Steve Koerber's Old Blog

Remuera's house sold name since 1998 – 021864166

Posts Tagged ‘Auctions’

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 »

Privately sellers can lose bigtime

Posted by Steve Koerber on July 8, 2009

stk20561pwhWhenever I sell a popular home at auction I receive lots of phone calls after the event.  The calls are mainly from buyers who were unable to bid due to their circumstances.  People often want to know how much a home sold for so that they can compare it with others they’ve seen (or are likely to see) on the market.

One of my recent auctions attracted around 400 people during the 3 week marketing period.  The auction had 8+ registered bidders and sold for a great price. 

Early on I knew that if the auction program was correctly managed, I would achieve an exceptional result.  Several pre-auction offers were submitted.  In consultation with the owners we agreed not to sell circa $500,000 and to wait until auction.  They agreed, we waited, and sold for much more at $537,500.

From day one I was keen to prove a very important point with this auction.  A very similar home nearby (but not renovated) sold  a month earlier well under $500,000.  That home wasn’t auctioned, had 2 or 3 offers submitted and sold within days of hitting the market.

I had a great opportunity to prove that the logical way to sell a popular home is by auction.  If you’re a potential seller, please note that the owners of both these homes paid a similar fee to their agent.  My point is this – my owner got much better value, for the same cost. (Yes, I have an ego , they chose the right agent).

But that’s not the end of the story.  After auction sales I always ask my callers to guess the sale price before I tell them what it was.  This is a fascinating exercise and the range of guesses is always huge.

After the above auction I received a call from a fellow who was keen to know the sale price.  His guess was $500,000 or $510,000.  When I told him $537,500 he was shocked that it was so high. 

I then discovered that he had just accepted a private offer under $500,000 for his house nearby.  That is why he was shocked!  He was thinking – Have I under-sold?  When he asked if I had similar homes available for him to buy, the reality of the situation dawned on him.  Even if I did, there were 8 people lined up to buy it.  Scary but true.

As a seller, if you really know the market and have your finger firmly on the pulse, selling privately might be a real option for you.  My concern for you is this:  if you misinterpret market conditions you might be surprised how much a good agent could get you for your home.  Especially at the moment in Auckland, it’s important to make people compete for the right to buy your home.

The selling process needs to be managed carefully from day one.  I hope this story demonstrates the value a good agent (and a good process) can add.  If you’re selling privately in this hot market, there’s a big chance you’ll lose money.

Posted in Selling your home | Tagged: , , , | 3 Comments »

2008 The Year in Review

Posted by Steve Koerber on January 1, 2009

2008 The Year in Review  2009-300x20111

January started with a rush. Buyers were plentiful for realistically priced properties.  My first sale of the year resulted from a phenomenon that often occurs around the festive season – “a change of family circumstances”. My Australia-bound family of five decided Auckland was a better option.  Instead of moving over the ditch, they paid $1.25million and moved around the corner to a similar but bigger version of the home I had recently sold for them at auction for $1.3million.  Ironically, bucking recently reported migration trends, the family who bought their home had just returned from an unsuccessful attempt to enjoy life in Brisbane.  On a more poignant note, New Zealand lost the legendary Sir Edmund Hillary.  His state funeral was held in Parnell on January 22nd.

February is usually one of the busiest months for home sales and 2008 didn’t disappoint.  With the kids back at school and business as usual, I managed to list and sell six properties during what seemed to be a very warm spell.  Things were also hotting up for Remuera residents Bob Bangerter and Mark Bryers as the Commerce Commission and the SFO both announced investigations into their failed Blue Chip group.  Several finance companies had already fallen by February and many more followed as investors understandably fled the sector.

Being the last month of the financial year, March is always a hectic time of year for me.  My family know that I’ll often be home late and that my weekends are focussed on open homes, listing and selling.  Having said that, Easter was earlier this year and we did fit in a nice break at Ruakaka Beach (30 minutes South of Whangarei).

April saw the biggest monthly drop in the number of Auckland homes sold for many years.  Compared with April 2007, Barfoot & Thompson’s sales for the month were down 50%.  For the rest of 2008 sales volumes lagged well behind 2007’s numbers.  These results confirmed that October 2007 was the peak of the latest real estate cycle.  The sale of 44A Armadale Rd marked my 40th sale in that street.  It was a major milestone and an achievement that I am very proud of.

