When it came to shifting a beautiful old New Zealand mansion, a local agent held a ‘Dutch auction,’ in which prices start high and then drop in stages until a price is settled upon. Could this be the start of a new trend? TheMoveChannel.com finds out…
A Dutch auction is a type of auction where the auctioneer begins with a high asking price which is lowered until a participant is willing to accept the auctioneer’s price, or a predetermined reserve price (the seller’s minimum acceptable price) is reached. The winning participant then pays the last announced price.
These types of property auctions are convenient when it is important to auction goods quickly, since a sale never requires more than one bid. Theoretically, the bidding strategy and results of this auction are equivalent to those in a sealed first-price auction. The Dutch auction is named for its best known example, the Dutch flower auctions.
Premium Real Estate in Herne Bay, New Zealand, used a Dutch auction to sell a two storey colonial weatherboard mansion on London St in St Mary’s Bay, Auckland.
The home, which boasts sweeping harbour and bridge views and permission for two other properties to be built on the plot, was valued at £1.95 million by QV Valuations, New Zealand’s largest property information company.
However, in the current climate, the home only fetched half its QV value – going for less than £967,000.
The Dutch auction saw bidding start at £1.8 million and this price then fell in stages, sometimes as large as £185,000 each time, according to Pene Milne of Premium Real Estate.
“We should view this as a great result, said Ms Milne, as many other agencies had listed the property this year and not managed to sell it.
“The Dutch auction worked well because it was an unusual technique which flushed out people who had previously not expressed an interest in the house,†she added.
The buyer was a Kiwi who does not live in Auckland.
Meanwhile, according to the New Zealand Herald, a senior real estate official has questioned the realism of QV valuations, blaming low volumes of house sales on QV ratings which he says mislead vendors into expecting high prices which buyers will not pay.
Mike Pinkney, a Real Estate Institute board member and agent, said the new council valuation of his own property was £110,000 above market value.
“People base decisions worth multiple thousands of dollars on QV valuations, deciding what they will sell for or deciding what they will pay instead of getting a real valuation done for around £150, which includes home inspection and takes into account current market value,†said Mr Pinkney.
Will Dutch auctions become a new property trend? Let us know your thoughts on [email protected]
For more information on Property Auctions and the market in general, please visit http://auctions.themovechannel.com/
-ENDS-
Notes to editors:
TheMoveChannel.com is a property website that was founded in 1999 as an online resource for buying, selling and learning about property. It now receives as many as 300,000 visits per month and advertises over 50,000 properties in nearly 90 countries, which are listed by over 500 partner organisations.
For further information as well as images and interview possibilities, please contact:
Dan Johnson
Managing Director
http://auctions.themovechannel.com/
0207 952 7650
