Selling Options

There are more options than ever available for selling property, whether you choose your local real estate agent or to go it alone do so as informed as possible.

 

Setting a Price

How do you decide what price your house should sell for? As well as using a real estate agent for their opinion, there are several ways of determining what your property is worth in the current market in order to establish a fair price. Remember, if you are using an agent their fees will be coming off the purchase price.

The main ways to establish a price include:

  • Local, comparable sales - One way of establishing a price is to look at comparable market sales that have occurred in your area recently. Seeing what similar houses in your area have sold for can help you understand the market. You can easily do this by purchasing Local Sales information.
  • E-Valuer - An E-Valuer will give you an instant estimate of your properties current market value, using comparable market sales. 
  • Full Market Valuation - A Full Market Valuation will give you a current market value, and is completed by a Registered Valuer. It involves a full inspection of the property as well as analysis of local sales.
  • Rating Valuation - A Rating Valuation can also be used to establish a price at which to sell. As Rating Valuations are typically only done every three years, if the market has moved it can be out of date.

Negotiating the Sale

Selling your home isn’t as straightforward as setting a price and having a buyer agree to it. Regardless of whether you’re selling your home privately or through a real estate agent, you will need to decide how you want to sell – by auction, tender, or by offer and negotiation.

Offer and negotiation

Offer and negotiation involves setting an asking price then an interested buyer will make an offer. Further negotiations over price and/or conditions will occur before all parties are in agreement.

Most offers are made using a standard Sale and Purchase Agreement contract. As a seller you have the right to negotiate the price and conditions once the offer is made. Due to the nature of the contract and negotiation period, it also allows you and the buyer to take the time needed to think about the price, and any other changes to the contract each time it comes back to you.

Quite often buyers will make their offers conditional upon aspects like building reports and finance. This means that even if the offer is initially accepted, until the sales goes unconditional the buyer still has avenues whereby they don’t have to complete the sale. However, conditions can also be added by the seller. This can include clauses such as being allowed to accept a better offer, or a specific deadline to go unconditional.

Your real estate agent can provide you with a copy of a Sale and Purchase agreement. Otherwise you can buy forms online, including at the Auckland District Law Society.

Auction

Another option is to put your property up for auction. This can be a quick process as once your reserve price is met, the offer is unconditional. You also have all your potential bidders are there at the same time. Auctions also allow you to sell by a set date, with the option to still accept offers before the auction as well.

At auctions, the buyers have done all their due diligence beforehand so generally they are committed to getting the property. Auctions can be beneficial if there is more than one buyer interested in the property as a bidding war can eventuate, and prices can be driven up.

If your home doesn’t reach reserve you can negotiate with the highest bidder to reach an agreed sale price. Otherwise, you may need to re-evaluate your selling strategy and determine what to do next.

When selling by auction, your reserve price needs to be a price you’d accept, as once it hits this reserve, you are contractually obliged to sell.

Tender

Tenders are a way of selling your home privately. Each potential buyer submits their offer without knowing what any of the others is offering, and you get to pick the one to accept. Like auctions, tenders give you the opportunity to put a set date on the process, beneficial if you need to move out within a specific timeframe. 

Because buyers don’t know what any other party is bidding, they generally put their best offer forward. Although this can give you a good idea of their price range, you still have the ability to negotiate with any offer if you don’t want to accept.

Tenders can put buyers off. Because of the private, closed style of sale, some buyers prefer to avoid this method if possible.

Using an Agent

Especially if it’s your first time selling, deciding which agent or agency to go with can be tricky. With many options available, which one you pick can definitely make a difference in how long it takes your property to sell and how much you get for it.

  • Locality – Where your agent is based can make a difference as to the level of their local market knowledge. Although most work within certain suburbs, some have more knowledge and experience than others. Scout around for someone who is active in your area, who has a history of information on the area and whose previous sales are in and around the area you are selling within. 
  • Recent sales – Ask the agent about their recent sales in the area. Having an agent with a wealth of previous sales, especially recent ones, shows you they can get results. If the agent has quite a few active listings in the area it can also show you that others trust this person to sell their house. 
  • Ask around – You might be able to get a feel for an agent’s reputation by asking your friends and family. First hand experiences and anecdotes can be invaluable when establishing whether an agent will be the right fit for you.
  • Terms of your contract – What package the agent suggests for selling your place can also make a big impact. Especially if you scope out a few different options, the terms of their contract such as their commission fee, as well as how they propose to market the property and the associated costs, will all play a part in whether you choose to go with one agent over another. Make sure you think they are worth the price they are quoting, and that are going to work enough for their money. As well, check out what marketing options they suggest and think about whether those options are really going to find your target buyers.
  • Licensing – Lastly, one thing to check when you use an agent is whether they are licensed. Due to legislation real estate agents have to be licensed meaning you will be protected should on the off chance anything happen. The Real Estate Agents Authority can help you if anything does happen or if you want to check out your agent further.

