First National: Auctions Least Effective - Survey

First National monthly market survey for March shows auctions are currently the least effective residential housing sales tool.

However, they are working well in mortgagee sales and scare supply properties.

First National has 70 offices across New Zealand, with around 500 salespeople. The group’s monthly survey measures key market indicators including buyer enquiry levels (open home attendance, emails, web views, walk-ins), listings and contracts signed.

Listings increased again in March but overall buyer enquiry was lower than February, the survey showed.

Respondents were also asked to rate the effectiveness of selling methods (auctions, tenders and individual negotiations) in their regions, not just their own businesses.

Individual negotiation between buyer and seller was deemed by 72% of respondents as the most effective, followed by tenders at 18%.

Auctions were considered best method in just five locations: Manurewa, Rotorua, Waiheke Island, Tauranga and Timaru. However, First National agents in Ashburton, Kaitaia, Otaki, Tauranga and Wanganui said auctions were working well for mortgagee sales.

The survey reflected other industry groups reports of increased listings but regional variation lowered the overall listing increase to just 3%, on par with previous years.

Regional listing variations were between increases of 8% and decreases of 5%.

Increased listings showed up in Canterbury, Taranaki, the Waikato, Wellington and Marlborough.

However, listings in the Nelson/Tasman region, Auckland, the West Coast, Southland and Bay of Plenty had dropped from February. Other regions were on par with February.

First National Group general manager John Stewart said in the current subdued market, vendors need to make sure they were using the right selling tool.

Some realtor groups use auctions as their main selling tool but vendors must be careful their agent is giving them the best advice for the sale of their property.

We saw a competing agency take 10 properties straight to auction in one town last month and there was not a single bidder.

Mortgagee sale appears to be ideal for auctions and tenders can provide vendors a multi-offer situation but mainly we are seeing properties get the best price using skillful individual negotiation.

At a time when buyers are scarce we wonder if encouraging vendors to follow the auction pathway first is the best advice. At an auction, buyers must be able to unconditionally purchase.

In times like this, where buyers are few and far between anyway, the best price may well come from someone with a home yet to sell rather than from one of the few cashed up buyers in the market.

It's that fine balance that real estate professionals must manage between getting the vendor a sale and attaining for them the best price available in the market.

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