Sometimes bidding at auction can really pay off

Many buyers like to shy away from auctions altogether, eliminating even the potential for securing that particular asset. It’s fair to say that most buyers tremble at the thought of having to fight it out in a public place, where agent ‘spin’ and underquoting can confuse even the most organised of buyers.

But the reality is that most VENDORS hate auctions too.

Despite the record breaking prices and the short four week campaigns, auctions can be terrifying for the sellers too. What happens if nobody bids? What happens if a heckler in the crowd puts buyers off? How will they feel if their best bid is well under reserve? And how will they cope if the agents come inside to refer the bids and ask them to drop their reserve? Auction day puts everyone under pressure, not just the buyers, and it’s important to understand what a property is REALLY worth, and whether it’s advantageous to bid before auction or to turn up on the day to bid. And for the vendors, it’s vital that their agent knows which buyers are interested, how far they could go and whether it’s advantageous to accept prior offers. For one particular property, the terms and buyer interest changed for the worst at the last minute and took EVERYONE by surprise.

This well renovated, well located and high-tenant-demand property in Ascot Vale went to auction on Saturday just gone. We had a buyer who we felt could have potentially been suited to the property, however his budget of $450K was most likely going to be insufficient for a property we’d appraised at $470,000. Based on comparable sales in the area and a record $530,000 for a renovated 2BR apartment just a few streets down, we felt that our client’s ONLY opportunity to purchase the unit was to make a pre-auction offer of $450K. The agent and their vendor rejected the offer, justifiably explaining that they had five strong buyers showing interest and they’d prefer to run the campaign through to auction. We were relieved by their timely response and respected the vendor’s wishes. We promptly negotiated on our alternative property and secured a fantastic unit for $427,000 and moved on.

On Friday afternoon, just 24 hours prior to the Ascot Vale auction, we received a call from the agent asking if we’d be bidding. He was disappointed to hear we’d bought, and divulged that three of the four remaining buyers had also bought.

That one buyer attended the auction and bought the property at a considerably lower price than appraised; $435,000. Nobody could have envisaged all four buyers purchasing – but in this skittish, fast moving and energetic market, nothing should surprise a buyer and NOTHING should surprise an agent.