The Unconditional Blog

The impartial voice of the industry

 

Archive for the ‘Buying / Selling a home’ Category

0

Are property buyers really in the box seat?

Posted on: June 23rd, 2011 | Filed in Buying / Selling a home, Featured

“There has never been a better time to buy a house” – this was the first line of the Sunday newspaper article this past weekend. A big call some may say, especially when the property market has seen a very sober and lacklustre market over the past 3 years.

It is worth pausing for a moment to reflect on what circumstances arise to cause the property market to be either a great time to buy, or a great time to sell.

These circumstances are usually in opposing territory. However there are always exceptions and most recently in that heady period around 2004 when the pace of the market favoured both buyers and sellers with prices and volumes rising steadily and at such a pace that you almost “had” to buy and sell – or you feared being left behind in the market.

Great time to buy!

Great times to buy are generally when the cost of borrowing (interest rates) are low; when the availability of property on the market is high, and when there are not many other competing buyers in the market.

As to whether falling prices are a great incentive to buy is debatable as a cautious buyer will usually hold off  in these situations to see if prices may in fact falling further.

Great time to sell!

Great times to sell are generally when the cost of borrowing is cheap thereby encouraging a lot of buyers to come into the market. Ideally this is also combined with a shortage of properties on the market therefore forcing buyers to compete with each other to buy your property.

As to price, it is likely sellers are not that concerned. All they want is to sell. The price they sell at will be as the market dictates, which will allow them to move on and buy another property as appropriate.

 

The newspaper article went on substantiates the claim of it being a great time to buy, by stating that interest rates are currently at the lowest levels for decades. That is certainly true and with the vast majority of property purchased with a mortgage the cost of borrowing is a key driver of the market. The chart below (courtesy of the Reserve Bank) tracks mortgage rates over the past 20 years and clearly shows how low today’s rates are on a historical comparison – especially when you see the peak at over 15% in 1991.

Reserve Bank of New Zealand - Floating & 2yr fixed rates for new borrowers

The article stated that in addition to low mortgage rates the other key driver of a “great time to buy” was the fact that “prices across the country plunging in the past month”. I would challenge this assertion from the standpoint as made earlier that falling prices can in certain circumstances impede buyer motivation. It is also so important to look at house prices not on a one month basis but on a trend perspective.

The recent blog post entitled “NZ property prices continue to ease” highlighted the Stratified mean sales price across the country. This showed no sign whatsoever of “plunging prices”. Property sales price are in all cases below the peak of the property market back in 2007 (with the sole exception of Wellington which has managed to set a peak back in late 2009). Prices would be better described as stable or lacklustre rather than plunging.

One fact the newspaper article omitted completely was the a key driver of the property market – the inventory of unsold homes on the market. As stated earlier this statistic, far more than sale price is likely to impact the state of the market as either a buyers or a sellers market.

Realestate.co.nz publishes its monthly NZ Property Report which tracks this inventory measured as the number of equivalent weeks of sales of unsold properties on the market. In the May report published on the 1st June as well as the regional Property Pulse regional factsheets the data showed that in the Auckland market and now emerging in the Queenstown market the power is moving from buyers to sellers. A lack of new listings and a rise in sales volumes which is helping to clear what has been high inventory is leading the Auckland market to be in a deficit of properties on the market. If as a consequence of these low interest rates, buyers are more active in the Auckland market, then there will be a need for more listings to come onto the market. This then directly favours sellers. Potentially in this seller’s market a consequence of the lack of listings may lead to property appreciation due to more demand than supply.

Outside of these major markets of Auckland, Queenstown and possibly Wellington the rest of the country is still very much in a situation of high inventory of unsold properties. This means that if there are buyers eager to take advantage of low interest rates then in these more provincial areas they will have ample opportunity to pick and choose amongst the properties on the market and allow them to drive a good bargain – maybe these are the areas of the country where buyers may well be “in the box seat”!

0

NZ property prices continue to ease

Posted on: June 15th, 2011 | Filed in Buying / Selling a home, Featured, REINZ Monthly data

The latest property sales data released by the Real Estate Institute yesterday highlighted the easing of property prices in May. The national median price of all properties sold in the month was $350,000 down from $360,000 in April. A year ago the median price was $350,000, 2 years ago in May 2009 it was $337,500.

