by Carly Susic, Melbourne Buyers’ Advocate
One of the most daunting things about buying a property is competing at the auction. So what happens if you are the only bidder at auction? It’s a great situation to be in. Without competition, you are free to negotiate in a strong position.
How likely is it that I am the only bidder at auction?
It’s more common in a weaker market. When there are more vendors than buyers, buyers have the luxury of choosing their preferred property and being picky about what they purchase. This means less competition and a greater chance you will be the only person raising your hand on auction day.
However, even in slow markets, quality homes will still often have competition (more on this later).
How do I know if I am the only bidder at auction?
You never can know for certain until the auction. I’ve been at auctions where a surprise bidder comes out of nowhere and surprises the competition. I’ve also seen auctions where three or more bidders were expected and most drop out, leaving only one bidder ready and willing to purchase. So never be overconfident about your chances.
Look for signs at the open homes
If you don’t see many other buyers inspecting the property during the open home, this is a strong sign of lack of interest. Perhaps there is seemingly no one coming back again on repeat visits. Interested buyers tend to visit often, perhaps bringing friends or family back to see the property too. They also tend to have deep, thorough discussions with the agent. If that’s not happening, it is possible that you may be the only interested buyer. It’s also possible that there are other interested buyers, but not at the price point you’re willing to pay. (But only the auction will determine that.)
Advocates have an advantage here
Often because we know the agents well, they may simply tell us how many interested buyers they have. However they are not likely to do this for a single buyer. This gives our clients an advantage because we don’t need to speculate about the level of interest—we know directly from the agent. So if you are feeling uncertain, you may consider bringing in a buyers agent with good connections to your real estate agent. Alongside the many other ways we support our clients, we can possibly (but not always) leverage our connections to get you more market insights.
If the agent talks up an offer beforehand
The last thing agents want is a quiet auction with only one buyer. So they may try to lock down the only interested buyer before the auction. They do this by coming to you and indicating that the vendor is open to offers prior to the auction. This means they get a firm sale without struggling to sell at the auction. So if this happens to you, you can consider it likely that you’re the only bidder at auction.
Look for signs on auction day
Bidding at auctions almost every weekend of the year, I’m well versed in the telltale signs of interested buyers (and lack thereof). In the old days, we’d simply look for someone with a chequebook in their jeans pocket—but things have changed. Nowadays, signs of interested buyers include:
- buyers who seem nervous, by pacing, fidgeting or even sweating
- buyers with agents by their side, encouraging them to prepare to bid
- the presence of other buyers agents working for their clients
- people with a notepad or the paperwork like the Section 32
- people clearly with family and friends with them, perhaps with a parent bidding on their behalf
- people filming or streaming the auction or taking photos
- people on the phone with someone on the other line while the auction is running
A big crowd does not always mean many buyers
Often the crowd is not always a direct indication of buyer interest. For example, there’s likely to be plenty of neighbours about. Neighbours are just coming to take a look and see what the home sells for. They tend to know the others in the crowd and you’ll see them chatting happily. They’ll be far more relaxed, and perhaps they’ll have their dog on a lead with them, so you can confidently discount them as potential buyers. Also, you may see people just researching the market who are not ready to buy. Often there will also be friends and family of the vendor as their agent may have suggested they bring along the rent-a-crowd
When the bidding begins
Once the bidding starts, you’ll get a good indication of the genuine interest. Most auctions are slow to start, but when you’re the only bidder, it will be radio silence. Typically the auctioneer will place a vendor bid to kick things along. If the crowd is still failing to act, you can be confident you’re the only interested bidder.
You don’t want to get into a bidding war against vendor bids, so proceed with caution here.
If you are the only bidder the property is likely to be passed in to you. This gives you the right of private negotiation with the agent and vendor after the auction. You are in a strong position. The market has spoken and you are the only one interested at the current price.
Even if you really want the property, prepare to negotiate at this point. If you love it and there are no other buyers, you should be able to secure a reasonable price. Do not agree to whatever the vendor asks. The reserve that the agent tells you when you get inside is likely to be a higher figure than the real reserve. They will have added on some room for negotiation—be prepared to walk away if you feel they are asking a price that is above the property’s true value. Otherwise you risk overpaying.
For more on negotiating when the property is passed in to you, check out this blog article.
Of course, if you’re happy and determined to purchase, go ahead. However, we do urge you to think about one final thing if you are the only bidder at auction.
How you buy it is often how you’ll sell it
If you are the only buyer interested in the property, it is likely that, should you wish to sell, the same scenario will apply. So you must ask yourself the question—am I buying quality here?
Why are there no other buyers?
Is there something the other buyers know about the property or the area that you don’t? Think twice about making a major financial decision. Just because you are the only bidder at auction, does not mean you should purchase the property. There is no such thing as a bargain in real estate.
Evaluate the property and its future potential before you purchase
Perhaps the home is a fixer-upper and you’re willing to do the work. You can put in a new kitchen, upgrade the garden and add an extension. But what about the factors that are unchangeable? Buyers are put off by them now, and future buyers will agree.
This could be factors like:
- the area and location—like near a freeway, train line, industrial zone or busy main road
- future developments (check with your council)
- the orientation, especially south-facing properties
- a poor layout that can only be fixed with a knockdown rebuild
- heritage listing that prevents major renovations
- powerlines nearby
- zoning for commercial use or potential zoning changes
- restrictive stratum titles
The best rule to follow about buying fixer-upper homes
Ask yourself—is everything that needs to change within my power? You can upgrade the decor and renovate, but you can’t change the area, the zoning, the nearby amenities (or lack of them).
While you might be excited to get the property for a cheaper price, you may also struggle to sell down the track. The next buyer might be as bargain hungry as you are now, forcing you to sell below your desired price point.
To recap: when you’re the only bidder at auction
- You can never know the true level of buyer interest until the auction begins
- Buyers may drop out or appear from nowhere prior to the auction, so be prepared for all eventualities
- A low turnout at open homes can be a sign of weak interest
- Being the only bidder at auction is more common during weaker markets
- At the auction, look for signs of interested buyers
- Avoid unnecessary bidding against vendor bids
- If you are the only bidder, the property will be passed in to you
- Most importantly, consider why there are no other buyers
- Evaluate the property rationally—is this the best purchase for you?
- Don’t buy just because it’s a so-called bargain
- When you come to sell the property, you may struggle to find interested buyers
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