There are special tactics you can use to outbid the competition at an auction. Picture: Jeremy Piper
Bidding at an auction can be a daunting task. But with the right preparation and some expert plays in hand you can increase your chances of winning the property of your dreams. Here are some buyer’s agent tips to help you on the floor.
SUSS OUT THE COMPETITION
Buyers agent Bianca Field from Bought Agency says getting to the auction early is recommended.
“Show up early and watch the registration table,” she says. “Listen to the conversations.
“You see who’s coming with their parents, who’s underprepared, who’s an opportunistic bidder who hasn’t done any due diligence. You see the people who are organised and have already pre-registered – the people that have planned ahead are typically more interested in buying the home.”
It’s good to know the other bidders you are up against. Picture: Rohan Kelly
She says it’s often possible to figure out which person wants the property the most or which “has the deepest pockets” through these observations.
CHOOSE A VANTAGE POINT
Field says once you’ve figured out who’s who in the game, it’s time to choose an ideal vantage point.
MORE: ‘WTF’: Huge warning over cheap Aussie unit
Luxe sales timed to coincide with Lunar New Year
“When you’ve taken your bidder’s card and you’ve stepped outside, grab the most comfortable place that you can be where you can see everyone else,” she says. “This will help you feel more relaxed.”
Buyers agent Bianca Field. Picture: supplied
At indoor auctions, Field always tries to get a spot sitting down, which shows confidence. When bidding outside, she usually stays as far away as possible while still being close enough to see the other bidders’ faces.
“It allows me the privacy that nobody’s looking behind me at me, but it also gives me the upper hand in being able to see everybody else’s emotion,” she explains.
Choose your vantage point. Picture: Rohan Kelly
SETTING A PRICE
Before even showing up, it’s important to research price, says buyers agent Sanjeev Sah from Investors Dream. He suggests interviewing five to 10 of the top agents for the area you are buying in and asking them why certain properties that are similar to the ones you are interested in have sold at their sales prices.
It’s also important to find out what type of market you are buying in, he says. By going to open homes and finding out how many offers have been submitted, you can get an idea of demand. If it’s a competitive market, prices will likely be going up every week and you will need to factor this in when setting a walkaway price.
Investors Dream director Sanjeev Sah. Picture: supplied
Sah says when adding an auction buffer to your spend limit, it’s a good idea to consider your financial situation as well as the uniqueness of the property and why you are buying it. While investors are usually driven by the profitability of the numbers involved, homebuyers might want to consider scarcity and other emotionally driven factors.
“If you know you’re going to live there for your lifetime, it’s your dream home and your budget allows for it, your buffer could be a good 10 per cent,” he says. “But generally, we say 3-4 per cent is a good number for a maximum buffer.”
It’s good to open with a strong bid. Picture: Rohan Kelly
BIDDING TACTICS
Field says if you have the confidence to open bidding, it’s best to do so with a strong bid.
“Open at a level that doesn’t get it started to encourage everybody, but at a level that’s probably a midway point,” she says, adding that she likes to open “at a level where there’s only one bidder left.”
However, if that is too daunting a task, Field suggests letting someone else open the bidding and then building a stronger pattern from that.
Don’t be guided by the auctioneer – be guided by the body language of other bidders. Picture: Rohan Kelly
“I don’t recommend sitting back and waiting till the end,” she says. “Emotional bidding happens about three quarters of the way into an auction. So you’re naturally going to be caught up with people who are out of control and emotionally bidding to secure the home at whatever it takes.
“You want to cut them off before they get to that stage.”
She says when people start to reduce their bidding increments it’s often a sign that they’ve either gone over their bidding limit or are just about to. In fact, bids of less than $5000 are a telltale sign that a bidder’s budget is coming to an end.
Will you be the last one standing? Picture: Daily Telegraph / Monique Harmer
“If you can increase your bidding increment while the other person’s deliberating about reducing theirs to a certain level because they’re up to maybe the second or their last bid, that is the time to actually change your increment and increase it,” she says. “It looks more aggressive.”
In a softer market where there are only a few buyers, however, bidders may hold back with smaller bids to see if they can get the property for a cheaper price, she says. If you are unsure of how to play the game, Field says matching the increment is the best way to go.
“Don’t reduce it ever,” she says. “It shows weakness.”
MORE: Silent housing burden busts Boomer myth
English (US) · 