When a potential client approached me for help with purchasing a property in Sydney’s West, they were working with a tight budget and seeking a large family home that was also zoned as an R3 development site, suitable for townhouses and duplexes. The competition for such properties is intense, attracting interest from families, first-time homebuyers, and developers alike.
The client believed the price guide reflected good value, considering the current market conditions. However, I informed them that the modern 6-bedroom home, given its R3 zoning and excellent condition, would likely attract high competition and the indicative price was only a teaser with the real expectation in a ten percent range above this.
Their budget was $1.25 million, though they preferred to spend closer to $1.1 million. They were fixated on the pre-auction guide of $895,000, mistakenly thinking this was the price. I explained that price guides are often underquoted to attract more buyers. While this practice is legal, it can be misleading and often leads buyers to exceed their budget out of emotion.
Complaints about underquoting usually come from buyers with unrealistic price expectations. As a property professional, I can provide an accurate market price, helping buyers navigate these challenges.
It’s common for buyers to have emotional reactions when they miss out on properties. A buyer’s agent can help manage expectations and provide professional recommendations. My role is to secure the property for the best price, knowing its value and the market conditions before negotiations begin. Pre-auction negotiations are preferred for a controlled environment with less competition. The process of purchasing can be frustrating for the uninitiated especially when emotions run high, however this will not change the agent from trying to get the vendor the best possible price.
In this case, the property was listed for auction with a guide of $895,000. It went to auction and was passed in, with bidding not reaching the $1.1 million reserve. The client missed the post-auction purchase at $1,095,000. This suggests they might not have been transparent about their budget or were restricted by their bank’s preapproval.
When working with clients, I ensure their financial position and spending capacity are clear. This helps determine if they can be competitive or if their expectations are unrealistic.
As an auction expert, I know that small amounts can make a big difference. Techniques to slow and limit price increments at auction require knowledge, perception, and auction floor bravado. Post-auction negotiations are also crucial to secure the best outcome.
In summary, concluding a transaction on auction day is essential. Agents aim to close sales, and vendors are committed to the process. Understanding market dynamics, vendor motivations, and preparation is key to successful property acquisition.
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