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Some property buyers have been bidding against themselves at auction to secure a sale, but experts say the trend is unnecessary in a declining market where buyers have more homes to choose from than usual.
Across the capital cities, the number of auctions is up 26.7 per cent this weekend compared to the five-year average, on Domain data.
Buyers will have more to choose from than last year in Sydney and Melbourne as auction volumes are up.Credit:Rhett Wyman
Melbourne has 742 homes scheduled for auction, up 41 per cent on the five-year average. Sydney has 585 auctions scheduled this weekend, up 12.2 per cent on the five-year average. The five-year average includes lockdowns for both cities in 2021 and for Melbourne in 2020, when fewer auctions were held.
But with more homes on the market and property prices falling, buyers’ agents say it is unnecessary for buyers to bid against themselves to get a deal done at auction, as seen at a string of auctions last weekend, especially if they are the sole bidder.
Last weekend a first home buyer offered $750,000 for a one-bedroom unit in Sydney’s Surry Hills, but the auction stalled as the reserve was $800,000. The selling agent persuaded the highest bidder to increase his offer by $20,000 and meet the sellers in the middle. Other bidders have been in similar situations.
OH Property Group principal buyers’ agents Henny Stier said if buyers are in a situation where they are bidding against themselves, vendors may still have unrealistic expectations.
“That means that the vendor’s expectation is still above where the market is, yes, maybe they had come down from their expectation but not enough,” Stier said.
“I think a lot of buyers need to familiarise themselves with the auction rules, they don’t realise that if a property is passed in it’s sometimes what the agents need to condition the vendors down on their price.”
She said there is far more choice available to buyers and more price reductions on offer than there have been in the last two years.
“It’s definitely a buyer’s market out there,” Stier said. “There is absolutely no need to bid against yourself because the pressure is on the vendor to meet the market.”
Buyers’ agents say it is unnecessary for buyers to bid against themselves in a declining market, especially if they are a sole bidder at auction.Credit:Peter Rae
She said some buyers bid against themselves because the vendors are not genuinely motivated to sell, or the price is significantly lower than what was promised by the selling agent.
In one instance, Stier purchased a property $100,000 below the vendor’s bid at an auction a fortnight ago when she was the sole active bidder and asked the auctioneer to retract their vendor’s bid.
“A lot of the buyers are not familiar with the rules around auctions and auction process,” Stier said.
“In most cases it’s not necessary, there are some cases where the property is just not going to sell below a certain price. But a buyer needs to be able to tell who is a motivated seller; it might be a deceased estate, or they have already bought.”
Michelle May Buyer’s Agent principal Michelle May said there was a lot of pressure on agents to draw out as many bids from buyers as possible.
“I went to a mid-week auction where there were more agents than bidders on the auction floor, and they were all banding together to pressure the buyers to bid more,” May said.
She said while it was important for buyers to hold firm, bidding against yourself depends on how far apart you are from the vendor’s reserve.
“It’s not a case of just walking away, if it is really close and is an opportunity price-wise. It really depends on how far apart you are, and how well this property suits your needs, and how much competition there is,” May said.
“If you are legitimately the only person there then you might walk away and start to negotiate afterwards.”
In Melbourne, Wakelin Property Advisory director Jarrod McCabe said in many circumstances buyers are in the box seat this year.
“I find it unusual that they’re expecting buyers to bid against themselves in the public domain. Pass the property in and negotiate,” McCabe said, adding vendors have the opportunity to put in a vendor’s bid to bridge the gap.
He said vendors also do not need to sell at an unacceptable price if buyers are making low-ball offers well below the guide.
“We’re certainly seeing more properties pass in because they’re not reaching the vendor’s reserve.”
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