Does this sound familiar?
You find a home listed for sale online which looks pretty good. The property came up in your search criteria and is going to auction in three weeks, so you decide to go and check it out.
At the open home, you’re taking a look around, and it seems to tick all of your the boxes. Yay! The agent gives a price guide of the mid $500,000’s. Perfect – your loan approval is up to $615,000, so even if the bidding gets to the high 5’s, you’ve still got a good chance.
Deciding this is the one, you get things underway: approval from the bank, your lawyer checking out the documents and maybe even pay for a builders inspection. All the while you’re dreaming about moving into your new home and the best way to arrange your furniture.
After an anxious night, auction day finally arrives. You’re a bundle of nerves but excited – this is your time. The auction gets underway, and the first bid is $550,000, higher than you expected. Bidding quickly rises to $610,000 and then goes on to sell for $635,000.
What?! The price guide was in the mid $500’s. And the home sold well into the $600,00s. You didn’t even get a chance to bid. All of that time, energy and money, and it came to nothing.
This happens All. The. Time.
And if it hasn’t happened to you, it’s probably happened to someone you know.
It’s no wonder so many first home buyers feel like it’s all too hard or that they’ll never be able to buy.
So, what went wrong?
Real estate agents work for the seller, the vendor. It’s their job to create as much buyer competition as they can to get the best result for the vendor.
To achieve this, agents tend to quote ‘price guides’ which are likely to create a strong level of buyer interest. The more interest, the more competition, the better the sale price.
There’s even a saying in the industry for it: “Pitch it low and watch it go”.
But let’s not hold agents marketing techniques against them. It just means is this:
The agent is doing their job. So you'll need to do yours.
To stack the odds in your favour, you’ll need to have a good understanding of how much the property is reasonably worth.
You can do this by simply checking out recent sales of comparable homes in the local area:
• Attend open homes in your area/s of interest and follow up with the agent to find out the eventual selling price.
• Ask an agent for recent area sales and research the old listings online.
• For any of the homes which have sold that you haven’t seen, drive past and take a look from the outside.
You’ll be rewarded for your effort.
Missing out on a home you had your heart set on can be extremely disappointing, especially when you’re totally out-bid.
Having a good understanding of what a home might reasonably sell for, before making an offer or bidding at auction, could save you hours of time, money and stress.
*I need to mention that there are occasions where even an agent couldn’t have predicted the eventual selling price. In a cooler market, the sale range can be easier to estimate.
...Looking for more?
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