May is traditionally my month of learning & professional development.  This year I was thrilled to be ranked 16th of 1000+ salespeople within Barfoot & Thompson.  I was officially recognised by the company at our annual conference.  I was also given the opportunity to share some of my success principles on stage in front of 1500 people as part of a Q&A panel.  A week later I attended an invigorating three day real estate conference in Sydney hosted by one of the industry’s greats, John McGrath.  While there I caught the ferry to Double Bay and picked the brains of Bill Malouf, Australia’s number one real estate salesperson.  His average sale price is about $4.5million more than mine.  I learnt a lot that day!

June was the month in which the Mars Phoenix Lander found ice on Mars.  Despite some jitters in the local real estate market I continued to sell most of my listings and was enjoying my best year ever.  Barfoot & Thompson’s Auckland market share remained as strong as ever, hitting 37%.  images1

July marked the fifth anniversary of the last time the Reserve Bank of NZ actually reduced the official cash rate.  In July 2003 rates were cut to 5.00%.  In July 2008 they were cut to 8%.  With unprecedented speed, rates were cut again in September, October and December and sat at 5% by year’s end.  Money very quickly became a lot cheaper, but much harder to borrow.  In July Crude Oil hit an all time peak of almost US$150 per barrel.  By year’s end it also was down to about US$40 per barrel.  I started a coaching and mentoring group with the aim of enhancing the careers of selected colleagues within the New Zealand real estate industry.

August was a huge month for me and at one point I had five full page advertisements running in the Central Property Press.  You might think, so what?  The reason I mention this is to illustrate the power of marketing.  These impressive bigger advertisements attracted so much attention that all of the featured properties sold.  In a tighter market environment, I was successfully attracting multiple bidders to all of my auctions and selling them.  It was at this time that I realised that as many “auctions” fail as “for sales” fail.  If people try to tell you that auctions don’t work, it really is a fallacy.  The fear factor makes auctions an easy target for naysayers.  So please, before you judge auction as a method of sale, make sure you talk to someone like me who knows them inside-out.      

September saw the return from Beijing of our successful Olympians.  The team finished 26th on the medal tally and brought home 3 gold, 1 silver and 5 bronze medals. 

In early October I took the family to our favourite holiday destination, Cairns.  We spent two very relaxing weeks celebrating what was my best year in real estate.  After so many working weekends I really enjoyed the opportunity to spend more time with Katie 14, Charlotte 5 and Joshua 3.  Upon our return, the global financial crisis was in full swing and home buyers were all of a sudden a lot more cautious.  The exuberance and confidence of the past five years was gone in a heartbeat.  I dusted off the ‘tough market’ strategies gleaned from my experience of the 1998 – 2000 market and got stuck in.   

Politically speaking November was a fascinating month.  The election of Barack Obama was an historic event comparable to the election of Nelson Mandela as South Africa’s President in 1994.  In NZ we said goodbye after nine years to Helen Clark and welcomed John Key as Prime Minister.  By year’s end he appeared to be doing a pretty good job.  Most buyers I spoke to during this period were convinced 2009 was going to be a better time to buy.  Consequently it was my least successful month of the year.

December the 3rd I auctioned a cute two bedroom cottage at 15 Ventnor Rd Remuera.  Spirited bidding from 7 bidders resulted in a good sale at a figure higher than the owner’s bottom line.  An American buyer who had been in constant email contact with me said I should contact him after the auction.  I wrote back saying that the auction was likely to sell under the hammer and that he should bid.  He didn’t believe that an auction could sell in what he defined as a buyer’s market.  The result proves that the market is always buoyant at the right price.  I finished the year in new territory, recognised as Barfoot’s number one salesperson in Remuera. 

Thank you to everyone who has supported me throughout 2008.  My hope for you is that 2009 will be a year of abundance and opportunity.  Some people will struggle financially this year.  For those who do, I believe it is prudent to belt-tighten and learn from past mistakes.  Concentrate on saving and investing, rather than consuming.  And when the tough times seem like a distant memory, as they will, avoid the consumption mentality of the past 15 years, keep saving and investing!  

If you or anyone you know needs real estate help and advice this year I’d be thrilled to hear from you.

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