We’re entering the sales period that we in the real estate industry refer to as the ‘pre-Christmas squeeze’. This refers to a tight window of around six – seven weeks between Labour Weekend and Christmas that allows sellers to maximise the exposure of their property and capitalise on buyers who have not yet secured one.
This can be a golden windfall for residential property owners – if they’re aware of it. But then comes the big question. To auction or not to auction your property? What factors will influence your marketing decision?
- If there is something unique about your property
- The state of the residential property market
- Supply versus demand. The raw numbers. (i.e. the number of cashed-up buyers versus the amount of listed housing stock for sale)
- The level of competition in your price bracket, type of home and geographic
- Timeframe and urgency of the sale
The market can become very active when a distinctive property is listed. Is your property unique in some way? Examples can include unique qualities such as a coastal property that comes with its own mooring and jetty. Likewise, a rentable multi-dwelling property that offers strong income streams that could attract a savvy investor or developer if subdivided. Such qualities are more likely to attract a wide range of potential buyers and increase the chance of securing a good price at auction.
Current state of the property market
Sales stats for Auckland’s North Shore show that there were just 263 residential properties sold unconditionally in September 2019. This reflects a 15% drop in sales volume compared to September 2018, when 302 properties were sold. A tightly held market.
The good news is that values of properties have tended to stabilise through the winter and early spring period, with the median sale price jockeying along over the past three to four months at just under $1 million.
- There’s an acute shortage of quality entry-level properties, particularly in Birkenhead, Northcote, Hillcrest, Beach Haven and Birkdale.
- There is an over-subscribed number of pre-approved buyers whom are capitalising on the historically low, two-year 3.5% fixed interest rates. These include first-home buyers and mum and dad investors.
- The number of listings is relatively subdued for this time of year.
- We’ve also noticed the odd long-term investor is starting to re-appear at our open homes again, due to the low bank deposit rates and the volatile share market.
The level of competition in your area (supply vs. demand)
You need to know which properties of a similar price and type will be competing with your property and in your area at the time of launch. Obviously if there are a number of similar-type homes available and buyers have a choice, going to auction may not be the best marketing method. It may actually dissuade buyers from even attending your open home. If buyers have a choice they may vote with their feet and concentrate on properties with a defined price that they can readily act on.
If you’re trying to sell your property in a suburb that is in hot demand and where the housing supply is tight, then going to auction may be to your advantage, by generating maximum interest and heating up the bidding process.
If you choose the Auction option
We recommend creating flexibility within the auction campaign which allows owners to consider pre-auction offers. Occasionally during marketing you’ll get a buyer willing to pay a premium price who is not available on auction day, or whom you could lose if they purchase elsewhere before the auction takes place. An owner can balance this risk by either accepting a pre-auction offer or by bringing the auction date forward.
At Lochore’s we can advise you on the most appropriate marketing option to suit your particular property, location and goals.
by Lochore’s guest blogger Chris Gemmell