The median price is the midpoint price of all sales in the month; whilst a consistently trusted measure of the market price for property it can be influenced if the composition of the properties sold skews heavily towards high end or the low end of the market. For this reason REINZ developed in association with The Reserve Bank the Stratified House Price Index which applies a modeling technique which ensure that the composition (price ranges) of property sales does not skew price data – effectively ensuring that the index reflects the true value of property sales on a “like-for-like” basis.

The Stratified price for properties sold in May across the country was $358,925 down from $365,593 in April, a fall of 1.8%. A year ago the stratified price was $361,610 (down 0.7%), 2 years ago in May 2009 it was $353,425 (a rise of 1.6%).

So by this measure properties values seem to be pretty static with a small degree of long term rise. However to gain a true picture of property prices and values you need to see the picture of the trend over the longer term.

The chart below shows the stratified price for property sales across the whole country covering the period since 2007. The chart shows that over the past 18 months since late 2009 prices have definitely eased.

Current price of property sales prices remain 5.8% below the peak of property prices which was over 3½ years ago. The bottom of the recent property cycle was over 2 years ago in January 2009 when prices dropped to $337,400, the current price is 6.4% up from that point.

Out of interest casting the data back over the past 2 decades ably reminds of us of the history of the NZ property market as shown below!

The stratified price data is provided for each of the main metropolitan areas (Auckland, Wellington and Christchurch) as well as the North Island and South Island aggregate of property sales outside of the main metropolitan areas. The detailed paired charts below highlight these 5 regions for both recent property prices as well as long term.

Auckland

Wellington

Christchurch

North Island excluding Auckland and Wellington

South Island excluding Christchurch

 

2

Accuracy of property listing data

Posted on: May 16th, 2011 | Filed in Agent Tips, Buying / Selling a home, Website searching

The NZ Herald today published an article “Revealed: NZ’s top homes for sale“. The article utilised search data from Realestate.co.nz which is publicly accessible to search out the most expensive top 20 properties currently advertised on the website.

The article highlighted a property which was advertised on Realestate.co.nz for sale at an asking price of $17.5m. This was the price which the agent had sent through to our system, and therefore this is the price we displayed for the property.  The property upon investigation is actually for sale at $1.75m.

The NZ Herald has had to make a update to its online article to reflect this error presented in the article, the print article though was published based on the data presented on the website at that time. To be clear Realestate.co.nz was not approached to provide this information.

Now clearly this situation is not satisfactory – it is not satisfactory to the property owner as very people will be interested in looking or enquiring about such a property at that extreme price level; and not satisfactory to the prospective buyers who may question the accuracy of data on the website.

Running the website of Realestate.co.nz is a challenge of extensive data management. We display over 74,000 residential properties for sale or rent at any one time, around 700 new listings are added on an average day together with around 500 changes to property details. These additions and changes are provided by the total of over 1,050 offices subscribing to the website who send data to us electronically all the time.

If we were to start to review every listing coming in everyday to look for mistakes or accuracy of information we would need to employ an army of reviewers. That however is not the real issue. The key issue is that it is not possible for us to review or audit any of this data as we are not in a position to know any details of specific properties. The listing agent who is providing a service to the vendor is responsible for the accurate collation and publishing of this information on the web and in print.

Such situations as these are deeply frustrating to us. We act immediately we are informed of an issue or if a complaint is made to us. We investigate and communicate with the agent concerned and take immediate action, in this case to correct this price. In other cases we often remove the listing pending any investigation to ensure that no misleading or inaccurate information is displayed on the website.

The key thing is this regard is the importance for all agents and salespeople on behalf of their clients to proof their listings and in that way ensure that every advert whether on the web or in print is accurate and a true representation for the property they are marketing on behalf of their client.

 

 

 

 

4

Property searching on mobile is a clear winner

Posted on: May 13th, 2011 | Filed in Buying / Selling a home, Featured, mobile, Website searching

I was very interested to read this week of the performance of the Trade Me iPhone app. In a very open manner they shared their data with the NBR. This naturally prompted me to examine the data from the Realestate.co.nz iPhone app after our first 5 months of operation.

As far as uptake is concerned in excess of 1 in every 10 iPhone owners has now downloaded the app, a total exceeding 25,000 downloads since we released the app in November. Every day we continue to see over 100 new users discover this great way to discovery property for sale right around them.

