Stephen Jones

What is it with the NZ habit of selling houses by Auction?

Does this make it difficult for the average person to buy a house?



Stephen

Pom_Chch

I personally hated the whole auction experience. Luckily the properties in area that we bought in went through deadline sale. Properties usually go for a much higher price at auction. You always get a couple of people who desperately want the house in question and wont stop until they win. More money for the vendors, more money for the agent.

In Christchurch a lot of properties are going to auction, although you do find deadline sales as well. Out in the Waimakariri district where we have bought a house they mostly go to deadline sale, sometimes auction.

jmh

On the whole, auctions are one of the worst ways you can sell an item, whether it is a house or an expensive painting. We hear reports in the media about how much an item reached at auction but this doesn't tell us how much the item could have sold through private negotiation or tender. Remember, the auction finishes when there is only one buyer left. That buyer may have been prepared to pay a lot more but now doesn't need to.

In terms of the property market, I've been watching it for some time and after a while you notice that many properties fail to sell at auction and are then relisted with a price or 'for negotiation'. Unfortunately for the vendor this then sends a clear message to potential buyers that they can risk offering low. In fact auctions may benefit buyers more if they can negotiate a sale following a failed auction because the vendor is now 'conditioned' to accepting a lower offer. I've seen some really nice properties get 'passed in' and marketed at a surprisingly low price. And if you offer outside of the auction process you can add conditions like 'after a satisfactory LIM or building report'.

Basically auctions benefit agents. To buy at auction you need to have 10% deposit (used to be 5% for non auction purchases but as we know this changed recently) and the offer is unconditional. This means that once you have signed the Sale and Purchase agreement you can't back out. In the event of an auction failing to reach the reserve agents put pressure on the vendor to drop the reserve claiming that 'the market' has spoken. It's a very stressful process for the vendor in these circumstances.

Auctions are big in Australia too. I'm guessing that a significant reason might be the nature of the Sale and Agreement process which commits you to the sale very early in the process. This has positives and negatives. I'm awaiting exchange of contracts on a sale on my UK property which was agreed back in February. There is no chain for either party but the sale could fall through at any minute with no loss to either party. It's very frustrating from this end.

I posted about a book which covers auctions in great detail. Worth a read if you can get a copy from the library:

http://britishexpats.com/forum/new-z...agents-831022/

TommyLuck

Stephen - I highly recommend popping along to couple of auctions that you have no intention of bidding in before you put yourself in the situation of having to actually bid, just to see what it's all about.

One of the auctions I went was brutal with people stopping bidding only to re-join $100k later on, then stopping again and joining in a further $50k on, etc, etc ...

The chap who ended up "winning" looked like he was going to be physically ill, poor bloke.

jmh

Here's an interesting clip about auctions in Auckland:

Empty auction rooms for Auckland's property market

Empty auction rooms for Auckland's property market - Story - Campbell Live - TV Shows - 3 News

If it won't let you watch it because you are outside of NZ you can download an app from Hola.org for your browser, select your country and bobs your uncle!

Hola – Access ALL of the web (free VPN) & faster browsing

moonie2011

I bought my house at auction and thought the whole process was great,
I went to several auctions before to see what was happening.
When the bidding started two people were bidding then it stopped and because the price hadn't reached reserve they took the highest bidder out with the owner and negotiated a deal that would mean the house would sell, return to auction and auctioneer said 'we are on the market' this means that now any bid could buy the house. This is when I started my bidding until I won it
I felt that the whole process was transparent, it was clear what others were willing to pay (no owners/agents trying to squeeze extra money out of buyers by saying others are interested, there's already an offer, etc) the price I paid was what others were willing to pay (no putting in offers that could be too much) and I'm five minutes I knew the house was mine, plus the buzz and the excitement of doing it was amazing.
So I am pro auction

Dandy du2

I have also been looking into the auction property in NZ too but find it hard to get a clear idea of average house prices in the area.
How can you find out what the house actually sold for at the auction? Also is there anything like the uk website "ourproperty" that gives you an indication of what houses actually go for in the area.
I have tried googling sold house prices NZ but no luck.

cappuccino

You can purchase reports from QV or ask a real estate agent for local sales histories. Also, on the bottom right hand corner of many (not all) of Trademe listings, they show 3 recently sold properties and their prices in the nearby streets.

The Weezer

Hello, when I want to find out what a house sold for at auction I sometimes call the agent involved in the sale. Often they will just tell you without further obligation.

Also, you can have a look at this website:

Property info - Our property reports - QV.co.nz

You have to pay a little to get the sales history, and if it's a recent sale it may not show up immediately.

Also, you might possibly contact a real estate agent in the area your interested in. They can be very helpful and will possibly tell you the prices of houses that recently went for auction.

Good luck!

Edit: I posted this at the same time as Capuccino!

davros1984

Yes - average people simply cannot afford to buy houses in Auckland anymore unless you class the average person as earning 120K and having around 200-250K in the bank.

Good luck.

Pom_Chch

I think if you buy a property at auction in an place that doesn't have issues with housing then you'll have a better experience. It's a nightmare in Christchurch at the moment when it comes to auctions. A friend at work has been to a few and the bids carry on going up and up way past what the house is valued. People are desperate in Chch due shortage of good housing, which is when it all gets out of control.

chocolate cake

I bought my house at a Auction too a couple of years ago, after following a few previously and then losing out on two auctions for houses I was interested in. I can't say it's a pleasant process, most be worse still if you've a house to sell instead of new to a market.

Auctions are popular with the Agents for sure, less work for them and the value decided by the market. Also offers by tender seem to be another common method.
It is worthwhile though becomming friendly with an agent, if only to get hold of accurate info on actual sold prices in the area.

jmh

If you see a house that you like going for auction and you can't participate (which many people can't) keep an eye on it anyway. Quite a lot of houses get 'passed in' and the price details change to a $ amount or 'negotiation'. You can then go in with a conditional offer.

I just had an offer accepted yesterday (yay me!). It failed to sell at auction and I put a conditional offer in about a week later. As it happens another offer was put on the table on the same day and it went to closed bids. I won even though I was $15,000 below the asking price. Same thing happened to a place I offered on in Pukekohe - I lost that one. You do have to be prepared to miss one or two before you get success.