Melbourne was host to 628 auctions last weekend (2nd July), down from 1,000 over the previous week and 1,073 this time last year. Of the 518 results collected so far, 56.8 per cent have been successful, the lowest preliminary clearance rate the city has seen since the week ending 19th September 2021 (56.4 per cent). Over the same week last year, 73.1 per cent of auctions were successful.
If 2021 was a FOMO market (Fear of Missing Out). 2022 is a FOOP market (Fear of Over Paying). As the market transitions, we are seeing price falls in Australia’s two biggest cities. Melbourne & Sydney are leading the way.
Here I outline five key points to help ensure you don’t overpay for your next property?
1 – If a property passes into you at auction and you’re the only bidder, you have the upper hand to negotiate at the vendor’s reserve price.
Be aware that the reserve price can legally move up at anytime before, during or after an auction. I recently watched a property in Port Melbourne pass in at auction. The reserve clearly moved up, and there was only one bidder. The buyer’s last bid was $1,825,000. That same buyer went inside and negotiated head to head with the auctioneer and paid $2,025,000. – Don’t take a knife to a Gun Fight!
2 – Don’t rely on the advertised Statement of Information as Gospel. A real estate sales agent can provide comparable sales back six months. In reality, sales from six months ago are irrelevant in the current market. Do research or outsource to a professional buyer’s agent to learn how to value an asset and buy in a buyer’s market.
3 – Understanding the land-to-asset ratio of the asset you’re interested in buying is crucial. Please take one of our recent purchases, for example. We paid 2.1 million for a family home for one of our ex-pat clients. We just had the bank valuation return with a land value of 1.8M and $300,000 for the building. There is no way in the world you can replace this house for $300,000 – https://www.realestate.com.au/sold/property-house-vic-highett-139189479
4 – Be wary of buying before the auction. Suppose you buy before auction in the current climate. You are simply the only buyer at that price! The other buyers are well below where your offer is. In this instance, you might be in a better scenario by hiring a buyer’s agent or buyer’s advocate to bid at the auction for you. https://www.industryinsider.com.au/services/auction-bidding/
5 – Outsource the property search and negotiation to a professional. If you don’t want to overpay, hire a professional who understands how property market cycles work and knows how to get around with things for you.
A professional buyer’s agent or buyer’s advocate can save you hundreds of thousands of dollars. After all, if you found yourself in court, would you hire a lawyer who understands the rules of engagement or would you represent yourself?
If you want to gain an advantage in the market, speak with one of our Property Buyer Agents on +61 8374 7652 or book a Zoom call here
Industry Insider Property
Level 3, 489 Toorak Road, Toorak 3142
+61 8374 7652
+61 402 346 810