You’ve spent months researching the market and attending open for inspections, and now it’s time to get down to business.
Chances are, if you’ve committed to attending an auction, you will have already spent a lot of time visualising how your new life inside that property might look – and the future of this dream-like fantasy is what’s at stake when you pick up your paddle.
Add in the natural pressure associated with competition and it’s easy to understand why auctions are often fraught with emotion. Which is why it pays to be prepared.
1. Pick up your paddle
Regardless of whether your state requires you to pre-register, you will need to show ID to the selling agent on the day of the auction, so that they can take down your details and hand over a paddle.
You will need to show the auctioneer your paddle every time you bid.
2. Watch body language
Once you have your paddle in hand, stand in a position that allows you to keep an eye on the competition.
Non-verbal cues offer valuable glimpses into a rival’s buying power. One of the biggest mistakes buyers make is they don’t watch their competition.
If there is a bidding sequence that’s going $800,000, $810,000, $820,000, and it slows down, and a buyer tries to go $825,000 and they’ve got their mum and dad with them and they’re all looking at each other and having a conversation – there’s a very good chance that that buyer has reached their limit and they’re discussing with the family whether they’re out, or whether they should go another $5,000.
In the event such a buyer comes back with “a desperation bid of $5,000″, auctioneers recommend immediately placing a higher bid – a signal of intent that he likens to a knockout blow.
3. Control the tempo
Momentum plays a big role in determining the outcome of an auction. Generally, the faster the bidding, the more likely buyers are to get swept up in the emotions of the occasion and feel pressured into placing higher bids.
It is recommended to bid in odd increments, so that the auctioneer is forced into doing more challenging arithmetic.
If the auctioneer is asking for a $10,000 bid, you can give them $13,000, you’ll be surprised by how many auctioneers will struggle to add them up. That will slow down the bidding.
4. Bid confidently at the end
If you’re competing against a high number of bidders, you might decide that starting the auction with an aggressive opening bid is a good way to determine who the real competition might be.
But in a softening marketing, it’s safer to pull your punches until the end draws near.
5. When a property passes in 21
In most states, if a property passes in (i.e. is withdrawn from the auction after failing to meet the vendor’s reserve price), the highest bidder gets first right to negotiate a price with the seller.
When this happens, buyers shouldn’t fall into the trap of thinking that they’re the only person interested in buying the property, and that the chips are entirely stacked in their favour during the ensuing negotiation.
While the property might have failed to meet its reserve at auction, other buyers will likely attempt to buy it if it goes back on the market – and a seller is highly unlikely to budge on their reserve.
7. What you should not do at an auction
There are many common mistakes buyers should be aware of – and should try to avoid – at an auction.
- Don’t show excitement. Stay calm throughout the auction – you don’t want other bidders knowing your intentions.
- Don’t jump the gun. Start low and avoid shouting your maximum bid as soon as bidding begins.
- Don’t bid if you’re unsure if you want to buy. If you win the auction, it’s yours to keep. So ensure you do want to buy the property before you begin bidding.