In today’s property market, particularly in the auction capitals of Sydney and Melbourne, it is highly likely that when a property is listed for sale by auction it will sell on the day. And the proof is undeniably in the pudding.
According to a recent CoreLogic article year to date auction clearance rates have been near enough to 80% in both Sydney and Melbourne. So why does it happen then that a property for all intents and purposes that is listed for sale by auction sells prior?
Keep reading to find out the main reasons why a property sells before auction and how to make sure you’re in with a fighting chance if it does.
As an experienced Sydney buyers agent I have seen this issue first hand. I mostly hear it from disillusioned clients who have engaged our services because they keep missing out on securing their dream property by patiently waiting for auction day to come around. But it never does.
Here’s how the scenario typically plays out. A property is advertised for sale by auction. You inspect the property and make enquiries of the agent who says the vendors are committed to selling at auction. But then a few days or maybe a week or so later, before the scheduled auction, you find out the property has been sold.
I recently had a client engage my services to bid for them at auction as they were unable to attend on the day. To prepare I went along a week before the auction and inspected the property located in Alexandria. Alexandria is a suburb becoming increasingly popular with young Sydney professionals in a fashionable pocket where Sydney’s inner west and inner east meet.
I asked the selling agent if the property was definitely going to auction and he assured me that it was. After the inspection I looked at other similar properties listed for sale in the nearby area and considered them against the price guide being quoted. I also reviewed everything remotely similar that had sold in Alexandria in the 6 months prior.
Pretty soon I had a clear idea on what I thought was a possible sale price range for the property.
Later that day I prepared a negotiation strategy for my client and sent them a report detailing as such. I recommended putting in a pre-auction offer $100,000 above the price guide quoted by the agent. This was both below the maximum range I thought the property would sell for and what my client was prepared to pay.
I told my client there were 3 good reasons for doing this. Firstly, it would let the selling agent know that they were serious about the property. Secondly, if the vendor countered the offer it would indeed confirm they were open to selling prior. Thirdly, if they rejected the offer outright it would reaffirm the property was definitely going to auction. A win win situation all round if you ask me.
So on the Monday before I had a chance to put in a pre-auction offer for my client, the selling agent called and advised the property was selling that day.
It turns out an offer was received that morning that the vendors were happy to accept, but as a courtesy the agent was seeking interest from any other interested parties.
To cut a long story short, I put in an offer that day for my client which was within the range they were prepared to bid at auction and it secured the property.
While every situation is different, in my experience as a Sydney buyers agent here are the 6 main reasons why a property sells before auction:
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If you liked this article perhaps you might also like How To Slow Down The Bidding At Auction.
Shelley Horton is the founder of Sydney based exclusive buyers agency Albion Avenue. With a 20 year career honing her skills in every aspect of the property industry Shelley knows what makes a property worth buying and how to get the best deal.
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