A four-bedroom home in Bethlehem, Tauranga NZ, is about to go to online auction with a reserve of $1.
The property’s agent, Rodney Fong, explained that the rock-bottom reserve price was intended to increase exposure for the property. The strategy has worked so far, with coverage of the sale in the NZ Herald and Stuff.co.nz. And, everything else going to plan, the exposure should pay off with more bidders and a higher sale price.
Jeremy O’Hanlon of Homes.co.nz agrees.
“What a fantastic way to drive up exposure. The Homes.co.nz listing of the property shows recent sales in the area getting up towards $800,000,” he said. “I wouldn’t be surprised given the exposure that it doesn’t surpass the upper end of the HomesEstimate.”
The creative pricing strategy isn’t the only unique aspect of this sale, it also marks the first time that online site PropFi has been used to sell a property.
“Our focus is on introducing innovative technology into New Zealand’s real estate sector and inspiring real estate agents to embrace change that will benefit the industry across the board,” says director Angie Zingel.
Fong says that the online sale is an “exciting twist” to the conventional auction.
“I believe it’s another tool agents can use to sell property. As an auctioneer myself, I think there is still a place for auctions on site and in rooms but this gives us another option to sell a property.”
The strategy is not without risks, of course. Prospective buyers may be scared off by the unconventional sale method and take a wait-and-see approach to online real estate auctions. That could leave the home’s owner, Lynn Michel, with a lower sale price than she was expecting.
Given the market, however, real estate experts do not seem too concerned.
“I suspect in this market it will get a pretty good result,” says Anton Jones, owner of First National Mount Maunganui, Tauranga and Omokoroa. While there is always a risk at auction, which a low reserve price compounds. “[I]n a market like this…the risk is reduced.”
University of Auckland’s Bodo Lang, a senior marketing lecturer, agrees that it’s an interesting tactic.
“The big upside is that it will definitely maximise the number of people looking at the auction which is exactly what a seller wants,” he said.
Lynn Michel has owned the land since 2007 and was inspired by an upturn in market activity to sell the property. She has a special connection to PropFi as well: The auction business is owned by her son and daughter-in-law.
Michel attempted to sell the land four years ago but didn’t have any luck. After building a home on the property and watching the prices rise throughout the area, she’s hoping to try again.
The auction begins October 24 at 6 p.m.
