Auction clearance rates are dropping below 50%, house sales are dropping and prices have softened – but real estate agencies are still confident that putting a property under the hammer is still the best way to sell.
Most of the Auckland agents and auctioneers that OneRoof spoke to this week said that auction campaigns, rather than selling a house by negotiation, were the quickest way to bring in interested buyers – even if they’re not in a position to make unconditional bids come the day of the auction.
Barfoot & Thompson Glen Eden agent Ying Li Howe said that all her listings this year had gone to auction.
“Sometimes there might be no bids, sometimes only a few bids, but I can say that since January all my vendors have sold and got within $5000 of their asking price,” she said.
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“A two-weekend campaign is set up to test the market.”
Howe said that before heading into the auction room, she gets her vendors to give her three prices – the best price they hope to sell their home for; the amount they’d set the reserve at; and, if the property passes in, “the realistic, absolutely sharp asking price that they’d sell for tomorrow, after the auction”.
Howe recently sold a three-bedroom weatherboard property in Massey less than 48 hours after it passed in at auction and had another house on West Coast Road, in Glen Eden, under contract three days after it passed in. The sale prices were all within vendor expectations, but there are some sellers who hold out for last year’s prices, she said.
“Sometimes we need to slowly bring them back down to earth,” Howe said.
A property on Te Atatu Road South, in West Auckland, sold for $2.395m. Photo / Supplied
“If the gap between buyer and seller is $100,000, I warn the vendors we might then have to drop $20,000 a week.
“There are still confident buyers, people who’ve got their finance sorted.”
Bayleys national auction manager Conor Patton said that vendors now get it that last year’s auction success rates, sometimes nearly 100%, were unusual and this year's 60% clearance rate was more typical.
Patton said that sitting down with vendors pre-auction helped to educate them as to what could happen next. “Auctions are a call to action, a time frame and still the best way of getting accurate prices. Even if there are not cash buyers, we still ask them first," he said, adding that 75% of properties with a bidder at auction end up selling.
“You won’t win Lotto if you don’t buy a ticket. There’s value in the process.”
And if vendors have no bidders registered on the day of auction should they still go ahead?
Yes, said Barfoot & Thompson auctioneer Marian Tolich. “We’d tell them ahead of time, there’s nothing worse than a surprise, but we still go ahead. With all those people watching on-line, you're still profiling the property. They might be in a position to ring the agent after the auction, there could be conditional buyers.”
A house on West Coast Road, in Glen Eden, West Auckland, sold for $995,000. Photo / Supplied
Tolich added that vendors have more flexibility on pricing in the last couple of weeks.
Daniel Coulson, chief operating officer for Ray White New Zealand, said that in the last two weeks, the company has averaged 1.9 bidders per property – with a couple of properties reaching eight bidders, and one having six.
He said when there were three or four bidders, vendors need to listen carefully to what the market is telling them.
“If the price stops short of expectation, and buyers under competition don’t want to pay what you want, then clearly you need to find another buyer. The challenge is, do they exist now? Or will you wait another few years?”
Striking auction numbers still happen. Ray White agents Regan Golding and Olivia Upton had eight bidders competing for a three bedroom house in Vandeleur Avenue, in Birkdale, which ended up selling for $1.27m, $240,000 more than a neighbouring house.
“It was more like last year,” said Golding.
“The house had amazing landscaping and immaculate presentation. A house just up the road, very similar size and floor plan sold the week before for just $1.03m. The right house does really well at auction.”
In West Auckland, Harcourts agents Tim O’Shea and Shelly Reilly had similar results for a renovated four-bedroom home on Te Atatu Road, where four bidders pushed the price to $2.395m, a full $200,000 above reserve.
The 1179sqm property had a legal two-bedroom house and desirable zoning for apartment development.
Mount Eden Ray White owner Jared Cooksley said this year 90% of his agents’ listings were auctions, with 75% to 80% selling under the hammer or immediately after the auction.
“One or two person auctions are still selling, you’re inviting people. We’re still having bought forward auctions, we’re still having 50 people at open homes. Some people have been looking for a long time, if it’s a nice house, they can’t wait.”
