditional offers at any time, written on the standard agreement and presented through your agent. You can accept, reject or negotiate on price and conditions. If a second written offer arrives, the sale becomes a multi-offer process.

What is price by negotiation?

Price by negotiation is often used when the likely price is hard to estimate. Buyers make offers based on their own view of market value, and you negotiate with them on price and conditions.

What is a multi-offer process?

A multi-offer process gives every interested buyer an equal chance to put forward their best offer. It is not an auction, so no agreement forms automatically with the highest offer, and you are not obliged to accept any of them. It only applies when there is more than one written offer, and an agent may start one after an early offer or if a property does not sell at auction, tender or deadline.

Which method suits which property?

• Strong buyer interest and a clear price range: auction or deadline sale can focus attention and create competition.
• Hard-to-price or unusual properties: price by negotiation or tender lets the market tell you what it will pay.
• You want to compare conditions as well as price: tender.
• You want flexibility on timing: advertised price.

Ask your agent which comparable Levin sales were sold by each method, and what the results were against the original appraisal.

What should I check before choosing?

• Your timing and how certain you need the outcome to be.
• Whether you have a clear reserve or price expectation, and the evidence behind it.
• What marketing the method needs and what it costs.
• Have your lawyer or conveyancer check the final agreement.

Read what to check before signing an agency agreement and how to choose an agent, or request a free appraisal and talk through the options for your property.

Source: Settled (settled.govt.nz): Understanding the methods of sale. This is general information, not legal advice.