An Auckland property put up for auction with a reserve of just $1 has sold for $600,000.
The freestanding 3-bedroom home based in Landette Road, Manurewa, was described as a "$1 reserve do-up". Planted on a 600 sqm flat freehold section with a double garage, it needed work, appealing to property enthusiasts, investors and first-home buyers to replace fixtures and fittings and give it a lick of paint.
"With interest rates at an all-time low, this is the perfect home to buy, so don't let this one slip away," the listing said.
Ray White real estate agent Pat Lapalapa, confirmed on Thursday that the home had sold for $600,000 - almost $100,000 more than the expected price.
"It definitely fetched a lot higher than expected: the owners were rapt," Lapalapa said.
The auction started with over 40 registered bidders, with five groups holding court on the bidding. As the auction progressed, the number of bidders dwindled to three, before the auction closed "way above what we thought it was going to sell for".
"Normally, do-ups in the area sell around the early $500,000's...this one needed more work than the average," Lapalapa added.
According to REINZ, the median sale price for a three bedroom home in Manurewa was $638,000 in June, up from $610,000 in June 2019.
Chief executive Bindi Norwell said it wasn't unusual for agents to use "interesting marketing techniques" to draw attention to a property.
"A few examples have included using jet skis or kayaks, giving away a car with the property or even the $1 reserve. Auctions with a $1 reserve aren't that popular, but there have probably been a handful over the last decade," she said.
Setting a $1 reserve is a potentially risky strategy, as it puts a property "on the market" immediately, meaning it could literally sell for $1.
"It also means that the auctioneer is unable to place a vendor bid on behalf of the owner as this can only be done when the bidding hasn't reached the reserve price yet."
But where there's a shortage of listings and strong demand, the agent may decide that the strategy could pay off.
"[Given] the number of auctions we're seeing in the market, it's also a good indication of confidence in the wider market and that purchasers can get 'cash' approval from the banks to bid," Norwell added.
Trade Me property spokesperson Aaron Clancy, said that despite the economic impacts of COVID-19, so far, the market was holding up with no evidence that distress sale listings had increased.
"Compared to the same month last year, we didn't see an increase in the number of mortgagee and urgent property sales onsite in June, however it's still early days.
"We may not see the full extent of COVID-19's impact on the property market until post-September when Government wage subsidies have ended," he said.