The biggest challenge of 2022 has been getting vendors to understand they may not fetch as much for their homes as they wanted, Auckland real estate agents have told OneRoof.
In Auckland’s north west, Harcourts agent and star of the reality TV show Rich Listers Diego Traglia says that getting people to realise what their property is worth in the current market has been the biggest challenge.
“Most people are buying and selling in the same market, and the smart vendors will realise that, yes, a perceived loss on their property might not be all that bad because they will be making gains when they buy their next property.”
Traglia says vendors who expect 2021 prices are "living under a rock”, and risk losing out.
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“The first two to four weeks is where you find out what your property is worth. Unfortunately, if it takes you two months to realise that, then the problem is that your two months down the line and your property could be worth even less.”
The “brave and the smart” accept offers in the first month but others switch agents and can still be on the market months later. “The problem is the vendors always say, ‘If that’s the first offer, imagine the second.’ I always say to my vendors, ‘hey, sometimes the first offer is the best offer, we won’t know until we’re there but be prepared because sometimes the second offer doesn’t come’," Traglia says.
“If your goal is upsize your home for your family, then that should be the goal, and not ‘how much am I going to get from my house?’.”
Harcourts agent David Ding, whose patch includes the North Shore suburbs of Glenfield, Bayview and Sunnynook, says it’s been an unusual year, with buyers proving to be much pickier than in previous years, but he believes stubborn vendors have had the biggest impact on the market.
Ray White Remuera agent Steve Koerber sold this Rakau Street home for $4.2m, which was below the appraisal, but the owner accepted the offer because it was cash and unconditional. Photo / Supplied
He has seen vendors withdraw their properties from the market rather than accept even a few thousand dollars less than what they wanted. “The amount of withdrawn listings is a lot compared to last year. Those that have withdrawn the listing, they all received an offer – they all received, I would say, a fair offer.”
The hardest properties to sell have been do-ups with old kitchens and bathrooms, and homes that are tenanted and untidy, he says, whereas last year those properties sold amid the buying frenzy fuelled by FOMO (fear of missing out).
In 2022 presentation became more important than ever, partly because people had no extra money to do up properties. “That is why people would rather buy a renovated home than a do-up. Last year if you spent $800,000 the bank may still give you $200,000 for renovation.”
Buyers have also been more unlikely to compromise on key features. Ding says in last year's market buyers made do with cross-leases, but in this one they want a full site in a better location. “They just want something extra for them. Like, even if it’s a done-up sometimes the buyer says, ‘It’s not a cul de sac, I don’t want it.'”
Buyers have also had time on their side, with Ding noting that some have used lengthy building inspection reports to put pressure on vendors. “They'll ask, 'Can you fix these 20 items or can you drop me $50,000?'”
Some vendors, though, dug in and refused to budge. Ding says he had a property where the gap between the offer and what the vendor wanted was only $8000 but the vendor wouldn't take the deal.
Ding saw two big categories of sellers during the year – people cashing up to move to Australia and investors selling because of changes to the tax rules.
Also gone were developers, who last year pushed the price of 600sqm-700sqm properties to $1.7m or $1.8m, but this year those properties dropped $500,000.
Ray White Remuera Steve Koerber says the year has been a “huge” adjustment for sellers in terms of price expectations. “My whole career, but especially this year, has been a manager of expectations and this year mainly it’s been on the vendor side, to gently handle their disappointment and the fact the market isn’t what it was last year," he says.
“A lot of them do know but they don’t want to accept it. I’ve had a few properties withdraw from the market.”
One reason people have withdrawn is because it has been difficult for them to buy. “It’s hard to get a good deal when you’re not cash. In the same environment it’s very hard to get a good deal when most of the sellers are not in the mind space of reducing their prices, so it’s either they drop their expectations or they take their house off the market, and I’ve seen several of those.”
In the latter part of the year, however, it became easier to convince owners to meet the market, he says.
Koerber sold a property at Rakau Street for $4.2 million, which he says was below the appraisal but the owner accepted the bid because the offer was cash and unconditional. “That would be an example of an owner who has listened to the market and dropped their expectations.”
