The new channel 7 program called Under the Hammer provides a couple of great examples as to why buyers need to take the time to better understand the real estate market before parting with several hundred thousand dollars.

This week’s episode highlighted the nerves of buyers attending auctions as well as those who are prepared to bid against themselves during the auction and in the post auction environment – even to the tune of $60,000. I nearly fell off my chair when I watched a buyer bid 60k against himself which was almost 10% of the final purchase price.

The scary thing is with over a thousand auctions a week nationally literally hundreds of people every week spend tens of thousands of dollars more than they need to in order to buy a property. Add to that the extra stamp duty and interest they will pay and you’re talking about a serious amount of money...

Yes there are some negatives to showing your cards early in a negotiation that you need to consider. Firstly you will be breaking the golden rule of being the first to name a price and secondly you run the risk of your pre-auction offer (if rejected as they often are) becoming the benchmark of the vendors expectations e.g. "the reserve"...

Following is a copy of my letter to the editor at the Sun-Herald:

I’m writing with reference to the article titled “Pest plan to put bite on vendors” which appeared on August 16. In it, NSW MP Matt Brown called for the NSW Government to make it mandatory for auction vendors to provide pest and building reports to prospective buyers. I believe this suggestion has some merit and should be explored further....

Media reports this week say that the ACCC will be bringing in very heavy fines – not only for the selling agents but also for the vendors who engage in underquoting.

The Office of Fair Trading (OFT) already has fines and guidelines in place to deter selling agents from underquoting which has certainly reduced the practice since 2003 but failed to stamp it out. Now it looks like the ACCC is prepared to take it one step further and include home sellers as well in a bid (excuse the pun) to stamp out the unethical practice...

The article in the SMH on May 24 called ‘Emotion runs high as an era ends’ shows just how easy it is for bidders to get carried away with the auction day hype. The article says the successful buyers bid $35,000 dollars above their pre-auction maximum bid price to purchase the property as a relative spurred them on to keep bidding...

It seems as though everyone wants to know where the next property ‘hot spot’ is going to be where prices are expected to jump giving buyers a financial windfall in the near future. Don't get caught up in the hot spot myth. There is no substitute for thorough research before you buy.

If you want to buy real estate well, rule number one is to remember who is working for whom. The selling agent will appear to have your best interests at heart however the truth is what they are really interested in is selling you a property they have for sale and selling yours if you have one to sell.

So often I have people telling me that they want to buy a property but they don’t want to bother with properties that are up for auction.