Power of the hammer

By Tony Verdon

Auction-day momentum can lead to great results in Auckland's frenzied housing market, writes Tony Verdon

1 Sharpe Rd, Epsom has a 2011 capital valuation of $1,580,000 and sold for $2,460,000.
1 Sharpe Rd, Epsom has a 2011 capital valuation of $1,580,000 and sold for $2,460,000.

There's an art to getting an auction room to hum, even in Auckland's often frenzied housing market. For sure, you need a hard-working agent and a solid marketing campaign to give you momentum, but the real power lies in the hand that holds the gavel.

It is spring and Barfoot and Thompson auctioneer Murray Smith eyes the crowds at the central-Auckland auction rooms. The sellers and potential buyers are equally nervous but there's a third group here more familiar with the high drama about to unfold. Some of them are so relaxed they've turned up in shorts and jandals. They are the investors, waiting to pounce on the real estate bargains.

The first property to be auctioned this day is a large two-storey home in the heart of Epsom, on a corner section at 1 Sharpe Road. It is close to all amenities and is in the much desired double grammar school zone.

People tend to hold to houses in Epsom - this one is on the market for the first time in 30 years - so interest is thought to be high. Even so, Murray has to make several appeals for an opening bid, asking at one point whether ìwe are all going to just sit on our handsî.

The property has a 2011 capital valuation of $1,580,000, and Murray Smith suggests an opening bid of $1.7 million. A bidder eventually obliges with a bid of $1.7 million (just above the 2011 CV of $1.58 million) but there is a moment of pause in the room as other bidders take stock.

But in the current market, those who hesitate lose, and a second bidder breaks the tension with an offer of $1,725,000. From that moment the race is on, with bids (in $25,000 increments) coming in so quickly it is difficult to keep track. This is auction room momentum in action, with the price streaking through the $2 million mark within minutes.

At $2.25 million, there is a pause in the bidding. Murray changes speed and starts accepting $10,000 bids. It has the desired effect and the momentum picks up. He changes gear again a short time later, reducing the increments to $5000.

A new bidder enters the race with a $2.4 million offer. Another bidder counters with $2,450,000, but is quickly trumped with an offer of $2,460,000. It's a winner and the property is sold. The buyers in this instance were clearly unconcerned about the Reserve Banks home-loan to value ratio restrictions, and the vendors would have been pleased to end the auction the best part of $1 million above the CV.

It's a perfect example of why owners of attractive properties in popular locations choose to sell by auction. Even so, 12 of the 60 properties scheduled to be auctioned today were sold before they reached the floor, with five of those Epsom houses.

But not every vendor leaves the auction rooms happy. During the morning session four properties fail to attract bids and four others fail to reach their reserve and are passed-in (although, one of these properties, in Mt Wellington, is sold to the highest bidder during negotiations immediately after the auction).

One of the properties to sell under the hammer was 57 Ballarat Street, Ellerslie. Described as a classic Kiwi bungalow, the house has three bedrooms, a designer kitchen, polished floors, a deck, garage, electric gates and off-street parking. Bidding starts at $700,000 ($100,000 above the 2011 CV) and quickly builds until the house sells for $855,000 ($15,000 above the reserve) to a telephone bidder.

Another property to sell relatively quickly is a three-bedroom house at 27A Owairaka Avenue, Mt Albert. This meticulously maintained house comes with a large lounge, deck, a carport, plenty of off-street parking and views across Mt Albert. It is also close to cafes and shops. From an opening bid of $638,000, the house sells for $672,500 - $262,000 above its 2011 CV.

Mt Albert and Epsom are not the only suburbs where the CVs are looking dated. A three-bedroom home at 44 Caen Road in Panmure sells under the hammer for $653,500 - $63,500 above the reserve and $183,500 above the 2011 CV. And a two-bedroom unit at 9 Novar Place, Pt Chevalier, sells for $369,000 - $24,000 above the reserve and $114,000 above the 2011 CV.

The results of today's auctions are evidence of strong demand clashing with limited supply in Auckland. Look in most real estate agency windows and see how many central Auckland properties are listed with a price not many. Most are scheduled to be sold at auction or by tender, particularly in popular central and outer central areas and coastal suburbs on the North Shore.

The power of the auction room will be abundantly clear to those who watched the final of this year's The Block NZ. One of the properties broke through the $1 million barrier in spectacular fashion.

Contestants Caleb and Alice Pearson made an $181,000 profit when their project sold for $1,126,000. Under the rules, contestants kept everything above an agreed reserve price for each property, and their reserve had been $945,000. Winning the competition also meant they scooped up an additional $80,000 in prize money. An estimated 1.2 million viewers witnessed their elation. At least vendors whose properties fail to attract buyers at normal auctions can deal with the inevitable emotional extremes they can provoke in private.

- NZ Herald

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