How to bid at an Auction confidently
Buying a house isn’t always as simple as having an offer accepted.
Because the demand for property is so high, many sellers are going down the auction route, hoping for a higher price.
For any home buyer, attending an auction can be terrifying, especially if it’s your first time. To help you out, here are some tips on what to expect and how to prepare yourself, so you can bid at auction day with confidence.
Do your homework
This point pops up within every aspect of buying a home because it’s the most important. Know the features of the house and the area, what similar properties were asking for and what they actually sold for.
Understand the lingo
Auctions can be quite overwhelming at first, but you need to be aware of what you are getting yourself into. The conditions of auction will be available before the bidding begins. Either way, the more auctions you attend, the more you will understand.
Here’s some auction jargon you’ll need to know:
Reserve price – the minimum price set before the auction. If the reserve price does not reach the minimum, the vendor can choose to privately sell at a lower price.
Passed in – if bids do not meet the reserve price, the property will be ‘passed in’ or withdrawn from auction. The highest bigger then has the right to negotiate with the seller.
Fall of the hammer – Near the end of auction, the auctioneer will ask for final bids and count down the ‘fall of the hammer’, signalling the end of auction.
Get your finances ready
Have your pre-approval in place before you arrive at auction. You’ll know what you can spend and this puts you in a way better position than most. With your finances and deposit ready, once the hammer comes down there’s no backing out: it’s yours.
Do your due diligence
If you’re a serious bidder, your pest and building inspections need to be done and the contract looked over by a lawyer. Checking the property before the big day can help you uncover any problems. You definitely don’t want to be finding hidden secrets after you’ve purchased the property.
Practice makes perfect
Nobody likes being thrown in the deep end straight away. Attending a few auctions before you start getting serious and making bids is a helpful experience. It doesn’t necessarily have to be a place you love either, it’s the first hand experience you are looking for.
The main reason you want to attend is to see how it all works and the way bidders interact, perhaps even strike up a conversation with the agents or auctioneers. A quick chat with these experts can build your confidence and you might walk away with some great tips.
Respect the agent, and they will respect you. Remember, seller’s agents do not want you to spend more than you can afford. If you have to break the contract, the vendor loses the sale, the real estate agent loses their commission and you are faced with penalties.
If you’re serious about the property, it may be a good idea to introduce yourself to the agent and auctioneer before the bidding begins.
Put on your game face
It’s natural to be nervous but try not to let it show. Avoid standing at the back and position yourself where you can see the competition. Some people say a confident stare at the right time can psych out your competition.
Dress well and speak assertively. You know the old saying dress for success? It can give you the extra edge you need.
Stay within your budget
Despite what you want your opponents to think about your seemingly deep pockets, stay within your means. Set yourself a price limit before you head to the auction and stick to it. Many buyers can get too attached to a particular property and get lost in the moment, losing sight of the overall value.
Consider a buyer’s agent
A buyer’s agent is a professional who can bid on your behalf. Unlike real estate agents, buyer’s agents work exclusively for the buyer. They’re not for everybody, but there are some great reasons why buyer’s agents can help and give you a competitive edge at auction.
Don’t be psyched out
Buying a property at auction can be emotional and it’s easy to get carried away in the psychological game of an auction. Be confident, and stick to your bidding strategy.
Buyers generally budget to whole numbers, for example, $900,000. If possible, make yours an odd number, like $911,000. The $11,000 just might be the difference you need.
Break the mould
Try to avoid biding in small increments, and don’t be afraid to chuck in an obscure bid every now and then. If people are consistently bidding $2000, put in a $10,000 bid. You’ll assert your confidence by breaking the rhythm other bidders are comfortable with.
Helpful bidding strategies for auction
Here’s a few more tips and bidding strategies you can use to bid confidently on auction day.
- Make the first bid – this shows you are serious about buying.
- Meet counter bids rapidly – don’t hesitate, this tactic says, “I can do this all day.”
- Avoid slowing the bidding with smaller increments – this might come across that you are running out of money.
- When the bidding gets heated, make a knock-out bid.
It can be tough at first, but hey, you’re already putting yourself in a better position by doing some research. Now you can confidently walk into the next auction day with a few helpful tips, and you can always reach out to us for some extra help. We wish you good luck!
Successful Ways runs Australia’s most popular First Home Buyers Courses where you’ll learn how to negotiate with real estate agents, and every other aspect of the process, to secure your ideal home.
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