How to prepare for a property auction - Jan 2025

By Rich Harvey, CEO & Founder, propertybuyer.com.au

For decades, the New South Wales Central Coast region was in a property market holding pattern. It was flying under the radar of homebuyers and investors alike. But COVID’s significant upheaval brought the region into the limelight. Now, a raft of drivers across the political and economic spectrum will deliver exciting times to the Central Coast – and those who own property will be among the biggest beneficiaries.
Anthony Knight, Principal buyers’ advocate for Propertybuyer on the Central Coast, has lived in the region for decades. We recently chatted about the region and why he’s excited about what’s to come.

On an otherwise ordinary Saturday, you might just find yourself surrounded by a few dozen strangers, being barked at by an excited gavel-waving real estate agent, about to make one of the biggest and costliest decisions of your life.

Are you ready for it? And I mean really ready?

I’ve been in this business for a long time and have heard all kinds of horror stories about would-be buyers who’ve dove head-first into an auction without knowing the depth of the water. A few manage to escape with little more than hurt pride. Many come away with scratches and bruises, and maybe a scar that’ll last a long while.

Sadly, some must grapple with serious and long-lasting consequences that can haunt them for many years to come.

And sure, every now and then, luck lets the unprepared off scot-free. Such is life. But is that a major risk you’re willing to take? It shouldn't be.

First things first

Let’s take a step back and talk about some of the important steps you should tick off before auction day even rolls around.

If you’re serious enough to bid on the home, then get a building report and a pest inspection. These days, it’s common for these to be prepared by the selling agent and offered to prospective buyers beforehand, either for free or for a modest fee. Review these carefully and seek any advice or further reviews if something isn’t right.

If it’s an apartment or townhouse you’re looking at, also check through the strata report carefully. Some of those can be a minefield with the odd major planned works, special levies or sinking fund deficits hidden in plain sight in black-and-white.

Have the contract that must be signed on auction day reviewed by your lawyer or other seasoned professional advisor. Most of the time, they’re pretty standard, but sometimes there are special clauses that you might need to be aware of. If there’s something there you’re not comfortable with, discuss a proposed variation with your advisor.

It’s important to know as much about the property and the market it sits in as you possibly can. How is the market performing? What’s happened over the past growth cycle? What are the suburb’s long-term growth prospects? How does this particular home meet the market, both now and into the future? Knowing the answers to these questions will help you determine the property’s value and ensure you aren’t paying too much.

Check out recent comparable sales in the area. See if you can get a sense of what the reserve might be. And don’t take the ‘price guide’ at face value. More and more lately, these can be substantially lower than what a place ends up selling for - sometimes hundreds of thousands of dollars off. You don’t want to waste your time.

It’s crucial you have your fiscal ducks in a row before you even entertain the idea of bidding. Do you know how much you can comfortably spend? Do you understand the cost of going above that

budget, in terms of how much more you’ll fork out in repayments? Can you even access extra cash if you want to push past your threshold?

Preparing for the big day

On the subject of money… are you absolutely sure you’ve got any? By that I mean, have you got pre-approval? Once that hammer falls, the place is yours - no conditions and no cooling off period. You’re liable for honouring the terms of the contract. You need to be sure you have a bank who’ll actually lend to you. And you need to have some money on the day - a deposit, usually in the order of 10 per cent of the purchase price, is payable when you sign.

If you’ve never bid at an auction before, it can be a daunting process. There’s a lot going on, things move quickly, and the pressure is on to act. Getting carried away or losing your cool and making a misstep can be really tough to avoid.

It might be worth going to some other auctions beforehand. You’ll get a sense of how things tend to operate and what you might expect when it’s your time to stand in the spotlight.

Enlisting the services of an experienced buyer’s agent can remove the stress and angst. They will have spent time getting to know you, your circumstances and your real estate goals. They will have spent time reviewing potential properties, assessing their merits and long-term prospects, and discussing the pros and cons with you. And they’ll know your limit - and your absolute ceiling.

Then, they can bid on your behalf with a calm head, measured thinking and no raging emotion, acting entirely in your best interests.

The current state of play

The latest CoreLogic data available for the auction week ending Saturday December 7 showed a clearance rate across the combined capitals of 62.4 per cent. That was a full percentage point lower than the week prior and marks the lowest result so far in 2024.

Drilling down to look at the biggest markets is interesting. In Melbourne, 67 per cent of auctioned homes sold, while in Sydney, the flat clearance rate of 57.5 per cent is the worst of the year and eight per cent lower than a week earlier.

Sure, Christmas is approaching, and buyers might be sitting on their hands until the New Year to see if there’s more choice. Sellers also seem to be sitting tight, with the number of homes going to auction declining over recent weeks - 2597 for the period I just mentioned, down from 2881 the week before.

The peak over the spring selling season was a healthy 3135, CoreLogic data shows. And that will continue through until February. So, timing is playing a part.

But there’s no denying that broader conditions are weaker at the moment, with demand starting to slip and supply rising steadily.

Strong growth seen throughout most of the year, in much of the country, has slowed noticeably in recent months. At a national level, prices nudged upwards by a tenth of a percentage point in November. In the past quarter, even hot markets like Perth, Brisbane and Adelaide have recorded most sluggish rates of growth.

Supply has increased. More sellers have come to market recently, but they’re being met by fewer buyers - and the ones still out and about are hesitant.

It’s understandable. There’s an affordability issue, with prices still high. There’s a lot of uncertainty about the economy both here and abroad. And those promised interest rate cuts never eventuated, with concern about how long it might take to finally get some reprieve from the Reserve Bank. Would-be buyers have a lot on their mind.

Don’t go it alone

Markets are shifting and there are a lot of variables at play. It’s important to be prepared and not go in blind. Working with a buyer’s agent can give you the best possible shot at making your property dreams a reality with minimal fuss and angst - and without paying too much.

A buyer’s agent works for you. They’ll work to understand what you want to achieve and help you make it happen, all while carrying the burden of researching, shortlisting, assessing and then bidding.

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