Auction sales dominate top-end residential market

Auction sales dominate top-end residential
property market

Auctions are now becoming the most prevalent method for selling homes above $700,000, according to latest property statistics.

Based on Real Estate Institute of New Zealand statistics, top Auckland real estate agent Karen Spires from leading property sales company Bayleys is single-handedly responsible for the sale of 30 percent of properties in Herne Bay over the past year.

Karen Spires has sold 24 homes in the past year – virtually all in the inner city suburbs of Herne Bay, St Mary’s Bay and Ponsonby, and all but one selling for more than $700,000.

The Real Estate Institute data also shows that of the 24 homes Karen Spires sold, 79 per cent were sold under the auctioneer’s hammer. The other 21 per cent were sold ‘price by negotiation’ where no exact dollar value was attached to the marketing of a property.

“The growth in auction sales throughout 2009 was extraordinary and far exceeded levels I have ever seen before,” Karen said.

“By comparison, in the 12 months to June 2006, I sold 27 properties – with only 10 going through the auction process.”

Karen said the switch from ‘price-tag’ property marketing to the auctioneering sales process had been accelerated by the global financial meltdown of the past two years, combined with the associated huge uncertainty surrounding property values.

“There is so much contradictory commentary in the media about property values and market trends, that a growing number of vendors are simply letting the market decide. It’s an agent’s responsibility to the customer to bring every possible buyer for a home to the auction of that property. Those potential buyers, the market, then decide the price,” she said.

“It’s the ultimate true reflection of a property’s value - not what some Wellington economist or financial commentator thinks a home is worth.”

Karen said the auction process also delivered customers a set time frame in which to expect a sale for their home.

“With the more traditional offer/counter-offer/offer/counter-offer process, the sale of a home could take seven or eight weeks, sometimes longer. Buyers and sellers in the top end market are more decisive though, and want immediate clarity on when a transaction will be completed. The auction process is the most transparent process in the real estate market,” she said.

“A seller knows that on a set date, their home will be placed before a select group of buyers who want that property. The seller can see who is bidding, how the bidding interest is tracking, and if a home doesn’t reach reserve, they can immediately adjust their expectations accordingly while interest is ‘hot’ and get a deal done in the auction room. That cuts out a considerable amount of the to-and-fro process where buyer interest can wane.

“From a buyer’s perspective, an auction allows them to see their opposition. To know that there is actually someone else out there who wants the same property they do. That creates a real-time urgency… “how much can I really afford to pay for my dream home, knowing full well that if my bid isn’t high enough, then I’ll miss out?”

Of the 24 properties Karen Spires sold over the past year, 17 were valued at more than $2million.

ENDS

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