Older Parnell home sells for a stunning price! Owner buys for $850,000 and sells for $4,180,000! The auction insights you need to know!

From an aesthetic perspective, a fine work of art can bring pleasure and deeper philosophical insights. Its aesthetic value cannot be replicated, which helps explain why works by many artists command high prices and are keenly sought after by art enthusiasts.

Recently, a very fortunate Auckland homeowner attracted considerable attention at auction because the house's hallway featured original artwork by renowned New Zealand artist Michael Smither. After several rounds of fierce bidding, the house sold for $4,180,000, setting another house sale price record for Parnell.

Last month, the Barfoot & Thompson auction room was packed, with the property's listing attracting many buyers interested in collecting art. What makes this house special is the underwater scenery meticulously painted by renowned artist Michael Smither in its entranceway and on either side of the stairs. True to Smither's modern artistic style, the paintings are grand, magnificent and richly coloured, giving the entire house a strong artistic atmosphere.

International Art Centre director Richard Thomson said, “Michael Smither's works command the highest auction prices among living New Zealand artists. His painting Kingfisher sold for $340,000 in 2019. If these works on the walls were paintings that could be removed, they would be worth more than $1,000,000.”

With the value of the property combined with that of the artwork, no one can accurately predict its potential for future capital growth.

17 Takutai Street, Parnell, Auckland City

Michael Smither artwork

Image source: Barfoot & Thompson

The owner ultimately chose to sell by auction. Linda Galbraith, a real estate agent at Barfoot & Thompson Parnell, said buyers showed strong interest in the property on auction day, with many art lovers coming to bid.

Of course, while magnificent artwork has a direct impact on a property's value, professional property marketing and auction skills are also crucial to achieving a successful sale.

Today, we have invited experienced Barfoot & Thompson auctioneer Murray Smith to discuss the importance of auctions in selling homes, share his extensive industry experience and offer buyers and sellers advice from a professional perspective.

Murray Smith has nearly 30 years of real estate experience. A former national auction champion, auctioneer, marketing consultant and band member, he has auctioned more than 15,000 properties and also conducts charity auctions for numerous organisations.

Creating a fair, comfortable auction environment and securing the best price for owners

What does an auctioneer's job involve?

Intense bidding in an auction room can make many people feel nervous and uncomfortable. A key part of our job is to help participants feel as relaxed and comfortable as possible, and to ensure everyone has a fair opportunity to bid. We also need to secure the best price for the owner. Sometimes bidding stops while the price is still below the owner's expectations. We need to balance the interests of buyers and sellers and negotiate with each side, doing our best to achieve a sale during the auction.

How has the auction market been performing recently? Are sales volumes and prices still strong following the recent policy changes?

The property market was very strong before the Government introduced its new housing policies in March. Investor enthusiasm eased a little afterwards. That is normal: any major change, such as loan-to-value ratio restrictions or new tax policies, may prompt investors to pause and reassess their investments. What we are seeing now is that buyer enthusiasm seems to have returned recently. Overall, I believe demand in the property market remains relatively strong, particularly in Auckland, where there is still a substantial housing shortage.

What types of property are most popular at auction?

In my view, any property can achieve a desirable sale price at auction. It largely depends on market demand and the effort the real estate agent puts into selling the home.

The benefits of auctions for buyers and sellers

Why choose an auction to buy or sell property?

Firstly, for sellers, an auction sets a deadline, creating urgency among buyers and encouraging competition, which can lead to a better sale price. Secondly, our agents can enter prospective buyers' details into an online database so that interested buyers can be contacted if the auction is brought forward. Auctions have no set price limit, so they can attract a wider range of buyers.

For buyers, auctions offer a fair opportunity to compete. An auction is one of the most transparent ways to buy a home: buyers know all the terms, the settlement date and other details in advance. In the auction room, they can also see that they are paying a fair market price for the property.

Could you give us one or two examples of recent successful auctions and explain what made them successful?

High-end homes usually attract more prospective buyers. Two properties that achieved very high auction prices stand out in my memory. A luxury five-bedroom home in Greenlane sold for $9,900,000, setting a residential auction price record. It attracted many interested buyers within days of being listed, and a pre-auction offer of $9,400,000 was received on the second day. We therefore brought the auction forward. There were 8 groups of prospective buyers at the auction, and the house ultimately sold for $9,900,000. Competition was so fierce that the buyer who made the pre-auction offer missed out on the luxury home.

