The unexpected buyers returning to bid at auction in Melbourne and Sydney

The early signs of recovery in the Sydney and Melbourne property markets have started to appear with potential buyers returning to auctions and bidding on properties they have only seen on auction day.

Experts and agents say these unexpected buyers — who do not inspect properties, but instead turn up on auction day to buy — were common at the height of the market in 2015 and 2016. 

These buyers had a fear of missing out on a property and were better able to borrow money for a mortgage. But as the market softened, they disappeared.

“It did stop at one stage,” said Geraint Gardner, director and auctioneer with OBrien Real Estate Wantirna in Melbourne’s east.

But since the election, things have started to change.  While there may not be the same number of these buyers, there are still some are throwing caution to the wind and bidding after seeing a property the day of the auction.

Gardner said he had noticed such bidders since the May federal election.

“Buyers are starting to come back into the market, see the property at the auction and bid on the day,” he said. “I think it’s starting to come back in with the certainty of finances.” 

Last weekend, he sold a three-bedroom home in Jukes Road, Boronia, to a buyer who had inspected the property just before the auction.

“We had another one in Dandenong – they didn’t bid but they had the intention to,” Gardner said.

He said savvy investors were more likely to throw caution to the wind and bid without doing multiple inspections.

“They don’t have too much of an emotional attachment,” he said.

Brad Teal Real Estate director Brad Teal said while he had not seen buyers bid without inspecting a property first, particularly more expensive properties, he had seen some look at a property for the first time at auction, and then buying it privately after it passed in.

“They might have a look on Saturday, see it again Sunday or Monday and then make an offer and buy it,” Teal said. 

Thomas McGlynn, national sales director and auctioneer with The Agency, had seen a lot of what he called “dark horse” buyers turn up at auctions in recent weeks in Sydney.

“A lot of people you’re not expecting are interested arrive and unexpectedly bid,” McGlynn said. “It’s very similar to what you would see at the height of the market. It’s almost like going back in time slightly when it occurs.”

He said a shortage of new homes for sale could be one reason for the return of these types of buyers returning to the market.

Buyers’ advocate Cate Bakos said she had also observed the return, but warned it was a risky way to buy.

“There’s a couple of common causes of these types of buyers. Anyone who has been on a mission to buy for a time related matter. Sons or daughters will fly in and buy something for their ageing parents,” Ms Bakos said.

“They just bring their chequebook and it’s something they have to do to check it off the list.”

Others are investors coming back to the market as their borrowing capacity improves with the banks now loosening lending criteria.

She said buying without doing the due diligence on a property, including building and pest inspections before bidding, was risky.

Those who bid without understanding the lending criteria from banks or the Foreign Investment Review Board can also find themselves in financial troubles. 

“I think it’s a terrible idea and I would never endorse doing it,” she said.