Don’t get involved in the online property bidding wars
Originally published on Linkedin.
The competition in buying property is fierce. We already knew that the number of people turning up to auctions was high, but new data suggests that the number of offers being made online is up significantly too.
Online sales platform, Openn, has reported a 23 per cent lift in the average number of buyers per property over the last quarter, and those buyers are making a lot more bids, too, with the typical property listing receiving 19 bids, representing an increase of 63 per cent.
What does this mean? Simply put, because the competition is so fierce in the market that prices are being pushed well above expectations. Openn’s data supports that too, finding that 24 per cent of properties went for at least $50,000 above expectations.
Openn is a platform that has been designed to assist agents with ensuring that a property doesn’t undersell, but what is happening on that platform nonetheless points to the reality that the market still strongly favours the seller and their agents.
For an extreme example, a property in Melbourne listed on Openn was on the market for 19 days and in that time attracted 263 bids. Unsurprisingly, it sold for almost 40 per cent above the reserve.
But I don’t want to miss out!
Understandably, these trends can lead to a great deal of frustration for buyers. At Hello Haus we’ve assisted people with making house purchases after being unsuccessful on as many as 12 different prior bids. As we advise our clients, following an effective search and negotiation strategy will allow you to bypass a lot of that noise and stress in the current market.
Where possible you want to find your properties off-market or pre-market. To do that you need to have a deep understanding of the specific market you want to buy in. Rather than cast the net wide, focus on the ideal suburb or town that you want to buy in, and then make sure all the local agents know who you are. Be in constant contact with them, while also keeping a close eye on the prices with which comparable properties to what you would like to buy are selling for.
If you do this, and agents know that you’re a genuine buyer in the market, then you’ll often get opportunities to view and bid on pre-market listings. Then it’s all about the negotiation.
As we often advise our clients, too often buyers think that their first offer needs to be a Hollywood-style lowball offer, to which the seller will counter with an exaggerated high offer, and then, by the end of the process you’ll have a price point at about the middle that will make both parties happy. It rarely plays out that way.
Instead, sellers want to see genuine offers by people that understand the market and are not trying to play games. This is where the research comes in. By understanding what the real price of property in the market is, you can present an offer that would still save you money, but at the same time is easy for the seller to feel good about accepting. Some sellers do want to avoid the stress of going to market and dealing with auctions or a bidding process. If they can get a price that they’re happy with before listing on the market, then they’ll take it.
As an added benefit, if your bid on one off-market property isn’t successful, if the negotiations were done in good faith and the bid was genuine, the agent will remember you for the next time an off-market opportunity comes up.
For example, we were an unlucky under-bidder at Mermaid Waters at the Gold Coast for a knock-down re-build waterfront home. By keeping in close contact with the agent, we were able to subsequently secure a similar off-market purchase just a few days latter in a nearby street. As it turned out, it was a better property, and we had to deal with zero competition in securing it!
Don’t let the challenging and competitive market make you hesitant to buy. With the support of an expert negotiator like us at Hello Haus, you’ll be able to cut through the noise and buck the market trends.
If you’re struggling to participate in the bidding and auction wars, why not drop us a note to find a better approach?