It’s interesting to talk to real estate agents, particularly those who are very good at auctions.
You can find out some of the auction strategies that you might want to use to make sure that, if you’re a buyer, you’re not paying too much; and if you’re a seller, that you’re going to get top dollar.
Recently on Real Estate Talk I interviewed Frank Ruffo, who is the principal of Hodges in Bentleigh, and who is also one of Melbourne’s leading auction agents.
Here is the transcript of that interview:
Kevin: Frank, thanks for your time.
Frank: Hello, Kevin.
Kevin: Let’s firstly look at it from a buyer’s point of view.
What are the auction day strategies that you would suggest to abide to beat that auction competition?
Frank: There are actually two.
The first strategy is to bid, to make sure that bid at the auction.
Lots of times, you’ll see buyers come through the property and they’ve invested time, been through once or twice, brought they’re mum, their children, their family, and perhaps negotiated some terms around price and settlement with the agent and the vendor.
Then on the actual day on the auction, which is the performance when you’re front of the other parties who are also there to bid, they don’t put their hand up.
They say that 55% of communication is non-verbal and 35% is tone, so it really is a performance.
The person that buys a property may not always be the person who has the most money.
Sometimes it really is how that person stands, the way they bid, how confidently they bid, how often they bid, the size of the bid, and the volume of the bid.
It’s really that type of competition that you want to create around you to say “I’m here to purchase the property. I’m going to continue bidding.”
Give your last bid as if it’s your first bid and that you’ve got plenty to go.
Kevin: There is lots of advice about how you should bid, whether you go with one big king bid or whether you slow the bidding down, but you really need to know how the auctioneer works, don’t you?
Frank: Absolutely. If you go into an auction of a particular property, find out who the auctioneer is and perhaps see them at one or two other auctions prior to the auction you’re interested in.
See what their style is.
Are they any auctioneer who does lots of vendor bids, or do they do one vendor bid?
Do they start at the quoted price and follow a similar passion?
Mostly, in my opinion, a buyer who starts with the bidding at a lower point at the start of the competition and continues all the way through shows tenacity throughout the crowd that they’re there to purchase a property, as opposed to coming in at the very end and putting in that last bid.
That last bid, from a perception, may be the only bid.
There are lots of one-bid wonders.
You really want to have growth, and you want to be able to say, “I’m here at $800,000, I’m here at $900,000, I’m here at a million dollars. I’m bidding, and I’m bidding with confidence. We want to purchase the property.”
Kevin: Is it worthwhile trying to break down the bidding so that you actually slow the auction down?
Frank: Not from a position of strength.
You are competing against the other buyers in this market, not necessarily the vendor.
You certainly wish that one of the other buyers may slow the bidding down on your behalf, but if you’re there to purchase a property, your competition is against those other buyers and you want to be seen to be very strong in your bidding.
Kevin: I’d imagine, too, that you’d want to keep your top figure pretty much to yourself.
I’ve heard some real estate training where the auctioneer or the agent will try to find out what the limit is of the bidder, but you’re better keeping that to yourself, I would imagine.
Frank: Certainly those KPIs are important to the buyer, and probably best left with the buyer and the buyer’s advocate and family, kept in that circle.
With the highest bid, never have a round number, like $900,000 or $850,000, or $800,000.
Always have an odd number.
If you’re going to go $900,000, try to go to $911,000 because you’ll see that a lot of buyers may fall out at $900,000, and that $11,000 might be the opportunity for walking inside that house or walking away.
Kevin: I suppose it also tells people you could actually be reaching your limit.
Frank: Yeah, you could absolutely be reaching your limit. If you want to stretch above your limit, and if it’s $2000-3000, you need to decide whether it’s for you and whether it’s a smart decision.
Mostly in this particular market, by the time you settle on a property, it may have even grown by that last bid.
Kevin: Before I let you go, for anyone who may be bidding a property this weekend, what are your top three tips?
Frank: Firstly, let the auctioneer know that you’ve come to purchase a property.
Make sure your terms and conditions are ones you can bid with confidence.
Secondly, get in there and be proud.
Don’t sit on the fence.
Put your hand up when they ask for an opening bid.
Thirdly, give your last bid like it’s your first and you have plenty to give.
Just keep bidding. Bid loudly, and good luck.
Kevin: Good luck, indeed. Thank you very much for your time.
I’ve been talking to Frank Ruffo, who is the principal of Hodges in Bentleigh. There was some grand advice there if you’re going to an auction this weekend.
Frank, thanks for your time.
Frank: Cheers, Kevin. Thank you.
Listen to the full show at RealEstateTalk.com.au and while you’re there subscribe and receive our weekly podcast (or the transcripts) where I interview Australia’s leading property experts.