Nationally, 29.9 percent of properties listed for sale in August had a display price, Realestate.co.nz said.
Photo: RNZ / Nate McKinnon
If you’ve been in the market for a new home lately, you’ve probably noticed it is relatively unusual to see a house listed with a price.
Nationally, 29.9 percent of properties listed for sale in August had a display price, Realestate.co.nz said.
Just under 23 percent were going to auction, 22.2 percent were for sale by negotiation and 21.9 percent had another sales method.
In Auckland, only 12.07 percent of houses had a price listed, 31.54 percent were going to auction, 36.86 percent were selling by negotiation and 17.51 percent had another method of sale.
In Canterbury, 31.21 percent had a display price and just 5.79 percent were by negotiation.
In Wellington, 26.1 percent had a price, 15.93 percent were going to auction and 29.56 percent were being sold by other means.
But with places with prices being in the minority, how can buyers know what to offer?
Realestate.co.nz spokesperson Vanessa Williams said there was a lot of data available to help buyers understand the market.
“Looking at average asking prices for the area, along with recent sales of similar homes, can provide helpful context for understanding a property’s value. The realestate.co.nz price estimate, available on most listings, is a really great place to start.”
David Cunningham, chief executive at Squirrel, said buyers could start by thinking about who their competition would be.
In an auction, tender or multi-offer situation, it was likely to be the other buyers. In a negotiation, it was the vendor.
“Remember the real estate agent works for the vendor. They’ll be helpful, but their job is to sell the house for the highest possible price. They won’t help you stick to your budget or choose the best bidding strategy – even if they give you a nice pen and smile heaps.”
He said the main driver of price activity was scarcity.
If there were not many options to choose from, buyers would be more likely to bid against each other and drive up the price. When there was less competition for homes, the prices would drop.
Buyers could get information about the vendor such as why they wanted to sell. If they had already bought another place, or were struggling to pay the mortgage, they would be more motivated to accept an offer than someone who could wait it out.
“Vendors will more readily give up profits than suffer a loss. A vendor who has owned a property for over seven years is likely to have substantial profits built in. If they are upgrading, they are also likely to have benefited from a great deal on their new purchase.
“Empty houses and incomplete projects will sell for a full 10 percent lower than houses that are lived in and, crucially, not costing the vendor money. If you find one, offer a quick settlement – the seller will want to get out more than he wants the extra money.”
Cunningham said in a tender, a clean offer would be important.
“They might be prepared to compromise on price for a simple offer or one with a convenient settlement date. Again, this is about putting yourself in the vendor’s shoes.”
Ed McKnight, economist at property investment firm Opes Partners, said people should make sure they were basing their offer on what price other properties had sold for, not on the asking prices they saw online.
“Real estate agents and economists pay to get that data. But consumers can also get it. The best website I have found is realestate.co.nz, through their sold section. I often suggest to investors to type in the suburb they want to buy a house in. They can then see the properties that have recently sold and their price.
“Let’s say you are looking at a property in Waltham, Christchurch. And it has three bedrooms and two bathrooms. You could type in the suburb name in realestate.co.nz. Then you aim to find properties that have sold that are similar to the property you want to buy.
“This will help you get a good idea about what the market price is for this home. Having figured that out you can then make your offer slightly lower to leave room for negotiation.”
He said the real estate agent would have used a similar process when talking to the owner of the house to give them an idea of what sales price might be feasible.
Auctions were relatively common, particularly in Auckland, Canterbury, Bay of Plenty, Waikato, Northland, Gisborne and Coromandel.
Photo: RNZ / Cole Eastham-Farrelly
In smaller regions, it was more common to have a display price. On the West Coast, more than 90 percent of properties were listed with a price.
In Taranaki it was 68 percent, Nelson 82 percent, Manawatū/Whanganui 64.96 percent, and Coromandel 56.82 percent.
Auctions were relatively common, particularly in Auckland, Canterbury, Bay of Plenty, Waikato, Northland, Gisborne and Coromandel.
Cunningham said buyers going to auction would need to think about their strategy, whether that was waiting until the end, throwing in a high bid from the start, bidding fast or in big increments.
“Your aim is to make the other bidders think you can go higher than they can – even if you actually cannot. It is like poker – so confidence is key.”
Steve Goodey, a property investment coach, said he did not think auctions delivered the best price result for sellers.
“Auction strategies still work when competition is genuine and strong. But using auction by default, when buyer demand is thin, often short-changes the vendor. You may sell but not necessarily for the best price the market would pay.
“And that’s the point: getting the best price, not just the first one that hits the reserve.”
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