Trade Me’s app was launched at the same time, and in that time they have had over 110,000 downloads. Like Trade Me we had modest expectations of around 12,000 to 15,000 downloads within 6 months; so for us 25,000 for such a specialised app as compared to Trade Me’s app which covers such a diversity of content, is really encouraging.

This strong adoption of real estate listings search on the iPhone is reflective of a global trend which has seen over 1 million downloads of the UK real estate website Rightmove iPhone app and across in Australia over 180,000 for Realestate.com.au iPhone app.

The most developed market in terms of mobile usage for property search is the USA – there the #1 property portal Zillow.com reports not only downloads exceeding 3 million, but the level of engagement of buyers with property listings on the mobile platform is fast approaching a third of all viewings. For Realestate.co.nz we see that in the past month 10% of all property listings views are made via the iPhone app with a further 2% being on the mobile web platform across a number of mobile devices including Android and the iPad; this after just 6 months, shows how important the mobile platform is to the experience of looking for property to buy.

Another very interesting insight in the usage of the mobile device is the heavy usage at the weekend. Whereas the web usage has higher activity during the week the iPhone is clearly a weekend tool – part of the open home toolkit for a Saturday morning allowing active property hunters to drive around the areas checking out what is on the market or sitting in a cafe between open home visits.

In terms of usage the iPhone is clearly not a tool limited to the inner city suburbs, in the month of April over 90% of all listings of property on the iPhone were viewed by property hunters – that is a figure which has grown progressively over the past months as the penetration has gown and usage has extended to every corner of the country.

Clearly we see the iPhone app (and future Android app) becoming a critical platform to provide property hunters with a great experience to aid the process of finding that perfect property. We have new developments and functionality planned for the next few months and will keep improving the experience. With a dedicated audience of over 25,000 we are fully committed to this sector of the market.

 

4

The wish list of property seekers

Posted on: April 28th, 2011 | Filed in Buying / Selling a home, Featured, Home features, Website searching

This week we have been extending the testing of our new beta site for Realestate.co.nz. In opening up access to a wider audience we have encouraged people to share with us the things they like about the new site, as well as those areas where we could do better!

Such an exercise is tremendous in opening up a dialogue with our users. To date we have received 116 emails. Reviewing and replying to them has been an enlightening and enjoyable experience as I have certainly gleaned a great insight into not only how they feel about the site, but also the things that as active users of our site they would love to see us do more of.

Overall we seem to have developed a site design and functionality that judged on this sample group is a positive step forward.

As well as functional feedback it is really interesting to hear of the things that people most want to be able to find on a website. Taking a simple poll of these comments I have tabulated the top 5 things people would most like to see on a real estate site.

Map based search

This is by far and away the greatest demand from our users and thankfully this is something that the new site delivers to the massive satisfaction of this audience.

Many have commented as to the excellent value and experience of the iPhone app that we launched at the end of last year (now exceeding 24,000 downloads to date and growing!). That user experience seems to so many people so intuitive that we had to bring it to the web.

A comment made by all the people was the extent to which they were surprised and disappointed that Google had ceased to offer this service. Now we can step in to fill this void and provide a vital way of display property for sale as seen from an aerial view perspective. Or as one email commented – “show the properties exactly where they are, rather than where the agent would like to have us think they are!”

CV

It is clear that richer data is expected by users of real estate website and the data that most frustrates them is the access to the CV or rating valuation. This is seen as a “must have” and as many quote – the data is accessible from most council websites.

The fact is we would love to add this key fact to listings on the website, however whereas a single query can provide the CV for a single property for free via a council website, to enable us to provide this for all properties requires access to a database for all properties. This is a service for which we would have to pay a significant license fee to local authorities or to QV who acting for these councils undertakes to provide the data.

Definitive price

This response (can we please have a price on every listings) is not news to us. Ever since we started the website in 2006 we have had constant comments and questions as to why we cannot get or encourage agents to provide a price on every property. Users of the site are vocal in their view that a price or a price guide would vastly improve the user experience. Many go as far to state that they completely ignore properties for which there is no displayed price – arguing that they have no confidence that the appearance of a property in the search results may not be a true reflection of the expected price.

