Buyer hunger at level 3: Northcote villa flies out the door for $2.355m
29 Seaview Avenue, in Northcote, sold under the virtual hammer for more than $700,000 above its CV.
After two days of the best auction action his company has seen since 2016, Harcourts Cooper and Co managing director Martin Cooper is confident the momentum in the Auckland housing market will continue through the new lockdown.
Speaking to OneRoof on Friday, before the Prime Minister announced that Auckland would stay at alert level three for another 12 days, Cooper said: “The future is uncertain, but certainty is what people want from the market. That’s driving people to make decisions.”
Harcourts Cooper and Co has held three online auctions since the new restrictions came into effect on Wednesday. Of the 38 properties on the block, buyers snapped up 33.
First home buyer prize: 30 Zefiro Drive, in Massey, sold for $705,000.
The standout sale belonged to Harcourts agent Damien Henaghan, who was marketing a well-presented five-bedroom villa at 29 Seaview Avenue, in Northcote. Strong competition from seven bidders pushed up the price to $2.355 million – $710,000 above the 2017 CV and more than $1.5 million above what the property last sold for in 2006.
Also shining under the virtual hammer was a three-bedroom brick and tile house at 30 Zefiro Drive, in Massey. The starter home, marketed by Owen Yang and Wanly Tsang, sold for $705,000 – $15,000 above its CV and $258,000 above what it last sold for in 2013.
“We had several homes appealing to the first home buyers, there were six bidders for this one. They are competitive bidders, until they reach their bank-imposed limits,” Cooper said.
Another hotly contested property was a renovated two-bedroom townhouse at 1/246 Lake Road, in Takapuna. The home, marketed by Maree Gray, had six bidders battling it out until them hammer came for a sale price of $1.271 million – $321,000 above CV and $469,000 above what it last sold for in 2015.
Cooper said the company’s auction numbers for July this year were nearly double those for July 2019. “It’s been an unprecedented success this year, it’s the same sort of energy as 2015/2016 when the market was rapidly rising,” he said.
Strong bidding for 1/246 Lake Road, in Takapuna, saw the townhouse fetch $1.271 million at auction.
Cooper’s firm isn’t the only one enjoying success. Newly released figures by the Real Estate Institute of New Zealand showed that house sales last month were the highest for July since 2015.
Cooper thinks buyers have learned a lot from Auckland’s last house price boom; if they miss out prices will go up, so now they are making decisions. Fast.
Properties for sale Devonport and Takapuna had attracted a lot of attention and competition from local buyers and returning expats, Cooper said, and developers, many with overseas financing, were seeking out properties with favourable zoning.
“There’s strong interest from both Chinese and Kiwi developers.”
49 Roland Road, in Greenhithe, sold for $3.725 million at auction.
Lifestyle properties, in the city’s northern fringes, are also getting a look in. Harcourts auctioneer Shane Cortese said that in the past few months he had sold three properties for more than $3 million each.
One, a four-bedroom designer home on a 1474sqm block of land at 49 Roland Road, in Greenhithe, was contested by four bidders, including an expat in the United States. It ended up selling for $3.725 million – nearly $1 million above the 2017 CV.
“This tells us that even at the higher end of the market, buyers are making good decisions and competing transparently in the market,” Cortese said.
“Greenhithe is fast becoming a much sought-after destination.”
Cooper said buyers and vendors were comfortable with online auctions. “We’re very confident the momentum will keep going. It might be more time-consuming for agents. They’ll earn their money because they can only show two people through a house a day instead of 30 to 40 groups through in one weekend.
“But there’s a strong desire from buyers and sellers. Right now, it’s more important to have a home.”
Buyer’s market or seller’s market?
When buyers are plentiful, but properties aren’t, homes generally sell quickly. In a seller’s market, there is less risk associated with buying first and then selling your existing home. However, sellers in this kind of market may be less likely to accept an offer that is conditional upon you selling your home, so you could end up owning two properties for a period of time.
The average time it takes to sell a property varies from region to region and from month to month, so it’s important to talk to your sales consultant to get advice about current market conditions, recent comparable sales in your area and the possible demand for your property before making a decision to buy first.
Keep in mind also that in a seller’s market there will be more competition, so you can expect to pay top dollar your new home.
The good news is that you’ll have the peace of mind that comes from finding the right house to buy before selling yours.
Do you know how much you can spend on your next property?
Until you sell your property, you may not know exactly how much you’ll have to spend on your next one. In a buoyant market, you could easily have unrealistic expectations when it comes to the value of your own property. Your sales consultant can help you get a realistic picture of your property value by preparing a comparative market analysis of what similar properties have sold for in your area in recent times.
Are you a cash buyer?
If you choose to sell first, you will instantly become a cash buyer and be in a much stronger position to buy as soon as you find what you want. Do your homework on the market and area that you are looking to buy in so you’re ready to buy when the right property comes up.
Have you found your dream home?
Buying a new home is an emotional decision. If you want to follow your heart and buy that dream home before selling your current home, make sure you’re well informed. A good sales consultant will provide quality advice for your unique situation. If you are looking for a very specific type of property and it becomes available, it could be a good move to snap it up even if you haven’t sold your home, but there’s
no downside in getting expert advice before you do.
Are property prices are going up?
If you’re in a rising market, it could make sense to buy your new home first and negotiate a longer settlement. Your current property could potentially rise in value during the settlement period, allowing you to earn more when you sell it.
Are property prices falling?
