Auctioneer tells all – Surviving Sydney’s hot auctions
28 October 2013
Damien Cooley shares his tips on how to win without paying over the odds
“Start the bidding and bid confidently until there is nothing left” is the number one tip for bidding at a competitive auction from leading Sydney auctioneer Damien Cooley of Cooley Associates. “Don’t wait until the end, get in, be active and let your competition know you will buy at any cost.”
Damien’s advice comes as Sydney’s property market looks set to continue its long run of staggeringly high auction clearance rates.
Legacy Property chats with Damien for his insider’s view on how to come out on top such as whether to make an offer pre auction, what to expect on auction day and whether to bother with independent valuations.
With clearance rates so high, what can people expect on auction day?
“Bidding has been bold and fierce,” says Damien. “There is a big difference in the way a buyer will perform in this market compared to when clearance rates are around 50 per cent.”
The number of bidders at auction has been high, with the Cooley Index recording an average of 4.9 registered bidders per auction during September. However, as the number of properties coming to market increases rapidly over the next six weeks, Damien expects bidder registrations to reduce slightly.
Are people paying over the odds or do ‘fair-value’ opportunities still exist?
Damien believes that high clearance rates don’t necessarily mean people are paying over the odds, although there is no doubt prices are rising and growth is continuing.
“It means there is a happy point in the market where buyer expectations meet vendor expectations,” he says.
He expects the pressure in the market to ease a little from November due to increased stock levels, rising interest rates and unemployment. Against this backdrop, he expects auction clearance rates to drop back to around 70 – 75 per cent per month.
What sort of premium should buyers add to the agent’s price guide?
“Under quoting in this market is very rare,” says Damien. “What is more common are properties genuinely selling above expectations.”
For example, Damien recently sold a two-bedroom unit in Queens Park for $880,000 – well above the quoted price guide of $625,000 and the reserve of $650,000.
“This was just an outstanding result and not the fault of anyone but competition and what someone is willing to pay.”
Is there any sense in making an offer pre-auction or are you giving too much away?
Damien says that making an offer pre auction can be a good tactic in a strong market. “In fact, more than 34 per cent of our listings are selling prior to auction right now.”
Buyers should be warned, however, to make their offer a good one. It is the agent’s duty to go back to the other purchasers and let them know an offer has been presented. You could therefore either pay more than the next person by a long way or potentially create an auction before the auction.
“It’s my opinion not to do this,” says Damien. “Just go to auction and do your best. This way you know who you are competing against and what level they are at.”
Is an independent valuation worthwhile in this type of environment?
Damien believes independent valuations are a waste of time and money as they are always conservative and will turn you off buying quality real estate.
“Valuers right now are having just as much trouble as agents in knowing what something is worth. A sale three months ago of a similar property may have no relevance to a property on the market today. I don’t envy the valuer’s role. It’s a difficult one.”
What should a buyer do pre-auction?
“Research is important,” according to Damien. He recommends having a solicitor review the contract, conducting a strata search and building and pest inspection if appropriate, and asking the right questions of the agent such as the vendor’s price expectations.
“It’s important to know your product. Become an expert on what you are buying. There are things that I look for in an investment property that I don’t compromise on like aspect, parking and location. These things I can’t change. The fit-out I can change.”
Any final tips for increasing your chances of winning at auction?
“Having a professional bidder is a brilliant strategy,” says Damien. “It will cost you no more than $750 to $1,000 but could save you tens of thousands.” He also suggests bidding confidently and in odd increments, slowing the pace and breaking the momentum.
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