How to get full price at Auction!

[darren b]

Forget watching Auction Squad with their fantastic makeovers that add a pittance to the sale price. This is the big secret:-
Hire a team of squatters and let them have access to your house for 2 weeks with a license to destroy. The more destruction the better. Kick in walls and doors. Rip out all the walls if they must. Buy them a few cans of spray paint and let them at those tired old walls. Instruct them to leave their garbage in the house. (no garbage bags neccessary). Let them leave their used bongs and condoms in the house. Smash the windows. Dont use the toilet, the carpet is ok. A few burnouts on the front lawn is quiet acceptable! Light a bonfire in the living room to keep warm.
After the two weeks, call an agent and book an auction. It works believe me. Suckers will pay more for the house than buying a similar house in good condition at a private sale. I wish I was joking, but its true. I've seen half a dozen instances in the last month alone.
My question is:- are auctions a waste of time for a serious investor?

[asy]

What if the squatters REALLY REALLY like the house??

How do you get them out??

But! I can see what you are saying, Property sales is more a matter of psychology than anything else...

I, too, have seen people forgo a good house, in a good area in fantastic condition, only to buy a similar house in a similar area in seriously crappy condition, on the theory that such a crappy house MUST be a bargain.

In fact I remember one particular purchaser who liked three houses I had to offer, one was discounted due to proximity to children's school (not walking distance). The other two were very similar in attributes, except that house B had to be totally renovated before it could be inhabited.

The prices were identical. House A was reasonably priced (by all accounts, and the vendors had put a low price on it for a quick sale) and House B was put on the market some $15k more than we (and the vendors) had anticipated as a fair price, at the vendor's request, to compare with other sales in the area, notwithstanding the state of the house.

I knew this particular purchaser worked long hours and required a quick settlement as they had already sold the house they were in. The purchaser chose house B.

He started the negotiation by offerring 10k below the asking price. They ended up paying 5k above the asking price. (The vendors changed their mind as to what they would accept half way through the negotiations! !frustrating!).

House A sold at the asking price 2 days later. :)
(And yes, I did advise the vendors about the other sale in case they wanted to adjust their price... They didn't)

I asked him, after it was all over, why he had chosen house B.

He said that we must have put it on the market at a low price because of the renovations required, therefore he was happy to pay more than we were asking because he 'Knew' he was getting a bargain.

What I am trying to say is that perception is everything. This purchaser had seen both houses. He was not co-erced in any way. Yet he chose the house which required a LOT of work even though he didn't have the time to do the work, and would in all likelyhood have to pay to have the work done.

It is an odd industry... But I love it.

asy :D

[paulzag]

Originally posted by darren b
My question is:- are auctions a waste of time for a serious investor?

Yes auctions are a total waste of time...

...except when they're not ;)

At mortgagee auction I bought a strata unit in 1999 for $54K value $90K -- it reeked of urine. After renovation it valued at $110K.

1999 too long ago? I bought three 1br units in the same building a couple of weeks ago. If anybody has the SMH auction results for 26/10 or 2/11 let me know what the cheapest Sydney unit sale was that week. I figure I've done well.

And in 2001 I bought a house after the auction went bad.

Now in the last 3 years I attended lots of auctions that were a total waste of time. Lots of scary and disheartening hours at packed auctions. Often the under-bidder. even more often didn't bid.

To put it in perspective I figure the 1999 and 2001 deals made me about $60K. Not bad for a waste of time. But who knows what results would have been had I bought more?

Generally I can't stand buying at auction. But I find myself doing it.

Regards

Paul Zag
Dreamspinner

[Michael Yardney]

Are auctions a waste of time?

No they're not, but they are a real pain becuase you have to attend a lot until you find that bargain.
We found 2 such bargains last month.
1. One was in the prestigious inner suburb of Kew. We bought a run down house as a development site. There were 2 auctions in the street on the day 30 minutes apart. Both properties very similar and same size land. First one sold for $512,000 We paid $455,000 for our client's block, more than 10% below the price of the adjoining block and considerably less than was paid by the purchaser of the property 3 doors up 2 weeks earlier.
2. In Brighton we bought a house on a large block of land - 995 sq mt at auction 2 weeks ago to build our new house. The sale price was about 10% below the going rate for land in the area on a $ per sq mt basis.

I'm not quoting these examples to impress anyone, but to impress upon you that anyone can do this. The propery bargains are out there for anyone to pick up....but you must do your homework, know property prices in your chosen area well so that you recognise a bargain when you see one.
Sure we're doing it professionally and we're in the market the whole time for ourselves and for our clients, but all you need to do is to get to know one or 2 geographic areas well and you'll soon find bargains too....even amongst the auctions.