Why bid at an auction by telephone?

There are many reasons why you may prefer to bid at an auction by phone, rather than attending in person. These may include:

Geography: You may want to bid on a property that is rural or located interstate. Or you may want to bid at several auctions being held on the same day and can’t attend them all in person. If that’s the case, you may be better off organising someone to be there for you and work with them over the phone.

Nerves or inexperience with bidding: A lot of people feel nervous about bidding for themselves – it’s a normal reaction. It’s also normal to feel intimidated by other bidders, particularly if you’ve come face-to-face with some competitive types! Bidding over the phone can help you remain objective by keeping the excitement of the situation at arm’s length.

Avoid overspending: It’s easy to get carried away by the excitement at an auction and bid above your budget. If it’s a property you really want, it’s hard to stop adding another thousand when the object of your desires is only a few meters away – that’s why they often hold auctions at the property’s front door! It’s easier to stay in control if you place your bids remotely, because you can give your bidder an absolute spending limit.

What are the pros and cons?

Auctions can be loud and stressful, and bidding by phone can take a lot of the anxiety out of the experience. When the auctioneer starts spruiking and the crowd gathers, you won’t be distracted as you try to sort the sticky-beaks from the serious bidders. You’re more likely to remain calm on the other end of the phone, and go about things in a business-like fashion.

By the same token, not being able to see the other bidders can be a disadvantage, as you won’t be able to read their body language and gauge the competition. That’s where communication with your stand-in is essential! You may even like to use Skype, FaceTime or a similar app, so that you can “see” the competition during the auction.

How do you go about organising it?

The first step is to check that phone bids are accepted by the auctioneer, agent and vendor. If they are, you’ll most likely have to register and fill out a form beforehand nominating a stand-in to bid on your behalf. Then it’s simply a matter of nominating someone to bid for you. You may also like to organise your solicitor to be available in the event that yours is the winning bid.

What happens if the property is passed in and you want to negotiate?

If the bids do not meet the seller’s reserve, the property may be passed in or withdrawn from auction. If you are the highest bidder, you’ll have first dibs on negotiating with the seller. Your agent or contact on the other end can do this for you whilst you’re still on the phone, or can pass over the phone to the auctioneer or seller so you can speak with them directly.

How do you pay the deposit and sign on the dotted line if you succeed? When you fill out the paperwork to nominate your stand-in, you can specify how you’ll pay the deposit on the day if successful (usually 10 per cent of the purchase price). You can authorise the agent or auctioneer to complete a signed blank check, provide a signed bank cheque for 10 per cent of your maximum bid, authorise the stand-in to pay the deposit on your behalf, or transfer the money into the agent’s trust account.

In terms of the sale contract, you can nominate the authorised bidder or auctioneer to sign on your behalf. Alternatively, you may like to be present and go along to sign once the phone bidding is over, or tee up your solicitor to represent you beforehand.

Bidding at auction by phone could be a less stressful way of securing your dream home or investment property. It can also be more convenient if you’re not close by. Remember, organising pre-approval on a loan before the auction is vital, so please get in touch with your mortgage broker at Element Finance Fremantle and Joondalup. With any luck, you’ll hear those magical words on the big day – “sold to the bidder on the phone!”

Interest Rate News

The Reserve Bank of Australia (RBA) decided to keep the cash rate on hold at 1.5% again this month. It’s the 15th consecutive month with no rate change – the RBA last moved rates in August 2016, cutting the cash rate by 0.25 basis points. According to market analysts, it’s unlikely the RBA will make any move to adjust the cash rate at its final meeting for 2017 next month.

Property Market News

Home value increases slowed across the combined capital cities in October. Melbourne proved to be more resilient than Sydney, with dwelling values up 0.5% over the month, compared to Sydney, where they dropped -0.5%. Melbourne also saw stronger growth over the quarter, up 1.9% while Sydney’s prices fell -0.6%.

Dwelling values grew by 0.9% in Hobart in the month of October, and the city also saw the highest change in dwelling value growth over the quarter (up 3.3%). In Brisbane, values increased by 0.2% during the month of October, and 0.6% during the quarter. In Adelaide and Perth, there was no monthly change in dwelling values. Adelaide saw prices rise 0.1% over the quarter, while Perth’s prices fell -0.7% in the three months prior to October 31. Canberra saw prices fall -0.1% last month, but overall they increased 1.1 percent during the quarter.

