Real estate agents are the psyop masters of the property market. They’ve honed this skill over countless open homes, acting as the market’s maestro. Picture the “greater than” symbol knocked over on its side. At the top, you’ve got the vendor, filled with high hopes, often inflated by the agent’s initial appraisal. Down at the bottom, that’s usually you, cautiously optimistic and hoping for a bargain. The agent’s role? To make those lines intersect, guiding both parties to a middle ground where a deal can happen.
Fig: The Greater Than Symbol. Here, consider the expectations both of the vendor and the purchase (you!) during an auction campaign.
Trust the agent, just not about the price.
Real estate agents give vendors the price they want to hear to get the ball rolling. Once rapport is built, the truth starts trickling in. Agents work to align vendor expectations with market realities, which are often less rosy. Let’s not sugarcoat it; some call this “knee-capping.” But a good agent sees it as expectation management.
On your end, the price you hear will differ. It might be a lowball council valuation or the sale price of a lesser property nearby. If you ask what the property will sell for, expect the question lobbed back at you. Agents are careful not to spook the vendor or scare off potential buyers. Trust them, but only on matters they can actually speak to. Be friendly, upfront, and listen closely to their responses. They’ll either hint that you’ll face competition or suggest you attend the auction. That’s your cue to consider other due diligence steps.
The Pre-Auction Offer: A Double-Edged Sword
Found your dream home on TradeMe? You might be tempted to make a pre-auction offer. This is an unconditional offer made before the auction, hoping the vendor bites and maybe even cancels the auction. Some vendors despise the auction process and might take your offer as a lifeline. But often, the auction still happens, and the bidding starts at your offer. You’ve shown your hand, and now others can outbid you. Be cautious; your pre-auction offer might just be used to condition the vendor’s price expectations. Instead of aiming for a bargain, keep your finger on the pulse of the market. It’s more satisfying to be the homeowner when the hammer falls than to try to outsmart the market.
Know Your Three Numbers
Before you even think of raising your hand at the auction, jot down three numbers:
Market Price: The property’s objective worth.
Your Ideal Price: A price you’d be proud to tell your mates.
Your Max Price: Your absolute limit based on what you can afford.
Agree on these numbers if you’re bidding with a partner. These are your anchors; stick to them, and you’ll be at peace regardless of the auction’s outcome.
The auction floor is where dreams meet reality. You’ve done your homework, so what will be, will be. Stick to your numbers, trust but verify, and you might just walk away with the keys to your new home.