Learning how Americans strategise at auctions could give Australian property investors an edge on the completion. We spoke to a travelling auctioneer to get his insight on the LA market.
Hollywood is known for its stories of fame and glory on the silver screen, but its auction atmosphere may not be as well known.
Speaking to Smart Property Investment, James Pratt, auctioneer at James Pratt Auctions, recounted his experience auctioneering in Los Angeles.
“In America, they don’t do auctions as a way for sales,” Mr Pratt said.
“They’ve always done private treaty, and if there are auctions in the States, it’s seen as a foreclosure, or like a distressed sale, they call it.
“So, you can imagine in Bel Air with a $35 million house, and the person selling doesn’t want to have an auction because it looks like they must be going bankrupt or they’re having money problems.”
Past the American social belief of investing, Mr Pratt admired the American bidder, and said there was one key thing Australian bidders could learn from them.
“Americans are very good at just putting an offer in and going for it,” Mr Pratt said.
“Australians sometimes like to play the game; I put in $1.5 million, let’s say post-auction, property gets passed and put on $1.5 [million], then they’ll wait til maybe Monday, Tuesday, gives the opportunity for someone else to come in and talk to the agent and maybe another offer gets put in time.
“In America they’re very committal, so for example, if they like the property, they’ll just go and buy it and they’ll save themselves that time.”
By trying to appear aloof during the post-bidding process, Mr Pratt said it gives someone else the opportunity to take the property away from you while you pretend that you are not completely interested, even if the price you are at is at a total bargain.
“You’re also putting that owner in a position where they’re starting to look at their other options,” Mr Pratt added.
“In this market for example, I had a property pass in last weekend at auction, and it didn’t get sold until Thursday, but the thing was, the person who bought it on the Thursday only came up $10,000 from what they originally offered.
“If they’d just come up $10,000, they could’ve got it on the Saturday instead of just drawing and drawing it out.”