Here's how 5 auctions played out in the Inner West last week

I spent my Saturday, as every cool person does, inspecting properties and watching auctions across the Inner West, including Annandale, Ashfield, Camperdown, Erskineville, Glebe, Marrickville, Newtown and Summer Hill.

The day started off with slow results, with the first property failing to sell and the second one was sold post-auction with only 1 bidder. The next few auctions I watched however, were more exciting.

Auction 1
The first auction was a three-bedroom house that was taken to auction without attracting any bidders. The house needed work, was in a busy location and had no parking. It had character and potential, but there was nothing particularly special about it to attract emotional buyers on the day.

Auction 2
The second auction was for a renovated two-bedroom house that was quite small and had already been maximised in terms of its potential. The location was great, but the street was compromised. There was only one registered bidder, and it ultimately sold through post-auction negotiations.

Then onto the exciting auctions...

Auction 3
A three-bedroom, light-filled heritage house attracted three registered bidders, with two of them actively bidding. The property had been guided at $2.2 million and opened at the guide price. Bidding moved through $50,000 increments, then $10,000 increments, before settling into $5,000 bids. The bidding stalled and the highest bidder negotiated with the vendor before securing the property on the floor for a little over $2.4 million.

It's interesting how bidders get comfortable with the ping pong of same increments. It's common to see 10 or more quick bids exchanged back and forth in the same increment e.g. $5K or $1K bids.

They also tend to call out the increment rather than the price. For example, instead of saying "$2,350,000", they'll say "$10K". It feels safer to say "$15K" then to do the math and call out the total bid.

If buyers tried a different increment, such as $7,000 instead of $5,000, or said "$2,275,000" instead of "$10K more", they would have a better chance of unsettling their competition and encouraging them to back off.

Auction 4
The next auction I watched had the same ping pong effect, but next level.

It was a large house on a big block of land that had been renovated within the last decade or so. For the size of the land however, there were only three 'conventional' bedrooms, and the layout wasn't ideal.

There were four registered bidders and the property had initially been guided at $3 million before being reduced to $2.85 million. The auction opened with a vendor bid of $2.8 million before bidding quickly moved through $2.825 million and $2.83 million.

I always find it strange when nobody bids despite being registered. Why put yourself under extra tension and be so reluctant to make the first bid? In this case, three buyers started bidding after the vendor bid anyway, so it didn't make much sense to wait.

The increments moved through $10,000 and $5,000 rises until the third bidder entered the chat.

Bidder three placed a $1,000 increase, then the first bidder rounded it back to the nearest $5,000. For example, $2,925,000, then $2,926,000, then $2,930,000, and so on until it reached $3 million.

It happened at a super quick pace and made it seem like they were just racing to $3M with the same bids on repeat. If so, one of them could have come out swinging with a $50,000 bids, which would have rattled the other buyer to stop bidding.

After a long delay due to closed conversations with the vendor, the property was eventually called on the market and sold for a little over $3 million.

Auction 5
Next up was the auction of a double-fronted, freestanding house. It had four bedrooms and no parking. The location, relative to the suburb, was average, and the block wasn't a conventional shape.

The house drew solid interest with four active bidders fighting it out.

Bidding opened at $2.5 million and moved in $50,000 increments until it reached $2.9 million, with all four bidders participating.

The bidding then slowed and two bidders continued to bid it out with increments ranging from $50,000 and $25,000 down to $20,000 and eventually $5,000, before the property sold for more than $3.1 million.

This was the strongest result of the day and I think it came down to the fact that it was a double-fronted property. Even though the street and the block weren't ideal, the original section of the house had grandeur, light, potential and, with that double-front, it has scarcity.

Again, this goes to show that scarce houses are the ones that stand out. In the Inner West, scarcity usually means a combination of character, functionality, light, potential and location. It isn't necessarily an equal mix of these attributes, but there has to be enough emotional pull for buyers. It needs to create a feeling of comfort, lifestyle and future potential.

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