ANALYSIS: In New Zealand, it’s often hard to figure out what to offer on a listed property.
Whereas price guides are quite common in Australia, they rarely appear on listings in New Zealand, with most Kiwi agents preferring to let the market dictate price (last month, just 20% of new listings were advertised with a fixed price).
Agents do provide real estate websites with a search price for properties they are listing, but this rarely appears publicly, and is only there to help with buyer searches.
There are ways to read the market, though. Online estimates, like OneRoof’s, can give buyers a sense of a property’s worth, as can rating valuations, although are fixed in time and have more to do council rates than price tags.
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Another useful tool is checking out recent sales in the listing’s immediate vicinity.
A few months ago I was looking at a four-bedroom home in Rangiora, in Canterbury. It was listed online without a price, but here are a few things I did on OneRoof that gave me a good steer.
1. Check out the estimate and RV
The property’s RV from July 2022 was $770,000, while the OneRoof estimate pegged the property at $745,000, with a high range of $825,000 and a low range of $675,000. Also given was the suburb median – $680,000 at the time of looking.
2. Find similar properties that have sold in the area
The map on OneRoof allows you to filter for the following information: what’s currently on the market for sale, what has recently sold and the estimated values.
Looking at what’s currently for sale in the surrounding will give you an idea of how much and what type of competition the house you are interested in faces. Too much of the same thing could work in your favour price-wise, while a dearth of surrounding listings could work against you.
The “Recently Sold” filter is a good one to gauge of how much people are willing to pay for properties in the area. That will give you an idea about what the property you want to buy will sell for. Looking at the property history on the individual estimate pages will also give you an idea as to how long each property was on the market. Listings that sell quickly are a strong sign of a hot market, and could mean there’ll be some competition for the home you are looking at.
It’s also good to take a look at the images of the recent sales. If the properties look nicer and have more bedrooms than the one you’re looking at, then there’s a good chance you can pay less.
But if the property you want to buy is nicer, then expect to pay more.
In my case, the property I wanted wasn’t as nice as the one that recently sold for $810,000. It did have an extra bedroom but had less land.
So offering less than $810,000 would be a good starting point.
3. Make a spreadsheet
You can’t just look at one property. I recommend getting the numbers for at least another seven and creating a spreadsheet. Put the nicer recently sold properties above yours. Put the ones that aren’t as nice below.
Here’s what I got for my property:
Properties that were slightly worse than the one I want sold for between $730,000 and $742,500, while the properties that were nicer sold for between $780,000 and $820,000.
So what should have I offered? Between $745,000 and $775,000 is probably fair.
4. Use this information to negotiate with the real estate agent
If an agent tried to get me to offer $780,000 for my target home, I could say: “Acacia Ave around the corner sold for $780,000. And that property has a larger floor plan and bigger section. It’s also nicer. Your seller isn’t going to get that much.”
So running the numbers properly can give you confidence when deciding what to offer.
The property I was interested in did end up selling for $750,000 – within the expected price range. And the above research and analysis only took about 30 minutes. Time well spent.
- Ed McKnight is the resident economist at property investment company Opes Partners