Latest News & Articles

This monthly report created by the CoreLogic NZ Research Team covers the main economic factors that influence the housing market, and then looks at sales volumes, values, and active buyer types in both the national and main centre housing markets.
 
 
Some highlights of the June - July 2017 report:
 
  • Migration – We have started to once again experience a net loss of Kiwis to Australia, but this is unlikely to return to previous high levels of loss.
  • Building Consents – These have trended down right across the country in recent months, which is the last thing we need when our housing shortage continues to grow.
  • Consumer confidence – remains positive as people feel good about both current and future economic conditions.
  • Sales volumes – bounced back up from a very low April, but are weaker than last year across the whole country, especially in the North.
  • Market activity – this continues to slide downwards and is now well below the same time last year. This will translate into far fewer active buyers in the market over coming months.
  • Listings – New listings are at normal seasonal levels, but the lack of sales means that the total stock of properties on the market is much higher in Auckland than the same time last year. More choice along with fewer active buyers means far less reason for prices to rise. Meanwhile total listings continue to drop in Wellington and Dunedin which means it is still tough for buyers.
  • Buyer Classification – the share of sales to investors has risen in many areas, but given that the overall number of sales has dropped almost everywhere, sales to investors, particularly those needing a mortgage, has actually dropped dramatically. But this drop in investor activity has come at a cost with first home buyers at record low numbers in Auckland.
  • Values – Auckland and Christchurch values continue to slowly decline, Hamilton is flat, while the rate of increase in Tauranga and Wellington is now much slower than last year.
  • Outlook – Falling demand will lead to falling sales. Meanwhile total listings will rise leading to more buyer choice. With uncertainty about what polices on migration and housing will result from the upcoming election in September, it is likely that the current market weakness will persist through until after the election result is known. Strap yourselves in for a slow winter in the property market!
To download the full report click here.
 
You can also watch the most recent video update below, in which our Head of Research Jonno Ingerson takes you through the latest trends. 
 
 

Kiwis and their assets

Thursday, 15 June 2017

Despite all the talk of affordability, Kiwis still prefer their assets in property form but NZ's listed stocks are the rising star.
 
The value of residential property continues to grow beyond one trillion dollars, dwarfing the value of other asset classes, with residential mortgages secured against 23% of this value. 
 
 
Listed stocks have bounced around in the last couple of months but the overall trend has been upward since the start of the year. They are now only just over 2% below their all-time high of September 2016.
 
Learn more about the latest property trends by downloading your free copy of the CoreLogic May/June Property Market & Economic Update Report, available now. 
 
We’re currently looking at a nationwide downwards slide in sales volumes, a trend that started a year ago.
 
In Auckland, volumes are down 30% year on year, slightly less in Hamilton and Tauranga and less again as you move down South. But the slowdown in sales is definitely nationwide.
 
 
 
Furthermore, the sales slow-down has hit all types of buyers, not just investors. Whilst the share of sales to investors has rebounded, the actual number of investors is well down. Likewise, the share of First Home Buyers in Auckland is steady, but their actual numbers are significantly down. 
 
Learn more about the latest property trends by downloading your free copy of the CoreLogic May/June Property Market & Economic Update Report, available now. 
Jonno Ingerson, Head of Research, CoreLogic NZ Ltd.
 
The latest monthly QV house price index shows that the rate of increase of New Zealand property values is near zero.
 
It is yet another source confirming a widespread slowdown in the housing market - from demand, to sales volumes and of course values.
 
 
First I’ll cover values, then take a look at some of the causes, and end with my perspective on where this is all likely to go.
 
Value increases slow
As always, there are wide variations between cities and regions, but the general pattern is of a marked slowdown in the main cities, especially in the north, accompanied by a distinct slowing in regional areas.
 
To be clear - we aren’t talking about a widespread drop in values. In fact in many areas they are still increasing. It’s just that the rate of that increase is a lot slower than it has been over the past two years.
 
Auckland always tends to get plenty of attention when it comes to house prices, so let’s start there. According to the QV index, values in Auckland have been very gradually sliding since November, and have now dropped 0.7% since then. Digging a little deeper, we can see that values have been dead flat since November in the central city, Manukau and Papakura. The North Shore and Waitakere are both down over 2% since that time. Meanwhile, the old Rodney area in the North has risen 4.5% over the same time, still being pushed up by Aucklanders looking for more affordable housing on the northern fringe. Contrast all this to most of Auckland increasing at about 8% in the six months leading up to November. Quite a change!
 
