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How to turn a property auction to your advantage

Property Auctions can be a daunting and complex process for property buyers. The recent changes to the Property Agents and Motor Dealers Act while intended to provide more transparency at auctions have not necessarily improved the situation for buyers.

 

The changes to the legislation include:

1. Bidders must be identified and registered prior to the start of the auction.  

2. It is now illegal for a selling agent to provide any price indication during an auction campaign. 

 

These changes create a number of problems:

 

1. Some potential buyers, for a variety of legitimate reasons, wish to remain anonymous during the auction process.

 

2. By not having an indicative price range buyers are concerned that they will invest time and money in a property that may be well above their budget. The result being that some buyers are avoiding auction properties altogether. This has meant poor results for auction campaigns and reduced clearance rates across Brisbane and the Gold Coast.

 

Selling agents are attempting to overcome the price issue by providing recent sales data, however this in itself can be interpreted in many ways and can cause even more confusion for buyers. A selling agent recently provided us with ?comparable sales' for an auction property, spanning four suburbs and dating back to 2004. With this kind of data being presented, its no wonder buyers are confused.

 

As a result of these changes we have experienced a four-fold increase in buyer enquiries for us to represent them at auction. Our agents are now bidding at auctions every week on behalf of clients.

 

A buyer's agent can take the guesswork out of property prices by providing factual data and recent relevant comparable sales. They work with the clients and agree on an auction strategy and maximum budget up front. They then bid on the buyer's behalf, to give them the best chance of securing the property on auction day, without exceeding their budget. So the emotion is removed from the process and they are not in danger of spending more money than they intended.

 

When looking for a Buyer's Agent ask the following questions:

  1. Are you are Licensed agent?  Buyer's Agents must be licensed real estate agents registered with the Office of Fair Trading.
  2. Do you have professional indemnity insurance?  This will serve to protect consumers.
  3. Are you an REIQ accredited agency?  Accredited agencies must complete ongoing professional training and comply with the REIQ Standards of Business Practice.
  4. Are you experienced in all aspects of auction campaigns? Auctions are methodical programs that involve the systematic gathering of bidders to compete for the property on the day of the auction - Buyer's Agents who are ex-selling agents have the most experience with both sides of the auction process.
  5. Do you understand the psychology behind the auction process?  There is a lot of psychology behind the seller's motivation, selling agent's process and emotion of the buyers that needs to be understood by a professional buyer's agent.

                                                                                                        

For more information contact Meighan Hetherington, Managing Director and Principal of Property Pursuit - Residential and Commercial Buyer's Agents.

T:   07 31188565 or 0419 697771 E:   Meighan@propertypursuit.com.au