The need to prioritise the ‘micro’ over ‘macro’ for auction success
In today’s ever competitive auction landscape, taking the extra step to filter through the noise and analyse an auction on the micro level can be key for buyers securing a property.
In an episode of The Property Nerds, auctioneer Andy Reid has discussed the habits and mindset that he regards as integral for buyers looking to achieve success at auctions.
In illustrating what to avoid, Reid highlighted a trend of increased buyer caution in 2024, where buyers weary of high interest rates were “just hovering above the action without really committing”.
In describing the height of this hesitancy, Reid detailed how a southern Victoria auction with five registered bidders ended up passing in from a complete lack of bids, only for three of the bidders to then immediately make offers post auction.
“They ended up costing themselves a hell of a lot more money, as opposed to winning their right to negotiate, or at least throwing their name into the hat and giving themselves a shot of controlling their own destiny.”
“If you don’t bid, you’re giving up a chance to take control of your own destiny a little bit, to be honest.”
Reid was emphatic that this macro trend stemmed from buyers relying too much on statistics to make auction decisions.
In particular, Reid singled out auction clearance rates which he described as a “fallacy” that do not accurately depict how the industry operates.
“You look at the clearance rate for Sydney and it will say 70 per cent based on 800 reported sales, but then it will say a little thing at the bottom that says 400 haven’t been reported yet.
“Basically, this is 800 of the 1,200 auctions that were scheduled to go ahead. That’s a third of your data not even accounted for.”
As opposed to relying purely on data, Reid advocates instead for prospective buyers to get involved with each auction on a “micro” basis.
“They need to get more micro in their understanding of what’s going on per situation, because more often than not, you see buyers that think the clearance rates are really down and that they can play hardball, which then ends up costing themselves more after the event anyway.”
Although two auctions can appear indistinguishable from a statistical point of view, he said a buyer could gain a significant advantage at an auction by paying attention to the finer details, because “the human dynamics of each individual situation are very different”.
Illustrating this point, Reid discussed how a buyer attuned to influences such as an owner desperately motivated to move as soon as possible could give buyers a lot more leeway to turn the auction in their favour regardless of any adverse market conditions.
“Those human dynamics play a huge part in the outcome of each option as well. So buyers need to quit looking at this macro in looking at the news and seeing the news as the path to glory for them.”
Ultimately, Reid believes that for buyers to manifest agency over the course of an auction, they have to develop the ability to objectively interpret market forecasts that will otherwise dissuade lesser buyers, and instead operate on the micro layer to achieve success.
Listen to the full conversation with Andy Reid and Leigh Paliwal here.