If bidding for a PPOR townhouse at auction, would you ignore the price guide?

If you’re looking for a townhouse and something came up in Melbourne in an area that’s popular, would you ignore the potentially BS price guide?
Eg, if the guide said $820-$910k as an auction guide, do you assume they mean 1million and over? I’m just sick of the BS price ranges.

Interested in your thoughts.

 

Yes, always ignore the price guide. Do your own diligence and try to get a feel for the popularity of the property.

Remember also to adjust for comparables that are older than three months in this market.

Last tip: don't make an auction a "guessing game", make it a "buying game". Don't come up with some artificial limit based on what you think it's worth - what it's worth is up to the market, not you. Go in with your finance limit, which removes the temptation to guess the price - which may be interesting but won't get you anywhere productive.

 

nothing is selling within the price guide anyway. So what option do we have? Just ignore and develop your price point based on past sale and your requirements.

 

I wouldn't ignore it... I would use it as an appropriate figure to add 15% onto.

 

Do you want to buy a PPOR for cheap?
Or do you want to buy a property you will cherish forever.

A year ago when COVID hit I bought a PPOR - I almost thought it was overpriced but 12 months later I am sitting pretty...

It was not close to my finance limit but family & friends continually told me how the market would crash and how the suburb was dodgy.

Plenty of people will come out with negatives - but in the long run... there are mostly only positives. Look at those and slowly watch your perspective change.

 

I’m looking to buy something that I see value in.
If something is priced between $800-900 then I should expect to be able to make an offer between $900-910 and think I stand a chance.

 

As other posters have said, there’s what ‘should’ happen..vs market realities. I have always secured my financing at 20% over guide (which coincidentally, is usually still within range of comparable recent sales) and bid confidently in the knowledge I (a) stand a decent chance at buying, (b) am likely to get support from the bank’s valuer, and (c) am buying a long-term asset, so don’t care overly where the property cycle is sitting at that exact point.

 

This.

Part of your due diligence may be to ask the agent how they have come up with the price guide. Eg, what comparable sales have they used? They may have used an off market sale you're not aware of.

Note that competing buyers may be prepared to pay more than what comparable sales may suggest.

 

Guides are mostly nonsense. I determine the price I'm willing to pay based on

1. Comparables
2. Current value
3. Add value potential.

That's why buying whether negotiating with the agent or at auctions never phases me. It's mostly a planned out mechanical process for me. Never emotional.

 

Yeah definitely ignore the price guide. often selling agents use a low figure to entice a crowd. I always look at comparable. For example, looking at 'sold tab' on REA is better than 'for sale'. Consider a 'good price'(that would be 'fair value'), and a 'walk away/stretch price'. This way you're relying on your own research, and not what the selling agent is telling you.

 

with respect, if you need to depend on agent price guide, you havent done enough due deligence. thus you need to do more home work.

 

Not really, in this sort of market common sense and logic goes out the window

Two almost identical properties one might go for 50k more one week apart
Or you might get more people blindly throwing offers at them

 

The only price guide in the current market is the last bid.

 

If you are buying in Melbourne in good suburbs, the Price guide should be ignored.

For example, if you are buying in Bentleigh east or Mc Kinnon, then add 20% at least to the price guide.

If you are buying on Lara Lara or Werribee, go less the price guide.