Should I Buy at Auction in the Eastern Suburbs? - Aug 2024

By Munro Donen, Principal Buyers' Agent & Director, Propertybuyer East

Sydney’s Eastern Suburbs appeal to a wide cross section of buyers. While it’s true we have diverse property options, those wanting a quality home still need a sizeable chunk of funds at their disposal. The Eastern Suburbs market could be the most resilient market in Australia with a strong history of capital growth.

Buying property at auction can be a challenge for anyone who doesn’t do it regularly. I go to auctions all the time and I think it’s easy to spot an experienced bidder compared to one who is trying it for the first time.

Experienced bidders have an advantage – not just because they understand the auction process, but because they know about the tactics used by auctioneers and competing buyers too.

Here are some things we’re seeing at auctions in the Eastern Suburbs right now. Understanding this helps buyers’ agents like me secure properties that are being sold via an auction campaign.

Auction activity

Auction activity is best described as patchy right now, and there are a few reasons why.

Firstly, there’s a widening gap between buyer and seller price expectations.

Many sellers are convinced property prices are still rising rapidly across all the Eastern Suburbs. In reality, however, most buyers aren’t as desperate as they were a year ago. Interest rate rises have hit hard and borrowing capacities have been impacted. There isn’t the frenzy of FOMO in today’s market. Unless sellers get realistic about what price they can achieve for their home, their property won’t sell.

Secondly, advertised price guides aren’t truthfully reflecting buyer expectations. I’m attending a lot of auctions where the price guide is being exceeded at the event, but the property still passes in.

For example, I was at an auction for a Double Bay home with a price guide of $8 million. The property would eventually pass in for that exact figure. Another auction in Bondi Junction was guided at $3.5 million. That home passed in for $3.6 million and is now listed for sale at $3.7 million.

A conservative price guide is designed to bring a crowd to the event in hopes it will scare the top bidder, or eventual private treaty buyer, into paying more.

Another auction truth is that agents are using auctions as part of their holistic marketing strategy. These agents tell their sellers that an auction prompts buyers to get real and make competitive pre-auction offers and/or bids on the day. If the property passes in at the auction, these bids set the tone for post-auction negotiations.

A further consideration for purchasers is that we’re seeing far more buyers’ agents at Eastern Suburbs auctions. As professional property buyers, we have comprehensive experience with auctions. Buyers’ agents understand the process and rules for auctions. They’re also expert negotiators who will have completed comprehensive due diligence on the property and its price. Amateur purchasers don’t really stand a chance against professional buyers’ agents. In the end, it’s likely they’ll either pay too much for the home or miss out altogether.

Finally, you might be seeing softer auction clearance rates right now and think that means the market is turning in favour of purchasers. In fact, these softer clearance rates aren’t telling the real story. A high proportion of the properties being advertised for auction are transacting either pre- or post-auction. Don’t fall into the trap of believing the statistics are working in your favour as a buyer.

The solution to auction success

As you can see, buying at auction in the Eastern Suburbs is complicated. The truth is that the best way to secure a property at auction is with the help of a qualified, locally based and experienced buyers’ agent. We use our relationships with agents to secure important information about the home going to auction. We also conduct comprehensive due diligence on the property in the lead up to auction day. Our clients can feel secure in the knowledge that we will not let them overpay for a home and will use our formidable experience to put them in the best position to succeed at the auction.

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