10 Tips to win at an Auction.

Articles

Jun 17

As areas develop, And markets mature in different suburbs Auction as a method of sale becomes more and more prevalent as a means to offer the highest level of transparency in property price negotiation.

Lots of buyers fear auctions but they shouldn’t; They are a great way to purchase where as a buyer you have the benefit of being able to see your competition face to face and get clear and honest understanding of who wants to own the property - Many buyers enjoy success at auction & often pick up property are prices LESS than they expected, You just need to know what you are doing !

One thing we have noticed for sure in our area is that the rapidly shifting prices has caused Agents to reconsider their method of sale & many including myself have adapted by listing property for auction as this method is more suitable to the rapidly changing market place-

With property prices changing rapidly it makes sense to present stock to market via the method of an auction.
This way the buyers & the vendors get the clearest view of the reality of the market.

The onus of establishing a properties market price is put back to the market on any given day (via auction),
Reducing any chance for an agent to accidentally undervalue or overvalue an asset.

I personally have spoken with many buyers recently who are walking away from their dream homes just to avoid the whole spectacle of an auction - This is sad, Because they shouldnt be scared of Auction & miss out on the property they desire.

So, I’ve decided to write this article for them, Something to relieve some of the anxiety purchasers have by empowering them with some tips & strategy which will hopefully give them the confidence to not only attend their first auction but raise that paddle - And be the last bidder standing.

“Do your sums at home - KNOW your budget BEFORE you register” - Michael Garofolo, Cooleys Auctions
One of the biggest mistakes we see purchasers make time and time again is that they go to the Auction without a pre-determined bidding plan OR they go to the auction only with a plan on what to do up to their ideal price but NOT beyond that ideal price.
AVOID being unprepared for this situation, Have 2 Plans.
Yes, You may have a figure in mind you know you hope to stop at, BUT what if the auction is down to 2 buyers, Your at the pointy end of the event & the price you wanted to buy has been exceeded but you can sense that your opposition is also running out of steam and now the emotion of it all has got to you, YOU WANT TO WIN - How far will go ?
Know this in advance, Especially if you are bidding on for example a block of land for a build that you hope to flip on completion.
If there are things certain things you can adjust in your build to counteract the extra amount you may need to pay at the auction, Know this in advance dont try do your calculations at the auction you will just stress yourself out, lose focus, And may end up over spending unnecessarily.
Spectate some auctions in your target area to get an idea of how they work & who your competitors are.
This ones pretty straight forward, You are (as a buyer) in many senses going to battle in the open market so take the time to identify competitors and get a feel for the auction and how it works.
There is only 1 winner at every auction, No prizes for second place so they will likley be attending future auctions in the area and if you recognise them and know how they conducted their strategy in the last auction there are obvious advantages for you.
Get some face time with the Agent, Show them that you mean business at the auction and are a buyer they NEED to work with.
Auctions, Are often won by the purchasers who are well KNOWN to the agent. On auction day the auctioneer swinging the hammer has no idea who you are as a buyer.
They will purely be distributing their attention based on who is bidding - But if you build some rapport with the Agent beforehand & they KNOW you mean business prior to the auction then you may find they will stick close by during the proceeding & this has its advantages, It puts you on the auctioneers radar and may get you some attention without you having to bid for it.
Get there early, And get a good spot !
Some Auctions in Sydney pull crowds in the HUNDREDS if you get there late & are crammed into the back corner of the room or behind a huge crowd of competitors your not going to attract much needed attention and Ive been to auctions were buyers who would of paid more claim to have missed out simply due to not being heard.
Strike fear in your rivals by exhuding confidence through your body language.
You are here for 1 reason & 1 reason only : To WIN, no matter what.
This is pretty much the vibe you want to project to everyone else in attendance, Check your body language & that of your competitors.
Auctions can be won and lost on this, If you stand tall you will appear very strong, If you sit spread out taking up a lot of space you will appear very relaxed and confident - If you stand in a corner clutching your handbag with your arms folded you will look scared, Anxious even, And thats not good as your competitors will feel emboldened that they can outbid you easily.
You WANT the other buyers to give up and forfeit the property to you.
Bid early & Bid Loud
Remember that the property wont sell until it hits its reserve anyway, You may aswell get in early and send a message to the auctioneer and your competitors that you are not there to muck around.
If you do this and immediately notice other buyers start talking between themselves and physically retracting their posture then consider it a success, They know that you are a fierce competitor and with any luck thats enough to make a few of them think twice about getting into a rally with you.
OTHERWISE bid low odd increments to nerf the pace of the auction at the very start.
The complete opposite strategy has its merits too, Especially if you feel you can confuse your competitors and slow it at the start. WHEN would you opt for this game plan ?
Perhaps you turn up to an auction and there doesn’t appear to be many registrations and those holding paddles all look very anxious, And low on confidence already.
You can set the auction pace slow here, Use one or two small odd number bids to confuse the comp so maybe you can force a rally between buyers at the lower range giving you a chance to prepare a big dramatic knockout blow when they start running out of steam.
You've gotta be quick in the desert.
IF your within budget, Employ a strategy of quick counter-bidding, This will shake your competitors confidence and potentially further dishearten them from competing.
Every time a competitor bids swiftly & firmly return serve, You can use small increments although the auctioneer will definitely ask for bigger leaps in pricing :
Use your discretion here there are 2 options to consider.
Firstly : You personally dont have to be the one who gives in to the auctioneers coaxing for bigger increments, You can let someone else get sucked in to that, Then quickly immediately counter-bid again to assert dominance again at the new level.
Secondly : If the auctioneer asks for a bigger blow and there is hesitation from the crowd to give in a big knockout blow may just do the trick here and send A message to the crowd that you are very comfortable to exchange blows at a higher range thus further accomplishing the goal of scaring the other buyers away from competing with you.
Dont bid against yourself !
You would be suprised how often this happens, And good auctioneers are skilled at creating an environment for this phenomena to occur.
Stay calm, Track your bids and pay attention so that you dont end up in financial fisticuffs with yourself for a property you were already in the lead to win anyway.
Use a buyers Agent
There are seasoned professionals out there who attend auctions professionally and employing a pointman to help you achieve your property investing ambitions may be one of the best investments you make.