A one-bedroom unit in South Auckland sold under the hammer last week for $291,000, only to be relisted for sale several hours later.
The property at 1/27 Avenue Road, in Otahuhu, was bought by Auckland real estate boss Rickhil Prakash at Ray White Manukau’s auctions on August 2.
Prakash, who is the owner of Hills Real Estate, listed the property for sale through his agency later that day.
He was one of five bidders who competed to purchase the unit, with his winning bid $89,000 less than the property’s CV of $380,000, but still well above the reserve.
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Prakash confirmed to OneRoof that he had bought the property for himself, and had bid for it over the phone.
“I buy as a trading company and I disclose that I’m an agent with another agency. I disclose that I might try to sell for a profit or a loss,” he said, adding that the plan was to sell the unit to a first-home buyer who might not have been able to bid unconditionally at the auction.
The ground-floor unit on Avenue Road is now being pitched at first-home buyers. Photo / Supplied
“We haven’t got any interest so far – prices are correcting very fast,” he said, adding that the unit needed work. “Buyers and investors are looking for good deals and there are a lot of listings.
“We might have to settle on this because the buyers are taking longer, so we’ll have to do a paint, carpet, cleaning when the tenants move out. Because of the market change, we want it to be presentable, then it will attract first-home buyers.”
Prakash, who refers to himself as a “property ninja” on his website, said that at any one time his company was trading around eight to 10 properties, but conceded that business was down on last year. “I’m still in the market, always watching auctions, but not getting as much,” he said.
“It’s different now. Last year it was very easy – you put up a listing, buyers call, [and there are] multi-offers in the first or second day.”
He estimated that 10% of his trades would make a loss, with some listings taking one to three months to sell. When asked about his margin, he said: “There’s a definite shift. The margin won’t be much, maybe $30,000 to $40,000 but I don’t know. Or we sell it at cost.”
Ray White agent Bob Lemalu, who brought the Avenue Road property to auction last week, said the vendor, a long-time investor, had been happy with the sale price as the property had needed updating.
He said that in the current market, cashed-up investors were snapping up bargains while first-home buyers were struggling still with bank financing. “These are the times that experienced investors come out. They wait for the good properties to come up,” he said.
Real Estate Authority CEO Belinda Moffat says there is nothing preventing a real estate agent from acting as a property investor. Photo / Supplied
Belinda Moffat, chief executive of the Real Estate Authority, said there was nothing preventing a real estate agent from acting as a property investor or trader.
“However, there are rules and laws in place designed to prevent potential conflicts of interest,” she told OneRoof.
Once someone has bought a property at auction, they can put the property on the market before settlement and the full transfer of title, she said.
“An agency is entitled to list a property [on this basis], though this would need to be disclosed to potential buyers,” she said, adding that a licensee would also have to disclose in writing to a prospective buyer they or someone related to them owns or has an interest in a property before the buyer signs any contract.
Ray White Manukau co-owner Tom Rawson said that traders would often ask vendors to agree to variation clauses ahead of the auction.
“There are common clauses that traders use that clarify to the vendor things like the GST position, settlement times, whether they can have early access [before settlement] for trades.
“Traders will often ask for a three-month settlement and try to re-sell in that time before settlement, without taking legal ownership.
“If it takes longer to re-sell, they might have to take [the] title and have a plan B to keep the property as an investment or renovate.”
