More property buyers, continuing low volumes of supply and higher clearance rates are pushing bidders into adopting much more aggressive strategies at auction in order to win the homes of their dreams. Auctioneers report a surge in the number of buyers now jumping in quickly with strong first bids – sometimes even over the vendor’s reserve price – or waiting till the end to jump in at the last minute.
“There’s no strategy that can guarantee anyone will secure a property at auction other than having the greatest emotional connection to a property coupled with the best access to funds,” said Scott Kennedy-Green, chief auctioneer at McGrath Estate Agents.
“But there’s a definite increase in the number of registered parties and enthusiasm, which means bidders are competing more actively and are no longer cautious about entering the fray. We’re seeing them bidding closer to, within, or above the range of expectation.”
At one auction recently for a three-bedroom semi-detached house on Clifton Road, Clovelly, in Sydney’s east, with a reserve of $2.1 million, the very first bid was for $2.14 million. It ended up selling well above the reserve for $2.25 million.
“We’re seeing a lot of bidders start at a very strong, confident number at a lot of auctions now,” said Damien Cooley of Cooley Auctions. “They’re often over the owner’s reserve as they’re out to knock out the competition and show other buyers their dominance with aggressive bidding tactics.
“There’s much more strategic bidding now with the market growing so quickly and lots of registered bidders. Before, in the weaker market, you’d see people standing with their hands in their pockets or their arms crossed, and not willing to put in the first bid.”
The Sydney market is now firming up with the auction clearance rate around 70 per cent last weekend, with a pick-up in the number of listings of 8 per cent on the week before, according to AMP chief economist Shane Oliver.
In Melbourne, clearance rates have tracked well above 70 per cent for the past few weekends. Listing numbers were lower last weekend because of the Cup Day holiday on Tuesday, but the clearance rate was still 69 per cent.
As a result of the fresh wave of activity, we’re seeing the nature of those attending auctions changing markedly too, says Scott Gibbons, the independent freelance auctioneer Mr Sold.
Now most have pre-approved finance in place, have done their research on the property, have attended auctions in the past to prepare, and are now ready, willing and keen to do whatever it takes.
“They’re in it to do and own, rather than look and wish,” he said. “They’re bidding strongly but some are trying to put others off by bidding strange numbers, like $673,471. It can be funny the first time, and a little bit the second, but by the third, everyone’s groaning.
“As an auctioneer, you try to bring it back to round numbers, like $675,000. We’re up to speed now too with Asian bidders who often like to throw in eights, and avoid fours in the numbers.”
During the bidding, some participants are also bidding the moment a rival puts in their bid, in a show of strength also designed to intimidate, Mr Cooley says. Alternatively, they might sit back and watch until the auctioneer is ready to bring the hammer down onto the contract in the final few moments.
“They’ll have kept their nerve all through the process and not made a bid,” he said. “Then, if the price is still within their budget, they’ll come in right at the end to bamboozle the other buyers.
“Of course, it can be heartbreaking for the other bidders but we’re seeing it now more and more. If there’s a big crowd, I’ll pretend the hammer is about to fall, but I’ll be watching out for those late bidders.”
Some bidders at the moment are also bidding in higher increments in a deliberate show of strength to their competition, and only creeping up by smaller figures in the closing stages.
A number are also putting in pre-auction offers in the hope of a sale so they don’t need to go through the process, says Mr Kennedy-Green.
His top tip to succeed if you are bidding at auction is to be prepared. “Make sure you’ve done your research, you understand the vendor’s expectations and your budget sits within a realistic range,” he said. “In this market, there aren’t a lot of under-market price opportunities.”
Mr Gibbons recommends starting with a good, confident first bid, particularly if there are a lot of registered bidders. “Start strong and bold, with both your bid and your body language, to try to put off the opposition,” he said. “That way, you’re proving your strength early.”
You should also introduce yourself to the auctioneer before the auction starts, advises Mr Cooley. He says that can disrupt the auctioneer’s strategy; it’s not something they like.
“But do make sure you bid,” he said. “Some people might wait for a property to pass in so they can negotiate with the vendor, but a lot of vendors don’t look favourably these days on someone who hasn’t bid.
“It’s much better to be flexible and maybe increase your last bid if the owner isn’t prepared to sell at that price, even by going from $1.205 million to $1.21 million, as an owner might then be willing to sell for less than they intended.
“It’s always better to buy at auction as it gives you clarity for the purchase and the owner can’t renege on the deal afterwards.”
Article, all credit to SUE WILLIAMSDOMAIN REPORTER NOV 4, 2019 domain.com.au