A buyer’s agent’s tips on how you can keep your nerve at auctions and avoid paying too much for your investment.
Real Estate Buyers Agents Association of Australia (REBAA) has issued a warning to buyers who are looking to take part in the furious auctions of Sydney and Melbourne, especially during the summer months.
REBAA president and buyer's agent Rich Harvey said he was increasingly seeing frustrated buyers in the Sydney market paying 'silly prices' just to secure the property.
We call them the 'wounded bull' bidders. They've been to several auctions and they've probably missed out on about 10 places and they charge in at the next auction and pay whatever it takes to get the property,” said Mr Harvey.
“We are concerned that this group of buyers are overpaying on properties that they will later regret or that they're simply paying prices that are beyond their means. Buyers need to keep a cool head and set their limit before they attend the auction. This will help keep you from overspending on a home if you get caught up in emotions of the auction atmosphere,” he said.
Mr Harvey also urged buyers to be wary of bank valuations, in the current market these are becoming more and more conservative, which can be an issue if a buyer gets caught up in auction and overbids on a property.
“You don't want to buy a property with a 20 per cent deposit for $2.5 million only to discover later that the bank valuation is $2.2 million and you need to cough up an extra $300,000 at settlement,” he said.
“This is particularly dangerous and something many buyers don't think about when they're in the heat of the moment. If you're unfamiliar with the auction process and worried you might not come out on top, working with an experienced buyer's agent can be a great strategy,” said Mr Harvey.
For first time buyers, or even seasoned investors who haven’t bid at auction before, seeking a more experienced professional can result in you securing a property for a lower price, which will negate the fee involved.
“These professionals can assist you with everything from providing an independent appraisal, offering advice to bidding in your place. A buyer's agent is emotionally detached from the process and can read the body language of the other buyers. They know how to make the right moves at auction and whether to bid fast or slow or in large or small increments to give you the competitive edge,” said Mr Harvey.
It can be hard to be patient in a high stress situation, such as a busy auction, but becoming too emotional is more likely to result in a purchase you regret once the heat has died down.
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