A majority of the hot spots in Sydney are primarily auction based in their preferred method of sale. This isn’t a coincidence. The vendors that are selling their property most likely bought the property at auction and prepare to sell via the same method.
There are 3 phases to a successfully marketed auction property.
1. Pre-Auction – This is where the property hits the market and has loads of interest up front and the offers presented are strong enough for the vendor to consider now. (Different markets offer different strategies. Typically, we see Price & Circumstances. eg: If the subject house is worth $1M. Offer 1 is $1.1M with a 2 week settlement vs Offer 2 which is $1.11M with a 6 month settlement. Whilst the price in Offer 2 outweighs the first offer, the circumstances of the second offer might appeal to the vendor as their reasons of sale might preference a shorter settlement over a delayed settlement. This can work both ways.)
2. Auction Day – This is where you complete your due diligence beforehand whether that be a pest & building inspection for a house or a strata search for a unit, and turn up on the day and bid for the property. The current perception is that auctions favour the home seller & the buyer is forced to pay overs to secure the property.
This can be the case for extremely good properties and when the market is hot (supply vs demand). However, I am seeing some auctions pull up a bit shorter than expected and auction day can be very favourable to the purchaser too, given the right set of circumstances.
3. Post Auction – This is where the property may have been passed in and is now open to sale by negotiation. It’s a good idea to be the highest bidder to obtain first right to negotiate.
The Selling Agent –
There are 2 types of Auction Selling Agents.
1. The good operator who has a lot of experience. They know how to successfully run an auction campaign. They are fastidious when it comes to call backs, organization and updates. They understand that the buyer is perhaps one day going to be a seller and they take that into consideration when dealing with all people.
2. The bad/lazy agent. They don’t call back buyers. They underquote. They treat buyers with no respect. They change the rules to suit themselves. They typically work in different offices every 6-12 months.
It is a good idea to know who you are dealing with. You will get an instant vibe as to whether or not the agent you are dealing with is genuine or not.
I had an example the other day of an agent who had a property going to public auction. He didn’t want to quote prices or assist the buyers in any way by standing his ground that the property was going to auction and that the word “auction” means exactly that: – turn up and pay what you have to, so to speak. The same agent then received pre-auction offers. He then proceeded to tell the other bidders that the other offers must be undisclosed as it wasn’t fair to give the other bidders an “unfair” advantage. Wasn’t this the same property going to auction? An open event that gives everyone the right to publicly turn up and bid and see where the market is? The agent technically didn’t do anything illegal but he changed the rules to suit himself and in so doing, lost a lot of credibility. (This above example would be different for private treaty sales)