Bidding at auction for your dream home can be a stressful yet exciting experience, and several strategies will enhance your chances of winning the property.
Always be prepared for someone who has deeper pockets and a greater desire, but it’s possible to exert some control over the process.
First of all, you should gain from your lender pre-approval for a loan so you’ll know your spending limit. Then, do your homework by asking local agents about comparable, recent sales. This way, you’ll get some idea of how much you should spend.
On auction day, arrive early. Take time to have a final look at the property and introduce yourself to the selling agent and auctioneer. It pays to have a quick chat with them so they recognise you when you’re bidding, or when you want to negotiate if the property passes in.
While it’s nice to exchange pleasantries, be sure to keep secret your spending limit. You shouldn’t share that with anyone. Of course, don’t forget to register with the selling agent and receive in return a bidder’s paddle. Without that, you’re not in the game.
As the crowd gathers for the auction, position yourself so you can see all potential bidders and be able to judge their body language as the auction proceeds. It’s quite easy to sense when potential buyers reach their limit, and that’ll give you guidance how you should modify your bidding.
Experienced buyers will try to slow the process down right from the start, often bidding in odd increments. The aim is to get rivals off balance and avoid being swept up in a frenzy of bids that pushes the price higher and higher.
If the property passes in, the highest bidder has the first right of refusal on the opportunity to negotiate with the owner. If that’s you, don’t believe no one else is interested in the property. Over-confidence can see the deal slip through your fingers.
Here are some additional tips for bidding at auction:
- Register with the selling agent beforehand. You’ll need to show your ID, and in return, they’ll give you a paddle with your unique number on it. Wave it at the auctioneer, and you’ll be bidding.
- Position yourself strategically within the crowd. You want to see everyone and gauge from body language the serious buyers and their spending power. You can usually tell when someone has reached their spending limit.
- Bid slowly. You can do this by going up in different increments, such as $10,000 with one bid, and then $12,000 with the next. Everyone pauses to do their sums, and you begin to control the speed of the auction.
- Avoid fast-bidding. Buyers get carried away when the pace picks up and they can over-stretch. You don’t want to be one of those bidders.
- If everyone is staring at each other and not bidding, be courageous and take the plunge. But don’t go in with a round number like $500,000. Instead, offer $485,000 as this means there’s a temptation to cool the bidding to $5k increments instead of $10k.
- Don’t go high early on. That seems obvious, but what you’ll do is convince the agent and auctioneer that you have the funds to go beyond the reserve, and they’ll push hard to get you there.
- With online auctions, you should group your bids and go hard when the time is right. Because there is no element of body language involved, others will think they have no chance to beat you and will likely back-off. This psychological strategy best places you to clear away the opposition and win the property.
