It’s auction time but you don’t know how to bid at auction; poker face with big sunglasses or wear your Sunday best in an attempt to scare away the competition? One buyer’s agent gives us his tips and tricks for how to buy a house at auction.
I’ve just started the daunting process of looking to buy a house in Sydney. I’ve been researching online and inspecting properties and have been interested to note that auction seems to be the popular method of sale in the thriving Inner West where I’m looking.
My partner and I both own investment properties and have been through the property buying process before, however neither of us have experience buying a house at auction. I know the basics, like doing our due diligence, setting our maximum purchase price and the other all-important steps on the pre-auction check-list; but what should our strategy be when bidding at auction?
I spoke to Brisbane-based buyer’s agent Zoran Solano from Hot Property Buyers Agency to get some tips on buying a house at auction. He believes that while every buyer needs to have an auction bidding strategy, there’s no one-size-fits-all approach. Auctioneers have different tactics and a buyer’s approach also might vary from a $500,000 property to a $2 million property.
However there are some basic strategies that Zoran recommends for bidding at auction.
Run your own race
Don’t let other buyers or selling agents push you out of your comfort zone. Some real estate agents can be overbearing when you’re bidding at auction and hover around and press you to make higher offers.
If this happens to you try to remove yourself from the situation. If you’ve properly prepared pre-auction then you should have a good idea of the property’s value and have your limit set, so politely ask them to leave you to it or tune them out.
Before the auction begins, position yourself somewhere prominent and noticeable in the crowd. Don’t hide up the back or in a corner. Stand where you can see what’s going on, and, more importantly, so the auctioneer can clearly see and hear you when you’re bidding at auction. It will be easier to have conversations and help limit the possibility of being misinterpreted.
Say the full amount when making an auction bid
State loudly and clearly the full amount you’re offering each time you make a bid for the property. While partly psychological, reinforcing the amount not just for yourself or the auctioneer but for all the other bidders around you injects some reality into the house auction and establishes your confidence.
Knock out the bargain hunters from the serious buyers
Beware the ridiculously low opening bid. If the auctioneer starts the bidding at auction too low, chances are they’re trying to build an atmosphere of competition by opening with a bid that will get the bargain hunters involved.
If this happens and you’re confident in your auction preparation and the property value, throwing out a much higher bid can work in your favour by knocking out the competition that isn’t serious. Just make sure you keep the bid low enough to still allow yourself to get the property for a better price than you’re prepared to pay.
Hold off bidding until it’s on the market
The property won’t sell until it reaches the vendor’s reserve price. When this happens, the auctioneer will, and has to by law, say that the property is ‘on the market’. There’s no harm in holding off bidding at auction until this happens. Unless the auction property reaches reserve it won’t sell, so there’s no need to get stressed about bidding until you know it’s going to sell.”
Remember – buying a house at auction is all good and well but before you start flexing your paddle-raising muscles, be sure you’re actually ready to bid by reading through our pre-auction tips to help prepare for buying at auction.
Have you recently bought or tried to buy at auction? What auction bidding strategies did you use, and did they work?
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