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Expert buyer’s advocate, founder of Amy Lunardi Property and the host of The First Home Guidebook - an educational podcast & online course
that empowers first-home buyers with all the necessary tools and knowledge needed to buy their first home.
Ready to sharpen your critical eye when it comes to comparing properties? Read this before you take any auction result at face value. In this post I share 6 things you should be aware of when it comes to auction results
Property is an incredibly dynamic market. At any point in time there are a finite amount of properties and buyers in a market, but an infinite number of outcomes which can occur depending on the decisions and actions those buyers take.
Before you use any property as a reliable comparable sale to another property, it’s essential to make every effort to understand the variables behind an auction result and understand that each property and auction campaign is unique, and sometimes we need to dig a little further to get the FULL picture.
Here are 6 major things to be aware of when reviewing auction results:
Having a property pass into us with no other bidders is one of our favourite scenarios, but interestingly it can sometimes have the opposite effect on a buyer as they begin to wonder why nobody else was bidding.
It’s human nature to feel a purchase decision is validated by other people’s desire, and in these situations we need to forget about the other buyers, appreciate the highest bidder is now in a strong negotiating position, and focus on our own due diligence, research and appraised figure to be confident that this is the right property at the right price.
Often it’s because the buyers have purchased something else, or perhaps they’ve simply had a change of heart. External factors like job losses, family illness and relationship upsets can also change the landscape for prospective buyers.
Timing plays a huge part of any auction campaign, and if there are a number of comparable properties on the market at one time there’s a higher chance an agent wont be able to rely on buyers who have flagged their interest.
As a buyer’s advocate i’m horrified to see people purchase without doing a scrap of due diligence, but it happens more frequently than most people expect.
Walk ups are one of the reasons we like to purchase prior to auction as this format often limits the competition to just those people who have already seen the property.
Walk ups can be a blessing for a vendor if it bolsters the sale price, but can also be worrying for an agent as they haven’t qualified the buyer and run the risk of them not having the right deposit or desired terms.
The property sold well above reserve. I’ve also been to auctions with so many people the agent had to stand on a fence so everybody could hear, but there wasn’t a single person who put their hand up. It can be intimidating, but there is absolutely no correlation between number of people at an auction and how many bidders there will be.
An agent might put a property ‘on the market’ at a price lower than the vendor originally was prepared to accept with the purpose of stimulating more bidding, or they might pass the property into a buyer above the reserve if they know that the strongest buyer has more to spend.
For these reasons an agent will usually be hesitant to disclose a reserve prior to auction, however we do often get a heads up from agents we have good relationships with if the reserve is unrealistic and non-negotiable, to avoid wasting our client’s time and their building inspection costs.
The mere thought of standing in a public, crowded space with emotions running high gives most people a shock of adrenaline, let alone those who plan to bid. But remaining pragmatic and asking the agent clever, pointed and direct questions can make the difference between flying blind and having some valuable insight. Never underestimate an agent’s willingness to answer a question like “How many bidders do you feel will put up their hand?” Agents hold the clues and provided you ask nicely, most will be happy to help.
A must-have checklist for any aspiring property buyer - you’ll never look at a property the same way again.
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