The growing gap between buyers' and vendors' price expectations is taking its toll in the auction rooms

An apartment in the Zest building was one of the few to sell at this week's auctions.

The growing gap between the price vendors are expecting to receive for their properties and the price buyers are prepared to pay, was never more obvious than at this week's main Auckland apartment auctions.

At Ray White City Apartments' regular auction this week seven apartments were offered, with the auction of an eighth that had been scheduled to take place cancelled just prior to the event.

The seven units that did go under the hammer were a good mix and included a couple of leasehold units, a couple of shoeboxy numbers that have been a mainstay with investors, and a couple of units likely to appeal to owner-occupiers.

So something for everyone, and there was a good turnout of potential buyers. Many of them were prepared to raise their hands.

The auctions at Ray White City Apartments usually achieve some of the highest sales rates in this sector of the market, and of the seven units that were offered this week, four attracted multiple bids, two attracted a single bid each and one had no bids.

But by the end of the auction only one of the apartments had sold.

As one of the agents present said at the end of the proceedings, "it's been a tough day at the office."

To be fair, one of the apartments was auctioned in unusual circumstances.

It was an apartment in the Beaumont complex on the corner of Franklin Road and Victoria Street West, just across the road from Victoria Park.

This is a popular complex with owner-occupiers and units in it usually sell readily.

But just before the auctioneer opened the bidding on it, he told the room that he had just been advised by the vendor's solicitor that the disclosure statement for the unit incorrectly stated that it had never been the subject of a weathertightness claim, and that a claim had initially been made several years ago but it did not proceed.

This caused a potential bidder to raise an objection that he had not had time to undertake due diligence on the issue.

That appeared to cast a pall over the proceedings and although there were believed to be several potential buyers for the unit in the room, it did not receive any bids and it was passed in.

Interest.co.nz understands the weathertightness issue was a comparatively minor one which the building's body corporate resolved without the need to go through formal proceedings, but the initial claim was still a matter of record.

Had this issue not arisen, then that particular unit may also have sold.

But even if it had, two sales out of the seven properties offered would still have been a particularly poor result, and the mood among buyers does not appear to be improving.

Down at Barfoot & Thompson's regular apartment auction things were no better.

Of the seven apartments scheduled for auction, one was withdrawn and another was sold prior to the event, leaving five to go under the hammer.

Two of those received no bids and only one of the others was sold.

Another tough day at the office.

The results of both auctions with details of the properties offered and the prices achieved on those that sold, are available on our Residential Auction Results page.

If you are interested in commercial property, check out recent sales on our Commercial Property Sales page.

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56 Comments

Auction only works when what you have to offer is exceptional. But then most owners think their patch is really that - exceptional. Good exercise though.

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12

It's an exercise in conditioning of the vendor by the RE agents. RE's care mostly about turnover, not ultimate price.

Yep, they are often when they get passed in.

Then the put the acid on: "We brought you the market" blah blah blah.

I think the gap is 200k from theory to reality .

Auctions are for REs to get great advertising and promotion for themselves at the cost of the vendor.

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19

If vendors sell privately they can afford to get a little less...I sold privately but got considerably more than the useless agents managed to achieve...and it cost me less than $1k...
https://www.linkedin.com/pulse/what-i-learned-from-selling-my-house-priv...

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I read this article with interest yesterday and I have to say that you're going to see a lot of this happening as poor auction sales are now the new normal.
Also, it confirms what pretty much everybody has known all along, RE's do very little for a hell of a slice of the pie.

Yup.

Nice work. The commission thing has always bugged me (its at the wrong end).
I also think about it this way. If i could get $500k on trade-me without trying, and an agent could get me $530k. If agent fees were $20k, then the commission is effectively $20k on $30k. Ie up near 70%. That's nuts.

And that is how their commissions should be structured, say 20% of everything above 90% of expected value.

Good article Erin. The hourly rate for agents is criminal. When you actually start looking at the maths it's enlightening.

