Buyers are putting their best offer forward to beat off the competition by either forcing the auction to be brought forward or by stopping the property from going under the hammer at all.
The number of auctions being brought forward in Auckland in the past few weeks has increased and, in many cases, the sale price has exceeded the accepted pre-auction offer, leaving the seller with an unexpected cash bonus.
The auction on a four-bedroom, three-bathroom home on Station Road, in Papatoetoe, was brought forward this week and sold under the hammer at Barfoot & Thompson’s auction room for $1.3 million after only one bid was made.
And a three-bedroom, one-bathroom 1960s home on Whytehead Crescent, in Kohimarama, sold for $200,000 over the pre-auction offer at the end of March. The brought-forward Barfoot & Thompson auction opened at the accepted pre-auction offer of $1.525m, but several other bidders in the room pushed the sale price up by another $206,000 to $1.731m.
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Barfoot & Thompson auctioneer Murray Smith, who brought the hammer down on the Station Road and Whytehead Crescent properties, said there had been a notable increase in auctions brought forward. “It’s not like it was two years ago, but there’s definitely a lift.”
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He has had one auction brought forward this week and is waiting on confirmation for a second. “It’s a really good sign. Owners in the right place, buyers accustomed to the new mortgage rates and buying on the basis of that, and just getting on with it, and wanting to get moving. It would be good if that keeps going because that will remove the throttle.”
Smith said the pre-auction offer was usually a price that would be hard to beat, but the brought-forward auction provided the seller extra protection of ensuring the price they had accepted was right.
Harcourts Papakura salesperson Alex Dunn was working with a buyer whose second attempt at a pre-auction offer of $832,000 on a house in Weymouth was accepted, triggering the auction to be brought forward.
But four other bidders quickly got themselves in a position where they could also bid unconditionally for the house and his buyer ended up having to pay an extra $50,000 to secure his first home.
A 1960s house on Whytehead Cres in Kohimarama sold for $200,000 more over the pre-auction offer. Photo / Supplied
A property on Station Road in Papatoetoe sold under the hammer this week for $1.3m in a brought-forward auction. Photo / Supplied
Dunn said people seemed to be worried about missing out on buying at this level because they thought it could be at or near the bottom of the market.
“I think there’s a little bit of FOMO coming back. Not necessarily fear of missing out on the property, but fear of missing out on buying at this time.”
Dunn said sellers will often accept a pre-auction offer if it is above the general feedback received during the campaign.
“They know it’s the bare minimum they are going to get at auction day and anything above that is just a bonus for them.”
Ray White Remuera salesperson Matt Gibson said people were putting in pre-auction offers to make sure they didn’t miss out and to get ahead of the competition.
Some even made them in the hope a “solid” pre-auction offer would be accepted and the owner would withdraw it from auction completely.
Gibson recently sold a beautifully renovated property on Ngatiawa Street, in One Tree Hill, which had 74 groups look at it within two weeks.
Barfoot & Thompson auctioneer Murray Smith: "It’s a really good sign. Owners in the right place, buyers accustomed to the new mortgage rates, and just getting on with it." Photo / Fiona Goodall
A strong pre-auction offer of $1.29m was made by a woman who didn’t want to miss out. When the auction was called a few days later her offer was accepted, she was the only bidder and nabbed it at that price.
“She just put too much pressure on people with timing, just to get their ducks in a row with the banks. She saw the property early, got a building expectation, and was ready to go, and it allowed the vendors to get their next property also.”
Another property on Gowing Drive in Meadowbank also received an acceptable pre-auction offer last week and was pulled from auction.
Gibson said the owners had been given three days to sell their property to go unconditional on their next property so decided to take the offer and scrapped having a brought-forward auction.
“A lot of people have an offer on another property subject to selling theirs, and if they get a bird in a hand, they don’t want to miss out on the next property, and if they get a price they are happy with then they just run with it and go, ‘yep ok we will take that’ and it secures their next place.”
Harcourts national auction manager Shane Cortese put the uptick in brought-forward auctions down to buyers thinking it was a good time and sellers wanting the certainty of an unconditional sale.
“We still don’t know whether the bottom of the market is there or thereabouts, but people are actually going, ‘ok, now is the time’.”
Some people were also trying to buy before their pre-approvals expired, while others were trying to lock in an interest rate in case there was another increase on the way, he said
Sellers were also open to accepting a good pre-auction offer, he said, because it gave them certainty of a sale compared with a conditional offer that could fall over for any number of reasons.
Harcourts Grenadier in Christchurch had five auctions brought forward last week and another property that accepted a pre-auction offer and then withdrew it before the auction.
Managing director Andy Freeman said it was a particularly good week in terms of brought-forward auctions, but it was too early to say if there was a trend yet.
“We are still getting some good results and some good prices. Out of a couple of those brought-forwards there was more bidding – quite good money, but that’s just how it runs I guess.”
Of the three auctions brought forward which sold for more than the pre-auction offer, some sold for “not much and some by quite a lot”, he said. “You can look at it two ways – one, the owner thought it was good, but it wasn’t as good as what the market was saying.”
Freeman said he wouldn’t encourage owners to wait if they had a good pre-auction offer because there was a lot of competition in the market and the potential buyer could be gone by the time the auction date came around.
Harcourt Grenadier’s overall auction success rate is currently sitting at around 50%. Usually within a few days a further 50% of what hadn’t sold under the hammer is either sold or under offer.
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