The Sydney property market is on a roll, with dwelling values rising another 2.5% over February 2021 alone.
Auctions are attracting big crowds and reserves are being smashed.
For example, in early March we saw the reserve price exceeded by almost half a million dollars for 33 Gerard Street, Alexandria. The 3 bedrooms, freestanding terrace was in a great location but in need of some renovation. It ended up selling for $2.25 million in a heated auction.
When competition between property buyers is so fierce, what can you do to make sure that you’re the winning bidder on auction day?
Auctions can be daunting at the best of times, and in a hot market, properties sell fast. To give yourself the best chance of success, you need to be ready to move quickly. Preparation is the key.
- Getting your finance organised early will save you valuable time and help you set your price limit so you can bid with confidence on auction day.
- Do your research, so you have a realistic idea of what the property might sell for based on recent sales of comparable properties in the same area.
- Attending other local auctions will not only give you an idea of what homes are selling for, but also provides a chance to observe and get comfortable with the auction process.
- Have your building, pest and strata report carried out by reputable professionals so you know exactly what you’re buying.
- Ensure you have the contact details of a conveyancer or solicitor who can review a contract quickly.
Being prepared means you can act quickly and confidently when it comes time to make a pre-auction offer or bid at auction.
Buying before auction
Sometimes the best way to make sure that ideal property becomes yours is to get in before auction day. Making a pre-auction offer can be an effective way to secure a property before the hustle and bustle of the auction, and it can save you the stress of auction bidding. It’s always worth asking the selling agent in the weeks before the auction whether the vendors are open to pre-auction offers. Make sure you get in early – vendors are often less inclined to accept a pre-auction offer only days out from the auction. Consider tailoring your offer to make it more appealing to the vendor, for example offering a larger deposit, an unconditional offer or a shorter or longer settlement, depending on the seller’s circumstances.
Tips for buying property at auction
To be the successful bidder on auction day, it helps to have a plan.
- Set yourself an upper price limit – there’s no cooling-off period, so if you win the auction you are obliged to buy the property. When you’re setting your limit, remember to consider the opportunity cost of missing out on the property.
- Ask yourself what you’ll do if the bidding gets close to your limit. Are you prepared to miss out on the property for the sake of as little as a thousand dollars? The current state of the market means that property is increasing in value day by day, so if you miss out on the property, you’ll also be missing out on the capital gains. It’s an individual decision, with no right or wrong answer, but worth thinking about before you start bidding.
- Bid early and go slow. It’s not a race, and by getting involved at the start you can settle your nerves before the bidding gets serious.
- Be confident – call your bids out loudly and clearly.
- If you think the emotion and nerves might get the better of you, consider asking someone – a trusted friend or family member, or a buyer’s agent – to bid on your behalf.
- If the bidding doesn’t reach the reserve price set by the vendor, a property might be ‘passed in’. When that happens, the highest bidder is usually invited to continue private negotiations with the vendor’s real estate agent. The highest bidder could be you, so be prepared to negotiate after the bidding is over.
Auctions can be overwhelming, but a bit of preparation and planning will give you the best chance of walking away from an auction as a proud new property owner.
If you’re searching for your next home or investment property in Sydney’s inner-city or inner west, we can help. Contact us today.