Autumn Newsletter 2021

.Auction advice for property buyers from Your Australian Property

When Your Australian Property Buyers Agents was bidding for a client at auction in the Melbourne suburb of Kew the auctioneer was holding court and three of his colleagues were placed among the bidders to assist buyers in attendance, as often happens.

From the buyers perspective is this a good or bad thing?

Should a Buyer take advice from a selling agent? Hopefully the auctioneer can answer all relevant questions prior to the auction commencing. In an ideal world Buyers should be able to bid in an open and transparent auction process.

In actual fact what happened was that all of the selling agents isolated the Buyers who were bidding and urged them to bid higher and higher as the auction progressed.

Despite the selling agents’ best efforts, two Buyers knew they’d reached their limit and withdrew from bidding. The third, a young couple, were then pressured to reconsider their limit multiple times by the oldest and most experienced selling agent in attendance, who happened to be the auctioneer’s father.

As an experienced Buyer’s Agent and licenced real estate agent with over 30 years’ experience, I have placed bids at many of auctions for my clients. I sensed that these young buyers were quite stressed, making hurried calculations, struggling to decide and ultimately bidding as they were pressed to do.

Outbidding me they purchased the property, paying quite a high price for the property and one that we were not prepared to pay on behalf of our clients as independent and professional Buyer’s Agents and having done thorough property research and due diligence.

So Buyers, remember the Selling Agent works for the Seller not for you. The more you pay for the $purchase price, generally the more they get paid and the happier their vendor is, generating more referrals for them. Selling Agents don’t work for or represent you. They don’t care if the bank won’t value the property at the purchase price and you have a lending shortfall. They don’t care if you extend yourselves and can’t go out to dinner or have a holiday once you move in.

Please consider using a reputable, independent Buyers Agent. They should have vast experience in the Real Estate Industry and be a Licenced Real Estate Agent. You pay them for their advice and representation and they have a duty of care to you, not the Vendor/Seller of the property.

Your Australian Property Buyers Agents offers people about to buy a property a free, no obligation consultation.  We provide advice and tips on buying well and not overpaying for real estate.

For independent advice on buying or investing in real estate, contact Zac Newbold, Director at Your Australian Property Buyers Agents on 1300 998 688 or +61 3 8899 6327.​

CALL​ 1300 998 688 or +61 3 8899 6327​ TO LEARN MORE ABOUT HOW WE CAN HELP YOU.

The Psychology of Auctions

​You think you’ve got your emotions in check. Perhaps you’re thinking about wearing dark sunglasses to the auction and you’ve practiced your arms folded, only raise of the index finger bidding technique. You’re as cool as James Bond in the famous poker scene in Casino Royal, with 007 in a game of bluffs and double buffs – “In poker you never play your hand. You play the man across from you.” James Bond­ 

However, are you at risk of suffering from the ‘endowment effect’? It’s a discouraging name given to a psychological trait studied in behavioural science for what drives us in our pursuit or protection of possessions. Simply explained, the ‘endowment effect’ is a prejudice that occurs when we overvalue something that we own. This can relate to property auctions when we overvalue the state of ownership and ‘winning’ at an auction to our own financial detriment: i.e. bidding beyond our reserve. Related psychological tendencies are known as ‘auction fever’ and ‘social facilitation’, auction fever being the general outcome of social facilitation which is an inclination to act differently when in the view of others and compete more or copy the actions of others. Understanding the psychology of property auctions is key to coming out on top without bidding beyond what you can afford. 

Interrupting the rhythm Auctions and auctioneers thrive on rhythm. A great auctioneer is like a conductor of an orchestra and is able to control the flow of an auction with verbal and body language. Rhythm in auctions is most famously used to trigger that endowment effect and speak to bidders’ emotions rather than their heads, beckoning them to bid for the win and not for the house. At  Your Australian Property we advise that purchasers need to research a property’s true value before auction so they can be stress free and confident on auction day to help control the auction’s flow.

