Auctions are paid for by the seller and so they cater to their needs not those of the buyer. They are staged with a clear deadline to draw in as many buyers as possible and create a sense of urgency.
If the real estate agent, auctioneer and seller get their way on auction day they will have enticed an unprepared buyer to pay more for a property than what the seller was prepared to accept.
As a buyer if you’re not careful and you don’t know what you are doing there is a very good chance you may end up missing out on the property you want or worse still, paying too much for it.
As a buyers agent operating in the competitive Sydney property market I have bid at and been to many an auction in my time. I have seen with my own eyes what works and sadly what doesn’t work well for buyers.
The one thing that is for sure above all else is that the more times you bid the better prepared you are and the better you get at it. So, if you’re a novice auction bidder it goes without saying that you will need all the help you can get.
Here are a few tried and tested tactics that you can employ as a buyer to slow the momentum of an auction and help you get a leg up on your competition.
• Start with a strong opening bid
Before bidding at an auction you should always know what a reasonable sale price range for the property is. If not then you shouldn’t even be bidding. With this in mind, don’t beat around the bush. If you go to an auction to buy a property bid early and be assertive. If you start at or close to the top end of what you know is a realistic sale price range you will quickly say goodbye to the hopeful bargain hunters and the inexperienced buyers who fell hook, line and sinker for the sales agents’ low sale price guide. If you want a property let it be known from the get go of the auction and go for it.
• Break the momentum
A good auctioneer can see when an auction is quickly gathering momentum. They will often try and suggest higher bids over and above the level the bids are at. For example, if bids are increasing in $10,000 increments an auctioneer might ask for a bid of $20,000 or $30,000 and suggest it might just scare off the competition. They do this to try and draw out an emotional bid from a nervous and inexperienced buyer. If you see this happening the best thing to do is stop bidding for a while. This technique is most effective if there are just one or two bidders as it tends to break the momentum of the auction. It will also leave your competition and the auctioneer guessing as to whether you are a serious buyer or not. Jump back in and start bidding again when you feel comfortable that the momentum has slowed sufficiently.
• Bid in odd increments
This technique has a knack of throwing out the momentum of the auctioneer and other buyers and disrupting the auction. The opening bid or offer at an auction typically starts at a nice even amount (usually suggested by the auctioneer) before bidding continues in even increments. This inadvertently helps the auction start well and then continue to flow by making it easier for people to quickly calculate and place their next bids. A simple but effective tip I have used when bidding at auction is to disrupt the flow by putting in a random odd numbered bid. For example, if bidding is going up in $20,000 increments throw in a bid of say $13,500. It will make the other bidders and the auctioneer stop and think and calculate where the bidding is at. All it needs to do is break their train of thought for a few moments so the dynamics of the auction change.
While every auction and auctioneer are different the fundamentals are the same. So why not try these tactics for yourself and see how you go.
If you liked this article on auction strategy perhaps you might also like Six Reasons Why A Property Sells Before Auction.
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Shelley Horton is the founder of Sydney based exclusive buyers agency Albion Avenue. With a 20 year career honing her skills in every aspect of the property industry Shelley knows what makes a property worth buying and how to get the best deal.
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