Monthly Archives

November 2018

Are the Christmas Holidays a Good Time to Buy or Sell?

Are the Christmas Holidays a Good Time to Buy or Sell?

Traditionally, sales activity in the housing market slows during the holiday period as people become distracted with Christmas shopping and planning their holiday vacation. However, this can be a good time to buy or sell, depending on the market you are in.

Buying:

One of the advantages of buying a home in December can be the eagerness of sellers to finalise a deal before the end of the year so that they can be done and dusted before their holiday. And they might be more open to a lower offer provided the buyer can move quickly and settle early.

Vendors who have properties scheduled for February auctions may also be willing to sell early if a buyer presents a compelling offer.

Selling:

Property sellers can meet different types of buyers during the holiday season—from the frustrated ones who have been looking for a property since the beginning of spring to the motivated ones who are keen to buy before Christmas or the beginning of the new school year.

People looking to transfer to a new city often use the holiday period to do their research by visiting their new city to look for their new home.

The end of the year is also a common time for rental leases to end, which will have a lot of people working out their next move – and some of these will be looking to buy.

As there are fewer properties in the market by the end of the year, sellers can easily make their property stand out from the crowd, enticing motivated buyers without having to deal with as much competition.

Remember though, that solicitors, mortgage brokers, and other service providers may close their offices from around mid-December to mid-January which may also significantly delay the settlement process.

While there may be fewer buyers in the market, there are also fewer sellers during this time and at the end of the day, supply and demand will vary depending on the market you are trying to buy or sell in, so consult with your real estate professional before making a decision.

Sell First or Buy First?

Sell First or Buy First?

Q: Now that our children have all grown up and left home we want to downsize from our current property in Parnell to a smaller property. We are worried though that if we sell we won’t be able to find anything we like. What options do we have? Margaret B.

A: This is a very common question these days Margaret, especially with the shortage of houses on the market in Auckland right now.

Obviously, you have two choices: Sell first then buy, or buy first then sell. If you buy before you sell you won’t really know what your budget is (you can’t be sure how much your home will sell for) and you may very well need bridging finance to get you through the period between when you have to pay for your new home and when you settle on (and get paid for) your current home. (The length of settlement is the time between unconditional date, often the auction date, and the day the new owner pays and takes possession). You can minimise this by asking for a long settlement on your new home, and then be ready to go straight to auction on your current home as soon as you have an unconditional agreement on your new home. This may enable you to get sold and settled before you settle on the new home, but what if your purchaser wants a long settlement too? Either way, you do run the risk of being forced to get bridging finance. In the very worst scenario, you may have trouble selling your home and end up owning TWO properties – not always ideal!

Alternatively, you can do what most people seem to be doing these days: Sell first and then buy. Of course, as you’ve said, the risk here is that you can’t find anything to buy once you’ve sold. However, what we have found is that people who have sold get very focussed very quickly on finding their new home, and they become a lot less fussy! And if it takes longer than you expect there is always the option of renting while you search.

Clarification: Last week we quoted auction clearance rates: These figures were for Ray White only, and not clearance rates for other agencies.

Are auctions still working?

Q: Are auctions still working?

A: With the ‘softening’ of the market we are often asked if auctions are still working. Or actually, people are often saying to us “auctions aren’t working now so we want to sell by negotiation, or with a price.”

This is absolutely not true. In our current market, an auction is still THE BEST WAY to sell your property.

There are several reasons for this, but let’s start with the facts: In Ray White NZ 82% of properties taken to auction sell, while only 34% of properties sold by private treaty (priced, by negotiation, tender etc.). In other words, you have twice the chance of selling when you go to auction as you do if you sell any other way.

Why is this? When a property is listed with a price or by negotiation, and a potential buyer sees it and quite likes it, there is no reason for them to take any action. With the slower market right now they know there is unlikely to be a queue of people lining up to make an offer. So they say to the agent “let me know if anyone is going to make an offer” and off they go to the next open home.

An auction, on the other hand, forces all interested parties to take action because there is a deadline.

At the end of the day, an auction still provides the vendor with all the benefits: you stay in control, there is a strong call to action/deadline, all bids are unconditional and the sale is final on the drop of the hammer and payment of the deposit.

If buyers are conditional (e.g. have to sell their home before buying) they will be at the auction hoping it won’t sell and ready to put in a conditional offer if the property doesn’t sell under the hammer.

Interestingly when the market turns from a seller’s market to a buyer’s market there are plenty of agents who just find auctions too much work, and too scary. After all, if it doesn’t sell under the hammer the agent is the one who gets the blame. It’s so much easier to hide behind a By Negotiation sale, hold endless open homes and blame the lack of activity on ‘the market’.

So, there you have it: Auctions are still working and working better than any other method of sale, regardless of the market.

Can you trust online valuations?

Q: We are looking at buying, but find it really hard to get a price indication on auction or ‘by neg’ properties. How accurate is it to use the CV of an online estimate of the sale price? 

Julie and Bruce

A: Didn’t your mother ever tell you “Don’t believe everything you read online”! There are some real problems with online valuations. No-one has actually looked at the property. Basically, the estimate is the result of a computer algorithm and doesn’t take into account interior condition, renovations, aspect, charm or just the general feel of the home. The Auckland property market moves rapidly, and online estimates are based on historic data of settled sales – sales that settled in the past month may have actually sold at auction several months earlier so the sale price is way out of date.

Remember too that there is more than one price for a home: It will be a different value for a buyer who wants to make it their home versus an investor. It may be worth more to you if it’s close to family, or in a school zone that you particularly want. These are the kind of factors that can lead to one buyer paying much more than another.

We have written before that we bought our apartment for just under $1m. Would we care if we had paid just over a million? Not at all. It just doesn’t matter in the scheme of things as long as you get the home you want and you are going to live in for the medium to long-term.

We see online valuations that are both too low and too high. Don’t let an online valuation pressure you into paying more than you think it’s worth to you. It is your opinion of value that counts, not computers!

When you find a home that you really think will work for you, our very strong recommendation is to do your own in-depth research on sales in the area. Take the time to visit other open homes nearby and ask the agents what they think. By all means look up the values online, after all, the more information you have the better, but don’t let a computer-generated valuation stop you from trusting your instinct and getting the home of your dreams.