With record prices being achieved across much of Australia’s real estate market over the past year, the popularity of auctions has also skyrocketed. As RE/MAX Australia Managing Director Joel Davoren explains, there’s every chance someone’s dream home will sell under the hammer, so agents need to ensure prospective buyers are comfortable with the process.
CoreLogic figures have shown that more than 2800 homes were taken to auction across the combined capital cities each week during May 2021, proving an extraordinary month for auctions so far this year.
As such, the buyer today needs to feel comfortable with auctions because there is every likelihood the property they want will go under the hammer.
Buyers need a strategy, which I could simplify with three instructions to give to them: do your research, don’t be late and don’t bid more than you can afford.
Agents should also ensure buyers are equipped with a strategy for managing disappointment. There will be plenty of competition and a buyer won’t have that property until the third and final fall of the hammer.
In the past, we were familiar with auctions where, even though there was bidder activity from the start, things moved in relatively small increments.
Now we are seeing properties reach their reserve and things go crazy in a flurry of bidder activity. This is not the time for the buyer to lose their nerve.
Through population redistribution, interstate and interregional migration, and in particular the movement of Sydney and Melbourne buyers, more people are familiar with auctions and well-versed in auction practices in markets they’ve not entered before.
Buyers at auction are now facing a sophistication in competing buyers that they may not have encountered before.
Auction or not, buyers really need to think about their strategy of purchase.
If a buyer has been constantly the underbidder, they will need to reassess how they are going about things.
If their ‘dream home’ is repeatedly snapped up before they’ve had a chance to make an offer, is unattainable or simply never comes to market, agents should advise buyers to reassess what they really need right now.
Maybe getting into the market in an alternative area or property will work for them after all.
An alternative strategy may mean the buyer will already be in the market when they want to make their next move and not be left behind.
Agents should also help make buyers more familiar with ‘no price’ strategies, which include ‘for sale by negotiation’, ‘for sale by tender’, ‘auction’ or ‘contact agent’ statements.
Property cannot be marketed in a misleading or deceptive way, but buyers, sellers and agents contend with different regulations around ‘no price’ in different Australian states.
However, buyers should not be deterred or frightened by a lack of price. What it does is give all parties the opportunity to focus on non-price issues.
It allows the buyer to focus on the property’s merits. Does it tick all the boxes? Is this a property worth pursuing?
Listing without a price is much better than listing at the wrong price, which can result in the buyer not being given the chance to make up their own mind.
If there is frustration out there in the market right now, I am convinced that buyers will adjust to the new conditions.
They will ‘rightsize’, renovate, upgrade, look at different markets and become increasingly more educated and in control of their strategy of purchase.
Making sure agents have a great relationship with buyers has never been more important.
I don’t believe we have seen this many properties sell before going to portals prior to the market conditions we have seen in the past 18 months or so.
The volume and frequency of properties selling before they are advertised in traditional ways is much higher than we have seen.
I’d thoroughly recommend buyers building relationships with sales agents, so they have a personal connection with the buyer and know what they are looking for.
There is no reason today for a buyer to be ‘just a number’ with a dollar sign attached. Great agents will not make buyers feel this way.
Agents have never looked after buyers better.
Buyer satisfaction is extremely high on the real estate agenda. Buyers should not think they are being overlooked or ignored by their agent who is managing huge volumes of work through increased buyer inquiry, greater numbers through open homes and multiple offers.
Agents are fully aware of the frustrations that today’s buyers are facing, which is why great relationships have never been more instrumental in achieving successful outcomes.
I hope this information reminds agents to help buyers manage expectations and set new buying strategies as they assist them in securing their perfect property.