The odds of being the successful bidder at a property auction can be improved by being well-informed and having a strategy, rather than just showing up and hoping for the best.
Auctions listings in Sydney and Melbourne are running at about twice the levels of 12 months ago, after the lifting of COVID-19 restrictions and as owners rush to bring their properties to market while there is still price momentum and before the holiday season starts.
A combination of seasonal factors and pandemic lockdowns saw the number of auctions tumble in July and August, before hitting a low in early September. Since then, listing volumes have been increasing by about 10 per cent a week across both major capital cities.
For the week to last Sunday, Sydney held 1577 auctions – the second busiest week on record – and Melbourne held 1891, its best week since late March, figures from CoreLogic show.
Preparing for an auction
Arjun Paliwal, the founder and head of research of buyer’s agency InvestorKit, says auction bidders need to monitor the most recent property sales until the time of the auction, as prices will have likely moved higher than they were just a couple of months ago.
“To minimise getting swept up in the action and paying more than initially planned, have a shortlist of several properties to fall back on,” Paliwal says.
“Not having all your eggs in one basket will mean you’re less likely to make a regretful over-purchase [by paying too much],” he says.
Cate Bakos, a buyer’s agent and the president of the Real Estate Buyer’s Agents Association, says some homebuyers may have to lower their expectations in a hot property market.
You should be prepared to compromise on cosmetic elements, but never light, orientation or location, she says. Buyers need to prioritise features, such as floor plan. “It’s the features of a property that you can’t change that matter most,” Bakos says.
“If a home has good bones and is structurally sound, an ugly duckling might be worth a second look, particularly if the neighbourhood is a good fit,” she says.
Communication is key
Bakos says it is good to get to know a property’s selling agent and the auctioneer as, if it appears that you have a good rapport with them, it can be intimidating to other bidders.
“It is also interesting how attire can create an image. Dressing a bit more formally can signal to other bidders that you can afford to pay a bit more,” she says.
And it is probably better not to have anyone standing with you who looks nervous, she says.
Patrick Bright, buyer’s agent at EPS Property, says bidders need set a clear limit on what they are prepared to pay before an auction and not get caught up in the emotion of the moment.
“Bids should be made with confidence and try to get a good view of the auctioneer, the agent and the other bidders, so that you can see what is going on,” he says.
Bright says if you are “nervous type,” consider getting help from a third party, such as a buyer’s agent or a trusted friend or family member who is experienced at auctions, to bid on your behalf.
Don’t feel rushed
It is important not to feel that if you miss out at an auction that it is the end of the world.
There are more auctions now and clearance rates are falling, creating more opportunities to buy, CoreLogic figures shows. That also means properties are likely to be on the market for longer, helping to tip the balance towards patient buyers.
Louis Christopher, founder of SQM Research, is expecting capital city home prices to peak in the first half of next year, with possible price falls as early as mid-2022.
He expects a catalyst for the falls to be further intervention by the Australian Prudential Regulation Authority to restrict home lending.
The regulator has forced banks to use more cautious interest rate assumptions when assessing new home loan customers. The change is expected to reduce new customers’ borrowing capacity by about 5 per cent.
Article Source: www.brisbanetimes.com.au
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