I went through a similar experience - the hope given, the hope taken away, the pressure applied. It must be on chapter 1 in the RE manual. I ended up selling privately and having been through the experience I would never use an agent to sell again.

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I have sold 20 properties through RE agents, then i sold 20 more myself off trademe and got more than the RE agents quoted . Agents want a quick easy sale. Just get a recommended Valuation Company to do a valuation, then give that out to potential buyers, and be generous and give some or all the saving of an agent back to the new purchaser. It will sell fast. Never use agents !!! You may end up with tothepoint. LOL.

Now we know why John Wheeler (& dealer) is so keen on a property crash. All cashed up and ready to buy at that low, low price.

Aren’t you all cashed up Zach ?
Oh yeah you’re a sit n hold type
Some day you’ll learn but doubtful
Hope your daughter found a job
Best wishes

.

And you're another one NorthernLights.

He/she has a strange obsession with your Daughter’s employment status. It borders on creepy.

Creepy would be the Ponytail puller with the 20mill house
I’m just concerned about kiwi youth finding a job

No Zach nothing planned for NZ for awhile anyway
I wish you well

Zachary Smiths reaction is proof he is indeed Tothepoint. Classic.

Good old Johnny Wheeler.The peoples champion turns out to be a bloody flipper!Classic.

Property Developer actually. We keep the prices down by supply. Zach is getting desperate. LOL. Another new user name i see. Keep up the spin Zachy.

john wheeler, if only Zachary would take a page out of your book! You knew when to sell, you know a cooked market when you see one.

Zachary, if only........(sigh)

Erin well done !
RE agents samevthe world over 1 good one out of 5
I fired 4 up here and 2 in NZ in past 3 yrs alone very poor standards everywhere
Had a good friend in SF former waitress turned agent who was good but that was early 80s

It often doesn't work this way Erin.

I was a commercial/industrial agent 18 years ago. Quit when auctions started coming in. They are a tool by agents for agents. So unethical. I write at length here: http://www.duganotherhole.com/?p=843

Prior to 2000, auctions were rare, with the only company doing them as a mainstay being Bayleys.

And so around those times we would see owners try to sell their own places - with a price listed. And the properties would sit there and sit there. And then they would come to us (or another agency) and ask us to sell it. Remember this is offices/shops/factories, not houses.

But the thing is, once buyers have seen how much people want, seen the property, they go away. And they don't come back even if the price is dropped. Some have already bought, others are just permanently put off. So you kind of only get one shot.

Gotta say I'm surprised you managed to get a high price after going to auction twice. I would have thought that wouldn't happen often.

Seems the Auckland apartment market could be in for a rough ride

Personally, I would like to see real-estate agents on the endangered species list within two years and completely extinct within four. I have had so many bad experiences with them it is unbelievable...if I had included all the terrible things the two agents in that article did, it would have blown out to 3000 plus words...so just mentioned a couple of things. BTW, would love it if people share the article...I am trying to start a major revolution here! :-)
https://www.linkedin.com/pulse/what-i-learned-from-selling-my-house-priv...

I quite like many of the RE agents I've met - it's the RE agencies (i.e., the company/corporate owners) that can be objectionable, and those who push their agents into selling advertising and selling auctions (and the conduct at some auctions) are of concern (and can be particularly unfair to the inexperienced buyer and/or seller).

Sure, some agents are incompetent, others unscrupulous, but there are many a good agent that makes a big difference from both a buyer and seller perspective.

I've never been an agent - though I have more than a keen interest in the RE market - and have bought and sold many a property. I only twice sold myself - once to someone who knocked on the door - and once via a TradeMe ad - and only did so that time because the property (a 99 acre lifestyle block) was going to require an agent willing to hike up and down paddocks and 4WD around it with potential purchasers, one at a time - as opposed to stand at the bottom of the main race with an aerial map, pointing out the boundaries.

The process was easy (and quick! two viewings, two offers) but the market was buoyant. And that's the main thing. If things are slow and there are few buyers (and lots of listings), and if most sales are conditional on the sale of another property, then agent/agencies really do earn their commissions.

