More people are selling their homes before their scheduled auction with the number of these sales now similar to those seen during the property market boom.
Just over a quarter of Sydney sellers – 28 per cent – sold their home before auction in August, while 14.5 per cent sold their property prior to it going under the hammer in Melbourne, Domain data shows.
The figures have risen since August last year, when sales prior to auction sat at 21 per cent in Sydney and 12 per cent in Melbourne, as the market cooled.
Domain economist Trent Wiltshire said the data showed sales prior to auction were historically higher when market conditions were strong.
“These pre-auction sales were particularly low at the end of last year and at the start of this year when the Sydney and Melbourne markets were softest,” Mr Wilshire said.
“The share of pre-auction sales is back close to where it was during the 2012-17 boom.”
Brad Teal of Brad Teal Real Estate in Melbourne said sales prior to auction were being determined by the level of interest in a property.
If there was only one strong buyer interested in a home or apartment, and the buyer was offering a good price, then the preference was to sell before it went under the hammer, he said.
“When the market goes into growth mode you can identify buyers [who are keen to buy] but when the market goes the other way, as it did last year, you find you have no certain buyers and only maybes and that’s the difference,” Mr Teal said.
As the market has improved in recent months, more sales prior to auction has revealed a number of serious buyers re-entering the market.
Mr Teal said this was partly due to people getting finance quicker through the banks. He said people were able to secure a mortgage within two weeks, rather than the four weeks it took to finalise a loan last year.
LJ Hooker Sydney auctioneer Ben Mitchell said he had noticed a significant bump in the number of sales prior to auction in July.
Part of the reason for the rise in the numbers was due to buyers’ fear of missing out, he said, with fewer homes for sale and more buyers at auctions.
Some buyers had attended multiple auctions with no success, and wanted to secure a property without the competition.
“I’ve seen some people at their fifth, sixth or even seventh attempt to buy and it’s heartbreaking from a buyer’s point of view,” Mr Mitchell said. “So they put everything in prior to try and buy.”
Chief auctioneer with Ray White Matt Condon agreed. Buyers were now coming to auctions with a plan in place to try and either avoid competition by making an offer prior, or opening bidding with a higher-than-normal amount to knock out competitors, he said.
“In general, buyers are trying to implement strategies rather than just arriving at the auction and sitting back and seeing what unfolds,” Mr Condon said.
His colleague Amit Nayak from Ray White Parramatta said locally there had been a number of sales before auction, particularly over the past few months.
Families keen to upgrade their homes to something bigger were making offers to avoid competing against other buyers.
“They’re mainly single dwellings purely because there aren’t many around,” Mr Nayak said.
A property he was due to auction, in Wentworthville, was snapped up by a young family after they made an offer too good to refuse.
The three-bedroom property in Owen Street was scheduled to be sold under the hammer later this month. However, it sold within six days of being listed.
Terry Lay, whose parents sold the home, said the sale happened very quickly after the offer well above expectations was made.
“Selling prior to auction was something my parents were open to,” Mr Lay said. “Auction time is relatively stressful, especially for my parents who are getting older.”
As well as getting a good price, the pre-auction sale meant his parents were spared from constantly preparing for open for inspections, he said.
“The people who bought the property were really keen – they had missed out on a few auctions and wanted to grab this one,” he said.
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