In his recent column in Switzer, John McGrath discusses the growing auction market and how to navigate your way to bidding success.
Here’s what he said:
Sydney market auction clearance rates are back to boom time levels, registering above 80% for the first five consecutive Saturdays of the selling season.
This is significant given several hundred properties are going under the hammer every weekend right now.
The highest clearance rate recorded so far this year was 86% on February 28, based on 597 reported auction results (APM).
This weekend, McGrath had two outstanding auction results at the premium end of the scale.
$15.3 million was the winning bid for a Sydney waterfront deceased estate in Vaucluse (the highest price at auction since May 2013), while $7 million was the winning bid for a stunning four-bedroom penthouse in the Soul development on the Gold Coast.
This shows me there is a lot of depth in the market when you have multiple bidders at this level.
I’ve been doing the auction rounds the past few Saturdays and it’s interesting to take an up close and personal look at how buyers are behaving in today’s market.
Buyers are definitely savvier than they were 10 or 15 years ago and if you’re facing up to bidding at an auction yourself, attending a few conducted by the same auctioneer should help you prepare for the event.
Why are auctions working so well? Well, they are by far and away the best method of maximising competition among buyers – particularly when the market is strong and there are multiple bidders wanting to buy the same property.
Buyers often feel they are at a disadvantage with auctions and that the price will always go high.
But that’s always the case when there is healthy competition for a property in any market.
I know it can be stressful to buy at auction but you also need to remember it’s the only way for you to know exactly what your competitors are offering, so you can tailor your own offers accordingly. (If you’re really nervous about bidding at auction, you might want consider using a buyers’ agent to bid for you – it’s a small expense that will save you a lot of worry.)
More people in Sydney are selling via auction and that’s no surprise in such a strong market.
So I thought it would be helpful to give buyers a few tips on how to improve your chances of purchasing at auction in today’s highly competitive environment.
Tips for bidding at auction
- If you’re going to start the bidding, start low
- Project confidence – make the other bidders think you have no limit
- Make your bids fast and assertive. Agonising over your next bid is a sign of weakness
- Call out your offer in full (i.e. say “$350,000” instead of increments like “$5,000”)
- If it’s going to pass in, make sure you are the highest bidder so you get first right to negotiate after the event
- Stick to your walk away price. Short-lived disappointment is better than long-lasting remorse
- If you miss out, accept that it wasn’t meant to be and look forward to finding something better soon!
Finally, try to take some comfort in the competition you might face when bidding at auction today.
The fact that so many other people want to buy the same property as you is great social proof that it’s a property worth fighting for!
It’s also nice to know that should you win the bidding, you can expect the same high level of competition down the track when it comes time to sell.