Highlights from this week:

Why buyers are terrified about auction
What can be done to make property more affordable?
It looks easy to make money from property developing - but is it really?
How to find the best deal
Making a good living from property in both the long and short term
Why ‘hot spots’ are not worth chasing

Transcripts:
Why buyers are terrified about auction – Cate Bakos
Kevin:  An interesting survey released this week actually from REBAA, which stands for Real Estate Buyers Agents Association of Australia. Buyer’s agents all around Australia are members of that organization and they monitor and help buyer’s agents work better with their clients.

An interesting part about the survey was it said that 60% of respondents cited overpaying as their number one hurdle facing them when they bid at an auction. I’m not surprised by that. In fact, I would have thought it might have been a little bit higher, but that would come largely from people who are actively bidding at an auction.

Cate Bakos is a buyer’s agent. She works in the Melbourne market and has her own company called Cate Bakos Buyer’s Agency. She joins me to talk about this.

Good morning, Cate. Thank you for your time.

Cate:  Thanks for having me, Kevin. Nice to be back.

Kevin:  I’m talking to you because Melbourne is the home of auction in Australia. That’s the place almost where it was born and where it continues to flourish, and that’s the most popular way for people to buy and sell property.

That 60% figure: what should people be doing, if that’s their biggest concern, to make sure they don’t overpay, Cate?

Cate:  It’s a great question. People often wait until they’re in the heat of the moment and they have a guy yelling at them with a gavel in his hand and a hundred onlookers standing at them, and that’s when they make their critical decisions.

Facing an auction can be quite a nerve-wracking thing for a lot of people, but when you’re there and you have a critical couple of seconds to make a decision, that’s when things can go pear-shaped.

Obviously, people who have been in the market and looking for property have probably attended quite a few auctions and they’ve seen those results where two emotional buyers fight it out. And it’s the auctioneer who’s in control of that situation, not those buyers. They’re the occasions where you see a really strong, crazy result that gets talked about by the neighbors for a long time.

People are terrified of doing that. You do want to buy, and under competitive competitions, you need to be strong, but nobody wants to set the land speed record for a house sale under pressure like that, so it’s a very, very significant fear for plenty of people.

And it’s not just relating to paying too much and doing so in front of a sea of people, it also is all about how they pay for their property if they’ve gone over their designated budget, and also being concerned about what the bank might say, because it is unusual, but there are occurrences where lenders will decide that the buyers have paid too much and the valuation can come in short. So, it’s a serious issue and there are ways to try and mitigate that happening to you.

Kevin:  Overpaying at auction is, as you say, a very real situation – so much so that agents who when they’re selling the auction concept to a seller will say, “Look, if there’s any chance of us getting a premium price, we should take the price offer then take it to auction,” because that competitive bidding brings out that premium price.

Have you got a rough feeling as to how many properties you think would actually achieve a premium because they went to auction, Cate?

Cate:  Absolutely. In the seller’s market where we have auction clearance rates around 80% in Melbourne at the moment, most properties that are mainstream and don’t have issues that are putting off mainstream buyers are going above and beyond where expecta