Byron Property Search
0428 555 501
(02) 6684 1744
8/42 Bilin Road
Myocum Byron Bay 2481
Auctions are funny things. Many buyers and clients find them stressful and hard to read, mainly due to unfamiliarity. In reality, the beauty and advantage of an auction is it's simplicity and transparency. Whoever is prepared to pay the most money on the day wins. What could be simpler? Still, some of the nuances are difficult for the uninitiated and that is what we will deal with here.
There are many theories about what to do at auctions. The most common one is to "go early, go hard" when upping an opponent's bid. Another one is to use the "knockout bid" approach, which is to make a serious jump at the right time to confuse and intimidate the competition. I have seen these tactics work and I have also seen them fail epically.
As in most things in life, usually the best practice is to be yourself and respond appropriately in the moment to whatever is happening. However, there are some essential facts that can help settle anyone planning to attend an auction.
1. The auctioneer is able to make one bid called a "Vendor’s bid". This is often used when the auctioneer wants to get the bidding started or take the bidding to the "Reserve Price". In the past, agents would often plant "dummy bidders" in the audience to pump up the interest. That has now been outlawed. The Vendors Bid must be publicly declared.
2. The auctioneer must announce when the property has reached the "Reserve Price". When the Reserve Price is reached the property is officially "On the Market" and will be sold. If it does not reach "the Reserve" then the property is "Passed In" and underbidders are allowed to negotiate outside of auction conditions.
3. Bidding under auction conditions means you need to be financially approved. The are no "Subject to Finance" conditions. Make sure you are fully prepped and researched before turning up to bid. You need to come with a ten percent deposit and be ready to go.
Many bidders like to hold back and sit on their hands until the reserve price is met. That is why there is often an uncomfortable period where everyone is waiting for someone else to make the first move. This is understandable since if the reserve price is not met, then the vendor will have to take a lesser price. There are pros and cons to this strategy. Yes, you may get to make an under-bid but this is not under auction conditions and the agents and auctioneers are able to take back control of the negotiation process.
Auctions can be stressful but at least all the cards are out on the table where everyone can see them. A tactic that the auctioneers and agents often use is to promote the fallacy that whomever is the highest bidder when the property is passed in gets sole right to negotiate with the vendor. This is not true. Anyone who has registered still has the right to bid after it is passed in. However, whoever has the highest amount when passed in gets to negotiate first.
This situation is often tricky for the uninitiated. If you are highest bidder when passed in, the agents will try to usher you in to a private room. It is often best to stay outside and in full view of everything. You could be intimidated into thinking that there are heaps of competitors outside ready to counter bid. If you can see that everyone has gone home then you can't be fooled.
Attending an auction is already an expensive and time demanding exercise. Why go to more expense if you may not even get the property? Here's why:
1. A buyer's agent remains unemotional.
2. You go into an auction fully prepared, researched and with a plan.
3. During an auction, listing agents often jockey and jostle a buyer. With a BA at your side it is a subtle sign that says, "Back off".
4. A BA is able to ask the right questions and get the right info so what happens at an auction is predictable and understandable.
If you are attending an auction anywhere in the Northern Rivers area, Byron Property Search can research the property and attend the auction for $750 plus GST.
Otherwise, good luck and happy bidding.
No sign of winter doldrums with the weather, or the property market, in Byron Shire this month. Most properties going to auction are selling beforehand and there is a high demand for new stock. I have no stats for local auctions, but Sydney for example, had an auction clearance rate last weekend of 80.4% for close to 500 properties. This is still very high. Sought after locations like Melbourne, Sydney, Byron Bay see no sign of a slow down as yet.
Some clients and other pundits are saying it must be time for an easing and prices should start to start coming off. No one wants to enter a market at the crest. Commentators are predicting a consoladation rather than a rapid drop. Good properties in sought after locations are now in such high demand they are often insulated against major fluctuations.
It was an interesting experience observing the progress of the Byron Masterplan. I was really happy to hear that it was nominated, and then the Australia Institute of Landscape Architects gave it the State Award in the Communities category. The lesson here was how to successfully navigate community consultation and how to make major decisions in a highly contested area, like we have in Byron Shire.
International ex-pats and non-resident buyers have been caught up in ASIC’s latest move to stop Chinese speculators. The new "Verification Of Identity" requirements by the banks require OS buyers to jump through many hoops to prove they are a real person. The move comes after regulators and ASIC found fraudulent loan applications of Chinese mainlanders fabricating identity and loan documents in order to expatriate funds.
The new requirements, although necessary, may be heavy-handed. In some jurisdictions a loan application will need to be filled out in front of a consular official. There is currently a 3-month delay for finance approvals if you are a resident of Hong Kong. Unfortunately, the move disadvantages all overseas buyers and not just the culprits.
Get off the couch and get out and about (memo to self). It is time you start to explore our beautiful hinterland and rainforest. A friend of mine, Mairéad Cleary, has done a great job collating all the good bush walks in our region. It is available online for $40 if you google Byron Trails or at better local bookstores.
The RBA were in conundrum on what to do with interest rates this month. They want to stimulate the economy but do not want to drive up housing prices. They want to bring down the Australian dollar but not go into a deflationary cycle. In the end they decided to lower it to the historically low rate of 1.5%. The banks have decided to pass on half of that cut and we may see a 0.13% reduction passed on to our mortgage payments.
Please see the related article "Interest Rates for Dummies" where I have gone into more detail about this decision and the affects low interest rates have on property and much more.
I love Melbourne and just spent three days there attending the REBAA (Real Estate Buyers Agent Association) conference. REBAA is the national guild for professional, exclusive buyers agents in Australia. Our main aim is to educate the public in the difference between a fully trained and licenced BA and someone who just calls themselves that. At the moment there is no barrier to entry in the industry and licencing is very light. If you know anyone thinking of using a BA make sure they contact a REBAAA buyers agent.