Property Auction – You Pay More

auctionProperties selling by Auction generally sell for more than properties sold by private treaty. Is this the reason Real Estate Agencies love Auctions? Probably especially the non-fixed commission agencies. There’s no doubting the general public interest in Auctions though.

The Auction environment can be electric, raising your adrenalin levels even if you’re not bidding and it’s probably the reason why there are lots of attendees just observing the proceedings – with no intention of bidding.

Buying a property at auction may cost you up to six percent more according to an news item on NZHerald and that can equate to thousands. The current average property value of $804,282 may go for an extra $48,256 at auction. That is a lot more than if the property was sold by the tender process or privately so it’s easy to see why Real Estate Agents push for the Auction for their clients.

Property Investors and property traders may therefore be more inclined to buy privately but sell by auction. Of course as a buyer you need do your due diligence before bidding at the Auction and that comes at a cost.

The due diligence costs can be as high as $5000 as LIM reports, building inspections, and registered valuations are sought. This is where investors are often at a slight advantage over home buyers as they may not need the registered valuation for finance pre-approval and if the property is to be fully renovated they may not get a building inspection either.

PropertyTutors had their The Masters event on Sunday and it was a full house. The rising property values and costs associated with purchasing a property in Auckland are not dampening the enthusiasm for property investment mentoring. Wellington has it’s The Masters event on Sunday 24th May 2015.

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