I know that many property investors are a little intimidated by the thought of bidding for a property at auction.
I can understand why because auctions are an emotional and exciting event.
And even after bidding at hundreds and hundreds of auctions, I must admit I still get that surge of adrenaline every time I bid.
But auctions can also be a psychological battle, so it’s important to have a strategy in place to give you the best chance of winning on the day.
And even as our property markets slow down, many of the A Grade homes and investment grade properties are still being put to auction.
Unfortunately, for every auction winner, there are usually three or four auction losers.
Let’s be blunt, 7 out of 10 auctions end up selling to the person with the deepest pockets, but for the other third — the winning mix will be a combination of style, guile, and savvy use of a smaller pile of savings.
So let's look at some things you shouldn’t do at auctions – blunders that could cost you a great home or investment property.
It’s interesting that sometimes many prospective buyers don’t want to make a bid and some let the property pass to another buyer.
Then, you see, they’ll hang around after the auction, hoping a deal isn’t reached so they can jump in and negotiate the bargain of the century – alas, this is usually a terrible tactic.
The way to be the winner at the end is to actually bid.
In fact, serious buyers should make sure they’re the last ones to bid because they can negotiate with the seller, with the vast majority reaching a favourable deal.
Many bidders set an inflexible limit, and often a round number such as $700,000, for no valid reason.
Buyers should do their homework about exactly what they can afford and consider being a bit more flexible if they have the capacity.
Often buyers can miss out on a property because they’re not prepared to increase their bid by as little as $500, which is silly when you think about the long-term capital growth potential they may be missing out on.
A buyer’s game-day performance can shake off competition, which may believe you have a bottomless wallet.
It’s important to dress like you have the means to buy the property, be assertive, and to stand at the front so you can see where the other bidders are.
Don’t be afraid to look other bidders straight in the eye and make sure you bid confidently in a loud clear voice.
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Buyers who pause mid-auction to confer with their family or friends about their limit or intentions could be giving away more than they know.
It’s important for a buyer who’s there with their partner to decide on who’s actually bidding and also to determine key signs to allow you to communicate in a non-verbal fashion mid-auction.
Savvy homebuyers should attend as many auctions as they can to watch the theatre of how successful bidders behave, their body language, and their interaction with the auctioneer.
A buyer needs to be assertive even if they’re on their last bid by making it seem like they have several bids still up to their sleeve
Starting too low, in some cases, might invite other bidders into the auction ring and allow momentum to build.
But going in with a strong, confident bid could knock out several contenders early on.
If you’ve done your market research, and hopefully you have, then making a ridiculously low offer is usually a mistake.
It’s a strange phenomenon that some buyers attend auctions and then pretend they’re not interested in it at all.
But it can work in the buyer’s favour to show interest during the entire auction campaign.
If no one bids at the auction, because seemingly they’re not interested, then the vendor is legally entitled to make a vendor bid on the property to help move the auction along.
This can either get things started or when the auction stalls because everyone is trying to “play the game”.
Agents say however that they want to help a genuine buyer purchase the property, so it’s important to be upfront about your intent and to bid with confidence.
It’s always better to be a standout buyer because it can help you compete better on auction day as well as be on the agent’s radar.
Just because a property is passed in, it doesn’t mean the vendor will necessarily sell the property to anyone there.
They may decide to try to sell it by private treaty or even take it off the market if they’re not going to achieve the price that they wanted.
While it’s important to be assertive, prospective buyers at this point in time shouldn’t be aggressive because this rarely works and will most likely just put the vendor offside.