Rotorua Daily Post health and business reporter

More properties heading to auction

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The difficulty of pricing properties in Rotorua's hot real estate market is leading to more properties being listed without prices or heading to auction.

Figures provided to the Rotorua Daily Post by the Real Estate Institute of New Zealand show the number of auctions held in the first six months of the year was 48 - compared to 67 in all of 2015.

While the figure is about the same percentage as previous years, local agents say more people are looking at auction with it being recommended as the best way to get the best price in today's fast moving market.

Ross Stanway, chief executive of Realty Services, which operates Eves and Bayleys Real Estate, said both brands had always been focused on auctions.

He said there were several reasons why they were so attractive, but the main reasons included giving buyers a time frame and an open, transparent process for the bidding.

"They are good, particularly in this current market where the market is changing quite significantly. In some instances the price movement occurs over a very short time frame."

He said auctions gave the seller the confidence that at that point in time they had the best chance of the best price from the best buyer.

Mr Stanway said there was sometimes education needed around the process for both the buyers and sellers.

"Through our group there are a number of initiatives to educate as to how the process works so there are no surprises."

He said a benefit of auctions was even if the property didn't sell on the day of auction under the hammer, there were usually sufficient contacts to follow up so a deal was done afterwards.

"The buyer needs to be in a cash position. If for whatever reason it is not sold at auction it still gives an opportunity for conditional buyers."

Mr Stanway said he expected the number of auctions to increase given today's real estate market.

"It is the best way of a seller finding out what the market sees their property at and is the best opportunity for buyers to compete openly."

Professionals McDowell Real Estate Rotorua owner Steve Lovegrove said they had picked up an interesting pattern.

"A real sign of a change in the market is the vast increase in properties going to auction."

Mr Lovegrove said while six months ago a residential property going to auction would have been "not very common at all", they were now being used more.

Real Estate Institute of New Zealand spokesman Bryan Thomson said auctions were definitely increasing in popularity.

The number of tenders in Rotorua has also increased from just six a year in 2013 and 2014 to 22 so far this year.

Mr Thomson said there was no question the provincial real estate market was coming to life and Rotorua was one of the significant markets.

"What happens when that occurs is you go from having a market where buyers have lots of choice and not lots of competition to one with less stock and more buyers."

He said it then became a market where sellers had the advantage.

"When that occurs, even in the provinces where auctions are not quite as common, they come to the fore."

Mr Thomson said in hot markets it could be difficult to identify what someone might pay for a property until they offered it, so auctions could be advantageous.

"One of the key reasons for sellers [to choose auctions] is they get to set the terms, how long the campaign will be, the rules, deposit, and possession."

He said there was also the benefit of knowing when a property would be sold.

"They have a finite sale date."

Mr Thomson said there were a raft of reasons it was good for the buyers too - including getting them to see properties which they may not have looked at if they were priced.

"I expect across the industry the number of properties sold at auction will continue to increase."

He said the only area where an auction could sometimes be challenging was if a seller wanted more than their property was worth.

"You find that out in a concise time frame."

He said some saw that as a negative, while others saw it as an advantage as it "stops you hiding from reality".

"Other times it allows you to get that nice surprise when you find out it is worth more than you thought it could be."

Mr Thomson said in the residential market the two most effective strategies were still either auction or a fixed price and offer by private treaty, although with that people needed to be "very, very sure you are accurate with your price".

His best advice for those looking to sell was to make sure they picked the right agent.

"You have to take it very seriously when you select the person."

- Rotorua Daily Post

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