AUCTION…a word that for whatever reason, strikes fear into the hearts of many! Today, it’s time to dispel the myths that surround auctions. Many buyers, especially those new to the buying process, can feel a certain reluctance to bid on a property that is up for sale by Public Auction. Unfortunately for these hesitant buyers, the majority of properties in the Inner West (particularly in the Strathfield market) are sold this way. Therefore, those people who are unable to overcome their apprehension towards auctions, will not only miss out on some of the most desirable properties, they may also miss out on some of the best buys. Let’s take the mystery out of the auction process so that you’ll feel empowered to attend an auction and bid with confidence. There’s no doubt that there’s a lot of emotion involved with both buyers and sellers on auction day; my 10 simple tips may just give you the psychological advantage and competitive edge to help you secure your next home.
- Attend some auctions:Get to know both the agency and the auctioneer who will be conducting the auction of the property you’re interested in. Ask the agent who the auctioneer will be and see how they perform at auctions in the weeks leading up to the auction of the property you’re hoping to own. You’ll soon discover that not all agencies and auctioneers are the same.
- Be prepared:Make sure you’ve done your homework by ensuring your solicitor has had the opportunity to ensure that all reports, paperwork and terms satisfy your needs. On the day of the auction make sure you confirm with the agent that there have been no last minute changes to the contract.
- Arrive early:Inner West traffic, particularly on a Saturday, can be a nightmare; so don’t be late. You will need to register to bid before the auction, so ensure you have a drivers licence or another prescribed form of ID with you. If you can’t attend, it is possible to have someone bid on your behalf however you will need to ensure the appropriate paperwork is in place.
- Position yourself wisely:Stand near the auctioneer so that not only can you see who your competition is, more importantly your competition can see you.
- Be first out of the gate:It’s important to take control of the process and stamp your authority on proceedings early…open the bidding yourself. Even if you start the bidding on the lower side, you’ve taken control and set the tone.
- Bid confidently:Never give your competition the impression that you’re running out of money. Hesitation will usually only encourage others to bid more so bid with confidence endeavouring to ‘knock out’ the competition.
- Bid in larger increments:Many buyers think that by giving a smaller bid (say $1,000) that they’ll ‘save money’. From my experience, the opposite usually happens; no one can judge the value of a property to within a few thousand dollars. For example: if someone bids $1,001,000, the temptation is to increase the bidding in $1,000 increments (which can go on indefinitely). If however you were to bid $1,010,000 you may just shut the competition down and secure the property; therefore whilst you’ve effectively paid only $9,000 more than someone else, you could potentially have saved yourself thousands.
- Never end on a round number:Whilst it’s important to stick to an upper limit, I suggest that you don’t make this an even amount. For example; if you’re thinking of making $1 million your limit and another buyer happens to have the same limit, what happens if they have the bid that lands on this amount? You miss out! By setting your limit at say $1,010,000; you may just give yourself the strategic edge that secures the property.
- Don’t wait until the auctioneer announces the property is ‘on the market’:There is no legal obligation to announce the property ‘on the market’ and most astute auctioneers won’t use this term at all. If the property has reached the vendors reserve price and you are the highest bidder, you’ll secure the property. If it’s not at the reserve price, then at least as the highest bidder, you’ll have the first opportunity to negotiate. If post auction negotiations are to take place, you want to be in the box seat. Remember though that your limited opportunity to negotiate exclusively is lost the moment you do not agree to pay the vendors reserve price.
- Be prepared to increase your highest bid:If you are the highest bidder and the property has not reached reserve, don’t be afraid to increase your own offer. This will provide you with the best opportunity to secure the property. During the auction is generally the time that the owner is most open to negotiation.
Whilst these tips will never 100% guarantee you’ll be successful at auction, they’ll certainly go a long way to dramatically improving your chances!