Auctioneer Jason Pantzer said buyers were making a mistake by remaining silent at auctions hoping they could negotiate if the home passed in.
SYDNEY auctions have become the ideal hunting ground for bargain seekers but many would-be buyers are failing to capitalise by remaining silent during auctions, housing experts claim.
They said those who registered to bid at auction stood a strong chance of coming up against only one rival bidder or in some cases would be the only registered bidder, putting them in a commanding position to negotiate prices.
Conversely, those who stood on the sidelines waiting for the home to pass in — a strategy that has been getting increasingly popular — were at a disadvantage as they were often not given the same access to vendors as those who registered to bid.
MORE: How to do a good deal at auction
Huge sale for rare Neutral Bay block
This comes as sales data revealed buyers have been in the box seat at auctions. The average city auction in September attracted 2.5 bidders and the average sale price was $2511 above the vendor’s reserve, according to Cooley Auctions figures.
Onlookers at a Marrickville auction: agents suggested bidders stand in a position away from the crowd. Picture: Luke Drew
At the same time last year, the average price for homes sold by Cooleys was $50,458 above reserve. Further back, during the market boom of 2016, the average auction was attracting five registered bidders.
Research group CoreLogic confirmed that weekly auction clearance rates, the proportion of properties sold successfully at auction, have hovered around 51 per cent for much of spring. This was well below the nearly 80 per cent clearance rate recorded over part of spring 2016 and also below the 60 per cent weekly clearance rates that characterised auctions over spring 2017.
But Real Estate Buyers Agents of Australia president and Propertybuyers.com.au CEO Rich Harvey said buyers who wanted to capitalise on the improved buying conditions needed to be strategic and come to auction well prepared.
He added that the current lending environment was making it difficult for many buyers to get loans which meant “cashed up” buyers who had their financing in order could pick up a “potential bargain”.
“If you are going to auction, make sure you have your deposit in clear funds and pre-approval ready to go,” he said. “In this market, vendors are looking to accept offers from buyers that are financially sound (and) buyers with full finance approval are at a distinct advantage.”
Buyers who remain silent at an auction are shooting themselves in the foot, auctioneer Jason Pantzer claims.
The Phillips Pantzer Donnelley director said those who employed the strategy of not submitting a bid in the hope they could later negotiate with the sellers if the home passed in often missed out on true opportunities to vie for the home.
Buyer’s agent Rich Harvey said buyers should make sure they had an auction strategy.
“If I was a buyer I would make sure I made the first bid,” Mr Pantzer said. “Bid at a level you are comfortable with and if it is too low, at least you have put your best bet forward.
“It also puts you in a position of power if the property passes in and the sellers want to negotiate, because your bid was the highest at auction.”
He added that buying at auction was the most transparent way to get into the market. “You can eyeball the competition. You can see what they are doing. It’s not down to chance.”
Mr Harvey suggested bidders stand in a spot where auctioneers could see and hear them well. “Stare down the competition with loud and clear bids,” he said. “Be confident in your body language and give the impression you have an unlimited budget and will do whatever it takes to win the property.”
Auctioneer Scott Petterson at the sale of a home in Canterbury. Picture: Tony Gough
Advantage Property Consulting director Frank Valentic added that bidders needed to think carefully about their offers. Calling the full price rather than rise amount and opting for odd numbers often worked better, he said. This was because most rival buyers made offers in rounded numbers.
LEARNING THE LINGO
“On the market” and “reserve” were vital terms to know, Mr Valentic said.
The latter was the minimum price the vendors were willing to accept in order to sell by auction, while an auctioneer’s call that a home was “on the market” meant the reserve price had been reached and the property could now sell to the highest bid. Mr Valentic said a property going on the market was a key point of the auction.
“Don’t be scared to ask the question, ‘Is it on the market?’ Once it’s on the market, you’re playing for keeps,” he said. “That’s when I’d bid aggressively.”