Pre-auction sales hit record high, with nearly a quarter sold ahead of auction day
A record number of Melbourne homes are selling prior to auction as buyers race to knock out the competition before their dream home goes under the hammer.
According to Domain figures, nearly a quarter – 23.6 per cent – of properties sold before auction across the city in February, a substantially higher proportion than Melbourne’s 10-year average of 14 per cent.
Domain senior research analyst Nicola Powell said that while buyers were looking to lock down a sale to avoid facing serious competition at an auction, vendors were likely to still be jittery about future COVID-19-related lockdowns and keen to take a strong offer earlier than they might have otherwise.
Melbourne’s property market has faced three lockdowns over the past 12 months, the most recent in February when auctions and inspections could be held only online.
“What we have seen is that things can change in Melbourne in a matter of moments,” Dr Powell said.
First National Barlow McEwan Tribe Altona managing director Scott Murdoch said about 80 per cent of properties listed in the suburbs he works in the south-west of Melbourne were currently receiving strong offers prior to auction.
A large number of sales were having “prior-to-auction auctions”, that is, situations where multiple buyers were trying to outbid each other before the official sale under the hammer, he said.
“I think people will look at the statement of information and see the price expectations and make an offer at the higher end of those expectations,” Mr McEwan said.
A townhouse at 1/16 Cain Street, Altona, recently sold before auction for that very reason, with the buyer making an offer just above the higher end of the price range.
Vendors were selling, not only because of the strong offers but also because they fear what will happen to the market once the federal government’s JobKeeper and JobSeeker payments finish at the end of March, Mr McEwan said.
They were also nervous about more homes coming onto the market, he said.
“They don’t want to wait for six weeks to see what the market does,” Mr McEwan said.
In the affluent coastal suburb of Brighton, buyers are making pre-auction offers as a tactic to avoid the disappointment of missing out on the sale.
Nick Johnstone Real Estate selling agent Matt Cleverdon said buyers were becoming emotionally attached to properties they wanted to buy, leaving them devastated if they missed out at auction.
“We’re seeing it right across the price ranges where a wounded underbidder has missed out and becomes a little more aggressive about buying the next time around,” Mr Cleverdon said.
A recent sale before auction at 13/149 Male Street, Brighton, saw an investor make an early offer on the three-bedroom townhouse to take advantage of having a tenant already in the apartment.
In Melbourne’s outer west, first-home buyers are also getting in before a sale under the hammer, Ray White St Albans selling agent Lam Ngyuen said.
One of the main reasons was because they were being advised to make offers subject to finance, to give them some breathing space to borrow the money they need.
Making offers at auction means the sale is unconditional.
“First-home buyers are hesitant to bid at auction,” Mr Ngyuen said. “Even though we really do push for auction, homes are selling before.”
Vendors who accept these pre-auction offers subject to finance are taking a risk, but it’s a risk they’re willing to take for an above asking price range sale, Mr Ngyuen said.
Ref: MELISSA HEAGNEY | SENIOR JOURNALIST (on 10 Mar 2021). Pre-auction sales hit record high, with nearly a quarter sold ahead of auction day. Retrieved from https://www.domain.com.au/news/prior-to-auction-sales-at-record-levels-in-melbourne-as-buyers-make-big-offers-1033574/.
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