Is Smashing the Expectation an Anomaly or the Market?

Mar 15, 2023

On the one hand the sale price is the market price by definition, especially when its at an open auction … but on the other hand what if the result is an anomaly driven by a desperate seller or a desperate buyer? One way to determine if a high price actually represents a movement in the market is to look at the DEPTH of the buyers.

You can do this by looking at other recent sales: are there a few big ones or was this an outlier? However in a thin lumpy market it may be difficult to find comparable sales … i.e. very recent sales of similar type. In this case ideally you should look at the depth of the buyers for the one particular sale. Was it just two bidders who pushed it up? Or were there 5 bidders who all bid above the expected price?

You can only have this nuanced data by being there at the auction and knowing who’s who in the zoo. Of course you could ask the selling agent how many registered bidders there were but unfortunately that data is unreliable as you don’t know how many of them were “dummy registerers” or just there hoping for a bargain.

To summarise, when a property smashes the expectation, sometimes it’s an an anomaly and sometimes it’s the market. Ask your buyer’s agent which it is.