Property Pulse

With the footy out of the way and school holidays nearly over, the spring auction season is warming up. Vendors are crawling carefully out of the woodwork and the number of properties scheduled for auction is set to increase over the next few weeks, particularly in Melbourne, Australia’s auction capital.

You’d expect real estate agents to be excited about having so many auctions lined up, and they are. But there is a downside. More properties being offered for auction on a particular day means a greater the number of vendors lining up to woo potential buyers.

Agents don’t want strong competition among vendors, they want strong competition among buyers: that’s what maximises a property’s market value.

In this kind of environment, many agents advise their clients to consider selling before auction day if the right offer comes their way. That way they won’t have to compete with other vendors whose properties are scheduled for auction on the same day.

If you’re the buyer in this situation, how should you act?

All too often, buyers inspect a property and develop a serious interest in it, then leave without telling the selling agent where they stand. They believe it’s smarter to play things cool and keep their cards close to their chest. They reason that if the agent knows they’re really keen to buy and are emotionally attached, the agent will “work on them” to push the purchase price up as far as possible.

They also believe that, because they put their name down on the attendees’ list during an open-for-inspection, the agent will automatically contact them if there’s a keen buyer and a chance the property might be sold before auction.

In reality, the opposite is true. How many times have you driven past a property that you thought was scheduled for auction in a few weeks’ time, only to see a giant SOLD sticker slapped across the board?

There’s no point being annoyed with the agent when this happens. Agents don’t have time to follow up everyone who attends an open-for-inspection. If you don’t make your interest clear from the outset, they won’t pursue you as a genuine buyer, or contact you if the property looks like selling before auction day.

If you’ve found a suitable investment property, there’s a way to register your interest without giving away all your cards. Tell the agent you want to think about it and have other properties to look at. Ask them to contact you if the property looks like being sold before auction. This way they’ll know you’re serious, but not desperate or emotionally attached, so you’ll be in a strong position to negotiate later.

Auction action
With the AFL season over for another year, auction numbers in Melbourne jump back on course, from 50 last week to 424 this week. This is the first of a four-week increase in advertised auctions, which could bring good buying opportunities. The next dip will come during the Melbourne Cup long weekend.

This week it’s Sydney’s turn to drop everything for a sporting event. The NRL Grand Final means there are only 157 auctions this week, compared with 351 last week.

Most areas in Sydney will see a drop in auction activity this week, so be wary of increased competition. Only the northern beaches and lower north shore are bucking the trend, with increases from 17 to 23 and 10 to 14 respectively. Auction volumes should return to normal spring levels next week.

In Brisbane, where rugby league also captures a large slice of attention but auctions are not as popular as in the southern cities, advertised auctions increased slightly this week from 185 to 205. There may be opportunities in southern Brisbane, where auctions are up from 17 to 27, and the Gold Coast, where they rise from 21 to 43. Watch your pennies.