By Rich Harvey, CEO & Founder, propertybuyer.com.au
There’s nothing quite like the thrill of an auction! I’ve attended hundreds of them, and I’m always excited to see how they unfold.
There’s the hubbub of a building crowd. Last minute rationalisations on price. The spectacle of the auctioneer’s banter, pitch and rhythm. The harried to and fro of agents trying to eke every last offer from the floor.
Sometimes there’s even complimentary coffee and snacks.
Yes, an auction is a celebration of selling that engages Aussies from all walks of life… but there’s an obvious serious side to these events as well.
Auction success takes a bit more effort than simply fronting up and raising a paddle. Here are my 10 top buying tips for a positive auction outcome.
1. Set a “hard” top price
Auctions are designed to get the adrenaline flowing. The selling agent wants to establish a sense of desperation that will compel you to bid well above your budget.
The number one rule of smart bidding is to set your upper limit in advance, and then stick to it no matter what.
While this figure might reflect your pre-approved finance amount, I also believe it should be your absolute pain point. The mark where a dollar more feels too much. That way, even if you’re beaten in the bidding by a small margin, you’ll known you gave it all you had. The auctioneers are highly trained to get you emotionally invested in the bidding process and the agents working the floor will nudge you higher if you don’t have your guard up!
2. Don’t be intimidated
The auctioneer will be a picture of unbridled confidence. They’ll project their voice and use hyperbole, humour and exaggerated movements to get you to keep upping your bid.
Don’t be intimidated by this persona. The auctioneer’s job is to get the very best bid for his seller, but I’ve seen auctioneers fall apart when an underbidder takes a little extra time to consider their next move. Don’t feel forced into keeping things rolling along by the auctioneer’s tactics. The typical “third and final call” will be called multiple times before the hammer actually falls.
3. Listen!
There will be plenty of information communicated by the auctioneer during proceedings. This will include the current highest bid and who’s made it. They will also let you know if the reserve price has been reached. Even before bidding starts, they will alert buyers to any special conditions the sellers might accept such as an extended settlement period or reduced deposit.
Keep your ears open and you won’t do crazy things like bid against yourself or make a bid that’s below the current highest offer (I’ve actually seen both of these things happen.)
4. Be polite, professional and unemotional
Anger and rudeness get you nowhere in an auction. Always maintain a polite, professional demeanour. The auctioneer is doing their job for their client – his urgency is not a personal affront. Staying cool and engaged without emotion is the key in this situation.
This extends to other bidders as well. Some will try to intimidate you through intense staring down or other standover tactics. Let the auctioneer take control in these situations. I’ve even heard of an auctioneer who shut down an auction and moved it to later in the same day so an unruly bidder could be removed from proceedings.
Being unemotional across all elements is essential. People are buzzing around, getting in your ear and trying to hype up everyone.
Whether it’s anxiety, anger or enthusiasm, just keep those feelings at bay. This is a financial transaction and you don’t want to make a wrong move that could cost you plenty simply because your blood was pumping and your heart was aflutter.
5. Consider opening the bidding
It doesn’t hurt to be the first bidder at an auction. The first bid at an auction is rarely the winner (if it is, you’ve clearly offered too much!) so consider making the opening bid.
It gets the ball rolling and establishes you as someone the agents should watch during proceedings. I’ve also seen agents offer small prizes – such as a bottle of wine or a gift basket – to the person who makes the opening bid. You might as well score the goodies if they’re on offer.
6. Slow the increments
Just because the auctioneer is asking for larger bids doesn’t mean you have to play their game.
If we’re getting to the pointy end of proceedings, consider reducing your increments to $1000 or even $500. You do need to read the room a little to do this of course (see below).
Sometimes an auctioneer will reject a small increment bid, but don’t panic. Instead, stick to your guns. They’ll come back to you eventually and ask for your smaller bid increment once everyone else stalls.
7. Bid quickly
Bidding with confidence can intimidate other buyers. Be right on top of them when they put forward their offers, particularly at the tail end of an auction event.
If the increments get down to $1000 or less, just keep coming in fast until your limit is reached. Relentless quick bidding can work wonders against competing buyers who are getting nervous about the price.
8. Killer blows can be an own goal
Some people like to put in a big “knockout” bid towards the end of proceedings to put the property beyond everyone else’s limits, but I think you should avoid this in most instances.
Chances are your knockout bid will end up costing you thousands more than necessary to secure the property.
Your goal should always be to pay just slightly more than the second highest bidder.
9. Keep Quiet
I’m amazed at the number of times over the years where I’ve seen couples discuss out loud their intentions in front of every attendee, including the agent.
Long before the auction starts, you and your significant other need to have established a plan and decided to stick to it. Don’t leave it until the auction’s underway to start discussing your moves while surrounded by competing bidders. Write down your bidding limit on paper before the auction and have it secured inside your pocket – and stick to it!
10. Read the room
Professionals know there are signs which indicate when someone is done bidding.
A discussion between spouses, folded arms, a look of dejection, the bidding card put in the pocket, moving to the back of the auction room/ yard, … all of these let me know how folk are feeling about the price. This is when my “poker skills” as a buyers’ advocate come to the fore. I’m an expert at spotting tell-tale signs a competing buyer has approached the end of their financial tolerance.
Auctions are challenging for those who are unfamiliar with the process – but this is exactly where we thrive as buyers’ advocates. Instead of dealing with the stresses and risking some costly moves, why not employ one of our team to tackle the auction on your behalf. The result will be the best possible outcome for your buying circumstances.
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