Australia’s largest independent body of professional buyer’s agents is warning home buyers and investors not to fall victim to the ‘wounded bull’ syndrome at the looming Super Saturday of hot auctions.
With this weekend tipped to be the highest February day for Sydney and Melbourne auctions on record, the Real Estate Buyers Agents Association of Australia (REBAA) is warning buyers to keep their nerve at auction or risk seriously overpaying for properties.
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,” said Harvey.
“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.
“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.”
On the weekend a three-bedroom Cremorne Point apartment went for $500,000 over the $2 million reserve with an extraordinary 141 bids.
Mr Harvey said buyers also needed to be cautious with bank valuations becoming increasingly conservative in the current market, in some instances knocking 10 per cent off the purchase price.
He warned not to get out caught on finance and overpay for a property that the bank later values well below the sale price.
“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.
“Fortunately, 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.”
Harvey said patience was a tough virtue to swallow in a hot market but that there would be more opportunities as the market moderates throughout the year.