We are currently house hunting. Last Saturday we have been to our first house auction.
This house is 3 bedroom and situated under a volcano, Mt Wellington. It has three bedroom, 100 square meters living space with total of 400 square meters land size. We liked it instantly the first time we walked in, it is warm, with spacious bedrooms. Only downside is that there is only one bathroom and also it does not get much sunlight. We thought about what we could have done with the house and also our budget, then came to the conclusion that this house is worth to pursue.
The following week its about getting in touch with the lawyer and also find a good building inspector. Our lawyer found there was an extension of the living room was applied to council back in 1996, but it did not receive a final approval. This could have a big impact on the value selling the house, as no one wants to take over a property lacking permit and have to deal with the council to regain a permit. The good news was the building inspection went well, this house was built in the 1930s, but had work done in the roof and under the house with approval. It has good insulation and we loved the solid wooden floors.
It is only a few days left till the auction and we were stilling waiting to hear back on the agent about what to do with the outstanding building permit. After a lot of phone calls to the council it turned out the 1996 work was applied but never took place. The council agreed to remove this from the LIM report, which is a record of all the work this house has gone through. We got full approval from insurance company and also our bank. With money in our pocket, now its show time.
The auction took place in a beautiful sunny Saturday afternoon. We got there just before it started, and it took place in the courtyard. There were about dozen people attended the auction. The auctioneer briefly went through the legal commitments of the auction, then he suggested started it at 1 million. No one raised the hand. The agents came to us suggested to make a bid, we said we wanted to wait for others to bid first. So a bit of awkward silence passed. Then I raised my hand and called out a figure much lower than 1 million. The auctioneer was surprised at my low figure but he still took it as a starting place, I suppose its better than $0. Another family added a bit more to that, then auctioneer asked if anyone want to add another 25K. I misheard the figure, so I just added another $2000. My figure caused a few laughs in the crowd. The auctioneer told me it did not work that way and it had to be minimum of 25K. I agreed to add that, and to be honest I was not embarrassed by the laughs at all. After that, it was the end of the auction no one else wanted to bid. We turned out to be the highest bidder. We Won !
However, the price we offered was a lot lower than what the vendor wanted. The agent pushed us to go near 1 million, I told them what I thought about the house. It a lovely layout and it is in a good school zone, we liked it but we were not crazy about it. There were a few things need to be done around the house and all of these work cost money. Also it is the buyers market right now, the market is not as hot as it was two years ago. Obviously the vendor still wanted a price at the highest point of the real estate market, they are out of touch with the reality. This land has already been subdivide, so there is no potential for adding another house to the land. The only thing for this property to increase value is to wait out for better times in the real estate market. So even if I have budget of 1 million I would not pay for it in such environment. The agent played the fear card, he said well if we put this house on the open market I guarantee it will be snatched up quickly. I said of course, there would always be someone with more money to spend and probably would not mind to pay so much. But to me there are also many better houses out there which could have much better value than this property. Each to their own and we just wish each other good luck.
So thats the end of our experience with the first auction we have been to. I am glad we didn’t cave in under pressure from the agent and the auctioneer, most people would get intimidated under those circumstances. I did wonder if I am being too realistic and should have aimed for a bit higher for this property, but then I do believe it is better not to deal with a vendor who is so out of touch with the market and wanted such a high price. The reality in the current New Zealand realestate market is that there is a ban on foreign buyers, the immigration has tightened up on the number of people moving to NZ. There are not enough buyers. Even with low interest rates, still the market is not as active as it used to be. The downside for buyers is there are not enough listings. I believe in hard work and do the research throughly . With patience and due diligence, over time I think we will find the most suitable property for us.
Watch this space.