We do share with these people that the listings we receive must be provided with either a display price, a search range or more common these days a non-display search price. We need to ensure that property listings for a filtered search price genuinely reflect the true range of the property for sale.

Land and building size

People generally believe that the size of a section or the size of the property should be as standard a set of data as the number of bedrooms or ensuites. It is hard to argue with this assertion as all properties have a legal title that defines the section size. As to building size this is certainly less easily available. To assist in this area we do integrate listings with property database of Zoodle which often provides section and building size. Where we can (accurate addressing of the property) we link directly from Realestate.co.nz to Zoodle.

Representative images

Interestingly a few comments were made as to the “authenticity” of some property images. The perspective was that photographers had been known to use certain types of lens to be – how it might be called “more generous” with the size of rooms when taking pictures.

Whilst we do not actively get involved in the production of photos (we simply display those images we are given) we are always delighted to see the general trend to have more photos, better quality photos and bigger photos. It is funny to think back 5 years ago when we started the website the average listing had just 4 photos and the size was tiny. Today the average has shot up to 16 and the size grown significantly.

0

Recessionary stress still felt in number of mortgagee properties for sale

Posted on: April 11th, 2011 | Filed in Buying / Selling a home, Featured, Money Matters

Whilst there maybe some signs of the recovery that most people have been longing for, one of the well known “lag” indicators – mortgagee property repossessions continues to make its presence felt in the NZ property market.

At this time there are around 280 properties on the market in NZ  (covering both residential and lifestyle properties) identified as being in foreclosure where the lender is forcing a sale as a result of the borrower being in arrears on the repayment of the loan or the borrower has signaled to the lender their inability to continue to pay and is therefore looking to exit the property.

There has not been any recent statistics released as to the scale of mortgagee sales since late last year, so in an attempt to shed light onto this sector of the property market we have examined key data from the website of realestate.co.nz.

Reviewing the current state of the market, the absolute scale of mortgagee properties is well below the peak of 2008 and 2009 when close on 400 properties were being marketed in this manner as shown from the chart below.

In absolute terms 280 properties is a significant number, however when put into context it represents less than one half of one percent of all the properties on the market in NZ for sale today – put another way it is only 1 in every 200 properties is a mortgagee sale. Even at the height of the recession the total only ever reached 0.75% of all listings.

This figure is far lower than the close to 10% of US properties that were in foreclosure in the peak recession period of 2008/9 – a situation that is yet to be resolved in many US states where the continuing levels of mortgagee listings and sales continues to drive down the sale prices.

Examining the past 3 years it would be fair to say that the trend for mortgagee listings is on a slow decline. It will likely take a considerable period for all the effect of the Global Financial Crisis and its impact on the NZ property market to work its way out of the system as far as mortgagee listings and for the level to return to the rate of around 100 at anyone time.

Another key indicator of the mortgagee sector of the property market is the use of the keyword search terms on realestate.co.nz as a means to locate mortgagee property. Over the past 3 years we have tracked this each week and the latest chart below shows the recent year.

Clearly the  peak of activity of keyword searching for terms such as mortgagee sale / mortgagee auction / mortgagee properties was back in 2008 and into early 2009. The recent 12 to 15 months has seen this fall away to a fairly steady level. That level is still resulting in these terms being in the top 5 terms searched on the site.

5

An insight into the Christchurch property market – after the earthquake

Posted on: April 1st, 2011 | Filed in Buying / Selling a home, Regional News

Post Updated to include video presentation at the end of the post – April 8th

The monthly NZ Property Report published on the first day of every month provides a view to the supply side of the property market, nationally as well as regionally. This month of March 2011 is the first full month since the devastating earthquake of 22 February, and so provides an opportunity to examine the impact that the quake has had on the property market in Christchurch and the wider Canterbury region.

Property for sale

The level of new listings coming onto the market in March was in some way fairly resilient. A total of 1,297 new properties came onto the market across the wider Canterbury region in the month. This was down 36% as compared to March last year, a significant fall when the rest of the country only saw a 10% fall in listings year-on-year. By comparison the impact of the September quake last year saw a fall of 26% in Canterbury compared to a 15% fall on a year-on-year basis for the rest of the country.

Using an assumption of the representation of the region to the total national property market it is estimated that c.480 less properties were brought to the market in March than would have been the case at this time of year had it not been for the impact of the quake.

