Americans baffled by houses sold in Australia through auctions

Americans have been left baffled after watching a livestream of a lively house auction in Melbourne - and the reason why will stun you.

Americans are in disbelief about the way houses are sold in Australia, and Aussies are equally baffled that it’s considered unique.

A short clip of a livestream of a Melbourne auction has gone viral after it was shared by a New Yorker on X, formerly Twitter, who explained this was a “crazy thing” done in Australia.

“Like this is the normal way you sell a normal house,” he wrote in the post that has more than 2.5 million views.

“Think about all the Australians you’ve known. Maybe they’re your friends or coworkers. Maybe they’re serving you brunch,” he continued.

“But you know what they’re not serving you? The truth about how they sell homes.”

It prompted Americans to ask “is this real?”. They were even more surprised the auction took place in the street.

In response, Aussies described watching auctions as a Saturday sport, explaining they were basically neighbourhood events.

Americans were left baffled by a livestream of a house auction in Melbourne (above). The practice is very rare in the US and typically reserved for a foreclosure sale. Picture: X

Those Americans who could get past their initial shock said they liked the sound of a quicker and more transparent process, rather than placing bids over a longer period of time without knowing what the competing bids were.

“It may be theatrical, but it’s transparent. None of this American undercover lying about who bid what,” wrote one person.

More than 20 per cent of homes sold in NSW and Victoria this year have been by auction. Picture: NCA NewsWire / Max Mason-Hubers

The difference between auctions in Australia and the US

University of Technology Sydney economics professor Isa Hafalir, who has lived in both countries and has first-hand experience buying properties in each, told news.com.au auctions were “very rarely” used to sell houses in the US outside of foreclosure sales.

He said the real estate market was more competitive in Australia, meaning auctions often have success in returning a better sale price for the sellers.

“In Australia, real estate agents and auctioneers want the neighbours to come and a big group of people, even if they are not serious buyers, because it has this kind of psychological effect that this is hot property and many people are interested in it,” he said.

He said people who are winning in an auction can feel as though it’s their house before they have won, encouraging them to bid more aggressively.

But Prof Hafalir explained it was also a more transparent process for buyers.

Experts says auctions work to deliver better sale prices in Australia because of the highly competitive market. . Picture: NCA NewsWire / David Swift

In the US, he said interested parties could put in an offer below or above the listing price.

“And then they would come back either saying ‘we’ll go ahead with your offer’ or they may say there’s another interested buyer who has a higher offer than you but they don’t necessarily specify what this higher offer is, usually they don’t,” he said, adding you may then miss out or get another chance to make an offer.

Leanne Pilkington, president of the Real Estate Institute of Australia (REIA), agreed auctions worked in Australia because the real estate market was often characterised by high demand and limited supply, especially in major cities like Sydney and Melbourne.

“Auctions are an efficient and transparent method of sale and competitive bidding may help achieve a higher price by engaging with multiple potential buyers,” she said.

“Vendors and purchasers participate in an open forum of price negotiation where the competition is clear.”

Australia has a culture where auctions are often attended by people who have no intention of placing a bid. Picture: NCA NewsWire / Jeremy Piper

Auction volumes in 2024 ‘well above’ same time last year

So far this year, 13.4 per cent of dwellings (houses and units) sold in Australia have been by auction, according to PropTrack data.

Looking at each state and territory, 27 per cent of property sales were by auction in the ACT, 22 per cent in Victoria, 20 per cent in NSW, and 10 per cent in South Australia. The numbers are significantly less in other states.

PropTrack senior economist Eleanor Creagh told news.com.au auctions were a particularly popular method of selling homes in Australia when selling conditions were strong, like so far this year compared to the same time last year.

“When market conditions are buoyant, a higher level of seller confidence is often reflected in the choice of auction as the selling method, creating a competitive environment that may result in a higher final sale price than might be achieved through private treaty sales,” she said.

“This year to date has consistently seen auction volumes well above this same period last year.

“Improved seller sentiment is contributing to an increase in the number of homes heading to market, while the higher clearance rate is likely driving increased confidence in auctions as a selling method.”

Ms Creagh said it was interesting auction activity was also well up in Queensland and South Australia compared to last year.

“Selling via auction has historically been less popular compared to other sales methods outside of Victoria and New South Wales, but the ongoing strength in selling conditions in these markets is likely contributing to an uplift in utilising auctions as a selling method,” she said.

This year has consistently seen auction volumes well above this same period last year. Picture: NCA NewsWire / Monique Harmer

‘Sticky beaks’

Pooven Bala, who founded start-up Auction Reporters, which was the source of the auction clip that has gone viral, told news.com.au auctions are often part of a buyer’s market research.

“I was one these ‘sticky beaks’ back in 2014 when I was looking to buy my first investment property,” he told news.com.au.

“I would often get a friend or even my wife to attend an auction for me (if I couldn’t) and ‘report it’ back to me. I wanted to know the first bid, when it got called on the market, how many bidders, and of course the final sell price.

“Long story short, now I stream public auctions on social media and prepare a short summary on my website so that the transparency that auctions provide is available and easily accessible long after the hammer falls. This started in 2015 and took a few years and a couple of pivots to get to where it is today.”

Mr Bala said it was very Australian that people could just “walk in, inspect the house and 15 minutes later see what it sells for”.