Busy auctions have become a thing of the past in most places.
With prices in Sydney and Melbourne falling and auction clearance rates low across the country, the auction market seems like a promising place for buyers at the moment.
According to PRD Real Estate chief economist Dr. Diaswati (Asti) Mardiasmo, while there has been a slight uptick in buyers making offers before auction, there has been an even greater increase in deals being done after auction following the property passing in.
“In this current property economic cycle, we’re definitely still seeing transactions go through with a higher preference for non-auction type sales,” she said.
As auction clearance rates fall, there has been an increase in non-auction sales as buyers stand back and wait to see what the opening bid and reserve are.
“We’ve seen a higher number of properties that didn’t clear at auction then being sold by negotiation in the next week or two because whoever it was that was attending the auction now has a much better idea of what the demand is for this property and what the pricing is,” she said.
A lot of bidders are just standing back and waiting to see what happens. Picture: Annette Dew
With these dynamics likely affecting the psyche of sellers, you may be tempted to make a lowball pre-auction offer in the hope it gets snapped up, however, there are risks in doing this.
Melbourne buyer’s agent Mario Borg says a low-ball offer made simply because it’s a buyer’s market is rarely the right strategy.
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“A pre-auction offer should be commercially sensible, backed by comparable sales and presented with confidence,” he says. “If it’s too low, you risk alienating the agent and vendor before the auction even begins.”
Melbourne buyer’s agent Mario Borg. Picture: supplied
When deciding whether to make an offer before auction, Sydney buyer’s agent Michelle May says it’s important to find out as much as you can about the situation of the vendor and how much interest there is in the property.
“The reason generally why things are selling before auction is because the agent doesn’t have enough traction to run a full auction,” she says. “If they’re not confident they’re going to have enough buyers to create that tension and to drive that price up, then they are much more open to taking pre-auction offers.”
Will the property even make it to auction? Picture: Annette Dew
Borg says while there are advantages to making a pre-auction offer, such as removing the uncertainty and emotion of the auction process, there is also a risk of overpaying.
“Sometimes buyers negotiate against themselves by offering too much too early,” he says. “Equally, a strong offer can simply become a marketing tool for the agent, encouraging other buyers to step up before auction.”
A strong early offer can wind up being a marketing tool for an agent. Picture: Damian Shaw
If the property does make it to auction, it’s not always an indication there are plenty of buyers ready to compete, Borg says.
“Sometimes it reflects genuine competition, but just as often it’s because the vendor hasn’t received an offer they’re prepared to accept before auction,” he says. “Many sellers still believe auction gives them the best chance of achieving a premium – well at least that’s how it is here in Victoria – even in a softer market.”
May says there is also the possibility that the property is a deceased estate and must go to auction. Or that the selling agent simply doesn’t know what they are doing.
Sydney buyers agent Michelle May. Picture: supplied
In any case, when it comes to bidding during a weak auction market, it may be better to sit back and wait and see, she says.
If nobody puts their hand up to make an opening bid, it could begin with a vendor bid.
“Then you need to decide what you want to do there. Are you going to let it pass in and then negotiate afterwards or is the vendor bid below what you would be prepared to pay, and do you then make a counter bid?” she says.
The strategy generally differs from that used during boom cycles where you need to be more aggressive and knock out the competition early on in the process, she adds.
However, it’s still important to watch the registration table carefully when you arrive to suss out your competition, she says, keeping in mind not all properties are struggling to sell at the moment.
PRD Real Estate chief economist Dr Diaswati Mardiasmo.
HOW LONG WILL IT LAST?
Dr Mardiasmo says while weak auction markets usually only last a few months before sellers adjust their expectations and meet the softening market, this particular situation is unpredictable.
New property tax laws have taken investors out of housing markets in different parts of the country, changing auction dynamics, while the possibility of future interest rate hikes has put the brakes on some buyers’ ambitions for now.
“So, at the moment in 2026, it’s just been a little bit more difficult to predict,” she says.
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