From about mid-2015 onwards, values began to rise rapidly in most of the other main centres, with the exception of Christchurch. That rate of increase has eased off to varying degrees.
 
In Hamilton, values were increasing as fast as 31.5% in the year to July 2016. Value change in the last six months has been exactly zero. Tauranga was rising 28.5% in mid-2016 and in the last six months only 2.7%. Getting the picture?
 
Further south, in Wellington the value increases didn’t get to the same crazy rates as further north, but having peaked at 21.5% annual change in 2016, that rate has now slowed to 7.4% over the past six months (an equivalent annual rate of 15%).
 
In the South Island, Christchurch and Dunedin are marching to their own beat. Christchurch values have been increasing only very slowly for the past three years, at a rate of between 2% and 4% annually. They are now dropping very slowly at a rate of 1.2% over the past six months. Dunedin has only just begun to slow in the last month. Another standout area worthy of mention is Queenstown. A stellar performer last year, increasing at 32% in the year to November, the last three months have seen a miserable 1.2% increase. Quite some slowdown that.
 
Many of the smaller centres are still increasing in value. Take Central Otago for example, where the overflow from the hot Queenstown market has led to rapid value increases in the likes of Cromwell and Alexandra. There are plenty of other examples, like most of the lower half of the North Island.
 
But I don’t think that growth in many small areas is going to last. More on that later.
 
When demand drops
The reasons behind the slowing market are not new; the Reserve Bank lending restrictions, banks getting even tighter on their lending, mortgage rates rising slightly, the winter season and finally increasing uncertainty about policy changes post-election.
 
These things impact demand first. Our unique measure of demand reflects that, showing an immediate drop from the moment the Reserve Bank changes were announced last July.
 
Sales volumes drop
As demand drops, the number of sales drops a few weeks later. The downward slide in sales volumes shows as the last three months of sales were 31% lower in Auckland than a year earlier, and the month of April was the lowest since 2008 in the depths of the post-GFC recession. This year on year sales decline when you look at the last three months is repeated in Hamilton (28%), Tauranga (23%), Wellington (18%) and Dunedin (16%). In many smaller towns there was a massive increase in sales activity in 2015, up to double the previous year, but that too has now begun to unwind rapidly and volumes are back to where they were three years ago.
 
And then values get hit
When sales volumes drop, values drop a few months later. No hard and fast rules here, but it is usually in the range of four to nine months between a significant drop in sales volumes and a subsequent drop in values. So no surprises to see values changing the way they are.
 
Demand continues to slide
The weeks of the Easter and ANZAC holidays had an expected drop in buyer demand. That demand usually bounces back to pre-Easter levels, but these past few weeks have been unusually low. This drop in demand will almost certainly lead to fewer sales, which in turn will flow through to further weakness in values.
 
The number of listings has an impact too
The number of properties on the market will influence value change. In Auckland a lack of sales combined with a normal level of new listings has meant that our measure of the total number of properties on the market is 50% higher than a year ago. That’s a lot more choice for buyers and takes a good deal of the upward price pressure out. Wellington and Dunedin on the other hand both have even fewer listings than this time last year, making the choice even worse for buyers, and so upward price pressure remains. 
 
My predictions
I would be very surprised to see a rebound in values anytime soon. Previous rounds of Reserve Bank lending restrictions have had only a temporary impact before everything rebounds. This time the signs of a slowdown are much more widespread. I’m still picking it will be post-election before activity picks up again. That is a prediction of human behaviour though, and as we all know that is a notoriously dark art.
 
 

 

Thanks to the way dates fell in the working calendar, the Statutory Holidays of Easter Break and ANZAC weekend were both in close proximity this year. What effect did this have on the property market?
 
Whilst workers rejoiced over the fact that they could take just 5 days of annual leave to get a whopping 12 days off in return, it wasn’t such great news for the property market. 
 
 
With many people taking extended leave in April, it is likely to have impacted on the property market. A slow-down in sales activity is particularly evident in Auckland - over the previous three months we’ve seen a 30% reduction in sales volumes over the same three months the year previous. 
 
Whilst the impact of the slow-down lessens as you move South, it is nevertheless nationwide. This slowing of sales activity follows the drop in demand that we’ve seen and falling sales activity usually means less upward price pressure. 
 
Learn more about the latest property trends by downloading your free copy of the CoreLogic May/June Property Market & Economic Update Report, available now