The chart below shows the monthly level of new listings for the Canterbury region. At first sight it does not show any dramatic fall off of new listings, either after the September quake or after the February quake. The highlighted section shows that the September quake set in play a slower level of new property listings which has weighed down on the market for the past 6 months and which based on the devastating impact of February will continue for many months to come.

The interest in property

Clearly the human impact of the Christchurch quake is the priority for people in the immediate aftermath of a disaster, however business and people pick themselves up and resume some state of normality. The real estate industry is an industry serving customers everyday and somewhere close to 1,400 real estate people live and work in the region which operates from over 120 offices of which 87 are based in Christchurch. There have already been notifications of 31 offices that have ceased operating from their prior location. Many have found temporary offices or consolidated operations in an existing office that thankfully has not been affected.

Their business relies on consumers and ascertaining the level of consumer interest in property is something a website can uniquely do as every day the traffic to the site can be assessed to see trends and behaviours.

Prior to the September quake the daily visitor number viewing Canterbury property was around 3,700, this fell to less than 2,000 in the days after that quake. Now 6 months after that quake the daily traffic is down around 20%. For the February quake that lower daily level of traffic again fell to below 2,000 per day in the immediate days after, and is now back to around 2,100 – a 35% fall from the period preceding the quake.

The chart below tracks the daily visitor traffic using a 7 day moving average – the red line tracks the February quake whilst the blue line track the September quake with both lines using the same axis which is 40 days preceding the quake to 70 days after the quake in the case of the September quake.

The chart certainly demonstrates (although not surprisingly) that the February quake has had a more significant impact on property searching in the region. At the same time the region has not ground to a halt. Property is being listed, marketed, viewed, researched, enquired about, negotiated and sold.

Interestingly a larger proportion of those viewings of Canterbury properties are being made by people outside NZ. In the month of March 29% of all visitors to realestate.co.nz viewing Canterbury properties came from overseas, this compares to 25% a year ago. That proportional growth though does result in lower absolute numbers as the chart above highlights. However a higher representations of Australians are researching Canterbury property during March than a year ago – some 15% of all visitors checking out Canterbury properties were from across the Tasman, up from 12% a year ago.

Property for Rent

Rental activity is far more dynamic than property sales. Property for rent comes onto the market more frequently and stay on the market for a shorter period. In the Christchurch market the availability of rental property has seen a significant fall off in the period since the February quake. The chart below tracks this trend.

The September quake hardly seemed to impact the availability of rental properties, whereas the weeks following the February quake has seen available inventory fall from just under 900 to just over 530. The available inventory of rental properties featured on realestate.co.nz comprise those properties being marketed by property management companies rather than private landlords. In speaking with some of them they see this decline as the result of two major factors. Firstly the demand for rental properties grew significantly straight after the quake as people searched for somewhere to relocate to from uninhabitable houses. Secondly a reasonably large proportion of rental inventory in some key areas of the city has had to be withdrawn as it is uninhabitable.

The level of activity of people searching for rental properties varies significantly from week to week. The impact of the Christchurch earthquakes has only further exacerbated this over recent months. The chart below tracks the daily (7 day moving average) level of searching for rental property in Christchurch city through the past 10 months comparing this year with last year.

The chart shows the almost instantaneous impact of the quake on searching for rental property in both the September and February period. The September quake caused a sudden drop followed by a minor increase in the next 2 to 3 weeks after the quake. After that, the next 4 months saw a lower levels of activity up until Christmas, by which time activity was returning to normal. The February quake equally resulted in a dramatic fall, however within a few days searching spiked to a very high level for a couple of weeks before falling back over the last week and a half up to the end of the month.

12

The stress and pressure of home buying

Posted on: March 28th, 2011 | Filed in Buying / Selling a home, Featured

Continuing this series of blog posts providing an insight into the experience of house hunting and buying. This is the 3rd and concluding part and follows “Sharing the experience of house buying” and the “Open homes and property data – the DIY of home buying”.

Selling method

The chosen method for selling this particular property was an auction.

Our current situation is that we own our own house, however at this time we have not placed it on the market. This situation I would guess would not be uncommon, as many people start by “watching the market”, waiting for the possibility of a property that really excites them to come onto the market; and at that point make the move to list their house for sale.

