5 Strategies to help you bid at auction
Buying property at auction can feel stressful, emotional and intense. When in actual fact, an auction is the most transparent way you can buy property. You can see who the other buyers are, how many there are and you get a very clear indication of their budget for the property once the bidding starts.
So, how do you put yourself in a prime position to buy a property at auction?
You should first understand that buying property under auction conditions means it is an unconditional sale. There is no cooling off period, no opportunity to have it subject to finance or building and pest inspection. You need to have done all your due diligence before the auction day and have your finance in order and a 10% deposit ready.
1. Know what your limit is and what you are prepared to pay for the property before the day. Do your research and have a good understanding of what the value of the property is for you. This is a transaction based on decisions that can change because of emotions.
Set your maximum price that you are prepared to go to for this property. It may depend on your bank approval figure or it may come down to how much you want it but you need to have your limit. If someone else is prepared to pay more than you, then you need to accept they can have it.
Try to set your limit slightly higher than a round number. An example of this would be, if your budget is $650,000, then you should consider $653,000 to be your limit.
2. Arrive early to get a feel of who may be your competition. It’s normally easy to identify who the neighbours are. They arrive just as the auction is starting and sometimes gather or wave to others that are in the crowd. Family and friends can also be identified as groups. Other buyers normally have that last good inspection of the property
3. Don’t be afraid to bid after all you are not there to spectate. The only way you can buy property at an auction is to get involved. You can control the bidding by setting the pace.
A good strategy to use is to start the first bid under a round number. Don’t start at $650,000 start at $645.000. Bidding will more likely continue in increments of $5,000 rather than $10,000
4. Watch other bidder’s body language. Understanding these behaviours can reveal when they are reaching their limit. If couples are making eye contact or whispering this is a fair indication they are reaching their limit. Making a phone call can also indicate the buyer needs further instructions to continue. Longer pauses between bids and reducing increments means limits are being reached. This is why step 1 is so important. It will help you look more confident and sends the message that you mean business.
5. Auctioneers are very good at squeezing those emotional dollars out of bidders at the pointy end of an auction. They will try to intimidate other bidders by calling ‘first, second, third time’ as much as they can. Know this, they will not knock down the hammer until they are absolutely certain everyone is completely out!
If you’re not certain you can go through with bidding at auction or even if you need to bid anonymously, you could ask someone else to bid on your behalf. Using a friend or family member is one option but using a professional who has experience in auction bidding and the real estate market is worth the investment.