It’s no surprises that Westpac’s latest Home Ownership report has found that more than 50 per cent of home buyers fear buying at auction.
Our own internal member survey conducted last year revealed the biggest fear buyers have buying at auction was overpaying. The survey also revealed the second biggest response was a general fear of knowing how and when to bid in public.
“Some buyers are genuinely petrified of bidding in public; much like
speaking in public, although adrenaline and a firm plan can usually help get
them past this hurdle,” says REBAA Vice-President Cate Bakos.
“A lack of understanding of the process, the likely selling price, the most
well-matched and genuine comparable sales and the agent’s tactics leave
most buyers feeling out of their depth at auction.”
Lack of knowledge and inexperience buying at auction are the major
contributors to overpaying for property, says Scott McGeever from Property
Searchers in Brisbane.
“The ultimate goal of any selling agent is to get an auction property sold
under auction conditions as the buyer is then locked into the purchase with
an unconditional contract,” he says.
“Even though a buyer may have a preconceived limit of what they want to
pay, if they do not have the market knowledge to base that on, they are
vulnerable to paying what the agent tells them they need to pay to win the
auction at all costs.
“This number one fear can all be traced back to a buyer’s underlying anxiety
that they will miss out and be back searching the web next week.”
Below are REBAA member tips for buying at auction:
- Do your homework
Don’t turn up on the day and register unless you have done all the due
diligence including seeking independent building, pest and electrical reports.
- Stick to the budget
Don’t rely on auto valuation applications or agent guides. Do your own
research or better yet, pay for a buyer’s agent or a registered valuer to value the property in advance.
- Consider the alternatives
If the budget is tight, maybe buying at auction isn’t the best plan. Paying for
reports and legal advice each time you go to auction can be costly and
quickly drains the bank balance. Have a buffer you’re prepared to lose so
you don’t end up with no deposit. Consider a private treaty sale.