One of the most common phrases you will hear a Real Estate Agent say to you, is that now is the right time to buy!
It may seem contradictory (even stereotypical) that our blog title reflects this statement, particularly when we say it’s the right time to buy at auction. Let’s be honest, people generally associate the word “auction” with a price that sells well above the estimated range.
But the reality is, the property marketplace has changed this year, compared to what it was last year and in the latter. Statistics are indicative of a buyers market – there are more properties passing in, and more properties being sold prior to auction – two variables that buyers dream of most when purchasing a home.
Again, we say now is the time to buy at auction, not to fit the stereotype, or to encourage you to buy one of our properties, but to truly provide you with value that will assist you in purchasing a property that you deserve, at a price that you want to pay – and here are three reasons why:
It’s spring selling season
One of the most anticipated times of the year to enter the property market as a buyer, is during the spring selling season.
Generally speaking, because of the great weather, buyers are more likely to stay outdoors in search of a property, and from a vendor’s point of view, their home will look and present the best with well-manicured gardens.
Given the season, this results in more properties being placed on the market for sale, which means that as a buyer, you have more options to choose from, and more chance of finding a property that ticks most, if not all, boxes on your list.
Unfortunately, with the increase of properties on the market also means an increase in your competition. However, statistics from the REIV indicate clearance rates that are as much as 20% lower than the previous year in any given week. The week ending the 7th October saw a clearance rate of just 56%, compared to the same time last year of 74%.
With historically low clearance rates, this indicates that buyers have the best opportunity to buy a property under the hammer, or have a property passed in to them.
Low clearance rates
A step further from the last point, is that the auction property market is seeing low clearance rates on any given weekend.
As mentioned earlier, clearance rates for this year have been as much as 20% lower than last year, due to the number of properties that are not selling under the hammer, and are passing in for failing to meet the vendor’s reserve price.
Generally speaking, we meet many buyers who have been burned by auctions that have sold far beyond the agent’s expectations. Whilst this does occur on occasion due to competition and demand, the reality of the property market we are living in at the present moment, is a market with up to 50% of properties being passed in.
As a buyer, your greatest asset in an auction is to be the last to bid. In other words, you need to be last, to be first! If the property passes in to you, you have an opportunity to negotiate with the vendor, and walk away without signing the dotted line if it’s beyond your means. This guarantees you the opportunity to purchase the property without any other competition!
If you are a buyer, and the property does not pass into you, fortunately not all hope is lost.
The nature of the current property market also favours you, as by definition, a property that passes in at auction is where the vendor’s expectation of the property’s value is more than the market’s perceived value.
Provided the property does not sell after auction, you are in a great position to buy whilst the vendor reconsiders the reserve at which they are willing to sell the property over.
What’s even better, is that three clear business days after the auction date, the property will be sold under “private sale” conditions – meaning that you now have a cooling off period, or purchase under conditions such as finance approval. However, bear in mind that unconditional offers will always be favourable upon vendors wanting security in their deal.
With favourable conditions in the marketplace for buyers, now is the time to purchase at an auction. The reality is, whilst we are in more of a buyer’s market, there are always vendors that need to sell their homes and move onto the next stage of their lives, meaning that despite the market conditions, there will always be a supply.
At Nguyen Real Estate, we are passionate about helping buyers purchase properties with care and with ease, and would be happy to discuss the auction process with you so that you are aware of your rights, responsibilities, and can bid with confidence. Contact us on (03) 9687 6070 today.