Record auction numbers in October

Auction volumes across the combined capital cities reached record highs at the end of last month, according to CoreLogic. In the last week of October, the combined capital cities held 3,690 auctions, returning a preliminary auction clearance rate of 67.8%. Melbourne saw volumes reach their highest level on record, with 1,983 properties going under the hammer and 71.7% being snapped up!

The ACT also had a high clearance rate of 77% for 128 scheduled auctions. In South Australia, there were 163 scheduled auctions and 68% sold. New South Wales held 1,395 scheduled auctions, and achieved a clearance rate of 64%. In Tasmania, there were only six auctions, but 60% of properties sold. Half of the 60 properties that went to auction in Western Australia sold, while in the Northern Territory there were 10 scheduled auctions (44% clearance rate). Queensland had the lowest clearance rate for the week ending October 29 (43% for 361 scheduled auctions).

Now the Christmas shopping season has arrived, we know you’ll be busy buying gifts for your loved ones – so it might help to read our article this month about resisting the urge to splurge! Now is also a fantastic time to talk with us about your property purchasing plans, or to see us about a home loan health check, so please give us a call and we’ll be happy to help.

Housing market conditions cooled slightly last month, while auction activity remained strong in Melbourne and Sydney, but quieter elsewhere. The good news is that there may be some fantastic bargains around the corner for buyers if dwelling values continue to drop!

Interest Rate News

This month, the Reserve Bank of Australia decided to keep the official cash rate on hold at 1.5 per cent. Interest rates have been edging higher in recent months, particularly for investors, but there are still some very competitive deals available! The introduction of the new bank levy from July 1 could cause interest rates to rise further, so speak to us and we’ll explain your interest rate options and whether it might be a good idea to lock in a fixed rate.

Federal Budget News

Last month’s Federal Budget introduced new measures to make it easier for first-home buyers to save a deposit, by allowing them to salary-sacrifice up to $30,000 into super and benefit from a reduced tax rate of 15 per cent. If you are a first-home buyer, talk to us about other changes that could affect you, such as NSW’s recent changes to stamp duty.

The government is tightening some of the rules relating to negative gearing claims. From July 1, all travel deductions to inspect, maintain or collect rent for an investment property will be disallowed. Plant and equipment depreciation deductions will be limited to outlays actually incurred by investors. The government introduced measures to increase housing supply, such as releasing Commonwealth land for housing development. New financial incentives were also announced to encourage over 65s to downsize, with the government making it easier for them to contribute up to $300,000 from the sale of their family home into super. If you’d like to know more about property-related announcements in the Federal Budget, please give us a call!

Property Market News

Dwelling values fell by -1.1% across the combined capital cities in May. The biggest drops were in Hobart (-4.8%) and Darwin (-3.5%), while Melbourne and Sydney also saw prices fall by -1.7% and -1.3% respectively. Perth’s housing values fell by -0.4% and Canberra’s dropped -0.1%. In contrast, Brisbane’s prices increased by 0.3%, while Adelaide’s rose by 0.8%. While there has been speculation we could be starting to see a property market correction, it’s important to note that May is seasonally weaker than other months – values have fallen during May in four of the past five years.

Auction activity remains strong in Sydney and Melbourne, but softer elsewhere. For the week ending June 4, there were 1145 scheduled auctions in New South Wales (76% clearance rate), while Victoria cleared 75% of the stock at the 1269 auctions. The ACT had 78 scheduled auctions and cleared 72% of the stock, while in South Australia there were 114 scheduled auctions (61% clearance rate). Things were quieter in Western Australia (34 scheduled auctions with a clearance rate of 47%), Queensland (43% clearance rate on 306 scheduled auctions) and the Northern Territory (33% clearance rate on 8 auctions). In Tassie, none of the 4 scheduled auctions resulted in a sale.

With so many changes happening in the property market, it’s important to seek expert advice about your home loan. We are on top of all the latest developments and can find the right home loan to suit your current and future financial needs. Please call us today!