Tony Brazier

www.braziers.co.nz

Tony Brazier

The Press - Wednesday 7 October 2009

What Method of Marketing is Best?

In the last article we discussed how best to choose an agent. One of the considerations for choosing an agency is in how they choose to market your property. Do they have a “Horses for Courses” approach or one proven method of choice for that agency?

There are many processes by which to market property, namely by; negotiation, within a range, negotiable over, tender, auction, deadline private treaty, etc. A good agency will explore with you the best process by which to expose your property to the buyers to get the best result. Some forms of marketing carry with them a certain charm, entertainment value and excitement for all concerned. None more so than auctions. If some commentators are to be believed auctioning a property is the ‘only’ way to find the highest price. Yet its critics accuse it of being the best way to get the lowest price due to never knowing whether that top price was all the buyer was willing to give.

Taking a stance at this end of the debate is ignoring the immense value that the auction process has and where it can fit in the scale of vendor’s choices. In this city we have some of the best auctioneers in Australasia, with names like McGoldrick, Dawson, Prier and O’Brien to name but a few, so if that’s the way you want to market then this is the place to be.

However, it must be put in context as by far the most popular way to buy a property is still by negotiation on an asking price. The emphasis is on having an asking price, as one international real estate website showed that 72% of buyers went no further when a property had no price on its website. According to the 2008 Lincoln University Christchurch (Residential) Real Estate Survey (by John McDonough) 80.81% of buyers buy their homes through traditional (by negotiation) means. Sales before, at, or after an auction made up only 6.74% of purchases. Sales done privately or family members sales had reduced from 16.9% (2005) to 11.11% in this survey (2008) showing that the various real estate processes are still found to be the most favourable by the public.

In a nutshell all methods have their place. However, if an agency has a particular passion for say, Tender or Deadline Private Treaty it is not always sensible to push this method for every transaction, especially when these particular methods hardly register on the scale at all of overall residential purchase decisions (survey).

Each agency will find what suits their particular part of the market and the buyers/sellers they deal with. Our agency likes “Negotiable Over” in some markets, but not in others. For particular types of properties Tender is fantastic for sellers, especially when we can name a half dozen buyers that would be interested on day one. It can be argued that tender sometimes has an advantage over auction in that no buyer knows just how high the other buyers are willing to go, therefore they have to play their ‘best shot’. Other buyers hate tender and would rather ‘eyeball’ the opposition at an auction. Go figure.

Negotiable Over is also an excellent process when there is multiple interest. We once had nine offers on a property on at Neg Over $450,000. Eight were between $445,000 and $475,000 (the vendor was willing to take $450,000). The ninth offer was $558,000. One has to ask, "Would that have happened in any other form of marketing?” Yet who knows how many people that day didn’t put in offers because they don’t like the ‘multiple-offer’ situation.

As a suggestion if you are going to choose Tender, Auction, Deadline Private Treaty or Negotiable Over, challenge your sales consultant to name up to five people that they can ring on day one that will most probably put in an offer. If they can’t, choose another form of marketing, as the risk of relying only on marketing to an unknown public to fill your auction room or tender box can be detrimental to your cause once the public know it was ‘passed in’ or failed to sell (on the day the offers/tenders were opened).

If you go the auction way check the company’s clearance ratios, ‘on the day’. Some are very impressive. For Tenders and Deadline ask how many sold via the ‘Opening’ day and for Neg Over, ask what the company’s list to sell ratio is. Some company’s have very high clearance rates in any or all of these methods. The decision for you is which one most meets your likely buyer’s needs.

You can make your choice of agency by following their preferred method of marketing, or your can choose your preferred consultant and then insist upon them carrying out a particular method of your choice. Usually it is a case of “Horses for Courses”, and not “One Fits All”.