Buying a property at auction can be a very scary thing to do, especially if you haven’t participated in one before.
If you’re planning to put in a bid at an auction this weekend it’s important to prepare yourself for all possible outcomes. It can be emotionally taxing over time if you miss out on your dream home over and over because of unrealistic expectations or misinformation on pricing.
Set yourself up for success by thoroughly researching prices and clearance rates in your areas of interest, to make sure you’re not wasting your time and that you can afford the types of properties that are going to auction there.
If you are the successful bidder of course you need to have all the practical things at the ready to be able to make the purchase on the day. Get the contracts looked over by a solicitor prior to the auction date, have your written pre-approval organised and be ready to pay a deposit on the day, which is usually 10 per cent of the sale price.
We also recommend attending a few practice auctions before bidding yourself, to get a feel for the auction process and what to expect when people get bidding. Afterwards review what happened and think about how you would’ve handled the same scenario if you were bidding.
Here are some bidding tips and strategies to think about for your next auction.
Tip 1. Open the bidding.
A good proactive strategy is to open the bidding close to what you think the reserve will be. If someone else enters the opening bid come in with a confident bid straight away and repeat this throughout the auction. Most buyers will be put off by this and lose the desire to keep bidding because they miss the chance to feel a sense of ownership of the property and don’t form an emotional attachment to it.
Tip 2. Bid with odd numbers.
Kick off the bidding with an odd number and always increase your bid in odd numbers. This may slow down the auctioneer, and confuse and slow the momentum of other potential buyers. At auctions it’s so important to stand your ground and be aggressive in your approach. If you don’t come into bidding strong someone else will step up and you’ll miss out. Take control and show you mean business by putting in numbered bids straight after everyone else’s.
Image: AFR, Glenn Hunt
Tip 3. Wait it out.
This one is a riskier tactic where you want others to bid first and you give them the chance to gain a sense of ownership and become emotionally invested in the property. Here you should wait until the very end of the auction to place a bid when everyone else has stopped. At this point a majority of buyers are likely to have reached or exceeded their budget and have already let the property go in their head.
Tip 4. Use research to plan your bidding.
Remember to do your homework. This will help you to gain a better understanding of how much the property will realistically cost. Look into what comparable properties in the area have sold for by weighing up their key features, such as the number of bedrooms, whether off street parking is included or not, the property’s condition and size.
Also, consider what the overall growth has been in the suburb over the past 12 months and beyond. Look into plans for future developments that will impact the value of the property, like shopping centres, train stations or schools. Factor in all of this research when thinking about how much you’re willing to spend on the property and to set your maximum bid or ‘walk away’ price before auction day.
For more information about auctions check out the pros and cons of selling at auction, how to buy a property after it is passed in and what you need to know about buying property in your capital city.
Best of luck for the auction.
Happy house hunting!
The homely.com.au Team