Unprecedented auction clearance rates achieved during February 2014 has property analysts attention. The nationwide weighted average auction clearance rate rose to 82% from 71.8% the week before.
Melbourne and Sydney markets have traditionally favoured auctions as a means of selling property and the high clearance rates achieved represents an active buying market and potentially increased market confidence.
Over the weekend ending 23/02/2014, Sydney led the way with a clearance rate of 86% and Melbourne not far behind at 77%. The previous weekend saw Sydney achieve 80% and Melbourne 69.2%.
All other capital cities recorded increased clearance rates, however the number of properties going to auction was far less than the favoured markets of Sydney and Melbourne
Senior economists are tipping the higher auction numbers to continue in this rising market.
It is very easy to get emotionally caught up in a buying frenzy at auction and this is what real estate agents rely on to get higher prices. High clearance rates should not make you jump in and buy! Rates can be skewed by under-reporting failed auctions…
Remember, there is no cooling-off period when buying at auction and if you are the winning bidder, you will have to settle even in the house is defective or you can’t obtain finance.
So, how do you successfully navigate the auction process in this competitive market?
Attend a few auctions first – this enables you to understand the process and build up confidence when you are ready to bid. Make notes of what properties similar to what you are looking at sell for and how different this is to the ‘price guide’.
Research the Market – review comparable sales data and median rents as well as normal due diligence on the property, neighbourhood etc.
Determine Maximum Amount – arrive at the maximum price you are prepared to pay and ensure you do NOT bid above this amount.
Get Legal Advice – obtain the terms and conditions of contract before the auction date and have your solicitor or conveyancer inspect the “Agreement of Sale”.
Conduct Necessary Checks – visit the property you are interested in several times to ensure it meets all your requirements. You may also like to have it inspected by a building inspector, pest inspector and even professional valuation to assist in determining your market value.
Obtain Finance – ensure you can obtain the money for the purchase and have immediate access to the deposit, often 10% which will be required when signing the contract on auction day if you are the successful bidder.
Keep Emotions in Check – if you are uncertain you can stick to your budget, consider engaging a friend or family member who can keep a cool head under pressure. A buyer’s agent can also be employed to bid on your behalf.
Dress to Impress – dressing professionally can be intimidating to other bidders and can give the impression you have an endless budget, which may deter others bidders early.
Register to Bid – most auctions require you register and provide identification if you are planning on bidding. Use the registration process to also identify if any last minute changes have been made to the Agreement of Sale / Contract.
Don’t Reveal your Cards – keep your maximum price a secret as divulging this can hurt you.
Bid with Confidence – providing clear, loud, confident bids may psyche out opponents and show you mean business (even if you are nervous….)
Know when to Stop – you have done your research and know the maximum amount you are prepared to pay. Do not go one cent more; despite the tactics employed by the auctioneer. There will always be another opportunity.