Why should you use a buyers’ agent at auction?
If you’ve been considering purchasing investment property, it’s likely that Sydney and Melbourne have been hot on your radar.
Together they have near single-handedly driven the real estate industry in Australia. Figures from SQM Research show that over the 12 months to October 2015, house prices in the regions have grown 17 per cent and 9.1 per cent respectively – significantly more than any other city.
It’s likely that Sydney and Melbourne have been hot on your radar.
It is a commonly held belief that a good time to hold an auction is when the demand is high and the competition is fierce, as this will help bump up the selling price of your home.
This can be reflected in statistics from CoreLogic RP Data, which expose Melbourne as the city with the highest proportion of auctions (39 per cent of listings), closely followed by Sydney (38 per cent of listings) and well ahead of the national average (25.6 per cent). In fact, in select suburbs the ratio was as high as 98.3 per cent.
Therefore, if you want to take advantage of the potential gains from our two largest cities, it’s likely that you will be going to auction! Here are a few reasons why you should use a buyers’ agent at auction:
1. They can assist in finding profitable property worth bidding on
The Australian Securities and Investments Commission asserts that it’s the due diligence you complete before buying an investment property that is the most important.
In order to determine whether a property will supply you with capital gains in the future, you need to consider an abundance of factors, including the location, the type of property and what demographic you’re looking to target.
Provided your Sydney or Melbourne buyers’ agent is skilled and accomplished, they will have intimate knowledge of the various areas and local markets, knowing the suburbs worth pursuing and the ones to steer clear of.
2. They can create a strategy based on the situation
Consumer Affairs Victoria (CAV) recommends knowing as much as possible about the property and surrounding areas, so you can set a price limit based on your financial position and the market value.
If you want to win an auction at a reasonable price, you need to have an effective strategy in place. A report from Genworth states that there are a number of techniques that experienced bidders use, such as bidding strong from the outset to intimidate other buyers, sneaking a bid in just before the auction closes or attempting to slow the process with smaller bids.
A buyers’ agent will be able to apply a fitting game plan after assessing the situation at hand, to ensure you get the best chance of winning.
3. They can stop emotional bidding
While investments are generally all about the numbers, the emotionally charged atmosphere of an auction means that even a seasoned investor may struggle to not get caught up in the moment.
According to a survey from Mortgage Choice, 17 per cent of recent home owners regretted their purchase, with 22 per cent of this number citing financial reasons. You don’t want to be a part of this group!
Having a third party bidding on your behalf can be of great benefit, as CAV asserts it removes the possibility of you overstepping your limit and spending more than you can really afford.
4. They can project confidence
Naturally, an auction can be quite an aggressive environment, as you go head to head with other investors and other property agents. It’s not uncommon to feel overwhelmed in the face of this process, ultimately being too intimidated to place a bid.
A competent buyers’ agent will have years of experience with auctions, and therefore will have the confidence and tact to ensure your desired bids are put forward.
5. They can negotiate with the seller
According to CAV, provided the seller permits, you can make an offer through a property agent prior to the day of auction. The process is generally the same as if you were buying by private sale, and as such there are legal documents to be prepared and signed – a buyers’ agent can take care of all this for you.
Furthermore, if the auction is passed in (meaning it didn’t meet reserve), the seller typically will commence negotiations with the highest bidder. This is an ideal time to have a buyers’ agent on hand, as it can be a battle of wills, with the seller usually wanting more financial commitment from you in order to close the deal.
6. They can provide access to private house sales
Often a buyers’ agent is only as good as the team and network behind them. The larger the better, as this provide you access to exclusive private house sales, allowing you to potentially take advantage of prices below market value.
This isn’t to mention being able to avoid the entire auction process!