In the dying days of the 2016 property year, I attended an auction for a client at 10AM on a Sunday morning, in the industrial-to-residential suburb of West Melbourne. I was surprised that 40 people could rouse themselves to turn up for a 1BR apartment auction on that day and time. I thought they would be either sleeping in, or at the café eating smashed avo !
Advertised at $390K but appraised by me as worth mid-400s’, I was there just in case we could buy it a little lower to fit the client’s budget, of maybe it would be passed in.
During the Due Diligence process, I had noticed and verified a mistake in the Sec32. This is rare. The apartment had been wrongly allocated the higher CIV value of a larger apartment with similar number in the same factory conversion complex. If a buyer did not realise this, that may think that the Valuer-General believed the apartment to be worth $535,000, which it clearly was not.
The auctioneer spruiked and after Vendor Bid at $400K, a young nervous bidder immediately yelled out $485,000! A $85,000 increment!
The crowd was stunned and bemused. Another buyers agent was asked, by name, to bid another $5K, but quickly declined. No one was going anywhere near this over-the-top bid and the young buyer was “successful”.
Whether he was misled by the Sec32 or not, this was case of brave but foolish bidding, and in my professional assessment, overpaying.
Bidding “like there is no tomorrow” may make you look like a winner in front of the crowd, but you will have given up thousands of dollars of future capital gain before you even start your ownership.