Real estate giants row over worth of auctions

Two leading real estate firms have gone head to head over whether auctions are a good way to sell houses.

First National - which has about 70 offices nationwide - has released a survey of its members which it says shows auctioning a house is the least effective way of selling.

But Barfoot & Thompson has hit back, saying auctions are a preferred method and have little to do with a successful sale.

Meeting the market with a realistic price is far more important than the mode of sale, says Barfoot director Peter Thompson.

"Auction makes people make decisions quicker, and it gives more of a timeline for vendors to know how long their properties will be on the market."

The First National survey asked property agents within the group to rate the effectiveness of selling methods in their regions, and not just their own businesses.

About 72 per cent said individual negotiation between buyer and seller was the most effective, followed by tenders at 18 per cent.

John Stewart, group general manager, said this was because of the current subdued market.

At a time when buyers were scarce, auctions might not be the best way because buyers must be able to buy unconditionally.

Mr Stewart said another agency that took 10 properties straight to auction last month found there was not a single bidder.

First National, which has about 500 sales agents, does a monthly survey to measure key market indicators. It found that while listings were up last month, overall buyer inquiry was lower than February.

"In times like this, where buyers are few and far between, the best price may well come from someone with a home yet to sell rather than from one of the few cashed-up buyers in the market," he said.

Auctions were considered the best method in just five locations - Manurewa, Rotorua, Waiheke, Tauranga and Timaru. However, they were also working well for mortgagee sales, said Mr Stewart.

"Mortgagee sale appears to be ideal for auctions and tenders can provide vendors a multi-offer situation, but mainly we are seeing properties get the best price through skilful individual negotiation."

Mr Thompson disagrees with the findings of the survey.

The real estate group conducts the most property auctions in the Auckland and Northland regions, where auctions continue to be the preferred mode of selling real estate, he says.

"We're averaging 80 to 100 auctions every week, and about 35 to 40 per cent are being sold under the hammer."

Properties which were not sold on the day of the auction were selling in the weeks after, he said, and that brought the numbers of properties sold by the group to between 70 to 75 per cent.

"There are plenty of buyers out there ... there have been many instances in recent weeks where we have been selling properties between $30,000 and $40,000 above the reserve that was set."

The way to sell was to have a realistic price that met the market.