Real estate guru John McGrath’s top tips for selling, bidding at auction

As the Aussie real estate market enters a ‘new growth phase’, property guru John McGrath explains the pros of selling via auction and how to play to win when you’re bidding.

We’re now seeing the highest number of properties going to auction this year, as more new listings flow onto the market this spring. Buyers have welcomed this increase in supply, which is giving them a bit more choice in an otherwise very tight market.

The good news for sellers is, it looks like this additional supply is not causing any significant change in market conditions overall. Recent weekly auction clearance rates have held steadily close to 70 per cent in Sydney and are between 60 per cent and 65 per cent in Melbourne and Brisbane.

Anything above 60 per cent indicates a healthy, buoyant market. So, it appears there is enough buyer demand to absorb the higher number of listings for sale today.

Homeowners have reason to be confident again. Picture: David Geraghty

It is likely that this recent uplift in new listings is not just seasonal. We think homeowners are feeling more confident after seeing home values start to rebound in 2023 – and quite sharply, in some areas.

CoreLogic data shows that between January and April, every capital city and regional area, bar regional Victoria, moved through the bottom of their market cycles and into a new growth phase.

Sydney is leading the East Coast market recovery with home values up by 8.8 per cent, followed by Brisbane at 6.2 per cent, Melbourne 3.2 per cent, Canberra 1 per cent, and Hobart holding steady. This is a good time to be trading property. There are benefits for both buyers and sellers when market supply and demand is roughly even with a bit of new price growth underway.

Going to auction remains the best way for sellers to achieve the maximum price possible. It’s the most effective way of discovering the highest price the market is willing to pay for your home today. Many buyers find auctions particularly stressful, but it’s worth remembering that there are several key advantages to buying at auction.

ADVANTAGES OF TAKING YOUR HOME TO AUCTION

The four auction advantages for buyers:

1. An immediate result

2. Knowledge of the exact competing offers

3. The ability to see your competitors and read their body language

4. Social proof that others value the property at the same price level as you.

A buyer’s main fear with auctions is getting carried away emotionally and paying too much. But you can alleviate this concern by determining your ‘walk away’ price before the big day.

Sit down and really think this through.

Review your finances and consider how much you want this home. If you turn up on the day with a firm final price in mind, you’ll feel much better and more prepared for the outcome – whatever that may be.

John McGrath oversees an auction in Sydney’s Surry Hills. Picture: Julian Andrews

TOP TIPS FOR BIDDING AT AUCTION

Here are my top tips for bidding at auction:

• Make a low bid to start the auction, then watch how it unfolds

• Unless the property is going to pass in, don’t bid again until the reserve has been met

• Wait until the bidding has slowed and the other bidders are losing steam

• Make your next bid with a confident tone

• Call out your offer in full (i.e. say “$850,000” instead of “$10,000”)

• If the bidding continues, make your counterbids fast and assertive

• If it’s going to pass in, make sure you are the highest bidder, as this usually gives you first right to negotiate (whether this is a legal right or a courtesy varies between states).

As I said earlier, always stick to your ‘walk away’ price. Short-lived disappointment is much better than the long-lasting remorse of paying too much.

* John McGrath is the founder, Managing Director and Chief Executive Officer of McGrath Estate Agents

Originally published as Real estate guru John McGrath’s top tips for selling, bidding at auction