The Block auctions 2023 - 5 key lessons!

Bidding at auction requires nerves of steel at times, let alone when 2.4million eyeballs are watching you bid on national TV.

The Block auctions were aired on national TV Sunday 5th November 2023. The results were mixed – ranging from a whopping $5m for Steph and Gian’s house (house number 4), compared to Leah and Ash’s house which passed in at $2.9m (house number 5).

The reserves were thereabouts – ranging from $2.97m for house numbers 1, 2 and 3 - to $3.35m for house number 4 (the winning house).

So, the question begs, why is it that Steph and Gian’s house (house number 4) achieved a record $5m against a reserve of $3.35m, compared to having ‘no sale’ for Leah and Ash’s house (house number 2) with a reserve of $2.97m?

The houses are all comparable in terms of land size, what they had to offer, location and position. The differences were marginal hence the slight variation in the reserves.

There are five key lessons which I believe we can take-away from The Block auctions of 2023 which may help you with your next property purchase at auction.

5 key take-away lessons…

1. Depth in buyers is everything

If there is no depth in buyer numbers, the property will struggle to sell.

Knowing this will help you with your game plan at auction as you don’t want to jump in too soon, to later find out that your only competition was you against the vendor reserve!

As we witnessed on The Block auctions, Adrian Portelli and Danny Wallis were the main (motivated) buyers. Once Adrian bought house numbers 1, 4, and 5, the other remaining houses struggled with house number 3 selling just a tad over reserve and house number 2 passing in!

2. The buyer with the deepest pockets wins

No matter how skilful you believe you are at auctions, the person with the most money wins.

Adrian Portelli (self-proclaimed billionaire) paid way over the top for Steph and Gian’s house at $5m (house number 4). The reserve was $3.35m which I believe is about right and is where intrinsic value is. Paying $5m was crazy and motivated by other factors!

Adrian had an ulterior motive which is why he made a $1million counter bid that secured him the property.

Adrian runs a subscription-based rewards company where he gives away (large) prizes to his subscribers. His buying motivation at The Block auctions was purely a marketing initiative for him.

Bidding on national TV, watched by 2.4million people, created an excellent opportunity for him to expose his business (LMCT Plus) which will inevitably increase his subscriber numbers in a significant way. The journos have gone to town writing about Adrian Portelli, who he is, what his business entails, and so on.

Adrian has also since gone to town announcing that the three Block houses he bought will be prize money for LMCT Plus subscribers and will be given away!

For you it’s important that you set your absolute walk-away purchase price so that you don’t get caught up in the hype of an auction and you don’t let emotions take you down a path you’ll later regret.

3. Be prepared

At times we see other Buyer’s Advocates at auction bidding on behalf of their clients, and calling their buyer client during the auction to see if they're prepared to stretch some more!

When we bid at auction for clients, our golden rule it to be prepared. Super prepared!

We ascertain before the auction the client’s maximum budget, then we ask them to dig even deeper to give us their absolute walk-away price to the last single dollar! Being prepared IS everything when it comes to auctions!

By being prepared, we don’t give anything away to the other bidders or to the auctioneer. And we certainly don’t get caught up in the emotion on the day – which is what the auctioneer will cleverly try to get you to do.

If I was bidding against another professional and I see they kept having to call their buyer, it would be quite obvious that they’re at their maximum and spreading themselves very thin. This of course helps me with my bidding game plan to ensure I win on behalf of my client using strategies to fight off anyone on their last dollar.

4. The reserve is merely an opinion on value

The true value of something is the price point where buyer meets seller, and/or the other way around.

The vendor reserve is usually a guide, largely influenced by the selling agent.

Of course, the selling agent recommends a price range quoted throughout the listing campaign. This is usually based on comparable sales – being a common method used widely across the industry.

When it’s all said and done, the property will be bought based on a price point which the motivated buyer is prepared to pay up to in order to meet their individual needs and wants. This may vary widely to the quoting range, or to the reserve. Adrian Portelli paying $5m for house number 4, against the reserve of $3.35m, is a case in point!

If someone has the means to pay over the odds, they stretch themselves to the last dollar to give themselves the very best chance to win the property. This number is usually in excess of the vendor reserve as evident by the run-away prices we regularly see in the major capital cities like Melbourne, Sydney, and Brisbane.

5. The auctioneer will be tenacious to squeeze every dollar

Real estate agents work for vendors and will be tenacious – and at times ruthless – in their quest to secure them the highest price.

At auction, emotions run high and the pace is fast. Keen buyers are playing against sophisticated tactics to drive up the price.

As you may have seen on The Block auctions, the auctioneer kept stalling "dropping the hammer" until he was convinced that there wasn’t another dollar left in the crowd.

Even when Adrian Portelli made his crazy $1m counter bid to claim Steph and Gian’s house for $5m, being $1.65m over reserve, the agent kept prowling until he knew there was no more petrol in anyone’s tank.

My final words...

As you can appreciate, bidding at auction to buy your home – or investment property – comes with a heightened level of emotions; fear, excitement, adrenaline, confidence, disappointment, and so on.

If you plan to represent yourself at auction, I recommend you attend as many auctions as possible (prior) to familiarise yourself with the process and to be well prepared.

If you feel that auctions aren’t for you, our master auction bidding services are designed to help you secure your desired property at a favourable price and on favourable terms. This also ensures you're not tripped up by the auctioneer in paying too much for the property, as we know when to keep pushing and when to bow out.

Good luck with your next auction and if we can be part of your next property move, please reach out as we are ready and willing to assist.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.