John McGrath - Best tips for buying pre-auction and on the day
Australian home values returned to growth in March, and average clearance rates have risen from about 55% in the late Spring season of 2022 to about 65% today.
These are indicators of rising demand in the market at a time when stock for sale is seasonally low.
The volume of homes marketed via the auction method has also increased by about 10% over this period, so there’s a higher likelihood that today’s buyers will have to compete at auction.
About one in five homes listed for sale via the auction method are selling prior at the moment.
With that in mind, here are my best tips for buying before auction and at auction in today’s market.
My best tips for buying before auction
- Ask the agent if the owners are willing to consider pre-auction offers
- Make your first offer close to your walk-away price and put it in writing to the agent
- Waive your right to cooling off to show the vendor you’re serious
- Tell the agent you have pre-approved finance
- Make your final offer an odd number. For example, offer $952,500 instead of $950,000. This suggests there’s some logic to your offer, and also that you’re at your financial limit
- You can make a higher offer contingent on the vendor undertaking certain repairs
- Consider offering special terms that suit the vendor’s circumstances, such as a longer or shorter settlement
- Make your final offer a lot more seductive by signing the contract and attaching a cheque for the deposit
My best tips for buying at auction
- Prepare yourself by attending some auctions to observe the atmosphere, auctioneers’ techniques and various bidding strategies at work
- Make a low bid to start the auction, then just sit tight, size up the other bidders and watch how the auction unfolds
- Unless the property looks like it’s going to be passed in, don’t bid again until the reserve price has been met and it’s close to the end, when the bidding has slowed down and the
- other bidders are losing steam
- Project confidence and determination in the tone of your voice to psych out the other bidders. Make clear and confident bids
- If bidding continues, make your counterbids fast and assertive. Create the perception that you don’t have a limit. Agonising over every bid is a definite sign of weakness
- Give your competitors a reality check by calling out your bid in the full price, not the increment (i.e. say “$950,000” instead of “$5,000”)
- If it’s going to pass in, it’s a big advantage to be the highest bidder, as you’ll usually be given the first opportunity to negotiate
- Stick to your walk-away price. Short-lived disappointment is better than long-lasting remorse
Whether buying before auction, at auction, or via private negotiation for that matter, keep in mind that fate can play a hand in finding the right property.
I’ve seen many underbidders walk away miserable only to find a more suitable property just a few weeks later.
If you miss a property, or several properties, accept that it wasn’t meant to be and look forward to finding something better soon.
Get an obligation free property appraisal with a McGrath Sales Agent and receive a property valuation estimate including an assessment of your property, its location, recent comparable sales and an estimated price guide.