A problematic box-style cottage on Auckland’s North Shore that was advertised with a rock-bottom reserve of just $1 has sold for almost half a million dollars.
The brave marketing strategy for the four-bedroom, one-bathroom home on Utting Street in Birkdale attracted 16 registered bidders with eight of those in the room and the other eight ready to make phone bids.
Harcourts listing agent Alex Dunn, who marketed the property with Ammy Multani, said the owners were “so stoked” with the result and even happier that it had gone to a first-home buyer instead of a flipper.
The property had been marketed as a project house with some structural rot in the support beams and some of the pilings starting to fall away in the earthworks.
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An opening bid of $250,000 was made and with five buyers actively bidding, the price swiftly moved up to $450,000. At this point only two bidders were left – a first-home buyer and a property trader who planned to do it up and flip it. They made bids in smaller increments until bidding stopped at $480,000 and it sold under the hammer.
“It’s a problem that’s solved for the buyers and they can move on with their lives and that it’s gone to a good person as well – that’s the icing on the cake," Dunn said.
The new owner had bought it as a first home for her and her partner to live in and do up.
“Her and her partner are tradies so it is going to be their first home so they are going to live in it and do the work required over the years.”
Harcourts listing agent Alex Dunn said the owners, who were separated, were “so stoked” with the result and happy that it had gone to a first-home buyer. Photo / Supplied
Dunn said he was pleased with the result of his first $1 reserve auction.
The marketing strategy attracted a lot more bidders than usual at the auction, where another 19 properties were on the slate. The next highest number of registered bidders in the Papakura auction room on December 20 was four, Dunn said.
“The strategy did exactly what we wanted it to do – to put the buyer in competition and get a premium price. It doesn’t matter what the market is – that’s always the goal.”
Dunn admitted the approach had been meet with some concern such as that it would sell for far too cheap and the vendors would be basically giving it away.
But those concerns were unfounded as the sale price achieved at the auction was within their price expectations. Previous offers that had fallen over earlier in the year, before the defects had been uncovered, had been in the early $600,000s.
Harcourts auctioneer Aaron Davis said $1 reserve price auctions are not for the “fainted-heart”, but “true market forces always play out”.
“You’ve just to play the numbers. When you have so many registrations you know that fair market is going to come through. When you only have one or none you’ve got nothing to deal with, but with 16 that’s what the property was worth and the owners get to sell their property and move on.”
Harcourts auctioneer Aaron Davis says $1 reserve price auctions are not for the “fainted-heart”. The Utting Street property had six contracts fall over based on building inspections. Photo / Supplied
While Davis has run $1 reserve auctions before, he said most people are fearful because they are worried a place might sell for only $1000.
“But the market forces will always dictate that it will come through because what happens is that the buyers have the surety of knowing that it is not an owner that is living in last year’s prices.
“It’s an owner that is prepared to accept the market today and that’s what it was. It’s true market forces, it’s true auction at its best because the buyers know it’s selling. They are not wasting their time.”
The Harcourts' listing described the property as “the ultimate property challenge”.
“This project isn’t for the faint-hearted but the results will be highly gratifying. Transform this four-bedroom home back to its glory in such a scenic location,” the listing said.
Dunn said the vendors had split up and wanted to sell before the bank forced them to. “Six contracts fell over based on building inspections. Our vendors are just about at breaking point. They just need to get rid of it.”
Dunn earlier told OneRoof there was no way the sale price would hit the RV of $800,000, and even renovated the property might only be worth $600,000 to $700,000.
In another $1 reserve auction in August this year bidders fought over two Central Auckland apartments that had been listed with $1 reserves.
The competition in the room at the Bayleys auction pushed the price up with the ground-floor properties in the SugarTree apartment block selling for $340,000 and the other for $310,000.
The units were sold with resource consents for live-work spaces, but would still need building consents and construction to make them habitable.
- Additional reporting Diana Clement