Our property is in a ready state to be put on the market. We had spoken with a local agent who had assessed our property and judged that we could very likely find an interested buyer in the current market, at a price which would afford us sufficient funds to buy this new property we had found. However this situation of not being “cashed up” meant that an auction was not our preferred approach to buying this house; it was however the chosen method of selling advised to the vendor of this house by the agent.

Whilst an auction did not suit our particular situation, this sale process does have is advantages and disadvantages. Clearly it’s attraction lies in the fact of the commitment it forces upon serious buyers to bid unconditionally and thereby guarantee a sale for the vendors. However the downside of an auction as is typified by our circumstances, is that it can potentially restrict the potential pool of buyers to just those who are financially in a situation to bid. A committed bidder needs to be in the full knowledge that if they are the successful bidder, they will need, immediately upon the fall of the auctioneers hammer, to sign an unconditional binding agreement to buy the property and write out a cheque as a deposit for 10% of the sale price.

Our situation was that whilst we could not bid on the property, we could offer a price which in our judgment would be a good price as compared to the market value. It is true that we could have presented a conditional offer to the agent prior to the auction; however we were reluctant to do this, as to do so was in our judgment revealing our hand. Our preference was to be patient and see if the auction surfaced a bidder sufficient to reach the vendor’s reserve.

As an added point of reference in researching this property, we did undertake a Google search of the owners. Their details were on the title to the property, which is public record. In some cases the title records a family trust which can limit such reseaerch. There is nothing illegal or even immoral about this action – we sought to find out public information about the owners – information which in our judgment could be helpful in appreciating any circumstances surrounding the sale, should that be available. I will not disclose the facts that we discovered; however what I will say, is that we discovered facts that in our judgment could have been a factor in why the owners were selling.

In the week leading up to the auction we did become resigned to the fact that as we could not bid at the auction, in which case our chosen strategy was to attend the auction with the express intention of viewing the outcome, and if the property was “passed in” with the reserve not met, then we would act to introduce ourselves to the agent as conditional buyers.

One thing that did surprise me in that final week leading up to the auction was the lack of a follow-up call from the listing agent. I would judge that we had made ourselves very conspicuous as potential buyers. We had visited the open home 4 times over the period leading up to the auction. We had completed the open home book each time and after the 3rd visit the agent greeted up warmly by name. So the agent knew who we were; had our full details including my business card and also knew where we lived. Despite all of this, except for a single telephone call after the first open home, we were never contacted again by the agent to ascertain our interest in buying, nor clarifying our situation. No email or call. That did surprise me, as I was sure we would have been seen as good prospective buyers.

Taking it one stage further given the information we had shared, the agent could potentially have undertaken some due diligence on us, given the knowledge of our address and contact details. Some Google searching and property record reviewing which all agents have access to would have helped profile us. All public information open on the web.

The Auction

The day of the auction arrived, as did a good turnout of locals. There is always that wonderful sense of uncertainty looking around at the people attending an auction and wondering if that person is a buyer or an interested observer and also who is the owner as they need to be there on the day. In total the on-site auction attracted around 20 people.

The auctioneer provided as usual, a summary of the property and went on to state the terms of the auction. Within this latter statement, he made a comment that completely surprised me.

Now whilst in attending a few auctions over the years I have been made painfully aware that the successful bidder would need to sign an unconditional agreement and pay a deposit of 10%, I had never heard the statement made at this preamble to this auction to say “that as had been agreed with the vendor some of the bidders had pre-negotiated variances to the terms of the deposit and the settlement date”. This was a surprise to me. Now maybe this is a recent change, but I did not know that there could be any terms that were negotiated. I do appreciate that the basic term of unconditional purchase would always still apply, but a delayed settlement might have been an option we may have been interested in. Anyway I chalked that down to experience.

To present the exact process of the auction I am keen to share the actual bidding and negotiation, however rather than detail the actual bids (which potentially could disclose the property) I will use numbers based on indexing the actual numbers to the current median price of property sold in NZ in February 2011 – $350,000.

So I will start by “disclosing” that the property was sold at a price of $350,000.

The auction began slowly with very hesitant bidding at levels well below the CV. The equivalent CV would be $285,800 and the first bid was for $264,000.

