Properties typically sell between 2% and 5% off asking price, data shows

Saturday, 10 February 2018

Christchurch properties sold closest to their asking price.

New Zealand property buyers are not bargaining hard to push vendors down on their advertised price, new data suggests.

The information from the Real Estate Institute of New Zealand and property listings site Realestate.co.nz shows the gap between the asking price, on properties where one was listed, and the sales price.

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The data does not include houses sold by auction or listed as 'price by negotiation'. These have been a large part of the market in recent years. Typically, houses listed with an asking price are those at the cheaper end of the market.

The data shows a median difference between asking and selling price of 2.67 per cent in the latter half of 2017, across New Zealand.

'Buying and selling houses is like balancing a set of scales - it's important to understand both sides of the transaction,' Realestate.co.nz chief executive Brendon Skipper said.

'As a rule, sellers naturally want to achieve the best price possible for their property and buyers want to buy at the best price possible, so it's about finding the sweet spot between those two points of view so that buyers aren't put off by an over-inflated asking price, and sellers don't sell too cheaply.'

Christchurch sales were closest to asking price - with just 2 per cent difference. There has been little movement in prices in that part of the country over recent years.

West Coast had the largest variation, more than 5 per cent. The market there can be volatile.

Real Estate Institute chief executive Bindi Norwell said: 'Agents use what is called a comparative market analysis (CMA) in order to accurately price properties. It looks at what similar properties in the area have sold for, but also takes into account any unique features your property could have, for example a pool or an architecturally designed property.

'Using a CMA combined with local knowledge and experience is what helps to develop this accurate pricing.

'There are many factors involved that impact the final sale price, such as the level of interest in the particular location and style of property, the type of marketing a vendor invests in and the sales strategy selected.

'However, this research shows that agents across the country are, in the majority of cases, very accurate when it comes to pricing property and helping both parties to find that happy medium which is so important when it comes to buying and selling a property.'

Norwell said demand and supply played a big part in what people were willing to pay.

Many buyers expect to offer less than the asking price and then negotiate up if need be.

But property market commentator and investor David Whitburn said the best offer to make to open negotiations would depend on the circumstances. Agents would offer some input on what the vendor expected, he said.

'Some guidance is unhelpful, citing the listing price. Some advice is too helpful, where disclosure of a vendor circumstance - health ailment, vendor having bought already - and leading information as to the lowest price the vendor will accept.

'You don't want to offend a vendor by going too low in a negotiation, they will often not bother counter-offering. What something is worth depends on a range of emotional factors in many cases.'

What someone would offer for a property that had been on the market for a long time with no interest would be different from what they might come up with in a multiple offer scenario.

Whitburn said buyers needed to remember the agent's primary duty was to the vendor.

'They are trying to get the best price, and in a predominantly commission-only industry, there is additional commission.

'Some agents are weaker negotiators and have been told a minimum price and to advertise for the vendor. I remember a property I negotiated a few years ago that was priced from $600,000 that I got at $542,300.'

Blogger Andrew Duncan said anyone whose house was on the market should be excited to receive an offer.

'If it is lower than what you want or expected then you can politely decline it. Anyone who has owned a home that has taken a while to sell will attest that it is far better to have offers that you turn down than to have no offers coming in at all. Also - a written offer can encourage other buyers to take action and make their offer at the same time. The resulting multi-offer situation usually works out well for the owner in question.'

He said he had never seen a vendor turn down an offer just because the person had made a cheeky bid previously.

'Let's say you offer $400,000 on a property with an asking price of $475,000, this happens all the time by the way, it just doesn't show in the stats. Now in most circumstances, the owner would likely turn that offer down… But imagine a week later, the buyer comes back and offers $465,000. Is the owner going to work with it? Usually, they would.'

He said there was no 'wrong' amount to offer.

'You are doing the owners a favour by making an offer, whether it is accepted or not. Don't let anyone ever tell you otherwise.'