Bidding at auction? Don’t make these mistakes.

By now I’m sure you’ve started to hear the media reporting that house prices are on the rise. For the past quarter, Melbourne house prices jumped 4.1 per cent, with houses regaining almost half of the price falls that occurred during the recent downturn.

For those of us immersed in all things real estate, out and about week in week out (and weekends!), we’ve seen the Melbourne market turning since the day after the Federal election back in May.

 

Regular readers will recall that back in June I was reporting the market had already shifted.

Sometimes it takes a little while for the media to catch up and often, by the time it does, many buyers have missed the boat. Is that the case for you? Were you looking for a home earlier in the year and you’re still on the hunt now? Are your clients? If this is you and you are feeling disheartened, I can help you. You just need to let me.

Fun and games at auctions

On Saturday I bid on a house at auction for clients looking to buy in Burwood. Happily, they are now getting ready to move into their new home.

What I find interesting is how people approach buying real estate. Arguably, this is one of the biggest investments that a lot of people make, yet they don’t really ask the right questions or quite frankly, know what they’re doing.

It baffles me, because the help you need is right in front of you, you just need to be open to asking for it.

Baffling scenario #1

In the lead up to this auction, the agent told me they had 4-5 sold buyers interested in this home. On the day of the auction, there were seven bidders including us.

Prior to the auction, our due diligence uncovered two major issues with the contract of sale. The contract was invalid as a result.

We spent the week going back and forth between the agent, the vendor and their conveyancer trying to get it sorted. On the eve of the auction, it finally was, but only because we chased for it to be done. Post all of this, the agent confirmed to me that no other buyer questioned the contract or the issues it contained.

One of the first things you must do when buying real estate is make sure that you have a valid contract. That’s basic due diligence that clearly some buyers either don’t know or don’t care to do.

Underquoting is still a thing

Having sorted out the contract issues, we showed up to the auction on Saturday to a house overrun with people inspecting the property. This made my clients nervous, as a crowd always can mean lots of bidders. But what I said to my clients was key – the property had been under quoted.

Agents still underquoting? Surely not! Yes, they are and there are still ways they can get around the laws that are supposed to stop it.
The most recent comparable sale from my own research and tracking the market in Burwood showed this type of property was likely to sell in the mid $900K range. The agent quoted the property during the campaign at $750K – $825K.

On auction day, the property was declared on the market at $870K ($45K over the guide range). It eventually sold to us, for $934K.

Baffling scenario #2

At the auction, there were 7 bidders. Following on from an opening low ball bid of $650K, the next bid was $770K and bids continued in $20K rises. One bidder then chimed in and asked the auctioneer if it was okay for him to bid in less than $20K increments.

1. the auctioneer works for the vendor, not the buyer. Do you think this guy is the most impartial person at the auction? His job is to get money out of you. Lots of it.

2. If you are attending an auction, actively bidding and still needing to seek advice about how to bid with the auction in full swing, do you really think you should be bidding at all?

I love auctions. They are a form of theatre and fun to watch. At least six people congratulated me on my bidding style post auction. The agent even told me afterwards I intimidated the other bidders so much they eventually just stopped bidding. I handed out a few business cards that day.

Auctions are my office where I do business.

Give me a call on 03 9686 2288 to discuss how I can help. I offer a free consultation, so why not call today?

Wendy Chamberlain from Chamberlain Property Advocates

By Wendy Chamberlain
Copyright 2019 | All Rights Reserved

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With a passion for all things real estate spanning over 20 years, Wendy loves that her role as a Buyers Agent and Sellers Advocate gives her buying and selling clients an experienced voice they can trust when it comes to negotiating to buy or sell something as important as their home or investment. Wendy considers it a privilege to be asked to help others realise such an important goal as home ownership and to be trusted with that honour. Get in touch today via www.wendychamberlain.com.au for a no obligation chat about how Wendy can work with you and help you save time and money to secure your new home sooner.