As ever (well from my very limited experience at least) those people who bid first at auctions tend not to be the ones who buy. In this case a new bidder entered the process at the second closing call and for a further 5 minutes the bidding crept up well above CV reaching after many tortuous assumptive closings by the auctioneer a price of $334,000.

At this point the auctioneer called for a 3rd and final time and passed the property in for negotiation between the highest bidder and the vendor.

After 15 minutes of protracted discussions and separate negotiations between the parties facilitated by the auctioneer the “stage” was reset with the auctioneer announcing that the property was now on the market at the price of $350,000. The auctioneer proceeded to await any counter bids, not a word was said and the hammer fell at the sale price of $350,000.

The Conclusion

So how did we feel at the end of this process?

I have to say surprised. We made some private bets as to the level of top bidding and the reserve. We felt that the bidding would not reach $350,000. Also we were sure the vendor had a higher expectation of sale price and had set a reserve at $387,000!

I can with full honesty say that we would have paid $370,000. We would have made that as a conditional offer on selling our house. I would go even further and say that we would offer that today if the property came back on the market. Additionally there may have been another conditional buyer out there like us who may have paid even more than we would have paid – maybe not, but we will never know. The property is sold, the vendor moves on and the new buyer moves in and the property market chalks up another sale in March 2011.

So what does this detailed insight into the buying process highlight? Well, as I have said from the start this process was not a piece of research, I was a genuine buyer and that is the standpoint upon which I make these comments. So in this situation the vendor could have potentially received more money for their house. That extra would have come with conditional risk which the difference in price may not have justified.

The whole process has heightened my awareness of the scale of research required in the process of buying a house. The process has also reaffirmed the appreciation of the emotional roller coaster associated with the process of buying a house. It has also I hope helpfully highlighted to real estate agents some of the issues and behaviours of buyers which they could take note of to enhance the marketing and services to buyers.

As to the future – well we will probably keep looking! – and researching.

10

Open homes and property data – the DIY of home buying

Posted on: March 22nd, 2011 | Filed in Buying / Selling a home, Featured

The open home - NZ property buyingContinuing this series on “Sharing the experience of house buying” in which I am keen to provide a first hand experience of home hunting and buying.

The Open Home

A house is exactly the same as any other product you buy – a car, a sofa or a piece of clothing. You want to be able to touch and feel the merchandise and in the case of a car – take it for a test drive. In the case of a house the “open home” is the opportunity to do a virtual test drive (although in the UK a couple of years ago there was a more immersive experience offered!).

An open home on a summer’s day is a sure-fire way to ensure you get a large number of people to come and view the property, and for this property it appeared that the whole neighbourhood had turned out judging by the hundreds of pairs of shoes on the front porch.

An open home allows for that voyage of discovery as you begin to see how those photos accompanying the online listing fit together as you move through the house.

Returning to the house for the second open home on the Sunday amazed us as to the extent of detail we had completely overlooked on the first viewing – good bits and bad. The other tactic of the second visit was to use my iPhone with its Realestate.co.nz app to capture specific photos not provided as part of the photos on the listing – I took over 60 additional photos to provide a rich visual record for later review.

During the visit I asked the agent if there was a floor plan for the property, either as a service provided by the likes of Open2view or as any property file records – unfortunately I was informed none was provided for this property.

Floorplans

Later on back at home armed with the now more extensive photo library we sketched out what we could recall of the plan for the house; in this way helping us better assist in visualizing the potential of the property in the context of where furniture might fit as well as which rooms we could use for what use (we are fortunate in not having children at home).

The exercise certainly left me with a clear view that floor plans are now a necessity for property marketing and yet are the rare exception in NZ. The ability to be able to sit comfortably at home and review the layout with contextual photos should be a basic part of all property marketing.

To help me I quickly found an online free tool to provide the ability to draw a floor plan which took so little time but offered such great reward.

Now with a more detailed floor plan of the house I set about collecting more data to assist in a more detailed research of the property.

Property data

The first set of data to purchase was a report from Zoodle which for $24.95 provided a comprehensive summary of 20 recent sales of similar property in the area surrounding the house.

This report shone a bright light onto the list provided by the real estate agent. Their list showed 10 recent sales of property in the area. What was glaringly obvious was the omission of a property which was just 4 houses up the street. This property had sold 12 months ago and then resold 3 months ago. The omission of this property from the report provided by the real estate agent called into question the value of the agent’s report.

