A run-down shack in South Auckland has sold for $510,000 after going to auction with a reserve of just $1.
The two-bedroom property on Fitzroy Street, in Papatoetoe, had been billed by Ray White listing agents Bob Lemalu and Lana Tatupu as the “worst house on the best street” and was bought by a builder who wants to turn it into a base for their business.
Lemalu told OneRoof that the owners had already left the country, and in the listing he made no bones about the challenge facing potential buyers.
The photos on OneRoof certainly painted a grim picture: the kitchen was barely there, the bathroom was a mess, graffiti decorated the living room walls and the yard was waist-high with weeds.
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Bidding started at $1.50 and quickly jumped to $150,000 and then escalated from there, with auctioneer Sam Steele fielding new offers almost every second.
Steele was clearly enjoying himself, smiling throughout the contest, as the last two bidders - both builders - battled it out in increments of $500.
He brought the hammer down after 150 bids and 24 minutes later on a sale price just shy of the property's 2021 $540,000 CV, and 13 times more than what records showed it last sold for in 1991.
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Lemalu told OneRoof that the packed auction had it all, with nearly all of the registered bidders property traders, although one or two first-home buyers were also in the room.
"There was drama, there was humour. The room was just amping. Just when you thought it was all over, there was another bid. The vendors were over the moon, they were riveted watching it from Brisbane, shouting and cheering."
He said that four or five bidders stayed in the game until the last $20,000. He said the buyer planned to make the house the office base for their business, and had the means to do the renovation themselves.
Lemalu told OneRoof that the bidders who missed out were already checking out four of more do-ups he has coming up in next week's huge auction day at Ray White Manukau, when nearly 60 homes are on the block.
Steele said that the result blew everyone away. "It's a very brave move for the owners to set that $1 reserve and it repaid them in spades. A number of parties saw the value at the same level, and that's a positive sign. It far exceeded our expectations."
Ahead of the auction, Lemalu told OneRoof that said that while buyers were coming for the chance to buy at $1, he had been expecting a sale price of around $200,000.
“For a good two-bedroom house done up on a cross-lease on this street, which is quite desirable, you’d be looking at [a sale price of] $500,000 to $550,000.”
He added: “We’ve really seen a return of traders in the last couple of months. First-home buyers, we tell them to really make sure they’ve spoken to their lenders and lawyers,” he said. “The majority of traders will renovate to sell to get it back on the market in six to eight weeks. The timing is the thing, they’ve got teams of tradies and the majority of them have their own private investors and funding, so they’re looking at their numbers.”
Lemalu, with colleague Gin Tonumalii, also has a tidier three-bedroom house on a big 875sqm site at 34 McLean Avenue, Papatoetoe, with an urgent sale.
The agents’ pitch is that the owners “need to progress with their urgent plans”. While the advertisement talks about the home’s potential for family living, the listing photos show waste and storm water plans that suggest the property, zoned for suburban density and close to Middlemore hospital and train stations, would also appeal to developers. It has a CV of $1.15 million.
“This property must be sold to allow the vendors to carry on with their next plan,” Lemalu’s advertising says.
He also has a do-up three-bedroom home on 98 Royal Road, Massey, another on 186 Preston Road, in Otara, and a fourth property, a character four-bedroom 1920s bungalow on 28 Pah Road, Papatoetoe that still has some period features, but is advertised as a renovation, and is surrounded by huge near new family homes.
The interior of the Fitzroy Street house is in poor shape. Photo / Supplied
The listing notes that refurbishment work is needed, but that the house is "a real opportunity for the 'savvy' investor". Photo / Supplied
The Fitzroy Street property's garden is overgrown. Photo / Supplied
Steele said that while $1 reserves were not perfect for every listing, they were the best possible way to see what the market would pay.
“Everybody has the chance to put their hand up, so you can be absolutely 100% positive that you got every dollar out of the market. It’s very honest,” he said.
He said bidders coming into the auction will have their own sums in mind, with many starting by looking at the land value – in this case the CV is $520,000 with just $20,000 for the home and improvements. “But it’s on a case-by-case basis.”
Not all the $1 reserve properties are dumps.
Wallace and Stratton agent Mitchell Eades is bringing a two-bedroom plus study terrace house at Lot 33/148 McLeod Road, in Te Atatu South, to auction on August 6 with a $1 reserve.
The auction room for Fitzroy Street was packed. Photo / Supplied
A two-bedroom architecturally-designed terrace home on McLeod Road, in Te Atatu South, Auckland, has a $1 reserve. Photo / Supplied
The mid-row terrace in the brand-new McLeod Green by developers Brilliant Stone is one of the last five or six of the 60 terraced homes yet to sell. The properties, which are expected to have title and certificates of completion ready for occupancy in August, were mostly sold off-the-plan when they launched in late 2020 and early 2021.
While Eades did not want to guess where the auction price might land, he said similar terraces had been asking $699,000 and he had one resale listing asking $729,000.
Eades said the original buyers were a mix of 70% owner-occupiers, 30% investors, but noted that off-the-plan sales for new developments coming to market were slow.
“It depends on the buyer, but selling off-the-plan needs to be priced lower. It’s mainly investors hoping that by the time it’s ready for occupiers, interest rates will have dropped,” he said.
In a similar play, another developer quit the last of his three-bedroom terrace house on Russell Road, Manurewa in April with a $1 reserve auction. Then 12 registered bidders pushed the price to $641,200.
The five other townhouses had already sold for between $800,000 and $930,000.
Last week OneRoof reported that a four-bedroom flat in a troubled development on the edge of Auckland’s Mount Albert was going to auction at the end of the month with a $1 reserve – and a warning from the listing agents that first-home buyers should stay clear.
The apartment at 41/125 Carrington Road, in a former student housing complex on the edge of the Unitec campus, is riddled with problems, said City Sales manager Scott Dunn and the agent marketing the property, James Mairs.
“I don’t want to see any first-home buyers or inexperienced investors at this auction,” Dunn told OneRoof. “People need to come and check this out before bidding.”
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