Houses still go under the hammer
Published on 08/05/2011
VENDORS might be switching back to private sales, but Victorians still love auctions.
Melbourne, it's claimed, is the auction capital of the world. If you are looking to buy under the hammer, it is important to set a few ground rules.
DO YOU HOMEWORK
STUDY the suburb where you intend to buy. Research recent sales of similar properties. Find out how long the property has been on the market.
Mal James, from James Buyer Advocates, said it was crucial for buyers to attend auctions to get used to the process before they buy. He suggested buyers get to know the style of individual auctioneers active in their suburb of choice.
"That way you will be familiar with how they conduct an auction," James said.
You also need to be honest with yourself - are you a good negotiator? James suggested the "Harvey Norman test".
- The case for a vendor's advocate Herald Sun, 23 Apr 2011
- Sellers rush to beat the Easter bunnies The Australian, 15 Apr 2011
- Record Victorian auction season Herald Sun, 9 Apr 2011
- Watch out for more dummy bids Herald Sun, 8 Apr 2011
- Do auctions rate in a soft market? Perth Now, 22 Mar 2011
"If you can't walk into Harvey Norman and knock $100 off a new TV, then do you really want to be negotiating the sale of your home?" he said.
IN A flatter market it's worthwhile making a pre-auction offer - the worst result for a vendor is to have a property pass in.
Melissa Opie, Keyhole Property Investments director and author of Property Rich, said to start with a low offer - who knows, it may just get over the line. Even if you plan to buy at auction, it's always a good idea to register your interest with the agent. If someone puts in a pre-auction offer that is acceptable to the vendor, at least you will be called.
"You don't have to tell the agent what you are prepared to pay, but let them know you're interested," Ms Opie said.
It might seem silly to say, but don't forget to bid on the property you want. Even if you think it will pass in, agents are legally obliged to offer the highest bidder the first right of negotiation. If that's not you, you might miss your dream home.
PLAY IT COOL
AUCTIONS are emotion-charged affairs. Keep yours in check. Know your limits and stick to them. Consider an odd number - do you want to miss out on a home for $450,000 when you could have bought it for $451,000?
Fletchers Real Estate director Tim Fletcher said buyers should have a strategy before turning up to bid.
"The worst thing I see is people bid furiously and then hesitate, look at each other and start a discussion about if they will go further," Mr Fletcher said. "All you are doing is signalling to the market that you are going beyond your limit."
Psychology plays a huge part at any auction. Opie said a few small actions can "psych out" other buyers.
Dress up - this gives buyers the impression you are cashed up. Consider going high with your first bid - you might shock other buyers out of the process.
Say every dollar amount - $600,000 sounds higher than 600 - and make yourself seen by the auctioneer and other buyers. Opie suggests using the auctioneer's name.
"Again it's about psyching other buyers out," she said. "This gives the impression you are a regular bidder."