If you’ve bought or sold property in our largest city, it’s more than likely you will have at least a passing knowledge of the auction process. While real estate agents in New Zealand’s other main cities entertain a wider range of sale methods, it seems most Auckland agents are stuck on auction… Except, that is, for The Property Market – and that’s because we think times are changing.
In the current market, with buyers beset by LVR criteria and the rate of property price increases cooling, we think auction can create unnecessary barriers for buyers.
Why’s that? For starters, making an unconditional bid at an auction is much riskier than negotiating a conditional contract. With banks currently erring in favour of more caution when lending, the greater risk will probably result in more hoops to jump through before your bank manager says ‘yes’ to a loan.
Secondly, bearing in mind that the pre-approved loan amount may well fall below the seller’s expectations, many buyers are jumping through hoops with their banks… and then falling at the first hurdle when the property proves to be too expensive. Recent figures show that the success rate for auctions is currently less than half what it was this time last year – we reckon that’s because buyers are getting sick of doing a lot of running around, only to be disappointed come auction day.
In contrast, homes selling with a ‘list price’ are going great guns. In the auction dominated Auckland property market, they stand out to buyers as shining beacons of price certainty. They also provide buyers with the opportunity to research the price before they present an offer. If the vendor’s real estate agent is worth their salt, they’ll have undertaken a thorough pricing analysis, which can be presented to justify the asking price to the buyer (and their bank manager!).
By way of example, The Property Market listed a gorgeous brick and tile unit towards the end of June. In line with our recommendation, and having reviewed our detailed pricing analysis, the vendor decided to list with a price. Within an hour of making the listing ‘live’ on the internet we had a call from a serious buyer, and two further viewings booked. In just 6 days, the property had received multiple offers and was sold for a good deal more than the original asking price! We know the Auckland property market is often called ‘hot’, but this is an exceptional response.
We put the buyer enthusiasm down to having the right price clearly advertised. By doing so, we’d cut out all of those whose budget wouldn’t stretch, and given those whose budget was in the ballpark a clear reason to consider the property.
So, if you’re living in Auckland and thinking about selling your house, consider listing with an asking price – it may well get you into your next home with a lot less fuss!