Property with a $1 reserve sells for $400k at auction
A Palmerston North rental property was sold at auction with a $1 reserve and fetched $400,000. The property was initially valued at $480,000 by CoreLogic when owner James Faber listed it six weeks ago, but market movements led to an $80,000 reduction in the listing price.
Despite the initial hesitation from bidders, the property's price rose quickly, with a Wellington investor ultimately winning the auction and agreeing to retain the existing tenant.
Mr Faber said there were scary moments when bidding stopped at $350,000, but he was happy with the final result. “It sped up really fast, someone was really excited to throw the first bid out at $100k, and it went reasonably well until $200k, then slowed right down.
“In the last week or two I’ve seen similar comparable properties pop up in the kind of $395,000-plus price point, so those sorts of things were things that got me really stressed about where this might go,” he said.
Faber, who plans to use the proceeds to pay back his mother's $300,000 loan for another subdivision project, admitted that the $1 reserve sale was a valid sales method but that he would not consider it again given the current market conditions.
The sale comes at a time when the housing market is experiencing mixed sentiments. While house prices did not fall as much in April as they had in previous months, a survey conducted by economist Tony Alexander showed that the fear of overpaying and the belief that the market would fall further were still prevalent among buyers.
However, with recently announced loan-to-value ratio restrictions, a potential return of positive migration, and likely plateauing interest rates, sentiment shifts may drive prices upward in the near future.
Although the property sold for less than its initial valuation, Faber's $1 reserve sale highlights the volatility of the current housing market and the importance of carefully considering sales strategies in uncertain times.