The solution is to understand the true value of the property and be emotionally invested. It is then easy to decide the maximum price you are willing to go to. Bidders need to use the rhythm of an auction to their advantage to beat out other early bidders quickly, intimidate latecomers and stop an auctioneer’s attempt to control the flow of the auction. The auctioneer will quickly identify you as a main player in the auction if you know how to manipulate the rhythm in the auction, as your very actions and presence will impact their ability to control the rhythm the way they want to. 

Reversing the norm There are various ways to upset expectations at an auction. Most expectations are for an auction to have slow, periodic bids that move eventually to smaller, quickly exchanged bids until the winning bid is announced. Use this to your advantage by reversing these expectations. A well-known auction technique is to assess the interest in the property on the day and if there are a number of clearly interested parties, use high bids at the start to remove these bidders early on and assert your presence as the main bidder. Increments for increasing a bid are often in whole numbers. You can try to interrupt the flow of an auction as it nears the end by offering an uneven number that requires the auctioneer to quickly do the sums. 

Portraying confidence Property auctions are often mainly silent and reserved events, at least for those in the crowd. It is accepted as respectful and reasonable that those viewing with no intention of bidding make little sound at an auction, especially any kind of noise that could be conceived as a bid. The leader is seen as the auctioneer, the only person who talks, with the vendor invisible within the property and bidders raising a hand to bid suggesting a calm attitude. Counteract this tendency by being as vocal and loud as the auctioneer. They have practiced that voice dozens if not hundreds of times. Very rarely will an auctioneer expect a bidder to speak with the same volume as they do, but why not? Ask if the property is on the market confidently and make your bids known. Throw the rhythm off with odd numbered bids and make sure everyone knows you are in the crowd. Of course, don’t be rude or obnoxious nor should you obstruct the auctioneer’s ability to do their job. However, being audibly and visibly present is a seldom practiced strategy that resists the usual psychological approach bidders take to auctions. Often there are great buying opportunities or even bargains available at Auction.

The team at Your Australian Property know the psychology selling agents’ use and the tricks of other purchasers to intimidate amateur bidders who are emotionally involved. With over 30 plus years’ experience in the Melbourne property market, our Professional Auction Bidders have saved our happy clients’ many tens and hundreds of thousands of dollars by planning a strategy and knowing the right moves at Auction.  

CALL​ 1300 998 688 or +61 3 8899 6327​ TO LEARN MORE ABOUT HOW WE CAN HELP YOU.

“Should I Be Bidding Now?”

There are some who show absolute confidence and poise with nothing appearing to throw them or ruffle their determined feathers.

In reality though, I’ve rarely come across people whose first attempts to bid at auction didn’t come with sweaty palms, nervous mannerisms and an overwhelming mix of stress, confusion and excitement. 

However bidding at auction can actually be enjoyable… by about your tenth event! For this reason, first-time bidders make mistakes that will upset their strategy and may result in missing out on what should have been an excellent first buy. 

Here are five beginner auction errors and how to fix them. 

1.  Failing to prepare “By failing to prepare you are preparing to fail” Benjamin Franklin. This particularly applies to bidding at an auction. The pressure of competition can make the average person behave strangely. If you’re one of the final bidders you’ll feel an adrenaline rush and quickened heart rate together with an internal monologue that’s screaming “What do I do now?!” That is not the time to make the decision about your absolute upper price limit. Well before the auctioneer calls everyone together, smart buyers know at what point they are going to pull out – absolutely, positively and without regret. Do your sums well in advance for every property you’re interested in. Know what you can afford to borrow and do your research as to what the specific property is worth. No later than a day before the auction, you (and any significant other) must have a comprehensive discussion about what you’re prepared to pay. Take your time and, if this is absolutely the home or investment for you, find your absolute limit – it’s that figure where literally a dollar more is a dollar too much. Also accept that you might be outbid – that’s OK. There will be other properties in the future and each auction is a learning experience. 