You can easily sell yourself as all the agents use trademe. Get a reg valuation, a building report all the lim information and make it avalible. Have the home vacant so viewing is no hassle, be honest with problems and if your not keen to negotiate in person do it through email. There is all the relevant forms online.

Completely agree. Have sold a handfull doing exactly that.

Maybe vacant, but not necessarily, if it is your own home, and definitely, definitely not unfurnished, that makes it an extremely hard sell. Most people, especially those buying a home for themselves quite like a house that has the feel of a home. Don't completely buy into some of the hype about it. You can quickly kick the kids' gear under their beds if need be. Keep bathrooms and kitchen clean, they are the real sellers.
About the only advantage to having a third person involved (agent) is that everyone tries to find reasons not to buy a house, (rather than reasons to) and it is difficult to bring up objections to the actual vendor, as they seem like criticism.

It's a game called "meet the market"

For 5 years, Buyers have been meeting the market
Now it's Sellers turn to meet the market
They haven't yet

We're going to sit this one out.

You hang in there Zachary! Ultimately you have Trump to thank for our economic correction. :)

There's been an economic correction?

Yep Central AKL -$200k and falling..... (And that's just here).
https://www.interest.co.nz/property/91100/lower-house-prices-see-central...

Quote: However the median price in central Auckland has had an even bigger fall, dropping from its March peak of $1,050,000 to $850,000 in October, a decline of exactly $200,000, suggesting the weakness in the central Auckland suburbs is not confined to the apartment market.

2/7 at the Barfoots auction isn't great but not terrible.

NO. That is terrible !

2018 - THE YEAR OF THE CRASH ! ( or is it already here ? )

Do you run panuku developments?

Houses that fail to sell at auction often sell soon after. This one for example which I was watching as it is "affordable" DGZ:
https://www.trademe.co.nz/property/residential-property-for-sale/auction...

The sales i mentioned this morning all went to Auction. One sold at auction, the other two had no bids but sold within a day. The agent is a very happy camper bagging three commissions.

Another 16 houses and units added to the auction results page since I last checked. Now the good results from a seller's perspective have been somewhat skewed by an unusually high 2017 RV for a high end property. Pleasant Place sold for 3.750M but had an RV of 4.825M. Its 2014 RV was 3.575M. So a pretty good price really but a mighty 1.075M below 2017 RV. This gives the following result:
24.170M in sales with an RV of 25.020M which is -3.40%

Yet 11 properties out of 16 sold above 2017 RV.

To the rescue comes my new method of countering the absurdities of the 2017 RV which is to remove the best and worst performer.
With this we get 20.198M in sales with an RV of 20.195M a 0.015% increase over RV for 14 sales.

Of course there will be squeals of outrage over this fiddling of the numbers but, come on, 5M is not your ordinary property!

I see there's the number of listings for Remuera and Epsom is building, not many risking going to auction, plus the viewing rates are dropping.

Doesn't look good for you and DGZ at the moment or the long term. Not to mention but at height of the selling season. Ahh well, we did try to let you know that this would happen.

When The Facts don't fit The Statistics, make The Statistics fit The Facts!

It happens in all markets. But when it comes to RV's it works on the way up ( "That low RV means nothing !) and the way down ("That high RV means nothing!)

Don't kid yourself, high influx of cashed up Chinese buyers now gone, locked down by their own government since early this year and they're not coming back due to Trump embarking on a trade war. Global events far beyond NZ control, thankfully we do have Labour at the helm to do the right thing.

And don't worry about a recession, that's actually a good thing it's basically hitting the reset button.

Yes of course you can sell your own home privately.
Reality is though that commission is only paid once.
That is that generally if a buyer is buying privately he will always offer lower due to knowing no commission being paid.
Most people have not got the ability to negotiate the best price possible,unless they have experience and that is fact.
How do you know you have obtained the best possible price available?
I know of plenty of properties sold privately and where owners think they did a great job by selling privately and saving commission.
Yes they saved commission but it also cost them plenty!!!!!
Everyone’s right to but get the right negotiator and you will do better.

