Steve Koerber's Old Blog

Remuera's house sold name since 1998 – 021864166

Posts Tagged ‘auction’

Frustrated with auctions? Want to know what the vendor’s are expecting?

Posted by Steve Koerber on October 19, 2009

Have you ever been to an open home and asked the question “What are the vendor’s expecting?”

In New Zealand we bring so many homes to the market that have no pricing, it’s no wonder frustrated potential buyers are always asking the same question.  

Auction, tender, by negotiation, set sale, expressions of interest, CV$920,000, POA, PBN, etc, etc.

The other day I had a conversation with a lady who came through one of my open homes.  The property was going to auction and she said to me in a very matter-of-fact manner “You’re the local expert, how much do you expect this home to sell for?”

So how does an “expert” answer a perfectly reasonable question like that?

I’ll analyse her question step by step:

Firstly, she was absolutely correct. I am the local expert.  I’ve sold more homes in the area in question than any other agent.  I look inside more homes than any other agent and/or property valuer.  I see more homes than buyers see.  If anyone has a reliable crystal ball I should have the Ferrari of crystal balls!

Secondly, I still have difficulty guessing how much it will sell for.  It is an auction and the market will ultimately decide the home’s fate (and price).  Sure I could have said to her “it should sell in the $1million to $1.1million bracket”.  Why am I reluctant to say that?  For many reasons –

1.  If buyer sentiment changes (due to unforeseen circumstances) between now and the auction most buyers might freeze.  This would affect the value.

2.  If interest rates went up or down between now and the auction some buyers’ ability to buy might improve or get worse.  This would affect the value.

3.  If all similar properties available for sale all of a sudden sold, this would affect the value.  Similarly if the market was suddenly flooded with similar homes, that would affect the value.

4.  If a neighbour who had won lotto decided they need the land to house their new fleet of luxury cars, that would affect the value.

5.  If a motorway extension close by was announced, that would affect the value.

6.  If there was only one bidder, that would affect the value.

7.  If there were 20 bidders, that would affect the value.

The most important reason I would be reluctant to say that it should sell in the $1million to $1.1million range is this:  In case it doesn’t!  If the owner is so realistic that they just want to cut it loose it could sell in the $900,000s.  How would the buyer feel when they call me after the auction, me having said $1mil to $1.1mil and I say it sold for $910,000?

Sure, the same person could come to auction, bid it up to $1,050,000 and then see it sail up to $1.2million.  That could happen, but how much control do I (or they) have over that occurence?  Litttle or none!

The market is the market and the value is the price offered by the highest bidder.  When it comes to guessing or estimating the value, vendor expectations are completely irrelevant.  I understand why buyers ask the question, but hopefully I’ve explained why it can’t and shouldn’t be answered.

One of the most profound things I have learnt (from Tony Robbins) is that the quality of your life is determined by the quality of the questions you ask.  If you ask “what are the vendors expecting”, that’s not a great question.  Most people ask it, I know why they ask it, but it’s not going to help you to buy a home!  If you re-phrase and ask “would the vendors accept $1,000,000?” then you would be asking a very good question and you would be more likely to get a realistic answer.  (If I know the answer to that question  I’ll answer it).

Still not convinced?  Still think I must know what every home is worth?  Give my crystal ball a try…..    crystal ball

Posted in Buying a home, Uncategorized | Tagged: , , , | Leave a Comment »

Tips for buying at auction

Posted by Steve Koerber on September 23, 2009

auction-main_Full

Many New Zealander’s seem to be intimidated by the auction process and it’s easy to understand why.  Auctions are very exciting events.  I’ve been in real estate for 13 years and I still get that surge of adrenaline when I bid on a property myself.

But if you avoid auctions because you’re uncomfortable with the process you’re going to miss a lot of good buying opportunities.  It’s usually the best properties that are offered for sale via auction, particularly in Auckland where a culture of auctions is ingrained.

All that said many buyers still perceive them as highly stressful events that lead to spur-of-the-moment decisions based on emotions rather than sensibility.

This only happens when people are unprepared.  Many people forget that pretty much all of the tough choices, such as determining your maximum price, can be pre-planned – thereby reducing the auction itself to merely a forum for executing decisions already made.

Preparing to buy via auction

You can authorise someone else to bid on your behalf.  Choose someone you trust who has auction experience, or even hire a buyer’s agent. 

Alternatively, get ready to do the bidding yourself, if you’re prepared and clued up, it can be great fun and yield a great result – here’s how.

Prior to the event

  • Use your research and budget to help you identify a ‘walk-away’ price.   It’s in your interest to keep this a secret from the agent, so they don’t use this information to help the vendor set their reserve.
  • Have your finance already in place and attend the auction ready to write a deposit cheque.
  • Attend some auctions beforehand to experience the atmosphere and observe different bidding strategies.
  • Organise any amendments to the contract, such as a longer settlement period, prior to the auction.  Talk to the agent and get agreement from the vendors in writing.

