Stay cool in heat of market
A little work can improve your prospects buying at auction, write Samantha Landy and Peter Farago
The auction market has gone from strength to strength since Victoria emerged from lockdown last year, with all signs pointing to a seller’s market. Clearance rates have consistently landed in the high 80 per cent range. And experts say reserves have become “a bit irrelevant” for A-grade properties, with prices consistently soaring well above them.
But this week, buyers have their best chance in months to snare a home, with realestate.com.au expecting an extraordinary 1940 properties to go under the hammer.
With autumn tipped to keep producing super Saturdays, we have asked the experts to share their tips and tricks for buying at auction.
BEFORE THE AUCTION
The first step for any would-be auction buyers is simple, according to Real Estate Buyers Agents Association president Cate Bakos.
“Make sure all the decision makers are on the same page,” Ms Bakos said. “If you’re a firsthome buyer bringing your parents, or you’re buying with a partner, make sure you decide, ‘we all want to go for this property’.”
Next, do your due diligence. She said this should include having the sale contract reviewed by a conveyancer, digging up any permit activity in the area and having a building and pest inspection.
“Especially in this market, do all this well in advance,” she said. “Getting a building inspector in the days before a super Saturday is near impossible.
“The chance of (a property) selling before an auction is also increased on a big weekend. The agents have a shedload on and vendors can get a bit nervous, so be prepared for this.”
Those interested in trying to buy before auction needed to establish whether this was an option and, if so, whether the agent and vendor would be open to accepting an offer.
Another important pre-auction step was gauging the sale price of your target property.
Ms Bakos warned against relying on advertised price guides. “Look at the sold tab of a portal (like realestate.com.au) for similar properties in the same area sold in the last eight weeks. Don’t bother with January or earlier,” she said.
Geelong Real Estate Advocates founder Tony Slack advised buyers searching for comparable sales to look for properties with a similar land size.
“Look at the land size first, … then look at the characteristics of the home,” he said.
Establishing the motivation of the seller could be helpful in working out the price they’d accept. Mr Slack also advised trying to work out the level of competition you’d be up against by scoping out crowds at open for inspections and directly asking the selling agent.
AT THE AUCTION
Sold By Group auctioneer Andy Reid said buyers should arrive at an auction armed with three figures: “What you think would be a really great deal, what you feel would be a fair price and what you are absolutely prepared to stretch to in order to obtain the home”.
“Writing those figures down and having them on you will allow you to stay focused,” Mr Reid said.
Ms Bakos also advised having a “firm stretch figure” in mind that was not a round number, like $650,000, but more specific like $652,000.
“When you reach that figure, if you’ve still got competition, you’ll have 100 people looking at you and an auctioneer screaming at you, so you need to have your final move in your head,” she said. “Even if you’re nervous, stick to your plan and bid confidently.”
Ms Bakos said no one-size-fits-all approach to winning an auction existed.
“Sometimes I find exerting my energy at the start of an auction can set the tone,” she said. “But I see a lot of good bidders hold back.
“The biggest risk you can take is holding back too much and missing out.”
In a hot market, Mr Reid advocated “going in hard with a significant first bid to try to slow some of the momentum”.
AFTER THE AUCTION
If it is looking like the property will pass in, make sure it passes in to you. Ms Bakos said this would give you exclusive rights to negotiate.
“In this market, you’re most likely going to come out with a sold sticker,” she said.
She said a buyer in this situation should take in the comparable sales they had found as evidence to help them negotiate a fair price.
If you win the keys, you’ll be required to pay a 10 per cent deposit. Ms Bakos said those who missed out should tell the selling agent to keep them in mind with any off-market opportunities — or if the sale fell through.
“Be gracious and polite. You never know,” she said. “And sometimes you can pick up an off-market property when you play nice.
“The agent will always make a fuss of the underbidder. They know how much money they’ve got to spend and they see they may be able to make a fast sale.”