Speaking as the agent you are The Boy.

Gordon, past agent!
Professional investor landlord now as working for wages is very overrated!

You clearly did not read my article...I know I got a better price than the agents because one wanted me to list it at $640K and the other tried to heavily pressure me to accept an offer at auction for $575 k. After firing both and doing it myself I get $675k...enough said really.
https://www.linkedin.com/pulse/what-i-learned-from-selling-my-house-priv...

You did the right thing Erin. A friend of mind who has now moved to the US, has managed to sell his Auckland home via Private Sale. Having waited a year for an RE to fail to sell it at an over inflated prices including the auction expense and stress. After a few weeks private it has now been sold.

No such thing as a “ professional “ investor landlord. You overrate yourself as always. Especially when you own as is where is property. Professionals have degrees and they give advice.

Professional:

engaged in a specified activity as one's main paid occupation rather than as an amateur

Just an interesting update on my Linked In article: https://www.linkedin.com/pulse/what-i-learned-from-selling-my-house-priv...

Paul Foster
Award-winning residential real estate salesperson | In top 5% of real estate salespeople | Iron Bridge Real Estate
I am an agent and I always have respect for people who sell successfully with a private sale so congratulations and well done Erin. I also completely relate to your cynicism towards a lot of what goes on in my industry. The very thought of you being taken into a room and given high pressure to drop your reserve makes me cringe.

Whilst I can understand why you encourage others to give it a go privately I think you are overlooking that not all people are as capable as you. You clearly have the ability to handle buyers and negotiate well, but a lot of people don't.

Over the years I've sold for a number of people who gave it a go privately but weren’t able to get a sale over the line. Some of those sales were for a price above what they were asking privately so therefore similar to your situation but in reverse.

My advice to people considering selling privately is often to start at the higher price with the agent and if they end up having to drop their price they can take it off the agent and try at a lower asking price privately without any commission. The key thing to that approach is to make sure there are no up front costs with agent and no penalty for withdrawing from market.

Here’s to giving the industry a shake up!
Like Like Paul Foster’s comment Reply 2 Likes 2 Likes on Paul Foster’s comment · 1 Reply 1 Comment on Paul Foster’s comment
24m

Erin Burke
Employment Lawyer and Director at Practica Legal, Hamilton, Waikato, Cambridge, Huntly, Bay of Plenty
To say the industry needs a shake up, respectfully, is an understatement. I have been involved in so many transactions over the years where straight out lies (no, not a misuse of this vey strong word) is the norm, including bailing out my 85 year old father, living on his own, who was being completely and knowingly (by agents) exploited...sorry...I know of no other profession who does so little for so much and appears to have no boundaries...you people have made your money, had your day....time to upskill and find a different profession... (edited)
…see more
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Gordon, you really shouldn’t comment if you don’t know what you are talking about.

I have 2 As is where is properties that both return close to 15 per cent on purchase price.

Both will get insurance no problem as nothing wrong with them now.

People in Chch have made a lot of money on as is homes.

If you are prepared to invest wisely then you will do very nicely

Offer still o n the table.

Your as is where is gains will cover your losses on your other homes as they continue to lose value month by month. Why did you not invest in Dunedin or Queenstown. I thought you were a professional. LOL.

Erin, with respect I don’t know this Paul Foster as he obviously works in Auckland.
I beleive that his comments regarding giving it to an agent at a high price then taking it off him and selling privately at a lower price is a stupid thing for any agent to say.

The best price is always gained when the home is first on the market and not after it has been on with an agent.

The private seller will get a bath as they know it has been on with an agent previously who,couldn’t sell it.

It is agents making comments like tha, that shouldn’t be in the industry as he is not representing the bests interests of the seller!!!!

Paul Foster should be ashamed of what he has said if that is exactly what he has said!

Hang your head in shame Mr Foster, that is a shocker and if you were an employee you should be severely disciplined and a complaint laid with the Real Estate Institute.