Buying a house at auction, or selling one, has always been a game of strategy.

For purchasers, it is about devising a plan of attack -- an auction strategy -- that will see you come out on top.

It is also about trying to understand the tactics of those around you, so you know when to keep bidding and when to stop.

For sellers, auction is a psychological game, played in an aim to get the highest possible price for their property. It poses some risks, no doubt, but it also offers the potential for great rewards.

Strategy plays a big part in all aspects of property auctions, none more-so than the auctioneer's plans for the big day and the listing agent's tactics for promoting the property and sale in the lead up.

Part of the strategy that leads into an auction -- and online auctions are no exception -- has always been grounded in the pricing of the property.

Over recent years, as most states and territories have tightened up pricing and advertising legislation to ensure consumers are accurately informed, pricing strategy has become even more important than ever.

Buying a house at auction in NSW: what does price mean?

In NSW, agents still have a choice about whether or not they promote a price guide for an auction. There is no rule that says they have to give a price, and no rule that says they can't give a price.

Sellers will work with their agent and/or auctioneer to determine which approach is right for their property. As a buyer, a few things to consider include:

  • Pricing laws dictate if a residential property is advertised with a price, the price must be presented in a certain way. For example, if the guide is a range, that range is restricted to a 10% difference. A property can't have an indicative price of $700,000 to $1,000,000, it can have a range of $700,000 to $770,000.

 This works well for buyers as it means you have a more accurate understanding of what the property should sell for, so you don't waste anyone's time, including your own.

 

  • To price a property -- to find that range -- an agent must complete an appraisal that includes researching comparable properties in the area that have recently sold, and they must present these as evidence for their suggested price to the seller.

 

As a buyer, this means you can rely on the modern price guides, more than you once could, as they must be evidenced by real comparable sales.

 

  • Pricing a property before auction is psychological. On the one-hand, seeing an advertised price can inform your bidding ceiling and make you less inclined to bid above it

On the other-hand, not advertising any price is a big turn off for some buyers as it increases uncertainty, and many won't even consider a property if it is auction-only and has no indicative price or range.

Buying a house at auction in Queensland: what does price mean?

When it comes to auctions and pricing, Queensland has rules that are quite unique -- rules that genuinely baffle some agents in other states.

In Queensland, it is mandated an agent or auctioneer cannot give any indication at all of pricing for a property that is set to go to auction -- they can't print it, they can't verbalise it!

The reason behind this is also psychological, in that it is thought giving an indication can impact the outcome of the auction, when in fact, the idea of an auction is to establish the market price, which is set by consumers and demand.

It was also introduced as a way to stop bait advertising -- promoting a property for auction at a price lower than it will realistically sell in order to drum up interest.

When approaching auction in Queensland, as a buyer, it is important you do your homework so you don't waste your time.

Heading out weekend after weekend to auctions only to find first bid is way above your ceiling is not fun for anyone!

  • Our simplest tip is to remember agents are permitted to put a 'search price' into the backend of their realestate.com.au (or any other site) portal for every listing.

 

Though the site can't display the price, it means if you search with a tight minimum and maximum price, you can determine if a property is likely in your price range.

 

  • While property appraisals from display sites like realestate.com.au or even the banks, like ANZ, aren't strictly accurate, as they are drawn from historic data and don't consider factors like recent updates or changes to the area, they are a good start.

 

Arming yourself with a few appraisals so you have even a rough indication of price can be helpful.

 

  • Likewise, thanks to the amazing search optimisation of realestate.com.au, a simple Google search of addresses, even a street, surrounded by quotation marks, will provide you with listing pages for properties near the one you are interested in.

 

Look for recently sold properties and create your own comparison reports -- take note of photos, condition, sale price and the area.
As an example, if you are interested in a property at 13 Jones Street, Townsville, type in "Jones St, Townsville" or any of the streets around it to get results.

 

Buying a house at auction in Victoria: what does price mean?

Victoria is the opposite of Queensland. In this southern state, is mandated that a Statement of Information is publically available for every property.

This document includes the comparisons the agent used to price the property, as well as other useful pricing information.

This may be seen as a strange approach to auctions, in that buyers will refrain from bidding higher than the prices indicated. In fact, Melbourne in Victoria often holds Australia's highest number of weekly auctions, with generally quite solid completion rates (save for some months during the downturn).

As a buyer, take advantage of the information available and how much this reduces your own homework!

Use the Statement of Information to get an initial idea of price, and then take a look online to see if other recently sold properties in the vicinity of the home tell the same pricing story.

Buying a house at auction on Sale Ezy: what does price mean?

Sale Ezy is a fully-compliant online sales system, Australia-wide. What this means is its processes are subject to the exact same laws as live auctions in any state or territory in the country.

In states where you can choose to advertise a price, Sale Ezy offers agents the option of setting an expected selling range that is displayed to all listing page visitors, or not.

Sale Ezy also uses a minimum offer as part of its auction process.

In a live auction in most states, an auctioneer has the right to reject any bid she/he feels is not in the best interest of the vendor and the auction.

When using Sale Ezy, the auctioneer sets this number in advance, so bidders who offer amounts below it are automatically instructed to bid higher.

This process has quite a few advantages, but most notably, it deters people who aren't serious and dummy bidders, meaning owners don't have to entertain offers of $200,000 on a property that is set to sell for around a million dollars.

Likewise, buyers don't see a bid of this nature on screen and develop unrealistic expectations that the property will be sold for an amount much lower than the owner will really agree. It's like removing the opportunity for underquoting or misrepresentation in online auction.

As a buyer participating in an online sale (to read more about why you should bid online, click here), you have the luxury of having the internet right in front of you and the ability to chat out loud to loved ones and advisors as you bid.

Keep your eye on the neighbourhood and comparisons, don't leave bidding to the last minute -- let other bidders know you are here for a reason, and agree in advance what you are really prepared to pay.

Happy buying!