2.  Not knowing your State/Territories Legislation Be knowledgeable about your state or territory’s rules relating to auctions. For example, arriving late on the day and raising your hand to bid as you close the car door is not on. While bidders don’t need to register in Victoria they do in many states, including New South Wales and that includes producing identification and other details. Also, know your State’s ‘cooling off’ rules. As proceedings approach the intense finale, under-educated bidders can become more stressed by unfolding events. How will you know when the property has reached the reserve? Will the auctioneer go inside to talk to the vendors? Is the property “on the market”? Take some time to learn about what happens if the property passes in. Did you know in many jurisdictions, the under bidder doesn’t not automatically have the first right of refusal? Also be aware of the seller’s specific requirements too. What do they expect in terms of a deposit? Do they want an extended settlement period? Here are two good ways of approaching this: Firstly, attend plenty of auctions before you bid so you can see how different scenarios play out. Secondly, talk to agents and auctioneers, particularly those selling your desired property. They will happily answer questions about their auction style and the particulars for the property you like 

3.  Bidding Strategy is Complicated When the moment arrives it’s best to be front and centre and make yourself be heard. You must ensure the auctioneer knows you’re a real contender in the sale and you’re there to win! There are also some who believe the best strategy is to hang back and make a “knockout bid” towards the end. It’s a great strategy but very dangerous for novice bidders. It gives other bidders a chance to build their confidence during proceedings and your “knockout” might actually be a vast overpayment for the holding. Also, think about whether you want to open the bidding. If so, what will you offer? Most sellers expect a first offer below reserve, but come in too low and you might be greeted by a withering comment from the auctioneer that will zap your confidence. Just like knowing where you’ll stop, have a think about when you’ll likely enter the fray too. You can see that the strategy of bidding is a complicated one. 

4.  Believing the auctioneer has the balance of power The fact it’s the auctioneer and selling agent who are most under pressure at an auction may surprise first-time bidders. The auctioneer is trying to get the highest possible price for the vendor and that means they’re actually beholden to the bidders at the auction. If agents “rush” you for quick decisions or push for a fast counter bid, take a moment to think. If they believe you may make another bid, they’ll wait for you to decide. This is also the time to employ your well-practised poker face. Try to give nothing away if you’re stressed. Relax and let them feel the pressure. While you should be respectful of the process, telling an agent you’d like a moment to gather your thoughts is fair enough too. Take your own pace, not the auctioneers. 

5.  Compliance on increments Auctioneers can request an increase in bidding increments or deny smaller ones but that doesn’t mean you have to comply especially towards the end of the auction. Auctions can come down to miniscule margins. I’ve seen events run at $100 bids – it’s excruciating for the crowd but could mean savings in the thousand for the eventual buyer. Auctioneers will try and dictate your bid margin – they may knock back margins that are too low in the early stages of an auction – but they’ll always come back once bidder numbers start to thin. Don’t succumb to the auctioneer’s suggestion of a ‘knockout’ bid. During proceedings there may be times where an increased bid margin conveys deeper pockets but this is better kept to more experienced bidders. Everyone, especially your competition, has their limits and the best strategy is to be one step ahead when the hammer falls. 

In Summary Bidding at auction may seem daunting to novice bidders but experience brings confidence. Unfortunately, in the meantime you may have missed out on some excellent properties due to that lack of experience. There is a simple solution. We at ​Your Australian Property represent you, the buyer, at auction. We provide an auction bidding service for buyers and this service has been designed to save you significant amounts of money on the purchase price and take the emotion out of the property bidding process.

Have a look at our expert Auction Bidding Service. Our professional auction bidders will fully plan and execute the bidding strategy on your behalf, giving you an enviable edge over your competitors – providing you with peace of mind. We have 30 plus years’ experience of the Melbourne property market and use innovative strategies to secure the winning bid at auction – we push boundaries so your interests always come first and exceptional results follow. 

Why not draw on our expertise so that your biggest worry on auction day is what brand of champagne to crack open in celebration of a successful outcome. 

CALL​ 1300 998 688 or +61 3 8899 6327​ TO LEARN MORE ABOUT HOW WE CAN HELP YOU.