Why My Buyers Were Terrified At This Auction
I recently represented a young couple at an auction in Kedron.
We didn’t end up buying because I didn’t see value past our agreed budget and another buyer came in with a higher offer. But nevertheless, my clients were absolutely stunned at how much pressure the agents applied to get us to raise our offer.
In their words “I’ve never been more nervous in my life! Thank god you’re here Wendy.”
So imagine this…
You see a property advertised online, it’s up for auction so you decide to go along on auction day and maybe place a bid.
You inspect the property just half an hour before the auction, and you fall IN LOVE!
This is it! The ONE.
The dream home you’ve been waiting for that ticks all the right boxes.
You’ve set your limit and promise yourself there’s no way you’ll go over it.
The crowd is building and you find out there’s 5 other registered bidders you could be up against.
You’ve never bid at an auction before but you figure, how hard can it be? I see it done on TV and it looks pretty straight forward. You want this house, you’ve been looking for 6 months now and nothing compares.
Emotions are building (and so are the nerves).
The auctioneer opens the auction with the first bid.
Now it’s your turn.
You’re hesitant but you put your first bid in. You’re outbid by another buyer so you decide to go to your limit. You’re outbid again.
What do you do? Because you really want this.
Another $10,000 won’t hurt?
But now you’re over your limit.
You’re the highest bidder but it’s still not enough.
The auctioneer stops the auction. He approaches you and explains that they haven’t hit the reserve but you’re in front. With another $20,000 you’ll win.
So you consider it.
The agent doesn’t take no for an answer and the pressure is now on.
You’re already $30,000 above your limit.
You decide it’s not worth losing this property for $30,000.
After all, you’re tired of inspecting property and you want your weekends back.
You buy the property – cash unconditional.
But the property isn’t worth what you paid and you find out there’s a major leak in one of the bathrooms. Your bank can’t fund the loan because you’ve paid too much.
You’re out of pocket.
Have you bought a dud? Now what?
STOP. What’s happening here?
Firstly, you're buying emotionally with NO STRATEGY!
Huge no no when it comes to auctions.
But interesting enough, I’ve found that a staggering number of buyers (particularly first home buyers) simply refuse to engage in the auction process at all.
And I can see why.
It can be downright terrifying for a newcomer to property!
Agents create an emotionally charged, intense, pressure cooker environment where buyers and sellers emotions are peaking and the pressure is on to buy / sell. Why?
It gets a result.
In Queensland, auctions are not as popular as in the southern states where this method of sale seem to be the norm.
Queensland buyers are preferring to negotiate under a private treaty setting; that is, buyers make the offer, it’s presented to the seller and usually there’s some back and forth until a price is agreed by both parties. This has been the “traditional” way in Queensland for as long as I can remember, although auctions are steadily making their way to the forefront. Especially when it comes to those unique type properties.
SO WHAT IS STOPPING BUYERS FROM BIDDING AT AUCTION?
I'll tell you.
BUYERS SEE PRIVATE TREATY AS SAFE. THERE’S AN OUT FOR THEM IF THEY NEED IT.
When asked the question, I have found that many buyers are simply afraid of the whole auction process.
They struggle to understand how it all works and end up throwing their hands up and moving onto the next property that’s listed with a firm price where they can negotiate in the safety of their own space and time.
No pressure cooker here.
But if you do see a property that’s going to auction that you like, it’s always best to get an experienced third party to bid on your behalf, be it a trusted friend who knows the auction process well, or better yet, a professional Buyers Agent like myself.
Don’t let the dream home glide by because you’re too afraid to go for it.
Get educated and get a professional on your side.
Perhaps my auction e-book can help?
Below is a link to a sneak preview of what it's all about. I've included the first chapter so you can get a feel for what you'll learn.
Wendy Russell is a leading Buyer's Agent and Auction Strategist, helping property buyers get into the market and get it right.