THERE’S no doubt sellers love an auction but there are some surprising benefits for buyers as well.
Australia’s largest auction house Ray White calls one in five auctions across the country with a year to date clearance rate of 71 per cent. Beginning with Ray White himself in 1902, the group has a long history of auction success.
Ray White’s Bianca Denham, who specialises in sales and auction performance training said it’s a myth that all buyers hate auctions.
“Have you ever bid at auction? Depending on the object of desire, the stakes can vary. For example, bidding at a charity auction for a hamper of goodies is a very different experience to bidding for your dream home,” she said.
“There’s a myth in the real estate landscape that buyers don’t like auctions. The pressure, uncertainty of whether your budget and eventual sale price will marry can feel overwhelming, but you may be surprised to know that many prospective purchasers love bidding and buying at auction.”
Ms Denham said it comes down to transparency, certainty and peace of mind.
Transparency
If you’ve ever been caught up in a ‘multi-offer’ private treaty experience, you will understand one of the most frustrating things is as a buyer, you feel like you have very little power. You are relying on the agent keeping clear lines of communication and when the property is highly desirable, this may include double digit interested parties.
We almost always hear from unsuccessful purchasers in this type of negotiation, which all happens behind closed doors, that they would have indeed offered a higher amount if they’d only known what the highest offer was. Legislation prevents agents disclosing offers in this type of selling situation.
Especially in a rising or highly competitive market, many buyers very much enjoy the opportunity that an auction can afford, to know exactly where the highest bid is and feel in control that they can choose to make another bid in order to secure the home.
Certainty
An auction contract is binding and contractual from the moment the auction hammer falls. Binding that is on both parties equally. For those house-hunters that have missed out on properties, there is such a fantastic feeling that comes from knowing the property is yours and the endless searching and inspecting is finally over. Auctions also eliminate the valuation risk regarding access to finance.
Peace of mind
Buying a property is in most cases, the most expensive purchase many people make throughout their lives. Balancing the feeling of getting good value for money and offering enough so that you don’t miss out on the property can be a very hard juggling act.
Knowing that the underbidder is willing to pay as little as a couple of thousand dollars less can give the successful purchaser great peace of mind when it comes to buying at auction. There is an old adage known as ‘buyer’s remorse’ that is coupled most frequently with expensive purchases, this is less frequently felt when buying is conducted during a competitive environment such as a public auction.
Ms Denham recommends attending as many auctions as you can to understand the rhythm and speed at which they can move. “Register for as many auctions as you can and try opening bidding at a level you would feel very comfortable purchasing at - you never know, you might just buy it!”
