Many people find auctions scary but it’s still the most common way to sell a house in Australia.
If you are wondering what to wear to bid at an auction, there is no shortage of advice on Google.
A sundress printed with cartoon pirates is not one of the suggestions but it worked for me.
When we bought our house in November 2014 the market was still going gangbusters.
It’s cooled since then – in my home town of Sydney, property prices dipped 2.3 per cent in the fourth quarter of 2015 compared with the previous quarter, according to the CoreLogic RP Data Home Value Index. Across all capital cities the fall was 1.4 per cent.
Mind you, prices as of December 31 were still up 11.5 per cent year on year in Sydney and 7.8 per cent across all capital cities. And if, like me, your main motivation is buying a home for your family for the next decade and beyond, the short-term fluctuations don’t matter too much.
It’s now officially a buyers’ market, but by and large house hunters still need to deal with auctions – a genuinely scary prospect for many people.
Auctions remain the most popular method to sell residential property in Australia and there’s a lot to be said for them; an auction is arguably the most transparent and straightforward way to determine market value.
If your end goal is to buy a home, you need a strategy for how to deal with auctions.
I don’t think it matters what you wear. But some of the auction advice we got from seasoned real estate types was genuinely useful.
A common practice is to hang back while the early bidding gets under way and jump in when it starts to slow down. The risk is that the hammer can fall very quickly and there’s no going back once it does.
Instead I was advised to either stand right in front of the auctioneer and call out loud and clear so he (it’s nearly always a he) can’t miss you, or to bid early so he would know I was there. Once you’ve pegged yourself as an actual bidder, the real estate agent won’t leave you alone and there’s almost no way the auctioneer would end the auction before checking back in with you.
At some auctions you’ll get a bottle of bubbly as a reward for being the first bidder, so why not?
The most important advice was for the pointy end of the action.
If you are buying the place with another person, make your decisions beforehand. If you are standing there conferring over whether you can bid a few grand more, you may as well be wearing a sign saying “I’m close to my limit”.
When the rival bidder drops down to increments of one or two grand, don’t follow suit. Come back confidently with another five grand even if it’s your last bid.
If you’re determined to avoid auctions, you’ll have better prospects now than at any time in the past three years.
The second-best time to make an offer on a property is a fortnight to 10 days before the auction. If you make an offer too early, you’re just giving them “market feedback” to set the auction strategy and price expectations; too late and most vendors would prefer to wait and see what happens on the day.
The first-best time is, of course, after the property has already passed in at auction. That wasn’t an option for us in a bull market, but it is now and three of my friends have recently succeeded this way.
We have no regrets and the pirate dress is now hanging in the built-in wardrobe.
Caitlin Fitzsimmons is the editor of Money. This is a new weekly column.