Auction bidding is designed to be a fast paced environment; emotions are high, nerves and anxiety can take over and it’s all too easy to make on the spot decisions that you may regret later. If you are overwhelmed or under-prepared to bid at auction, you run the risk of causing some serious damage to your back pocket. It makes sense to train for the big event, So here are our top 7 auction tactics you can use when you bid at auction for a property.
Prepare your budget before buying a property at auction
This one sounds obvious, but ensuring you have a clear indication of your absolute maximum bid before auction day is crucial. Buying property is often an emotional purchase no matter how level headed you try to remain.
The auctioneer is trained to squeeze every last penny you have, so it’s important to ensure you’ve set your limit and stick to it at auction.
You must ensure your emotions do not take over in the moment and you don’t walk away having overpaid or stretched yourself financially. Remember, that dream home will quickly turn into a nightmare if you can’t afford it.
Know the true value of a property before bidding at auction
Hand in hand with setting your bidding limit is knowing the true value of a property. This can be difficult to ascertain but with a bit of time, practice and research, you will get this down to a fine art.
Don’t rely on the agent’s quoted price as an indicator.
There are a number of ways to ascertain the true value of a property.
- Track similar properties that have sold in the same location via realestate.com.au sold section
- Access sale databases such as Property Data Online or CoreLogic RP Data
- Compare the property to the sales listed on the agent’s Statement of Information
We have a detailed, step-by-step instruction book on how to value a property. You can grab a copy here.
If you don’t have the time to learn how to work out the true value of a property, or don’t want to miss out on great properties while you learn, you can get help. We offer an assess and negotiate service which might be a perfect solution for you. You can find out more about that service here.
Controlling the bidding is a great auction bidding tactic
During an auction the auctioneer will take control over the bidding level. Depending on how close to the bids are to the reserve price or how far along the process is will determine how large or small the bidding increments will be. Their aim is to run the bidding up as far as they can, as quickly as they can up to and beyond the reserve price. Trying to take control of the bidding increments and pace can assist with obtaining the property at a lower price.
Tip – Try placing a smaller bid than what the auctioneer is calling for. For example, if the auctioneer is calling for a rise of $20,000, offer them $10,000. This will likely create objection from the auctioneer, but that’s the nature of the game and all they can do is say no.
If the auctioneer won’t accept your bid, wait a few moments and see if anybody else places a bid. If they do not, re-offer your bid. If there are only 2 of you bidding, this can work to your advantage and they are more likely to eventually allow you to place smaller bids. If the auctioneer will not accept your bid, they have no choice but to seek a bid from somebody else, or place a vendor bid and if there is momentum, they won’t want to lose it by continuing to deny your bid.
Strong starting bid
No two auctions are the same and the way to proceed from one to the other changes drastically depending on the circumstances. In some instances it can be advantageous to start off the bidding strongly and start high.
This tactic helps to eliminate the bidders who think they can buy the property at the lower level of the quoted price range. When an auction commences the auctioneer will call for a bid at a lower level in order to gain momentum and create competition amongst bidders. This is where some bidders will go low, thinking this is the right way to keep the price down, however this tactic rarely works when educated buyers are in the crowd to bid. So an aggressive bidding strategy can be a better option depending on your competition.
Aggressive opening bids can stop other parties from bidding repeatedly as this gives the competition more time to think, get emotional and extend their budgets. Bear in mind that if you’ve done your homework, you know the true value of the property and won’t get caught overpaying for the property.
Know the auction rules
You can’t expect to win a game if you don’t know the rules. Study the auction rules for your state and ensure you know what you are doing before you bid for property at auction.
We have seen a lot of buyers walk away shocked, angry or in tears when they have attempted to roll out known auction tactics incorrectly and at the wrong time. Understanding the auction rules is vital to knowing what tactics you can use and when.
Know when to walk away
Knowing when to walk away is a skill that comes with practice. The key is to learn how to read the body language of competing bidders.
I have seen buyers read the state of play incorrectly and push the price up unnecessarily. I have also seen buyers miss out for the sake of a few thousand dollars because they didn’t see the signs that told me, as a professional bidder, we needed just a tiny bit more to win.
Learning how to read body language is a required skill if you want to pay the right price for a property at auction.
Control your emotions
This is perhaps the most difficult trick to master when it comes to auctions. Auctions are emotion inducing affairs. Not only are you attached to the property and want to be the one to buy it, fear of missing out, nerves and anxiety and also time pressures can all play an impacting factor.
If you are not able to keep a cool head at auction, a great alternative is to hire a Buyer Advocate to bid at auction on your behalf.
Purchasing a property will be one of the most expensive purchases you make in your lifetime and hiring a professional is a wise investment. You may still choose to be present at the auction, but employing a Buyer Advocate to do the job for you takes the pressure off and allows you to harness their expertise. After all, you wouldn’t auction the property yourself if you were selling, so doesn’t it make sense to hire someone to purchase on your behalf?
If bidding at auction is something you want to master, practice these seven auction tactics and start to get a feel for when to use each strategy. Becoming a good auction bidder takes time and practice, so be patient as you build the skills necessary and expect to lose a few auctions while you build your skills.
If you want to avoid the learning curve and avoid losing good properties while you hone your skills, consider calling in a professional auction bidder to assist you.
We offer services for auction bidding and can help you prepare and get on the right track prior to auction, If you are unsure about the value of the property you are bidding on, we can also help you value the property and complete due diligence to ensure you do not overpay.
You can find out more about our auction bidding services here.
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