Not ready to buy yet? Five things you can still learn at auction

Not ready to buy yet? Five things you can still learn at auction
Not ready to buy yet? Five things you can still learn at auction

It make sense to go to some local auctions as part of your research and due diligence – even if you’re not quite ready to purchase yet.

If it’s going to be worth your time and effort, then you need to know what it is you’re looking to learn. For instance, here's what Catherine Cashmore took away from The Block 2011's lacklustre auction result.

Here are the five things that you should be trying to gain from heading to an auction.

  1. Market activity

    After you’ve been to a few auctions in an area, you should start to get a feel for the demand for property. Is it strong? Are there lots of bidders? Remember that just because a property draws a crowd, those attending may just be watching – and may not be genuinely interested in purchasing.

    Taking note of how busy it is on the day is one thing, but you should also note how many bids are made and how competitive the bidding becomes. This will let you know whether you will likely be entering an auction that will be quiet. Potentially this could give you the upper hand for lower bidding and negotiating if the property is passed in, or knowing if you need to put all your cards on the table.

    Keep an eye out for repeat bidders regularly attending auctions of similar properties – this can suggest who the highly motivated buyers are.

  2. Comparative pricing

    Another useful thing to note about auctions is exactly what price they end up selling or passing in for.

    It may take some time for auction results to be properly recorded, depending on the area you’re considering and the type of property and so to get the most real-time information possible it’s worth visiting a few.

    As you get to normally inspect the property one last time prior to auction, you can also note how much it went for and whether it is inferior or superior to the property you have your eye on. This should quickly let you know if what you’ve been estimating to spend will achieve you the property you want in the area.

  3. Reserve prices

    Another factor to note down is when the property is officially “on the market”. While you can’t always get a specific indication of reserve price, when a bid goes above it the auctioneer will tend to announce this.

    Every property is different and every vendor will set a different reserve, but this will help you prepare your strategy and to know when you might be interested in bidding.

    If you want to be the top bidder when a property is passed in, this will be of particular interest.

  4. Common language used and strategies

    Familiarising yourself with strategies used by buyer’s agents and common prospective purchasers, as well as the weaknesses that others have when bidding, can prepare you for when it’s your time to bid.

    Regular, auction success is said to be
    all about the strategy you employ. It’s worth also getting to grips with the process and the type of language used by auctioneers and the increments of bidding so that you don’t get thrown off. Familiarise yourself with the process so you’re more comfortable when it’s your turn.

    You can also become familiar with local auctioneers’ styles. Some are very good at hyping up a crowd and drawing out the bids. You should be prepared for how they may auction the property you really want.

    Here's Patrick Bright's guide to understanding "auction talk".

  5. Neighbourhood information from locals

    The final factor to keep an eye out for is how the locals react and what they say.

    A neighbour may tell you that a developer has been around trying to purchase all the properties in a specific block or of a certain size. Another might tell you about any reasons people are leaving the street, or even about other neighbours. As local experts in their own right, it pays to listen – the information may be crucial later on.

    Don’t feel as though you can’t ask them about the good and bad streets, or if they know of any other properties coming up for sale.

    As with all information, do your due diligence and confirm it yourself, but it may just lead you on to better things.

YOU MIGHT ALSO WANT TO READ:

12 tips for bidding at auction

A step-by-step guide to buying your first property at auction

Jennifer Duke

Jennifer Duke

Jennifer Duke was a property writer at Property Observer

Tags: 
First Home Buyers Auctions

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