Falling property prices can work in your favour as well if you can attract an interested buyer before prices drop further, leaving you free to purchase your new property at the lower end of the market cycle. However, falling property prices are also an indication of a slower market so it could take you longer to sell your existing property.
At the end of the day, your best course of action is to work with a real estate professional who can provide you with the local knowledge and insights you need to make an informed decision for your specific circumstances.
Bidding at auction: Tips and tricks from a champion auctioneer
For the uninitiated, bidding at auction can be nerve-wracking. Here are some strategies from Aaron Davis of Harcourts, winner of the 2019 Real Estate Institute of New Zealand (REINZ) National Real Estate Auctioneering Championships, that could give you an edge over your competition.
Work out the number you’re prepared to go to but avoid round numbers.
Most buyers stop at round numbers like $550,000, so make yours $553,000. That little bit more can often make the difference between coming out on top or missing out on a property at auction.
When the auctioneer calls for opening bids, be confident and assertive.
Throw out an opening bid and when another buyer comes back with a counter bid, don’t be afraid to respond with your next bid quickly and decisively. This gives the impression that you’ve got the funds and that you’re there to buy the property no matter what, which can discourage other buyers.
Call out bids that are higher or lower than what the auctioneer is suggesting.
Don’t be afraid to mix up the increments and bid in unusual increments like 36 instead of the usual 5s and 10s. Double bidding on top of yourself, which is when you already hold the highest bid and then bid again, can also throw other buyers off.
Sit or stand in a location where you can observe the other buyers in the room.
You’ll pick up important visual cues; facial expressions, signals between partners, even body language can give you a good indication of when your competition has reached their limit.
Don’t wait for the trial close to make your next bid.
When the auctioneer calls once, twice, third and final call, it triggers someone to bid. The trick, says Aaron, is not to wait for the trial close but to keep on bidding in random increments to discourage other bidders. If you hit your ceiling, you’re done.
As a seller, the results you get on auction day will depend on many factors, including the skill of your auctioneer. “The quality of the auctioneering can have an enormous impact on the outcome of an auction,” says Harcourts Managing Director, Bryan Thomson, “so it’s a testament to the expertise of our auctioneers that they continue to win the top awards at the national championships year after year.”
The insiders guide to buying or selling Real Estate
Whether you love the thrill of an auction or your knees tremble at the thought, auctions have become the preferred method of selling property in most of the major centres across the country. For those who are new to the process, buying or selling at auction can appear daunting. Don’t be put off! There are many advantages, and a few tips and tricks, that you should know about before entering the auction room.
The advantages of auctions for the seller:
As a seller, an auction offers you the opportunity to achieve the best price in the marketplace in the shortest possible time. Here are some of the many reasons why selling at auction has become so popular:
- Marketing without a fixed price increases the number of cash-in-hand buyers who will look at your property.
- Buyers come to an auction with their maximum price in mind as opposed to focussing on how low they can negotiate the price down to.
- Auctions allow buyers to determine the value of the property rather than relying on a sales consultant or a valuer, which can potentially result in a price that is too low and leaves money on the table, or too high and the property remains on the market for an extended period of time.
- Auctions attract the best buyers in the market, the ones that are cashed up and ready to purchase on the day without imposing any conditions on the seller. A third of all conditional contracts fail to result in a sale which can be discouraging.
- Conditional buyers are not excluded from auction. If the seller doesn’t get a suitable figure at auction, there is still the opportunity to have a conversation with conditional buyers afterwards.
What to expect when you sell at auction
Your sales consultant will guide you through the pre-auction and auction process which should include:
- Informing you about what is happening in the market, specifically around your area and in regard to properties that are similar to yours.
- Taking you through every element of the marketing plan, from the images and text for the advertising through to the scheduling of open homes.
- Keeping you informed with daily updates and weekly face-to-face meetings.
- Providing you with a written report on the marketing campaign and interest from prospective buyers.
- Helping you set a realistic reserve price.
Remember, you’re in control as the seller. You set the reserve. If bidding does not meet the reserve, you can decide if you want to enter negotiations.
Getting prepared to buy at auction
A common perception is that auctions are good for sellers, not buyers, but this is not the case. As a buyer, you know exactly who your competition is and the negotiations are out in the open for everyone to see. If your bid is successful, the contract is signed then and there, and property is yours with no further negotiations.
To make the auction process work for you, it’s important to arrive with your homework done. Here are some suggestions on how to prepare to buy at auction:
- Have your finances organised prior to the auction date so you know exactly what you can afford to bid. If you’re successful on the day, you’ll be asked to sign the sales agreement and pay a deposit, which is typically 10% of the purchase price.
- Organise a building inspection of the property you’re bidding on and have your solicitor review the property title and all legal matters related to the prospective purchase.• Review the auction documents beforehand.
- Research the local market so you can accurately assess the market value of the property. You may also wish to obtain an independent property valuation.
- If you’re new to the auction process, attend a few auctions to see what goes on before attending the one for the property you’re interested in
A buyer can submit a pre-auction offer to the property owner for their consideration. If they are willing to accept the offer, the auction date may be brought forward.
It’s important to let the sales consultant know you are interested in the property so if another purchaser submits a pre-auction offer and the auction is moved forward, you’ll be contacted. The reserve is set at the offer figure and the auction starts with that as the opening bid.
If no higher bids are received, the property is sold at the offered price, but if other buyers bid, the property will be sold to the highest bidder.
Regardless of whether you’re a buyer or seller, the more research and preparation you do prior to auction, the more likely you are to put your best foot forward on auction day