A survey of Australia’s peak body of professional buyer’s agents has revealed the biggest fear buyers have buying at auction.
The survey by the Real Estate Buyers Agents Association of Australia (REBAA), showed 60 per cent of respondents cited “overpaying” as the number one hurdle buyers face at an auction.
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 Melbourne buyer’s agent Cate Bakos from Cate Bakos Property.
“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.”
According to Newcastle Buyer’s Agent’s, Tiron Manning, in the current market buyers are prepared to go over the odds to secure a property simply to put a stop to losing their weekends to the property hunt.
“At the fall of the hammer when a buyer is a successful, there is the anxiety of ‘Have I paid too much?’ but in the current market should they miss out and the property later sells for significantly more, the reality sinks in that maybe they can’t afford their dream home,” says Manning.
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.