The auction clearance results over the weekend were exactly what most professional Real Estate Agents expected. Clearance rates were again in the 60’s and with next weekend’s potential 1300 auctions the rate will probably drop again. Last year with clearances regularly in the 80% range, buying at auction was simple for people who had money to burn; “keep bidding until you are the last one with your hand up”. This year that has all changed.
Last year, if you had no idea what you were doing you could simply watch the auction and compete with other potential buyers. This year things are different. If there are no other bidders, which will happen at about a third of all auctions, then you had better have a very good idea of what the property is worth. If you are too high you will overpay and if you are too low then you won’t get what might be a good property. EVEN GOOD PROPERTIES CAN PASS IN AT AUCTION. Assessment is the key preparation to be able to negotiate, whilst experience is necessary to close the deal.
When the property market is as finely balanced as it is now, in other words it is not a sellers market like last year nor is it a buyers market, then whichever team has the best negotiator will usually fair the best after the auction has been passed in. The auctioneer, whom you may have met or had a chat to before the auction, is quite often the agency principal, or at the very least an extremely experienced Real Estate Agent. It is his or her job to negotiate the highest price for his client the vendor. These agents are usually involved in at least a couple of negotiations every week and so they were probably involved in over one hundred property negotiations last year. How many were you involved in?
When people sell a property the vast majority will pay up to 3% of the purchase price to hire a professional negotiator to act for them. Why do you think they do this? Marketing a property is not that difficult nor is it very expensive now we have the internet. The majority of the fee paid to a selling agent is for their expertise in appraising and negotiating a property. If you are considering buying a property and you did not negotiate at least a couple of hundred properties last year, you should think about speaking with a buyers advocate.
A buyers advocate will not only save you money immediately by negotiating the property better than you, but also and more importantly assisting you in choosing the best property, taking into account both your needs and also the potential for long term capital growth. These savings will far outweigh their fees in the same way the selling agents do.
Ian James
