A desperate developer who risked selling one of his new-build homes for as little as $1 was saved from a crippling loss at a crowded auction room in South Auckland this week.
The developer was under pressure to sell his five properties in Māngere East, with his lender issuing an ultimatum: “Sell it or we will”.
He listed one of the properties, a three-bedroom standalone home on Massey Road, with a $1 reserve to show how motivated he was. Whatever the property sold for would be the reserve for the remaining four houses in the development.
The Harcourts auction on Tuesday night was packed, and the house ended up selling for $625,000, almost $200,000 below the asking price when it first hit the market in March this year, but still well above what many of the bargain-hunters present would have liked.
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The developer sold the next property on the block for $645,000, and another slightly larger home for $687,000. 449A and 449D Massey Road passed in after receiving multiple bids and are now priced at $695,000 and $675,000, respectively.
Harcourts listing agent Harsh Kathuria said 28 people registered for the $1 reserve auction.
The developer sold another two Massey Road properties under the hammer on Tuesday. Photo / Supplied
The auction opened at $100,000 and was fiercely fought over 42 bids and eight minutes. “The room was packed. People at the back were standing on the chairs to see. The crowd was wild, which was good,” he said.
“The bids were coming in quite quickly. We had multiple bidders on all of them. The best thing was we had buyers there to make a decision.”
Kathuria said a “mum and dad investor” ended up winning the $1 reserve property and planned to keep the current tenants in place. It was his understanding that the buyers of the other two houses were also planning to keep them as long-term rentals.
Investors looking for their first or second investment property appeared to have bigger budgets than the traders in the room, who stopped bidding at the $600,000 mark, he said. There were no first-home buyers because the properties were tenanted.
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Kathuria said the new townhouse market was tough at the moment because of how much stock there was, so it was great to have so many people turn up and bid.
Some of the people who missed out on the $1 reserve bid property then tried their luck at getting one of the neighbouring properties, he said.
Kathuria was confident the remaining two would sell quickly. “We were pushing to get all five under the hammer. We are still negotiating with two buyers [for the other properties] so there’s a high chance.”
It is the second time this year the stressed developer has sold off one of his properties at a $1 reserve auction. In February, he sold three apartments in a separate development on Caspar Road, in Papatoetoe, for bargain prices.
The developer still has two homes left to sell. 449A Massey Road has an asking price of $695,000. Photo / Supplied
449D Massey Road is currently rented for $700 a week and has an asking price of $675,000. Photo / Supplied
He took one of his Caspar Road apartments to auction with a $1 reserve and ended up selling it 68 bids later for $570,000 – below the RV of $790,000. The remaining two townhouses in the same block were called immediately after and sold under the hammer for $580,000 and $588,000, to buyers who missed out on the first property. Two of the buyers were investors, and one was a flipper, who relisted it for sale a month later and is still looking for a buyer.
The developer had hoped getting rid of the Caspar Road properties would take the pressure off, but eight months later he found himself back in the auction room having to sell of the Massey Road development.
However, Kathuria said while both auctions had attracted a lot of interest, the buyer make-up was different. “Last time we had more traders, but this time we had more investors.”
