Myth #8: Sellers are Aware when their Auckland Apartment has been Undersold to a Trader for Reselling
We will be talking about the Auckland apartment market and how can you determine if your apartment is being undersold to a trader. I will also tackle some of the common myths associated with a trader - All these in this podcast.
Apartment Specialists Podcast No: 25
Andrew Murray, Apartment Specialists. You know, when your Auckland apartment is being undersold to a trader to be resold. That's a myth. You don't know. Most of the time, you don't know.
One tenth - so one out of every ten Auckland apartment sales or apartment transactions on the Auckland apartment market is dealing with the trader. So that means over a hundred owners each year are selling to traders in one suburb in the city centre without even knowing in most cases.
Occasionally, clauses have been used. But these clauses are very misleading and give a completely different picture. So how can you be sure this isn't happening to you? Everybody thinks, "Oh, I wouldn't be that stupid to undersell my apartment". Well, the thing is, you don't actually know. Because me - being an apartment agent - it took me probably a year, or six months to a year, to actually figure out the values. So you as a vendor, how are you supposed to know when I'm doing this day in and day out? And the reason why - a huge reason - is sales don't always represent values.
Every apartment is different, every condition is different. It's a real minefield. So if you even suspect that your apartment's being sold to a trader, put in the agreement on the vendor side, "Subject to evaluation". Then you actually know - and just for the sake of that $500 you spend on evaluation - you've got peace of mind knowing that you're not throwing away money.
Probably the best way to ensure that this doesn't happen from the very start is when you choose the agent to represent you. Create a separate form saying that the agent will ask every prospective buyer - he puts in a contract - the purpose of the purchase. Is it an owner-occupier? Is it an investment for "x" amount of years, or it's to resell? And through doing that, you can actually ask the agent have they asked the purchaser a question and what is the reason for the purchase. Now, if they say it's to resale, they have to say it because you've actually given them a document or put a clause in for the sole agency saying they have to do so. You're not flying blind. Because it happens time and time again. And some of the top agents in the Auckland apartment market sell so many apartments to traders and no one has any idea.
I hope that helps and make sure you do put that clause in. If you're unsure and you feel like you're in an area where you can't make an educated decision - because you feel like you're just relying on the information in front of you - put it subject to evaluation for the vendor and that's not normally done - but in the Auckland apartment market that needs to be done. Or as I see it - if you can - ask to have that clause in the agreement. You can even say, "I don't want to receive offers from traders". And every offer, I would like to know what the purpose of the purchase is. I hope that it's been helpful.
The next myth I'm going to talk about will help educate you guys is the auction market. An auction is the best method of sale when it's unique, when it's going to bring in emotional buyers. I very rarely use this because I can get higher prices through listing with a price. But there are times when auction is the best method. In this market, the sad thing is that's not the case. And I'll go through that in my next podcast and how you can ensure that you're not falling into that category.
Thank you. Cheers!