Assessing Scott Pape's 12 tips for auction bidding and listings

Assessing Scott Pape's 12 tips for auction bidding and listings
Jonathan ChancellorDecember 7, 2020

Scott Pape's new television show is called Under The Hammer, which he says follows everyday people going through one of the most stressful events of their lives — buying and selling their family home at auction.

"Throughout the series you’ll see people who make huge sums of money — but importantly you’ll also see people who lose a fortune too — because that’s the truthful reality of real estate," he says.

The footage look captivating.

All the triumphs and terrors were filmed over the spring 2013 selling season. Last December, the filming by Scott Pape – better known as The Barefoot Investor - included a Surrey Hills, Melbourne auction through Tim Heavyside at Fletchers Real Estate.

Tim Heavyside (left) with The Barefoot Investor, Scott Pape (right). Picture courtesy of Tim Heavyside.

They look pretty happy with themselves, but Property Observer won't share or spoil the auction outcome.

Scott Pape has come up with 12 tips for "not getting screwed" as a buyer or seller, with some analysis below by the Property Observer editor at large, Jonathan Chancellor.

  1. Don’t believe your bank 

    A pre-approval for a loan from a bank doesn’t mean they’ll give it to you. It’s a lot like getting a number from an attractive woman at a nightclub. You’re a long way from being invited back for coffee — and it may turn out she gave you a wrong number just to blow you off. 

    Jonathan Chancellor says Scott Pape is a overly cautious with this tip, and while pre-approval isn't always going to come through, especially the longer you leave the purchase, it does provide some comfort and an indication of your borrowing capacity.

  2. The agent is lying to you 

    An agent’s job is to drum up as many people to an auction as possible, which is why they under-quote what the price the property will sell for. Don’t fall for it. Instead, do your own research. For $25 you can order a property report online with RP Data that will estimate the value of the home based on recent sales. 

    Jonathan Chancellor says understanding estate agents and particularly step price auction marketing — with the estimate rising at successive open for inspections — is of key importance. It is not that the agent is lying, rather just coming to a better understanding of where and what the market place is at varying periods of time. There are obligations for the agent to tell the vendor and the buyer the same thing, but agents are of course working for the vendor. Research is crucial for buyers so start as early as you can.

  3. It’s street theatre, and you’re the lead actor. 

    Act as if you’re Donald Trump (who himself acts as if he’s really a billionaire). The best way to get into character is to stand next to the auctioneer and eyeball the crowd (and your competitors). Pay no attention to the auctioneer -- in fact, flick your comb-over like the Donald, and fire him up. Throw in randomly priced, hard to calculate bids that stop the auctioneer’s flow. Let everyone know that you’re in charge. 

    Jonathan Chancellor says don't act as if you are the Trumpster. Yes, do position yourself so you can watch the competition at the auction. But you don't need to let everyone know that you are in charge, unless there are other bidders with the same silly intimidation idea.

  4. Shut your mouth 

    When the agent announces that the property “is on the market”, you’re actually in the box seat. You now know the seller's lowest selling price — but they don’t know your highest price. If you’re bidding aggressively the agent’s representatives will rush over to you and try to work out your level of interest. Keep your mouth shut. 

    Jonathan Chancellor agrees that the on the market announcement is the pivotal moment in any auction, but it's best to just concentrate on beginning your bidding  and liaising with you partner — so you secure the prize. No time now to be cute about your intent, but definitely don't blow everyone else of the water with a huge offer, as none might follow you, and you will forever be left wondering.

  5. No peanuts, no monkeys 

    Make sure you cough up and pay to get good legal advice, before you sign anything. An experienced conveyancer is worth their weight in gold, and may suggest additions or variations to the agreement. 

    Jonathan Chancellor says having the contract checked pre-auction is the wise thing to do. And don't overlook the building inspection report.

  6. Just Walk Away, Renee 

    When the bidding goes over your limit, take your bat and ball and head home — the last thing you want to do is go over your limit. Don’t get sucked in, there’s plenty of fish-fingers in the sea. 

    Jonathan Chancellor agrees that you should walk away, although after possibly allowing a little leeway for your pre-supposed limit if it's really your dream home. Investors ought be showing no such similar emotion. 

    And for the sellers…

  7. Apply Some Lipstick 

    Buying a home is a lot like the Tinder dating app: a lot of snap judgments are made on looks alone. That’s why the best bang for your buck isn’t always in renovating. Spending a little time and money improving the curb side appeal of your home, can make people come inside and check it out. 

    Jonathan Chancellor agrees with Scott Pape that curb side appeal can often be crucial in getting potential buyers out of their cars.

  8. Ditch the Beauty Parade 

    When it comes time to sell, most homeowners ring up a couple of local real estate agents and arrange a time for them to come over and give a valuation. Don’t do it — not yet anyway. Most agents have spent many hours perfecting their listing pitch — they have all the right closing techniques designed to get you to sign on the dotted line. Keep them out of your home. 

    Jonathan Chancellor agrees, but when the time comes, make sure you work them down a tad on their sales commission or incentivise their commission with higher price hurdles. It's not a sign of their weak negotiating skills if the agent agrees to an altered commission from their submission, just the way the increasingly savvy vendors improve their cost situation.

  9. Catch them in the Act 

    Instead, find a similar home to yours that’s for sale in your area. Then, ring the agent and ask about buying the property. Do they pick up? Are they really enthusiastic about the home? If they pass that test, head off to one of their open-for-inspections. Are they on time? Do they take the time to get to know the prospective buyers — who are the potential buyers of your home? 

    Jonathan Chancellor says Scott has nailed it with this advice, though it only works if you have the time. I also think once the agent has been selected to also send someone into your own home open for inspection to get feedback on what is being advised to the potential buyers!

  10. Don’t Pay for Glossy Advertising 

    Once you’ve found the right real estate agent, don’t let them talk you into paying for advertising. The truth about glossy advertising is that it’s more about promoting the agency than it is about promoting the property. Honestly, to sell a house all you need is three things: a website listing, a sign out the front of your house, and a good agent. 

    Jonathan Chancellor is inclined to agree with Scott Pape, as gone are the days of the oversized vendor paid print ads. There is a dwindling place for smaller glossy print presence in select localities, but let's face, it most buyers get their website alerts these days as the prompt to look further, rather than the randomness of coming across something in print. Vendors will still need to spend up on their website listing.

  11. Crunch or Be Crunched 

    After the agent has told you how much they believe they can sell your place for — and before you sign with them — look them straight in the eye and say: “if you make me lower my final price, do you agree to lower your final commission? 

    Good point, but Jonathan Chancellor says this goes back to the suggestion to incentivise the agent's commission.

  12. Sell, then Buy 

    Don’t buy a home before you’ve sold. It almost always ends badly. 

    Jonathan Chancellor says yes, this is the ideal scenario, but it is not always possible. Much depends on the individual circumstances surrounding your own situation, and how you cope with pressure. There's ertainly more pressure when buying first, but it doesn't have to end badly.
Under the Hammer is on Channel 7 at 8pm on Thursday night.

Jonathan Chancellor

Jonathan Chancellor is one of Australia's most respected property journalists, having been at the top of the game since the early 1980s. Jonathan co-founded the property industry website Property Observer and has written for national and international publications.

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