10 tips to win at an auction
2021 Will be remembered as the year we experienced perhaps the greatest, most unexpected property spike in Australian history.
Where so many people were expecting Q1-Q2 to be an absoloute dud, instead what we have seen is that its actually been incredibly profitable for some people lucky enough to get in and invest before the boom.
I dare say anyone who own’s property would no doubt be very happy to have the majority consensus proved wrong while they rake in the equity !
Remarkably, Some buyers who were able to get in and secure property in the most competitive months of February March have already been able to essentially scalp the market for 6 figures just in the Marsden Park area, let-alone other parts of Sydney where I’m sure there are stories of even bigger win-falls for those who managed to get in quickly at the right time.
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 by tens of thousands weekly & more competition than ever for homes it makes sense to present stock to market via the method of an auction.
That way the onus of establishing a properties market price is put back to the market on any given day, Reducing any chance for an agent to accidentally undervalue an asset that may be rapidly trending up in price during the campaign.
This is all well and good for the vendors who are selling their properties, They can just sit back and let their Agent & Auctioneer handle the formalities while they enjoy the theatrics & drama that is guaranteed in a good Sydney property Auction-
But; Its a very different experience for the would be purchasers who have no choice now but to compete in the street, Right in front of everyone if they want a chance to own their dream home.
And I get it - It’s not an ideal scenario & it may be an incredibly daunting one for a lot of buyers who never expected they would need to purchase this way before.
Most purchasers looking (especially in the area I sell) predominantly are first home buyers so they have sometimes never even spectated an auction let alone participated in one !
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.
Buyers are scared if they do participate they will either lose OR overspend & they are frustrated because almost every listing that catches their attention seems to be going up for auction now & they just dont know what to do - LITERALLY.
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 doesnt 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 immediatley 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.