Last year, a property in Remuera with a capital value (CV) of $5,600,000 attracted more than 10 groups of prospective buyers. Bidding opened at $4,000,000, but the final hammer price was $8,000,000—40% above CV!

Of course, exceptionally high auction prices are also common in the lower and middle price brackets. Last week, a home with development potential on a 1012-square-metre site in Manurewa, South Auckland, sold for $1,741,000 after bidding by 7 groups of buyers—nearly $1,000,000 above CV! The buyer plans to build 6–8 new homes on the site.

This property on Oxford Road, Manurewa, in South Auckland, sold for $1,741,000.

Overall, a successful property auction depends on the real estate agent's efforts. Marketing the home beforehand and communicating repeatedly with buyers brings more prospective buyers to the auction, generating more bids and achieving the best possible result.

For buyers and sellers: Tips

Question: What preparations would you recommend buyers and sellers make before an auction?

Answer: Firstly, both need a clear understanding of their price limits. For sellers, if the price falls short of their expectations, what is the minimum they can accept? Buyers need to consider how much they are willing to pay to secure the home they want. Secondly, buyers need to ensure sufficient funds are in place before the auction. I also recommend arranging a building inspection and other checks beforehand to ensure they buy a home they are happy with.

Question: How would you advise sellers to set an opening price?

Answer: I think it depends on how many buyers are interested in the house. If there are many, I recommend a competitive, relatively low opening price. A lower opening price encourages more buyers to bid, which can quicken the pace and make it easier to reach the desired price. If fewer buyers are interested, a higher opening price may be a better approach.

Question: Is there anything buyers should pay particular attention to at an auction?

Answer: Some buyers think holding back and waiting to bid is a good strategy, but that is not the case. My advice is that the best approach at auction is to bid confidently. Get involved from the start and keep bidding, giving other buyers the impression that you are determined to secure the house. Some buyers hesitate for so long that they miss the best opportunity to bid and buy.

Question: What role does the real estate agent play during an auction?

Answer: In my view, real estate agents are like coaches for buyers and sellers. They need to brief both sides beforehand so they are prepared for what will happen and the possible outcomes. These include bidding falling short of the owner's expectations or exceeding a buyer's predetermined limit. Agents are the link between buyers and sellers and play a crucial role throughout the auction.

Online auctions: a new way to buy

Could you explain how online auctions work and their advantages and disadvantages? Have they changed the way auctions are conducted?

In my view, online auctions offer more choices and possibilities. People can watch auctions online and also bid online. During last year's lockdown, people were concerned about gathering in auction rooms, and online auctions offered the best of both worlds. As auctioneers, we also need to keep track of online bids at all times. That presents a new challenge, but we have become accustomed to the process.

My advice to buyers is to attend the auction in person if you can. It may give you a better chance of securing the house you want.

We hear you speak some Mandarin. When do you use it, and what effect does it have on auction outcomes?

Numbers are expressed differently in English and Chinese. Chinese uses units such as hundreds, thousands, ten thousands, hundred thousands and millions. Bidding often moves quickly, and changing figures can be difficult to keep up with. When I encounter Chinese-speaking buyers, I say the figures in Mandarin so they can follow every amount and respond calmly.

Also, English is not the first language of many buyers. Interacting in a language they know breaks down language barriers, builds rapport and makes the auction atmosphere less tense.

Why would you recommend Barfoot &Thompson's auction services?

Barfoot & Thompson is both Auckland's largest real estate agency and its leading auction house. In the past 12 months alone, we have auctioned more than 8000 properties—more than any other real estate agency.

Our dedicated in-house auction team comprises 8 experienced auctioneers. They hold no other roles and focus entirely on auctioning Barfoot & Thompson properties, ensuring your property receives a dedicated auction service. Everyone on the auction team has worked in real estate for more than 10 years, and more than half have over 20 years of auction experience.

Barfoot & Thompson's professional real estate agents also assist and guide owners and buyers, registering everyone's details before the auction, actively coordinating communication during it and completing paperwork afterwards, making the entire auction experience worry-free.

Another point of difference from other real estate agencies is Barfoot & Thompson's commitment that auctioneers will never bid on behalf of the vendor. All bids come from genuine buyers. Vendor bidding runs counter to the principles of openness, fairness and transparency and does not serve the interests of owners or buyers. We do not accept bids that are not genuine.

Our auction rooms are located across Auckland and Northland. Auckland venues include the City, Highbrook and North Harbour Stadium auction rooms.

Barfoot & Thompson also offers online and on-site auctions to meet different clients' needs.

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