House with $1 reserve goes for $700k

The house on Orchard Way is thought to have sold for $700,000.

A Bay of Plenty home with a $1 reserve is believed to have sold for $700,000.

The four-bedroom, two-bathroom house on Orchard Way in Bethlehem went under the virtual hammer on website PropFi.auction today.

When the property was first listed, Ray White real estate agent Rodney Fong said the $1 reserve was to generate strong interest in the house - which in turn would generate more bidders.

The more bidders, the more competition which would potentially fetch a higher price.

Fong said the vendors were on board with the tactic despite the obvious risk of the house selling for a price that did not meet their expectations.

"They said let's give it a crack, bring it on."

He said it was the first time the website had been used to sell a property.

"It's an exciting twist to the process. People don't need to show up to an auction, they can bid from their couch on their computer."

Buyers wanting to bid on the house had to register on www.propfi.auction where they underwent a strict compliance and identification process before being able to bid.

Fairfax said earlier estimates put the property, which has a CV of $598,000, over $800,000 - but it went for $700,000.

The house was listed on an auction site with a $1 reserve.

Ross Stanway, chief executive of Bayleys and Eves real estate, said putting a $1 reserve on the home was an interesting tactic.

"The owners may either be extremely dissatisfied or pleased. Time will tell."

He said the auction process had stood the test of time for centuries and the hundreds of auctions run by Eves and Bayleys had statistically achieved good results for vendors and buyers.

"The auction process is not one we will tamper with from a gimmick point of view, but if a vendor has chosen to do that, that's their choice and I hope it goes well for them," Mr Stanway said.

Anton Jones, owner of First National Mount Maunganui, Tauranga and Omokoroa, said there was always risk when going to auction, but in a market like this where there were always people on the lookout for a house, the risk was reduced.

He said if the house passed all its pre-purchase checks, he could not see why it would not reach its market value.

"I suspect in this market it will get a pretty good result."