It’s no great surprise that auction clearance rates are lower than this time last year across our major capital cities with prices in these locations generally reducing.
The volume of properties being taken to auction is also well off the boil – down nearly 40 per cent – compared to last year.
However, buying at auction is one of the most transparent ways for buyers to purchase property.
Why is that? Well, you can literally see and hear your competition, so you know exactly where you stand.
Of course, auctions also create a highly competitive environment that can cause some buyers to go well above their budgets because of the pent-up emotion that is imbued in this type of sales method.
It doesn’t really matter what the market is doing when you buy at auction, though, because you must always stick to your budget.
Investment grade properties transact well regardless of the wider market because they are located in desirable areas that always attract plenty of buyers – but you never want to overpay because it will have long-term ramifications for your capital growth.
There has been a Mexican stand-off of sorts over recent months between buyers and sellers when it comes to value.
It took a while for sellers to accept that their potential sales price was not the same as they would have achieved last year because the market has changed.
And, likewise, one sniff of reducing prices and buyers all of the sudden believed that the property sky had fallen, and they can make low-ball offers that will be taken seriously…. Not!
But buyers and sellers appear be more realistic now that they’ve had a few months to adjust to the new market dynamics – and the smartest buyers are making the most of the opportunities currently on offer.
If you’re considering buying at auction soon, though, it’s imperative that you have a solid understanding of the market price of the property to ensure you don’t overpay or bid too low to even be in the running.
It can be difficult for everyday buyers to calculate the market price of a property and especially when prices have changed quite quickly.
One of the best strategies is to review recent (and I mean the past few weeks not months) of similar properties in the local area to see what price other comparable properties have sold for.
Now, this can be easier said than done, because some agents don’t disclose their results right away and some don’t disclose them at all.
As a professional buyers’ agents, we have such sound agent networks in the locations where we purchase for our clients that all we need to do is make a phone call or two to find out this information first-hand.
Because of these relationships, agents are usually quite happy to disclose this information to us off-the-record once the purchase is unconditional because we have often bought a number of properties from them for our clients. The same courtesy is usually not available to Joe and Jane Blogs mind you.
There are oodles of property opportunities available at present, because many buyers and investors have exited the market after last year’s record sale volumes.
That means that fortune is favouring the brave and especially those who have done the requisite research (or choose to work with buying experts) long before they raise their paddle at auction.