This article first appeared at rnz.co.nz and is republished with permission.
Does the method of sale you use determine what price you will get for your house?
New research suggests the answer is maybe.
Australian university researchers Kristle Cortes, Mandeep Singh, David Solomon and Philip Strahan recently produced a paper, How Perception Affects House Prices.
It found that properties that were for sale by auction generally achieved slightly higher prices, about 0.7 percent on average.
But they found there was a risk to sellers – if places didn’t sell, they later changed hands for a 1.3 percent discount.
“We provide the first solid evidence that public failure of the sale process leads to lower subsequent property prices,” they said.
The authors said auctions’ “discrete and highly visible failure” contrasted with negotiated sales, where people would post an asking price and wait for offers.
“The ‘failure’ labelling sounds embarrassing to the seller, and provides a sharp classification likely to be recalled by potential subsequent buyers. In a ‘for sale’ or private treaty setting, if a property lingers on the market, this embarrassment is less dramatic; there is no clear and agreed cutoff for what counts as ‘too long’, and the action of removing a property from the market is mostly invisible.”
They said about a third of Australian properties were sold via auction.
Auckland real estate salesperson Diego Traglia said some of the concerns highlighted in the Australian research were seen here, too.
In April, 14.1 percent of sales nationally were via auction, up from 13.7 percent in April 2025.
“Once a property passes in at auction, there can absolutely be a psychological shift from buyers. Instead of seeing it as a competitive opportunity, some buyers start wondering why it didn’t sell and whether there’s an issue with the property, pricing, or vendor expectations. That can impact momentum and negotiating power,” he said.
But he said context was important.
“Harcourts Auckland/North Shore conducted 53 auctions in the week ending May 10, 2026, with 25 properties sold on or before auction day. Across those auctions there were 73 active bidders involved, which shows buyers are still participating competitively in the auction process. Harcourts also recorded 6.5 percent of properties selling prior to auction, showing there is still demand from buyers willing to act early to secure a property before competition reaches the auction room.
“At the same time, across all agencies last month, the clearance rate was 44.1 percent selling under the hammer, which means more than half of properties didn’t transact at auction. That naturally increases the number of homes moving into post-auction negotiations, where buyer psychology can become more influential.”
Traglia said a failed auction did not automatically mean a property would sell for less but if a campaign lost momentum or the property sat on the market too long afterwards, buyers could feel they had more leverage.
“The longer that perception lingers, the more pressure can build on price expectations.”
Cotality head of research Nick Goodall said, in Auckland last year, the most common method of sale was asking price, followed by sales by negotiation and then auction.
He said auctions had a higher success rate at 83.1 percent in 2025 compared to 54.9 percent for asking price sales and 52.9 percent for those listed by negotiation.
“They also had a much shorter days on market of 26 compared to 91 and 86 for asking price and by negotiation respectively.
“These trends are pretty consistent over time too, with auctions always having shorter days to sell and achieving a higher sales rate than the other methods.”
He said there was no clear evidence of an impact on prices.
“I looked at what we’d call ‘vendor discounting’ – a comparison between first listing price and sale price, and last year auctions sold for a 3 percent discount, as did by negotiation, while asking price discounted slightly more at 3.9 percent. But I’m never convinced it’s the best measure as the listing price isn’t necessarily an estimate of sales price anyway as it can be used as a marketing tool.
“There’s also mixed performance year to year so no consistent trend. The discount was greater for auctions in 2023 and 2024 but lower in 2021 and 2022 – perhaps that reflects that auctions do better in strong markets but again I wouldn’t get too carried away.”
Goodall said the other option is looking at the sale price compared to its estimated value from its automated valuation model (AVM) at the time of sale.
“There’s some evidence of auctions achieving a better price but it’s pretty marginal and again not consistent. Last year properties first listed by auction sold for 1.9 percent above AVM, compared to 0.6 percent for by negotiation and -0.3 percent for asking price. Asking price has generally been the weaker measure according to this method over the last few years with By Negotiation and Auction trading ‘top spot’. Auctions again appear to do better in the growth cycle, selling for 2.7 percent above AVM in 2021, compared to 1.3 percent for by negotiation and -0.6 percent for asking price.”
Realestate.co.nz spokesperson Vanessa Taylor said about a quarter of the market was made up by first-home buyers and they were often using KiwiSaver to get a deposit together.
“That makes it near on impossible to buy at auction … if they’re looking to use KiwiSaver then you do alienate that part of the market.”
But she said in other segments, the transparency of an auction process would help.
“You hear from people who do any other sale method, which is effectively a closed book negotiation, that people miss out quite often and go ‘how much more did I need to pay? Because if it’s only $5000 I would have paid it.”
She said it was not reasonable to talk about a discount on a house because it was only worth what the person was willing to pay for it at the time.
“It’s what the market is willing to pay at the time with all the other nuances, how many more of hose houses are for sale at the time, what type of motivated buyer have you got? If it’s a first-home buyer and they passed in at auction they might now be able to go into a conditional sale.”
She said homes that sold by auction were on Realestate.co.nz for less time.
“Whether you sell under the hammer, which is an average of 22 days on site, or you sell post the auction, it’s still half the time than it is with any other sale method. So under the hammer, it’s about 22 or 23 days on our site. Outside of the hammer, it’s about 50 days on site. But every other sale method is 100-plus on average.”
