Property auction success drops to 18% at Auckland’s biggest agency
The number of properties sold under the hammer fell by 18% in the seven days to April 22 at Auckland’s largest estate agency, Barfoot and Thompson.
Ray White also reported a sharp decline nationwide over the past seven days, with clearance rates of 37%, down 24% from the previous week, a reduction according to the chief auctioneer of the company partly due to the long weekend.
Property investor Matthew Ryan, who owns around 100 properties, said it was time for estate agents to ditch the auction as they reduced the amount potential buyers were willing to spend when they realized how little competition there was in the room.
Ray White franchise owner Glenn Carpenter, however, said auctions are still helpful because they reduce the time properties stay on the market, which was important during a market downturn.
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Figures from Barfoot show that just six of the 27 properties in the central suburbs put up for auction have gone under the hammer.
Among the properties on the North Shore, only two of the 20 properties sold and in Manukau only one of the 21 properties sold.
Other areas performed better, with four of Franklin’s six properties selling during the week, and the only property listed in Papakura also sold.
Barfoot and Thompson were approached for comment.
Ray White also saw a drop in the number of registered bidders over the past seven days, with an average of 1.9 bidders per property, down 0.9 from the previous week.
The agency also reported that over the past week just over half (57%) of auctions received bids, down 24% from the previous week.
Auction clearance rates had been falling for some time, with one investor saying in March that the selling method had had its day as the market appeared to be collapsing.
Agents “send lists over”
MONIQUE FORD/Stuff
Property investor Matthew Ryan says he went to auction, saw bidding stop below its maximum and came away spending less on a home than he wanted.
Real estate investor Matthew Ryan said he was “amazed” that real estate agents continue to push the bids in today’s market.
He said bidding was great in a booming market as bids were pushed up by competition, but it could hurt prices in a down market.
He used the example of a buyer who saw a house he liked and might be willing to pay $2 million.
“But buyer B is more skeptical of the market, maybe doesn’t see the property working as well for him, and he’s only willing to go up to $1.5 million.
“As soon as the auction reaches $1.5 million or $1.55 million, people who would have paid $2 million realize that they no longer have any competition because the bidding stops.
“The agents will say ‘it’s fine because we’re just going to take them out the back to negotiate with the owner’.
Abigail Dougherty / Stuff
The Barfoot and Thompson auction houses have been much quieter this year compared to last year.
“But anyone who has conducted negotiations knows that when buyers no longer have to compete with other buyers, they become very conservative about the money they will pay,” Ryan said.
Agents should focus on finding the one buyer who falls in love with a home and start selling more before the private treaty deadline.
“They keep sending them to the trenches, but the clearance rates are low, and instead of actually analyzing, they keep listing properties for auction.”
Auctions reduce the time of properties on the market
Provided
Ray White Carpenter Realty owner Glenn Carpenter said agents should still sell properties at auction, even if more properties are not selling under the hammer.
Glenn Carpenter owns three Ray White franchises, operating primarily around the North Auckland coast.
He said auctions still had a place because they reduced the time properties were on the market.
“It creates urgency with buyers, it creates structure and imposes a timeline on them,” he said.
“You have 30 days to get it right and sell it. There are always exceptions, but in general, if you can limit your days on the market to 30, you’re doing a good job.
Ray White’s chief auctioneer, Sam Steele, said that in the past month a property put up for auction had a median ‘days on market’ of 27, compared to 38 for homes marketed by private treaty , which included sales by negotiation or priced properties.
“Our current national auction resolution rate is 52% over the last 3 months, with the number of auctions scheduled in March down only 16% compared to the same period last year, which shows confidence and appetite for trading back in a market that is adjusting to rising interest rates,” Steele said.
Steele said 2021 saw a record number of auctions, and with the market now returning to normal, auctions remained the preferred method of buying and selling.
“The average number of registered bidders remains stable compared to the same period last year, while properties with high appeal are seeing an increase in active auctions,” he said.
Carpenter said during the last market downturn in the last quarter of 2017 and the first quarter of 2018, the average time a property stayed on the market went from 23 days to 70.
Carpenter said lower auction clearance rates have caused sellers to ask more questions.
“A professional agent can answer these questions and give their sellers the confidence to move forward.
“A less professional agent will simply agree with the seller and tell them what they want to hear.”
