Popularity of auctions for house sales soars

By Michael Dickison

Kayne and Sheree Clifton with Alexis in front of the home they are selling by auction. Photo / Richard Robinson.
Kayne and Sheree Clifton with Alexis in front of the home they are selling by auction. Photo / Richard Robinson.

The number of houses being listed for auction is surging as limited supply gives sellers of even modest homes the upper hand.

Real estate agents are touting auctions as offering the greatest transparency for buyers and sellers despite - and because of - the secrecy around desired prices.

They have now become so commonplace that some owners say they have no choice but to join the trend.

Last month alone saw a record 1745 new listings around the country as auctions, which is 13 per cent of all new listings. And in Auckland - for the first time - more than 1000 new listings as auctions entered the market, a quarter of all new listings.

The Real Estate Institute recorded 6168 house sales in February, the latest month for which data is available. Eleven per cent - or 686 houses - were sold by auction. That was up from 231 houses sold by auction in January.

Historically, auctions were reserved for top-end properties for which it was difficult to even suggest a price. But current listings for auctions include inner-city apartments and modest homes targeted at first-home buyers.

Institute board member Bryan Thompson said auctions had recently surged as real estate agents pushed their benefits.

"The auction process very quickly determines what the market value is - you don't get to hide from the market, and that to me is a very positive thing."

Auctions were heightened in the current market, with a limited supply, but they could work even when demand was low, Mr Thompson said.

"When you look at the market we have right now, particularly in Auckland, there's competition from buyers with limited opportunities to buy property," he said. "[But] when you sell, the market's the market's the market."

In Auckland, more than a fifth of the sales tracked by the institute in February were by auction - by far the highest rate in the country. And yesterday, 43 of the 100 latest Auckland listings on Realestate.co.nz were for an auction. The website's chief executive, Alistair Helm, has called auction listings a "bellwether" for the property market, increasing during times of high demand and short supply.

"Vendors are more keen to pitch their property to a more active market," he wrote on his blog, unconditional.co.nz.

Auctions typically ran for about three weeks, during which individual offers could be made. But Ray White realtor Melody Lowe said the true value of a property was often realised only once the bidding started.

"Sometimes [potential buyers] make an offer, then pay $50,000 or $60,000 more at the auction. They're telling me [only] what they would like to pay for it."

Going, going, gone, in just three weeks

For Sheree and Kayne Clifton, initial uncertainties about entering an auction were outweighed by concerns they might miss out.

The Cliftons, who are 39 and 34, have this week put up their first home for sale by auction after six years.

They are expecting a second child and want to find somewhere bigger than the two-bedroom Onehunga house they share with daughter Alexis, who turns 2 on Saturday.

"For us, it's just not knowing what your house is actually worth," Mrs Clifton said. The couple have made improvements, including overhauling the kitchen.

They initially looked at selling the house on their own, but it became clear an auction would be much less stressful.

The quick process of the auction - just three weeks of open homes, then the bidding - appealed.

"When you're looking at houses, everything goes to auction now," Mrs Clifton said. "We've been looking at what's out there and sometimes it's frustrating when there's no asking price - but it motivates you to actually get in touch with the agent."

- NZ Herald

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