Real estate boss sells his lakefront home for $230,000 below its valuation

A real estate boss who sold his Rotorua lakefront home at auction for hundreds of thousands of dollars less than he was told it was worth says he’s pleased he took the lower offer.

Professionals McDowell Real Estate boss Steve Lovegrove believes if he had walked away from the highest bid at auction and waited for another buyer, the price could have plunged even further.

Lovegrove listed his Willow Avenue home in Hannahs Bay, Rotorua in October this year after purchasing another property.

An independent valuation carried out at the same time he listed the property valued the home with separate dwelling for $1.5 million.

But when auction day arrived, bidding for the property stalled at $1m. The auctioneer went into negotiations with the highest bidder who agreed to lift their bid to $1.27m.

Both he and the buyer knew the offer was still $230,000 below what an independent valuer believed the house to be worth, but Lovegrove took it anyway.

“The bidder knew it and we knew it. But why did we take that buyer? Because that buyer allowed us to make the move we wanted to make and we knew we were equally buying right with the house we were buying so we were transacting on the same market,” Lovegrove said.

“We knew if we didn’t take that buyer today, we would still be standing there with the house with no buyer.”

Lovegrove is convinced that six weeks on the house would be worth even less.

“Absolutely I swear we would not sell the same house again today to the same buyer for the same value and that’s the lesson we are trying to teach all our vendors. When you’ve got a buyer that enables you to move – I know it may not be the Lotto win or the price you expect – but you must seriously consider that buyer.”

Professionals McDowell Real Estate boss Steve Lovegrove: "We knew if we didn’t take that buyer today, we would still be standing there with the house with no buyer.” Photo / Andrew Warner

He paid about $588,000 for the property six years ago and estimated he had spent a further $500,000 to $600,000 adding a three-bedroom cottage alongside the existing two-bedroom dwelling.

Even without doing any work to it, the property would have increased in value over that time.

But despite not making a huge amount of money on the property, he still believes he made the right call and that the property still sold for more than it would have in 2019, but a little less than if it sold last year.

“We sold it for enough to allow us to make our next move,” he said.

“We understood it was important to do it. We do not regret it.”

And while he could have negotiated with the two conditional buyers waiting in the wings, Lovegrove said they wanted the certainty of knowing it was sold.

“Because you go to a conditional buyer and they might not meet their conditions and you don’t know for sure that it’s sold so we wanted the peace of mind to know it was sold on the day.”

The lesson Lovegrove’s learnt is one he’s now sharing with sellers.

“It’s about the motive and the move. Not price – price interferes with that. If you’ve got the motive and your motivated to move and the price you achieve enables that move then why wouldn’t you. You can always look over your shoulder at yesterday’s price or tomorrow’s price, but never look in the rear vision mirror in real estate – what's right for you on the day is right for you on the day.”

Ray White Manukau co-owner Tom Rawson said clients in his agency's auction room on Tuesday had exactly the same predicament when their property failed to reach the $1m reserve at auction.

“The wife goes, ‘I just want to move on’. They had been on the market for three months with another agency. ‘I just want to move on and hey we can make that work’.”

They decided to lower the reserve to $940,000 and once it was announced on the market bidding continued with the property finally selling for $980,000.

“It’s good for them in the long run. They’ve got a cash deal. They are happy with the price and whilst it wasn’t the million bucks they were after – the Lotto price – they are able to move.”

Rawson said a lot of vendors are wanting to sell via auction and some are even prepared to take a bit less at auction than a conditional offer just for the certainty that it won’t fall over later.

“They don’t want to have to sell subject to another person’s house sale. That’s quite a common thing at the moment, where ‘I will buy your house but give me time to sell mine’. People just want certainty so auction is a good certainty because it’s cash.”