Realtors say auctions the way to sell in today’s unsettled climate.
The auctioneer’s hammer is banging away on Queenstown’s unsettled property scene.
Real estate agents say auctions easily provide the most effective way to shift property, especially in today’s market.
They suit vendors who want to sell but are uncertain how to price their property while also stimulating buyers who might otherwise dither.
Bayleys Queenstown ran a “gala apartment auction” last week for 11 units – four were put away under the hammer.
Harcourts Queenstown is also promoting a “mid-winter auction night” next Wednesday to sell a cross-section of eight properties.
David Murray, who owns the local Bayleys franchise with wife Anne Rattray, says “when we came here [six months ago], quite a lot of stock was just sitting, basically stagnating, in the market.
“Just taking price out of it, which you do with an auction, giving it a good marketing period and a defined time at which you’re going to get buyers in the room and ask if they want to buy it, works well for us.
“Compared with general agency or sole agency but without any deadline, or even tender, auctions are producing clearance rates very close to 80 per cent, and nothing is coming anywhere close to it.”
Local Harcourts auction manager John Petre tells the same story.
“A general listing, where a property is multi-listed with a number of companies, we’re finding is abysmal – we’re getting less than five per cent of our properties sold in that way.
“If we’re the exclusive agency, we’re achieving about a 28 per cent result but under auctions we’re achieving three times that,” Petre says.
“Buyers are taking their time at the moment to make a call.”
But an auction motivates them to get their finance organised, for example, so they can bid with confidence.
“We do help them through the process by providing all the background to the property that isn’t always available with every single property.
“There’s a little bit of uncertainty out there but when buyers come to the auction room and see there are several other people also interested, it does give them the encouragement that now is a good time to be buying.”
It also removes uncertainty for vendors: “Sometimes it allows the vendor a better idea of where the market sits.
“There are times where the vendor gets a confused signal from our industry – there’s no better way of telling them what their property is worth than by taking it to auction.”
And the beauty of multi-property auctions is that you can guarantee a good crowd, Petre adds.
Both Petre and Murray say another advantage is the auction sales process being unconditional, with a 10 per cent deposit having to be paid on the spot.
“It does eliminate all the buyers who are just taking options on property,” Petre says.
Local Real Estate Institute of New Zealand spokesman Adrian Snow confirms there’s “a significant increase” in auction activity.
“One of the problems real estate agents and homeowners and any property professionals have had is being able to accurately price a property to market, particularly at the moment with property values coming down and no one really knowing where the values are settling out.”
Meanwhile, Snow says REINZ is introducing plain-English sales and purchase contracts.
“I expect most local agents will adopt this as the new format, based on ease of use and ease of understanding.”