Expert says selling homes at auction not the way to go in slow market

Property market commentator David Whitburn says he wouldn't put properties to auction in this market. Photo/Doug Sherring

A property market commentator and investor is advising homeowners to avoid taking their houses to auction in a cooling property market.

David Whitburn told Larry Williams on Newstalk ZB's Larry Williams Drive he believes sellers shouldn't be going to auction at the moment.

"I don't think it's the best form of sell in the current market, the reason is there's not the same level of demand out there so you're not getting as many purchasers if you're selling your property as you would have in the months and certainly the years gone by," he said.

Whitburn said the auction clearance rates were sitting at around 40 to 50 per cent, which was "well down" from 2015/2016.

He said auctions were a good way to sell property in a buoyant market when people had a "fear of missing out".

"You can attract an emotional premium if you have a targeted, in particular six-week marketing campaign to drive as many people as possible to build to crescendo," he said.

"It's the theatre of it all and everybody clapping the winner led by the agents and the auctioneers. That's all designed specifically as a marketing exercise to get people's emotions coming out to think, 'hey I'm a winner, I've won the property at that auction'."

"That's not there, the confidence isn't quite there at the market so people are being a lot more astute with their purchasing decisions and they don't prefer the pressure that an auction gives."

Whitburn said a property failing to sell at auction could be disconcerting for the homeowner and take their next step away, such as buying a new house.

According to Whitburn some real estate agents were still interested in auctions for a number of reasons, including their ability to get an auctioneers fee and market themselves.

"And they will be convinced that they are doing the best thing for you, however that's not necessarily the case nowadays and I personally wouldn't be putting properties in this market to auction and don't advise others to do that too," he said.

Whitburn said adding a price guide when houses were being advertised would be really useful and help save the time of potential buyers by allowing them to see if the property is affordable from the outset.