The second purchase I made online was a full property report from the local authority. Auckland Council (which now covers North Shore City) provide an online service which for just $26 provides a very comprehensive folder accessible and downloaded online. The turn around time is next working day and can be accessed as an online download or for $10 more can be couriered as a CD Rom. The property report tends to include consents, applications, plans, reports, photos as well as any code compliance for project work. Availability to such reports will vary by property and by local authority around the country, but it is certainly worth checking out.

This property file was invaluable in dating the key projects which had been undertaken on the property as well as some great floorplans from many periods over the past couple of decades. So much data, so readily available – all online.

Over the next week leading up to the auction date we sat down and planned out our thoughts about the appeal of the property as well as what we thought it was worth in today’s market.

Property valuation

Assessing the true value of property is a complex matter. The only true measure of value is what a person is prepared to pay for it. The fact is that property is not frequently traded and therefore there is no defined liquid market which allows market pricing to be accurately monitored.

Valuation estimates are available online which can provide a guide. The definitive valuation (as required by a bank for lending purposes) comes from a registered valuer, this type of valuation is charged based on the value of the property and can cost anything up to a $1,000. In our case we chose to use the online report service offered by Zoodle. For $49.95 you get an estimated valuation of a property, the report states a confidence factor as to the valuation as well as a valuation range. It also provides evidence to support the valuation, which is based on recent sales of similar properties, it evaluates the relevance based on location proximity to the property, the similarity of the property based on land area and house area and also rateable value.

In the case of the house we were interested in the estimated valuation on the Zoodle report was in excess of the current rating valuation, not a surprise to us as recent sales in the area had sold at anywhere from 10% to 35% over the current rating value.

Coming up – The Auction

13

Sharing the experience of house buying

Posted on: March 19th, 2011 | Filed in Buying / Selling a home, Featured, Online marketing

House buying is a significant undertaking and from a personal perspective not something that I have undertake for over 10 years, as we have been, and remain very happy in the home we have owned for this period. However a property appeared on the market recently. One, which really captured our imagination and set our hearts racing. As genuine and interested buyers I thought it would be very interesting to share the experiences and feedback on the process of this house hunting / house buying.

The house in question basically ticks all the boxes for us of a house that we would very happily move into – a house that, having kept our eyes on the market for many years we thought in that classic sense that there would “never be a house that would meet or exceed our expectations”! (and at a price that we could afford!)

I propose to post a number of articles in the next week or so as we progress through the process, a process that may or may not lead to us buying the house.

I intend to be completely honest about our experience. I have been completely transparent with the agents concerned, they have my business card as CEO of Realestate.co.nz and we are approaching this as committed and serious buyers, not as a piece of consumer research; although I hope that there will be some interesting insights.

I do not intend to disclose the specific details of the property nor the names or location of the agents. I trust that the insights, observations and feedback will be of interest to buyers, sellers and agents alike.

The first experience for me in relation to this property was one of those moments of surprise and delight. I received a phone call from an agent, someone who I had not met previously. She stated politely that as we had previously visited an open homes a couple of months ago she was keen to provide us with early notification of a property about to come on the market later that week that may interest us – if we were potentially in the market for this type of house in this location.

I have to say I was very impressed by the professional and considerate manner of the agent. We had not registered to be on a database but given that we had not been barraged in the preceding few months by potential properties I was not offended by this proactive approach, especially when the property so completely matched our criteria.

The agent provided us with the address and a brief description allowing us that night to drive by the property and more importantly look up details on the property for free on Zoodle. First impressions – perfect!

I should point out at this time that the agent who highlighted this property to us was not the listing agent!

Listings presentation online

The property appeared on realestate.co.nz the next day and was superbly presented with a great selection of photos, providing a comprehensive view of the property. With the address displayed on the property nowadays provides so much potential to investigate the local community and amenities all from the comfort of your home computer.

Whilst property descriptions are useful the real power of a listing online lies in the photos and address. When it comes to photos there is never a situation where I could say there could be too many as it is amazing how easily you forget some aspects of a property from an open home visit where comprehensive photos can prompt you to recall.

Coming up – the open home and floor plans

Page 4 of 18« First...23456...10...Last »