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“FOOP” — or the “fear of overpaying” — has now landed in Sydney’s auction markets, according to a new report.
The latest Apollo Auctions auction report has identified would-be buyers who hold the phobia as the “new breed of bidders” out in force across the city — although many of them are falling flat.
Justin Nickerson, the director of Apollo Auctions, has acknowledged that “FOOP” bidders have been “reasonably common” over the month of July.
Even so, “they weren’t having much luck because of their unrealistic assessment of the current market”, he shared.
“Many buyers in most markets understand that their current lending limit won’t last forever, so they are keen to transact and are bidding at fair and reasonable price points,” Mr Nickerson said.
Those buyers who are displaying “FOOP” are tending to try lowball offers that aren’t in line with current market conditions, without success, but it’s still having a slight impact on the market, especially when coupled with vendors “who still think it’s last year”.
“Our auctioneers are reporting that vendors are slowly catching up with the changing market conditions, however, a fair cohort of sellers are still hoping to achieve a result that may have been possible last year but is not likely now.
"The main vendor variant is still sitting above market feedback, dwelling in the emotion of a friend, neighbour, or enemy that sold a lesser home for more last year," he conceded.
"This vendor naturally 'doesn't need to sell'."
“This has resulted in a number of properties being passed in, when a sold sticker could have been applied to the sign board if the vendor had been a bit more realistic about the current market,” Mr Nickerson stated.
Even with the lending environment changing rapidly — illustrated by the Reserve Bank of Australia’s (RBA) third consecutive double rate hike — the director believes there are still plenty of buyers out there who are keen to purchase by auction, and it’s especially prevalent in Brisbane.
“Although buyer numbers lack the depth of 2021, this smaller group have adopted an assertive mindset with many transactions occurring as a result of direct bidder-seller negotiations during the auction,” he said.
From Mr Nickerson's perspective, even in a changing marketplace, "the auction process is still the safest, fastest, and most effective means of traversing this market with a process to calm all sides with transparency."
"It also incoluates against regret, provides social proof and completion, and offers a timeline for the buyers to buy and sellers to let go bu."
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