Too many investors shy away from auctions when in fact they could be the secret to your investment success.
Too many investors shy away from auctions when in fact they could be the secret to your investment success.
Have you bid at an auction before?
If the answer is ‘yes’, you would have more than likely joined the thousands who have gone through what some describe as ‘the most harrowing experience of their life’.
Bidders report they don’t sleep the night before and they feel nervous, anxious and even sick in the stomach.
Why do normal people, who are confident enough to be buying property, suddenly become like children who are scared of the dark?
Buyers can become so traumatised that they freeze up and can’t even get a word out.
Others don’t even make it this far – they get so freaked out at the very thought of bidding that they don’t even attend and thus miss out on the property they wanted, or they get someone else to bid for them and end up paying more than they had hoped.
These feelings and reactions are perfectly normal and you would not be alone if you have experienced this distressing situation.
So how do you overcome these irksome feelings, so you stay focused and bid your best to buy at auction?
Do your ‘home-work’
Be an expert on the area you are buying: Know your area like the back of your hand.
Different markets/ areas require different features: For example, size of land, size of home, number of bedrooms, rental income and potential use.
Go to the local council and obtain the local environmental plan (LEP) maps and development control plan (DCP): The LEP map will give you a bird’s eye view of the area. From this map you will be able to see the council zonings – what you can and can’t do with the property, where areas are built up or less dense, proximity to shops, facilities, amenities and transport. It will give you a clearer picture on where to buy.
The DCP will outline what you can and can’t do within the relevant council zonings – this way when you invest you can invest wisely, not just for capital gain or rental return, but for potential use in the future.
Speak to the town planner: Ask to speak with the town planner – ask them questions about the area you are looking in. Tell them you are thinking of buying something in the area and ask if there is anything you should know that is happening or changing. It is amazing how much information a town planner and attendants at council can give you – if you just ask and listen.
Talk to people in the area: You’ll get a greater feel for the area and wider understanding from speaking with the locals. Observe and speak to people who live and work in the area. Discover what it’s like to live there.
Be a detective
Internet research: Various public searches list what is for sale and sold. Some of these include, realestate.com.au, justlisted.com.au, domain.com.au, realestateview.com.au, homehound.com.au. Use the search databases the agents use as these provide history and the latest sales hot off the press eg. rpdata.com.au and apm.com.au.
By being extremely knowledgeable on an area – including its past sales and what is currently for sale – you will be equipped to make a judgment on price and what you think the home is worth so you can invest well and make an informed decision.
Don’t rule out a property from the photo – especially on the internet: There are agents who still take their own photos and some of them barely know how to turn the camera on let alone how to upload a clear picture. If you were going to rule the property out from the photo, consider how many other buyers have!
Attend open for inspections and personal inspections: You get to speak to other buyers at the open for inspections. You’ll find the buyers who are out looking are a wealth of information and will tell you what they think about price points. You can assess the level of interest. Are there many people at the inspections? The less the better for you. There is no better time to buy than when your competition isn’t buying.
Dealing with the agent
Be courteous and friendly: They are used to being treated like parking officers and will appreciate and remember you. If they like you – they will help you. You want to be the first person they call when they leave a new listing – before it comes to the market.
Don’t be scared to open up and tell them your situation: Buyers get scared to tell agents their real situation. Remember they want to help you buy because they get paid and you may sell through them down the track!
You won’t buy the property unless you want to buy it: No-one forces you to sign a contract. Yes, there are pushy agents out there – but that can often mean they have a vendor on their back really wanting to sell the property.
Get ‘on-side’ with an agent and ask for their advice and help in buying in the area: You will get a lot further this way. The more time you spend with them, the more they will help you (and the less time they are spending with other buyers!)
Some of the greatest bargains around are the properties when an agent doesn’t even call you back: If they’re not calling you – then they’re not calling others.
Let them know you are interested: Buyers often become all secretive with agents, thinking that if they tell them they’re interested they’ll end up paying more! In fact this is a great way to miss out on property and pay more because the agent either sells to another buyer before auction or encourages other buyers to place bids. If they knew they had you they would not be inviting more competition which drives up the price.
Agents can get complacent looking for other buyers when they know you are interested. Call them regularly to express your interest. Keep remembering the less competition, the better your position to buy.
Auction is the most transparent way to buy property: You can see who you are bidding with unlike private treaty where you can get gazumped and you’ll never know what the agent is passing on to the vendor.
Be confident and act like the competition have no chance – you are on a mission. Good luck in your bidding!
Kate Lumby
As a specialist property auctioneer to selected agents who market property by way of auction, Kate has been auctioneering in all regions of NSW now for 15 years.
In 2013 /2014 Kate was one of four finalist in the Australian Real Estate Awards for Auctioneer of the year and finished third out of 65 Auctioneers in the Premier auctioneers competition contributing towards raising $100,000 for Westmead Hospital Medical Research.
Kate is the director of My Auctioneer Australia.
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