By Rich Harvey, CEO & Founder, propertybuyer.com.au
The coronavirus crisis has changed a lot about how we live our lives, from socialising with friends and family to going to work – or not, as has been the case.
Property markets haven’t been immune from the need to quickly pivot in order to abide by measures designed to slow the spread of COVID-19. The biggest change by far was the introduction of online auctions.
Some states and territories have eased their restrictions around real estate inspections and in-person auctions, but there are signs that online sales events are here to stay. It’s a way of making would-be buyers and vendors comfortable, and it adds extra convenience to the whole process.
But how do you increase your chances of buying successfully at an auction when you can’t see your competition or get a read on the mood in the room?
How it all works
There are a few main platforms that sales agents use to facilitate the online auction process and they work in a similar fashion.
Buyers register their interest in bidding by creating an account on the platform, submitting their identification documents and credit card details. They’re also approved for a specific auction by the sales agent.
A nominal amount is ‘held’ on the would-be bidder’s credit card, to ensure security and give the vendor and their agent a bit of peace of mind. It’s usually around the $2000 mark, depending on the platform.
The auction is carried out online, with a live video of proceedings broadcast to those in ‘attendance’. You can watch and bid using a computer or smartphone.
If you’re successful, contracts can be signed virtually, and the deposit amount can be transferred straight into the agent’s trust account. It’s quick, convenient and simple – and you don’t even need to get out of your PJs for the life-changing moment.
The limitations
Online auctions are revolutionising a process that hasn’t really seen a lot of innovation, despite advances in technology and changes in consumer behaviour.
But there are some downsides, and most of them relate to tactics and tips usually offered to hopeful buyers. And they’re mostly to do with body language and ‘reading the room’.
When you’re in the room – or backyard or balcony – of an auction, you get a sense of how things are going by tapping into the mood of the auctioneer, vendor and other bidders. You can watch body cues to see if your competition is comfortable, nervous or uncertain; whether a property is at its reserve; how much is left in the tank of proceedings, and so on.
In real-life auctions, the pace tends to be fast and frenzied. Even if there aren’t many bidders, they don’t tend to be drawn-out unless the auctioneer is trying to slow things down to build tension and tease out a few more bids.
But in the online world, the need to cater for technical capabilities like slower internet speeds means that the pace can be a lot sedate. If you’re in a position where you want the hammer to fall on your offer sooner rather than later, this can obviously be a setback.
They’re also a new phenomenon and everyone is still getting their heads around how they work. For some bidders, such as older people not as comfortable with technology, it can exclude them from taking part. And some vendors aren’t as comfortable with the innovation, viewing it as a sign of how rapidly the world has changed – and continues to change – and perhaps thinking they’re better to hold off on selling for now.
Put your best virtual foot forward
Virtual auctions will remain a fixture on the property scene for a while – potentially long after this COVID-19 thing is done and dusted.
And with some states going backwards on flattening the curve, having to reintroduce strict restrictions, like Victoria, online auctions remain a vital tool to help the real estate sector continue ticking over.
So, how do you ensure your best chance at success?
It’s always crucial that you do your homework and know everything you possibly can about a potential property purchase, its history and future prospects, the suburb and what makes it tick, and the broader city market.
This will help give you an indication of what the place is worth so you can keep a cool and level head in the virtual auction room and avoid paying too much.
Register on the relevant platform nice and early. You can tune in and watch without having to jump through the various sign-up hoops, but if you decide part-way through that you want to throw your hat in the ring, it’ll be too late.
Talk to the agent about the platform they’re using and do some homework on how it operates. You can also find a number of example auctions on YouTube, to watch real-life examples of the whole process. It’s a good way of doing a practice run before the big day so you’re not surprised or confused.
Bid confidently by having your finance in order so you know what you can spend, but couple this with a strategic view of the property’s long-term prospects and how it fits into your overall strategy. You want to be confident but not cocky.
And, of course, using the services of an independent, experienced and properly qualified buyers' agent will take a lot of the guesswork out of things. The buyers' agent will know the area, be able to asses a property’s merits, liaise with the vendor’s representative and act on your behalf at auction.
They can obviously also source potential property deals for you, working with contacts to sniff out listings as well as off-market opportunities that fit your search criteria, ticking all the boxes on your needs and wants list, without the need for you to spend every Saturday at open inspections.
In this uncertain world with a whole host of logistical difficulties, they’re worth their weight in gold.
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