Sydney based buyer’s agent, Patrick Bright from EPS Property Search, has written a book giving excellent tips on buying or selling at an auction. This is an excerpt from “An Insiders Guide to Saving Thousands at Auctions: and available online.
This is some of the selling agents’ tricks of the trade when it comes to selling via auction. I frequently get asked – `Why are auctions becoming a more popular method of selling property?’ I believe it’s because a lot of selling agents enjoy the set timeframe and the additional control that they have as part of an auction campaign over both buyers and sellers. In addition, auctions usually have a larger marketing budget which is used to advertise the property – a spin-off is that the individual selling agent and their real estate agency gains extra publicity. Therefore it’s only natural that most selling agents will favour vendors to sell via auction rather than through private treaty.
Conditioning the Vendor
An auction campaign will typically last about four weeks. During that time, selling agents will provide information to the vendor on the current value of their property based on feedback from people who’ve inspected it. It’s called `educating or conditioning the vendor’. The selling agent will be trying to get the vendor to understand and accept the current market feedback so that they have a realistic expectation come auction day. These figures may be far lower than those discussed when the selling agent first listed the property.
On the flip side, the selling agent wants to create as much interest as possible from potential buyers. The best way to do this is to give people the impression that they could buy the property for less than it’s actually worth so that it increases the pool of interested buyers. This is called `underquoting’ and while it’s a breach of the Act it consistently goes on.
For inexperienced buyers this can prove very expensive as they end up paying for pest and building inspections and legal fees in preparation for auction on a property that is actually worth far more than their budget. Every time they go through this process they are literally throwing money down the drain preparing to bid on properties that were always going to be out of their reach. For selling agents `underquoting’ often creates a big crowd on auction day creating an illusion of lots of interest and a successful marketing campaign conducted by them even though a large percentage of the bidders can’t actually afford the property. Quite frankly it’s not hard to attract a crowd to a 20% off sale which essentially is what underquoting does. Understanding how to research the real value of property is essential to avoid this pitfall and ongoing expense – yes, you must do your research!
Over the past few weeks of reading these tips from my book you might form the view that I’m anti auction. Well I can assure you I’m not. I think they are a great way to buy well if you know what you’re doing and for those people with particular circumstances that suit an auction campaign they can be a good way to sell.
Patrick Bright at EPS offers an auction service in Sydney. BPS does the same in the Northern Rivers. The cost is $750 for a full market value estimation, attending and bidding at auction. More info here: