Buyers are flocking to a wide range of properties across the country — from standalone houses to duplexes and even blocks of land in suburban or lifestyle locations — as Australia’s property market continues to heat up.
And many auctions are drawing in dozens of bidders all desperate to secure a piece of real estate.
There is talk of aggressive bidding strategies, pre-auction offers, dangerously low guide prices, huge demand, and record-high prices.
But what no one is talking about is what is happening to those bidders who didn’t ‘win’.
The problem is, in our current market where bidders are turning up in droves to auctions, the number of people missing out is sky-high.
Because at the end of the day only one buyer walks away with property ownership, leaving many bidders perplexed and sometimes even feeling a bit desperate.
What we’re seeing, as a result, is one, or more, of the following:
- Buyers are sitting out of the market to lick their wounds before getting back on the property hunt — in the meantime, the market begins to move on without them.
- Some buyers make the decision to avoid auctions completely and only look for properties for private sale — as a result, these buyers will miss out on some of the better properties put on the market.
- Buyers are letting their emotions dictate their decisions. Sure it’s hard not to let your heart lead your head when making big financial decisions, but it's one of the worst investment moves you can make.
Unfortunately, while we all know we shouldn’t let our heart rule our head when it comes to our finances, I'm seeing it happen more and more often.
I’ve noticed many buyers making a number of emotional mistakes when they miss out on their dream home at auction.
Of course, the realisation that you’ve emotionally invested in a property only to lose out to someone else can be a difficult time.
And the worst thing is when emotions have kicked in, this is when buyers end up becoming more vulnerable and start making rash decisions and desperate purchases which could cost them in the long term.
For example, I’ve seen would-be buyers take shortcuts with their due diligence by not carefully checking the contract, or not organising a building and pest inspection.
Or they begin to compromise on the property’s location or even key features they want in a home just to be able to make a quick purchase.
Ultimately these vulnerable buyers are buying on the rebound and this means they’re subject to overpaying or buying the wrong property in the wrong location entirely.
In our current hot property markets, home buyers and investors are riddled with emotional barriers including fear, indecisiveness, and procrastination which, as I explained, can lead to poor decision-making.
And these problems are only exacerbated in a competitive market, so let’s look at some emotional blunders I’m seeing them make:
But remember, patience is a virtue and another opportunity will come up.
In the meantime, if you can’t find a property that falls within your budget or purchase criteria, consider looking in neighbouring suburbs.
Paying too much for a property is a frequent mistake made by home buyers and property investors who are swayed by sentiment and an overarching sense of optimism.
If you overcapitalise and borrow more than your budget allows, you can jeopardise your debt position which can harm your financial wellbeing.
Evaluate your budget and your offer strategy and be prepared to walk away if the vendor doesn’t accept your offer.
- Also read:Latest property price forecasts for 2024 revealed. What’s ahead in our housing markets in the next year or two?
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- Also read:Sydney property market forecast for 2024
- Also read:Boom to bust: What makes property prices rise and fall
- Also read:This week’s Australian Property Market Update – Latest Data, State by State November 28th, 2023
Although you may be time-poor and it may be tempting to pay 5-10% over your assigned budget, you need to be diligent.
Same as the above, it’s easy to get caught up in the theatrics of a faced-paced auction, and this is the prime environment for desperate buyers to overbid.
Before going to auction, have a clear bidding strategy and set your limits.
If you can’t eliminate emotion from your bidding, consider getting a family member or a buyer’s agent to represent you.
4. Being too honest
You may feel obliged to disclose as much information as possible to everyone involved in your property search.
However, this can work against you.
Instead, be selective about what information you tell and to whom — be mindful as everyone has an objective in mind and it's not always to your advantage.
5. Becoming emotionally attached
It’s easy to become emotionally invested in a property based on the way it makes you ‘feel.’
If you find that you are emotionally drawn to a property to the point that you are compromising your investment strategy, try to negotiate from a distance or seek help from an expert with an unbiased view such as a financial planner, accountant, a buyer’s agent or a conveyancer.
6. Not having your investment hat on
Many investors fall into the trap of buying a property that will be an investment now, and a home in the future.
Blurring your objectives in this way is risky because you may make a decision based on your own lifestyle, and this may not be a good fit for the location or the target tenant.
Make sure you separate your investment and owner-occupier objectives by having a clear strategy in place.
But this doesn’t need to, and shouldn’t happen if you take the right steps, remain on track with your investment timeline, and most importantly, leave your emotions at the door.
Clearly, property auctions are an emotional time — that’s why agents just love them — they play on your emotions.
And it’s understandable that buyers are vulnerable when they’re emotionally invested in a potential new purchase and there is so much at stake.
But there is something simple you can do to help keep you on the right track.
Get someone on your side.
Get someone to even the odds.
To make sure you make the best investment decision, it’s always best to make sure you have someone with you to support and to level the playing field.
An experienced and reputable buyer’s agent is a great resource to keep you on the right track.
But be careful who you engage with, currently, there are a plethora of new buyers' agents with very little auction experience and I’ve seen many of them make a number of rookie blunders — I love bidding against them and psyching them out.