Confession: What buyers’ agents really think about auctions
The popularity of auctions seems to be increasing in the Perth market, despite the wariness of some locals.
And while the vast majority of properties are still sold via private treaty, there is a feeling that over time auctions will take an increasing share of the market.
But what do local buyers’ agents, who buy property for a living on behalf of their clients, really think about auctions? Do auctions provide good opportunities to snap up a bargain or do they stack the cards in the seller’s favour?
We can’t speak for all buyers’ agents in Perth, but given Momentum Wealth has the biggest team around, we can certainly shed some light on the pros and cons of buying at auction.
Overall, it’s fair to say that the auction process is designed to be in favour of sellers. The aim is essentially to flesh out as many potential buyers as possible (by not quoting a price) and then put these buyers in a competitive environment to hopefully trigger a bidding war. And there are many ploys used by selling agents and auctioneers to encourage the process.
There is often considerable pressure and emotion involved with auctions, which is why they can be a buyer’s worst nightmare. And it’s because of this pressure that buyers’ agents are often employed to represent buyers at auction.
Given the choice, most local buyers’ agents would probably prefer to buy via private treaty over auction. This is because they have better control over the negotiation process and can ultimately achieve a better result for their client, the buyer.
Critically, with private treaty, a buyer’s agent can include conditions in the contract that protect the interests of the buyer, whether in regard to finance or inspections. Under auction conditions, offers are generally cash and unconditional.
That said, with the right bidding strategy, auctions can provide excellent buying opportunities. However, you need to do your research and prepare for the unpredictability of the process.
Perhaps the best scenario for a buyer is when a property is passed in at the auction and the seller, becoming increasingly desperate to sell, happily entertains a lower offer.
It is worth remembering, however, that smart property investment is about acquiring the right type of assets, not necessarily getting a great deal upfront. So the focus should also be on the property and not the method of sale.