You have likely seen the scenario play out before: A house in the Inner West sells for a million dollars above reserve after intense bidding between multiple buyers. Headlines celebrate an astonishing result, while observers point fingers at the selling agent for underquoting. Yet, we must acknowledge that there are occasions when the final price genuinely defies rational expectations. As buyers’ agents working on behalf of Sydney property buyers, these are the situations we persistently strive to avoid. Investing significant time and expense in pursuing a property, only to watch it sell well beyond budget, is frustrating and unproductive.
So, what is the one factor that consistently enables sellers to achieve these extraordinary windfalls?
The answer is simple: Competition.
What is Competition in the Property Market?
Competition arises when multiple buyers pursue the same property with determination. It occurs when buyers perceive a property as rare, desirable, and worth fighting for, leading to an escalating contest through auctions or private treaty negotiations. When more than one interested party wants a home, the measured logic of valuations and budgets can quickly give way to heightened emotions and bidding wars.
For sellers, competition is the ultimate driver of a premium sale price. For buyers, however, it is the very situation to avoid.
How Agents Create Competition
Real estate agents are highly skilled in developing strategies that spark and amplify buyer competition. Some of the most common methods include:
- Auction campaigns: Auctions thrive on visibility, urgency, and transparency with a fixed deadline. When multiple bidders are present, properties often sell significantly above their reserve price.
- Price guides: While underquoting is strictly regulated in New South Wales, strategic use of lower guides can attract more prospective buyers, encouraging engagement from all those who may otherwise have overlooked the property.
- Scarcity marketing: Agents emphasise unique features, school catchments, or lifestyle benefits that cannot easily be replicated, fostering the perception of rarity.
- High-quality presentation: Professionally styled homes, enhanced photography, and targeted advertising create emotional appeal and a sense of ‘must-have’.
- Tight campaign timelines: By running short, high-intensity campaigns, agents compress the decision-making window, forcing buyers to act quickly and compete assertively.
- Referring to other “interested parties”: When selling a property, many agents strategically foster a sense of competition among potential buyers. A common tactic is to mention other “interested parties,” sometimes with only the slightest hint of truth, to create urgency and fear of missing out. Even when those rival buyers are hypothetical or only mildly interested, the suggestion of competing offers can push genuine purchasers to bid higher or move faster than they might otherwise. This subtle psychological play is highly effective, but buyers should be aware of how it works so they can understand the dynamics behind the final sale price.
These tactics aim to maximise the pool of interested parties and lead to the bidding environment that sellers desire most.
What Factors Help in Creating Competition?
Not every property automatically attracts competitive bidding, even with the best selling agent involved. In fact, competition is shaped by a combination of market conditions, property attributes, and buyer psychology. Some key drivers include:
- Scarcity of supply: In tightly held Inner West suburbs, limited stock increases pressure among buyers who are already struggling to secure a suitable home.
- Location strength: Highly desirable suburbs such as Annandale, Balmain and Haberfield naturally draw broad interest due to their proximity to the CBD, reputable schools, and vibrant lifestyle offerings.
- Type of property: Renovated family homes, particularly those with generous land or heritage appeal, often command far greater attention than smaller or compromised dwellings.
- Market sentiment: In rising Sydney property markets, FOMO (fear of missing out) can easily escalate, pushing buyers to bid more aggressively.
- Comparative sales: When recent sales demonstrate strong upward price movement, buyers can be conditioned to expect higher competition and stretch beyond their limits.
The alignment of these elements creates conditions in which multiple buyers pursue the same property—and when this alignment occurs, it is not surprising to see results well above vendor expectations.
How Buyers Can Avoid Competition
For property buyers, the challenge lies in positioning oneself away from the frenzy of direct bidding wars. While it is not always possible to completely avoid competition, certain strategies can help reduce exposure:
- Buying off-market: Many transactions in Sydney occur discreetly, without being listed publicly. Off-market opportunities often provide buyers with more time to evaluate and negotiate without open competition.
- Targeting less exposed properties: Properties with suboptimal marketing campaigns, shorter inspections, or atypical layouts may attract lower levels of competition, even if they hold strong long-term value.
- Avoiding bidding wars at auction: Where possible, securing a property before auction can limit exposure to escalating competition. This requires confident negotiation and clear understanding of vendor motivations.
- Moving swiftly: Deliberate and informed action can be critical. Hesitation often allows additional buyers to enter the field, sparking the very competition that buyers seek to avoid.
- Broadening suburb horizons: By considering adjacent Inner West suburbs, buyers can often secure similar amenities and lifestyle advantages without facing the stiffest competition in headline locations.
The Role of Buyers’ Agents in Managing Competition
At Buyer’s Domain, our role as buyers’ agents is to minimise exposure to intense competition and secure properties under the most advantageous conditions possible. We achieve this through:
- Accessing off-market opportunities: Our extensive industry connections and reputation allow us to uncover properties before they reach the open market.
- Objective evaluation: By providing evidence-based assessments of true market value, we help clients avoid emotional overbidding.
- Strategic negotiation: We negotiate firmly and with clarity, leveraging insights into vendor motivations and agent strategies.
- Auction representation: In cases where auctions are unavoidable, we represent buyers with precision, discipline, and detachment ensuring that decisions are not clouded by emotion.
- Market intelligence: Our local knowledge of the Inner West and broader Sydney market enables us to identify properties that retain long-term value, even if they are purchased outside of the frenzy of competitive hotspots.
- Steering Clear of Competitive Scenarios: We have the insider knowledge and experience to assess if a property is likely to attract intense competition and sell for more than its intrinsic value. This saves our clients time and money.
With these strategies, we ensure that our clients approach the property market from a position of strength, rather than allowing themselves to be drawn into costly contests.
Conclusion
Competition is the singular factor that enables property sellers to achieve the highest possible selling price. It is the reason some properties soar to seemingly unexplainable heights, leaving underbidders bewildered. While sellers and their agents engineer competitive environments with calculated precision, buyers must be equally deliberate in avoiding them.
As buyers’ agents representing property buyers throughout Sydney’s Inner West, our mission is to place clients in the strongest possible position to acquire quality assets without succumbing to unnecessary market pressure and over-paying. By avoiding competition wherever possible, and navigating it strategically when unavoidable, buyers can approach property acquisition with confidence, clarity, and long-term value in mind.
For those seeking expert assistance in buying property in Leichhardt, the Inner West, or across Sydney, contact Buyer’s Domain to learn how we can help secure a home or investment without overpaying.