On the day

  • If you’re going to start the bidding, start low.
  • Project confidence – make the other bidders think you have no limit.
  • Make your bids fast and assertive. Agonising over your next bid is a sign of weakness.
  • Call out your offer in full (i.e. say “$350,000” instead of the increments, i.e “$5,000”).
  • If it’s going to pass in, make sure you are the highest bidder, as this allows first right to pay the reserve price.
  • Stick to your ‘walk-away’ price. It’s better to feel the short-lived disappointment of missing out on a property you love than the long-lasting remorse of paying too much.

Fate can play a hand in these things. If you miss a property at auction, accept that it wasn’t meant to be and look forward to finding something better soon.

Thanks to John McGrath for providing the framework for these tips.  Good luck and enjoy the ride!

Posted in Buying a home | Tagged: , , , | 3 Comments »

How do you sell in a buyer’s market?

Posted by Steve Koerber on January 9, 2009

I realise that most people reading this blog are currently neither buyers nor sellers of real estate in Auckland. 

However, if you are considering buying at the moment, I envy you.  You have plenty of choice.  If you’re clever and well researched you’ll make a safe purchase.  Like all long term residential property owners in Auckland since the 1950’s, you’ll probably achieve a similar long term return and be glad you bought when you did.  Trying to time the real estate market is a mug’s game.  For long term success, the most important thing is to play the game and get into it.  

If you’re a seller, you might be wondering whether it is a good time to sell.  The answer is simple.  If you need to sell, you should.  If you don’t need to sell, it might be best to wait for a while. 

If you’re currently on the market and you don’t need to sell, your home is probably priced above the market.  A positive outcome is that you’ll be helping those who need to sell, to sell.  Because a real seller’s price will look better than yours, buyers will be drawn away from yours to theirs.

So, if you really want to sell, should you simply price your home low?  Should you set a price then drop it regularly until you sell?  I believe the answer is no!

Recently I’ve helped many real sellers achieve good sales (within a 4 week time frame) by not pricing their homes at all.  How have I done this?

Instead of telling potential buyers what they should pay for a home (ala having an asking price), I’ve simply asked real buyers to nominate what they would be prepared to pay.  I’ve then shared their opinion with others who have expressed interest.  By sharing this valuable information amongst a group of people that have all expressed interest, I’ve been able to A) sell the home to the keenest member of the group, and B) convince them to compete with other like-minded people within the group. 

At the right price level you’ll always find a buyer, or two or three or more.  I love the “no reserve” auction concept as the purest and quickest way to establish a property’s market value. 

A “no reserve” auction is a little scary for most sellers to seriously contemplate.  However, if done right, with appropriate marketing exposure and hype, it’s actually a pretty safe bet for sellers who really need to sell.

If your’e a little less adventurous you can always try a standard “reserve auction” and maintain a bit more control over the sale price.

Posted in Buying a home, Selling your home | Tagged: , , , , | Leave a Comment »

Why auction in a buyer’s market?

Posted by Steve Koerber on May 1, 2008

If an auction is “correctly” run, the top bidder (even if there’s only 1 bidder) will pay the highest figure they are prepared to pay…not a few dollars more than the next highest bidder. And not necessarily on auction day.

Sellers pay agents handsomely to achieve a sale at the best price available in the marketplace. If a seller is keen and desires a quick result, auction is a fantastic method of determining the value of a home within a short timeframe.

If a house has an asking price of $800,000 and the best buyer over 4 weeks sees value at a maximum of $700,000, in my experience that buyer is unlikely to make an offer at all.

Time is precious to everyone and buyers don’t want to waste their time with over-priced houses.

If the same house has no asking price, is taken to auction after 3 or 4 weeks, in my experience if the higest interest is $700,000, a bid at auction is likely.

In the above scenario, via auction, the value of the home (within the timeframe) is more likely to be established than if it was priced. If a seller is not happy with the established value (best bid), they have the option of remaining on the market with (say) an $800,000 asking price to see if the next 3 weeks or 3 months produces a better buyer.

So why not just price a home correctly from the start? Easier said than done! Especially in a “buyers market”.

Posted in Selling your home | Tagged: , , , | 2 Comments »

Coping with no price marketing

Posted by Steve Koerber on March 2, 2008

One of the biggest complaints I hear relates to properties being for sale with no price.  Auctions, tenders, by negotiation, expressions of interest(!), etc.

As a buyer, how do you navigate this confusing real estate world when no-one puts a price on a property?

Here’s a tip:  When you call the agent, never never ask “how much?”  And avoid asking “how much does the owner want?”

Instead, ask this question:  Do you think $500,000 (or x dollars)  is enough to buy this property?  If the answer is no, ask the question again using a different dollar figure.

The agent’s response will tell you a lot about how much the property is worth.  It’s the property’s “worth” or “value” that’s most important.  Not someone’s “want” figure.

I know this all sounds like a lot of beating-around-the-bush for no good reason.  The reason pricing can be such a daunting subject is that listing agents work for owners, not for buyers.  A listing agent’s greatest fear is that they tell you the owner wants $500,000 and you were the plumb uneducated buyer that was prepared to pay $550,000.

Just trying to help you!  Don’t blame the messenger!  Give it a try!

Posted in Buying a home | Tagged: , , , | 2 Comments »