Planning on going to a house auction? Planning on selling your house by auction? A real estate agent – who has asked to stay anonymous – says there’s a few tricks agents use to drive up prices and impress their clients, but they can mean that as a buyer, you might be wasting your time…
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Cath* has been a real estate agent for seven years now – it has certainly been a rollercoaster few years in the housing market and she’s seen some serious highs and some serious lows.
“Now is a great time to buy though,” she says. “People are picking up some bargains – compared to a couple of years ago at least!”
Cath says that now, most of her sales are by price negotiation – whereas back when things were booming, auctions were the way to go.
“There was a lot more competition in the market then – things were frenzied and really suited selling by auction,” she says. “Now, I try to steer people away from selling their house by auction. Houses just aren’t reaching those numbers they were in the past.”
But, if by chance you are looking at selling your house by auction, or you’re going to an auction sale, there’s one thing Cath thinks you should know, that real estate agents won’t tell you.
“To sell a house at auction, yes, I only need one person who is willing to pay the price my seller has in mind,” she says. “But I need two people, to ensure that price gets pushed up to that number – one person isn’t going to keep outbidding themselves. But, ideally what I want is a lot more people than that at the auction. Psychologically, the more people I have in the room, the more pressure bidders are going to feel. Some people’s strategy is to join the bidding late, we know this, so that can put the pressure on, wondering when they’ll jump in. But also, just having that many people in the room gives you a sense that other people want this house too – it’s basic human psychology: if other people want it, you suddenly want it even more.”
Cath says her mission to get as many people in the room is twofold: it can push up that sale price, but also, it makes her look as though she’s done a good job in the eyes of the seller… even if a lot of people in that room couldn’t afford the price the seller is hoping for.
“Some agents are a lot more ruthless, but that’s why we ask a lot of questions and try to gauge how much a buyer thinks the house is worth and what they have finance for. Like I said, some agents really push the envelope – but what I’m looking for is that you have finance that you could at least pay the opening bid. In which case, I’ll be on your case to attend the auction.”
Of course, this strategy means that people can head along to an auction full of hope, only to be let down, when almost immediately, their dream home is priced out of their reach.
“I know a lot of potential buyers get pissed off in this situation, where they’re constantly missing out on homes at auction, but, really at the end of the day, I’m working for the buyer,” she says. “I’m trying to get the best price for them, to get the best amount of money for myself too – I’m not here to get a bargain for the buyer.”
Cath says she recommends getting very familiar with how much houses are going for in the area that you’re interested in buying in, and in the neighbouring suburb.
“After spending time familiarising yourself with how much properties are currently selling for, you’ll be able to work out what the price range will likely be for the house you’re going to – I wouldn’t leave that up to finding out from the agent working for the seller,” she says. “Then, if something looks too good to be true, it most likely is.”