‹ when does REST become complex? •
We’re currently trapped in the nightmare of the interminable house hunt. While doing a bit of research about house auctions, and came across this quote at realestate.co.nz.
A real estate auction is a controlled and fair process which is generally a win-win proposition for everyone involved. For the buyer, the benefits include knowing that you are making a smart investment as you are sure you are purchasing the property at a fair market value.
Here’s the rub: when bids are allowed on the part of the vendor (see the Real Estate Institute of NZ “Code of Practise“, section 3.4), how can the purchase price be a “fair market value”? A fair market value is only possible when only potential purchasers are bidding.
I even came across a brilliant (sarc.) page (unfortunately can’t find the link now) saying something along the lines that “vendor bidding helps you, because it raises the price to a point where the vendor is willing to sell”. Arrant nonsense.
On the positive side, not all real estate agents allow vendor bidding. Barfoots don’t appear to allow the practice — but on the negative side, their process for pre-auction offers seems convoluted and buyer unfriendly… or at least, me-unfriendly.
Here’s another nonsensical real estate statement in relation to auctions:
Make sure all the t’s are crossed: have your solicitor examine the Contract of Sale prior to the auction to ensure everything is in order. Also have any building and/or pest inspections carried out prior to auction day.
It’s the latter part that gets me. A building inspection could run to $500 or $600, and you’ve potentially got only a small chance of winning a property at auction. Assuming you attend a number of auctions without a successful purchase, that’s thousands of dollars literally down the tubes. Perhaps some write that off as a necessary expense of house hunting. I suspect many people don’t bother. Which means one of the largest purchases you can make in a lifetime is made without much knowing whether or not you might have bought a lemon.
Cheerful thoughts, as we try to find a place ourselves.
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