8 steps to winning at auction

This has certainly been the case in 2021, with no signs that the booming auction business is likely to slow down. According to Arjun Paliwal, founder and head of research at buying agency InvestorKit, anyone looking to acquire their first or next property in the next quarter should feel comfortable with the idea of ​​buying under the hammer.

“While buyers in Melbourne and Sydney tend to be familiar with auctions, the heat of the market lately has added more pressure, so they need to be armed with the latest market research and a solid strategy to understand. comparable sales, ”Paliwal said.

“In the meantime, those who buy in markets like Brisbane, Adelaide and regional areas, where in the past were not traditional auction markets, will see greater amounts of properties selling under the hammer due to the ‘improved seller confidence, “he added.

In her opinion, there are eight things buyers can do to increase their auction success.

  1. Preselect multiple properties

Auctions are fast and can often be driven by emotion. It’s easy to get caught up in the action and pay more than you initially expected. To minimize this risk, Paliwal advises buyers to create some sort of back-up plan by having a shortlist of multiple properties.

“Not having all of your eggs in one basket will mean you’re less likely to make an unfortunate over-buy,” he said. “You are also less likely to start looking for a home from scratch again,” he said.

  1. Stay up to date with recent real estate sales

Comparable sales will help you understand the value of a property, although Mr. Paliwal said in this current market your data must be very recent to give you an accurate indication of the price.

“Many buyers still take the traditional approach of using the last three to six months of sales. In this hot market, using this approach will give you an inaccurate price guide that will be 3-10% lower than the correct market price, ”he said.

Your price research should continue until the auction, and Mr. Paliwal said this could include calling agents for a guide to a recent sale or sub-offer.

  1. Compare apples to apples when looking at comparable sales

When doing your research, be sure to take into account the full context of the properties you are comparing. Factors that can be easy to miss, like a bus stop parked right outside your potential new property, or its risk of flooding or bushfires, can have a significant impact on the price, and you want to be sure to be armed with the best information. .

  1. Attend open houses and auctions to understand market demand

Again, it all comes down to research. Attending open houses and auctions in the neighborhood that interests you will be of great help when it comes time to showcase your property.

“You will be better prepared and less surprised by the auction you plan to bid on,” Paliwal said.

  1. Follow trend reports produced by real estate professionals

Staying up to date with the latest research from companies such as CoreLogic and SQM Research will give you a solid grasp of the real estate market and an understanding of recent performance trends in various fields, suburbs and streets.

Mr Paliwal said the key thing to look at is comparing a property’s guide to what it ends up selling for on the same day. The percentage difference will provide you with a more accurate price guide for the property you are looking for.

  1. Define a cutoff range, rather than a cutoff price

Before the auction you plan to participate in, it’s wise to set yourself a range that determines what you’re willing to pay, rather than a maximum price. Mr. Paliwal suggested setting your range so that the low is what you consider “fair value” and the high is your absolute non-negotiable limit.

“Think of that top price in your lineup as a reality check,” he advised. “If you pay for something on top, you’ll think it’s overpriced and a purchase you’ll regret.”

  1. Consider placing a strong opening bid to eliminate the competition sooner

“If you’re considering a starting bid and you’re willing to go up to $ 1.5 million for a property – and based on your research, you think that might be the end price – consider making a $ 1.25 million opening bid – plus to scare off the competition. You will probably eliminate two-thirds of bidders who did not do their homework well, ”said Paliwal.

Remember, auctions are driven by emotion. You may be able to gain an edge over your competition by being confident from the start.

  1. Consider placing smaller or odd bids to slow down a bid as you get closer to your threshold

When you’re $ 200,000 to $ 50,000 from your final price, ideally you want the auction to slow down so the price doesn’t go up as quickly. At this point, consider bidding in increments of one, five, or ten thousand dollars, or using odd numbers. This can force the auctioneer and bidders to slow down, giving everyone time to rethink.

About the Author

Juliette Helmke

Based in Sydney, Juliet Helmke has extensive reporting and writing experience in business, technology, entertainment and the arts. She was previously editor-in-chief at New York … Read more

8 steps to winning at auction


Last updated: 01 December 2021

Posted: November 30, 2021