Many buyers find real estate auctions attractive because of the benefits these events provide. But as with any competition, there really can only be one winner, so it pays to be well prepared and ready for a fight.
Michelle May, Sydney-based buyer's agent and director of her eponymous agency, explains the benefits of buying a property at auction, how to stand out and what to expect. 39; Australia for the auction market.
What are the advantages of buying a house at auction?
May, who has 24 years of experience as a buyer's agent, says buyers should view auctions as a great opportunity to acquire a property for many reasons. She lists some of the benefits below:
1. You can read the play.
To be successful at auction, a buyer must keep an auction ahead of his competitors and reach the reserve price. This is where the ability to read the play and accurately assess the competition comes into play.
"I appreciate the auction buzz," says May. “You can see the people there and gauge their reactions and their emotions. People watching is very important and gives you a unique advantage. "
She adds that there is a striking difference between in-person auctions and those that take place in auction rooms.
"Officers far prefer the experience of everyone on the lawn, watching the auction in action," May says. “Buyers and even viewers love it.”
2. You have a defined schedule.
An auction is one of the fastest ways to buy property. May says auctions typically have a fixed four-week deadline, which means the purchase can be completed in under a month. This includes time spent on inspections and completing paperwork.
However, she warns that when you win at an auction it means you are locked up.
"There is no cooling off period," May says. “This means that you don't get your deposit back if you decide to break the deal. You can't negotiate the terms and conditions after you've marked the house either.”
3. The transparency is total.
May says the visibility of the process is what attracts her to private treaty auctions.
"In a private treaty, this is a very complex situation," she said. “You have no visibility into where other buyers are and what their motives are. At an auction, you can actually see your competition. "
How has the COVID-19 pandemic affected the real estate auction market?
Like many other industries, the real estate market has not been immune to the impact of the COVID-19 pandemic Government-imposed lockdowns and measures Social distancing has ruled out public gatherings for a time, which May says left the auction. sector "jamming" at the beginning.
“There has been a major readjustment in in-person auctions to handle all of this online,” says May. “As with any new technology, there was initially a lot of disruption and issues in the migration and usability of proptech platforms.”
She adds that the outright rush to keep the real estate industry running and the auction on track for planning has resulted in a hasty transition to online and has diminished the practicality of the business. organization of an auction.
“The auction model has been tried and tested for many years and [what happened] was quite a challenge,” May says. “The immediate response from consumers has been dismal.”
"The feeling of being online rather than in person was quite strange. The auctions are usually very busy and lively, and there is a real humanized connection. Online auctions have seen everyone be quite distant and unable to assess people and their emotions, ”she says.
May says she had a general feeling that buyers were hesitant to buy properties at auction online.
“The real estate market is a very visual thing, and you have to see it and experience it in person,” she says. “Not only did it take some adjustments on the part of the industry, but consumers also had to adapt and the response has of course been quite reluctant. People feel more secure at an in-person auction. "
But now, with the restrictions lifted, May is grateful that traditional auctions are allowed again.
"It's now in person again with social distancing in place," she says. “Only registered persons are authorized to attend the auction. No place for spectators! "
What are the most important things to consider when auctioning off?
Mays advises potential buyers never to go to auctions unprepared. She lists five important things that will help pave the way for success.
1. Due diligence.
"You need to do your due diligence beforehand, in order to understand the full scope of the transaction and what you are buying as well." Don't go to auction and bid without it. You should also do your market research on recent sales in the area through auctions to see what scope you are playing. "
2. Prepare a checklist.
"You must have a checklist of 'how well this property meets my needs.' Does that fit into your life plans for the next five years?"
3. Stick to a budget.
“You MUST also stay within your budget. Don't get carried away by the whirlwind of an auction. And don't listen to that agent in your ear, telling you, "$ 1,000 isn't much more." "
4. Get pre-approval in place.
“The pre-approval has to be in place and this pre-approval covers that maximum limit of what you would pay for the house.”
5. Be confident.
"You have to believe this is the right house for you. If you are confident and eager to win this property, don’t be afraid to open the auction! "
What future for the Australian real estate auction market?
May believes that the ability of the auction market to adapt to the current economic climate will drive the industry's growth.
"While traditional auction markets will be here to stay, the technology to operate online will become more sophisticated," she said. "I believe a mix of online and in-person auctions, and the option for either one, will become the norm. This will make auctions more accessible to people. "
She adds that the auction market will remain strong in the capital markets where "there is an underlying demand".
“The real estate market in general always has its ebbs and flows,” May says. “In February the market was skyrocketing with the number of buyers and sellers. We were emerging from a slump and the market was very buoyant. Come on to this now and I believe the real estate market has performed incredibly well given the challenges. "
When asked about the strongest markets for real estate auctions, May says that Sydney's and Melbourne's “financial engines” are the most stable, adding that the city's suburbs are also strong markets because “there are still has an underlying demand for the property, as well as [large number] buyers and sellers in these areas. "
"These are the markets where the real estate supply is very low that are the strongest for auctions," she said. "Conversely, where there are more stocks in the market, these are the weaker auction markets."
Top tips for auctions
While it is true that auctions are places of competition, May suggests that participants still enjoy the experience. Here are his top tips for buyers bidding on an auction.
1. Soak up the experience.
"When you don't have a skin in the game, you can just watch. And because some auctions go so fast, you might even want to film it, so you can analyze it later! "
2. Be curious.
"It & # 39; s okay to ask the agent questions about the seller and other interested potential buyers, so you have an idea of ??who to expect. Were they the first time buyers of a home? Are they empty nesters? You need to understand who you are buying from. "
3. Have a strategy.
"In terms of auctions, you have the agents' price guide and other information gathered from conversations with them. Then you have what the auctioneer says. These will give you an indication of where they want to auction. So depending on where you are and what your budget is, you might want to come up with a high price first, way past the reserve and break the momentum. "
4. If you can, hire a professional.
“Buyer's agents are auction professionals. My success rate is 80%. This is not luck. It's being able to read the situation and understand the variables at play. "
