Bidding at auction
Bidding at auction is a nerve wracking experience for most people.
We have helped hundreds of our clients successfully purchase at auction and have put together a list of useful tips and strategies to ease the stress and help you feel confident bidding on auction day.
If another buyer has significantly deeper pockets than you do there really is nothing you can do to improve your chances of success. However if it’s a close race to the end, adopting certain strategies can be a useful way of improving your chances of coming out on top – and not paying too much at the same time!
But first, before you get to auction day, you need to be prepared.
1.Before Auction Day
#1 Attend local open for inspections and auctions
- Hit the streets and head out to as many open for inspections as you can.
- Ask agents what has sold recently and research those properties online so you can see how they compare to what you are looking to buy
- Attend the auctions of properties you have inspected to see what they sell for. Compare the agent price guide to the actual auction.
- Attending auctions will also help familiarise you with what happens on auction day.
- At auctions, take a look at how others bid, how agents negotiate the crowd and how the auctioneer operates. The more familiar you are with the whole process, the less nervous you are likely to feel bidding at auction on your auction day.
- Attending local auctions will also give you a good feel for the level of competition that exists in your chosen area from other buyers.
#2 Make sure you have done your pricing research
- It’s really important to know the value of the property in the current market. Make sure you are familiar with all the recent comparable property sale prices.
- Ask agents what has sold recently in your area and keep an eye on the weekend auction results published weekly on websites such as Domain. If you are still unsure about market value talk to us about a property appraisal.
#3 Do your due diligence
- Have a professional legal expert inspect the contract of sale and have confirmation in writing of any changes you would like to make to the terms and conditions.
- Have a building inspector examine the property to ensure there are no structural defects and a pest inspector to give the all clear for pests such as termites.
- If you are purchasing an apartment, arrange for a Strata Inspection so you are aware of any issues with the building
#4 Determine your auction strategy
- A skilled auctioneer can be very diligent at extracting a higher bid from you than you had anticipated, so it’s vital to have thought about your strategy and your maximum price carefully beforehand – and then stick to it on auction day.
And it surely goes without saying – make sure your bank finance has been approved and you have this in writing from your lender before bidding on any property!
Also don’t forget, if you are the successful purchaser at auction, you’ll be required to pay a deposit when you exchange contracts – usually 10% unless otherwise arranged.
2. On Auction Day
#1 Dress for success
- Sometimes even a simple thing like dressing smartly in a suit or wearing a jacket can boost your confidence, and it can give the impression to other buyers that you have a healthy budget – a bit of the intimidation factor!
#2 Arrive at the auction early & don’t forget to register to bid
- There’s nothing like being in a rush or getting caught in traffic and running late, to up your stress levels for what is already an incredibly stressful experience!
- Arrive at the property with plenty of time to spare, register to bid (you’ll need ID) and take in your surroundings and the competition as they arrive.
#3 Pick a position in the crowd where you can see the action
- You want to be able to see the auctioneer (and he or she clearly see you), plus the other bidders. Pick somewhere you can get a good view.
#4 Bid with confidence
- Spell out your bid: Instead of saying 9-50, say nine hundred and fifty thousand dollars. It sounds like more money and may help weed out some of the weaker buyers.
- Don’t be intimidated: Once your bidding is underway, run your own race – don’t let anyone – agent, auctioneer or other buyers intimidate you to change your strategy.
- Keep the bidding increments low, quick and confident.
- Act confident bidding at auction even if you really don’t feel it: Your body language can easily give away when you are almost at your limit. Hunched shoulders, a dejected look or constantly conferring with a family member or friend before placing every bid, will let other bidders know you are almost there.
- Bid without hesitation and with confidence as if you have thousands still left in your wallet, right down to your very last cent. You never know how close the other bidders are to their limit and if you remain super-confident they may just bow out.
When a property passes in
If the reserve price has not been met at the auction, don’t let the auctioneer or agent to pressure you to bid higher – and against yourself. It is better to have the property pass in and be in the box seat in the negotiation process with the agent. As the highest bidder you have the first right to negotiations and can often come up with a mutually acceptible price in the moments after the auction.
Good luck on auction day. We hope you find these tips helpful. If you are still feeling unsure and would rather a professional do the bidding for you, talk to us about our auction bidding service.
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