These are the tips every buyer needs to be well-positioned to win on auction day.
Buyers vie for a property by eyeing the competition while raising their paddle, hoping to be the highest bidder. One of the most popular ways to sell property in Australia, auctions, more often than not, achieve a higher sales price, and for the buyers, it is the most transparent way to purchase property.
Whether it’s your first time bidding, or if it has been a while since you’ve attended an auction, it is normal to feel stressed, anxious and excited during the lead-up and on the day. Knowing how to best prepare for an auction and how to handle yourself on the day will well-position you to securing the property.
We spoke with the NSW Chief Auctioneer for Belle Property, Andrew Robinson, to get his auction day tips for buyers.
Get your finances in order.
Before you register to bid at an auction, ensure your finances are in order. Having pre-approval from the bank means you know what you can afford. What price you’re willing to pay, and what your absolute stretch price is. This will shape your strategy come auction day.
“If you’re successful at auction, you will need to have a 10 per cent deposit ready to go on the day. To avoid any embarrassing hold-ups, make sure your maximum bank transfer limits have been lifted, and your bank is aware that a large sum may be transferred from your account,” advises Andrew.
Become familiar with the auction process
A golden rule of auctions is to never bid at the first auction you attend because there are too many unknown variables. Instead, visit as many auctions as you can in the area you’re looking to purchase to become familiar with the style of different auctioneers and sales agents. You will get a strong idea of who the competition is and the demand for similar properties.
“Buyers should always attend several auctions in the area they’re looking to purchase in before they bid themselves,” says Andrew. “Watch how people bid, the different strategies they use, what increments people increase by, the pace of the auction and how the auctioneer manages the auction. Being armed with all of this information will only help you when it comes time for you to bid.”
Do your due diligence.
Buyers need to do their due diligence because once they have the winning bid, it’s too late for them to pull the brakes on the sale because they had forgotten to have a building or pest inspection done. Before auction day, have the reports of all your building and pest inspections back, have the sale of contract reviewed by a lawyer, including checking the terms of sale and settlement period.
Know what the property is worth by asking the selling agent for comparable sales, or jump online and do your research with realestate.com.au and Domain who offer data around recent sales in the area.
Finally, register to bid. Familiarise yourself with the rules of your state – do you have to register before you can bid? What happens when the property passes in? When do you know once it has hit reserve?
Plan your strategy
Andrew advises that you should have an auction day strategy. Meaning you should know how you will bid, at what stage you’re going to start bidding, and how much you are prepared to bid. Buyers need to know beforehand how much they would like to spend and their stretch limit – what you can reasonably afford without impeding your quality of life. Set a firm limit and stick to it.
“It’s really common for buyers who are not comfortable with bidding at auctions to engage someone to bid on their behalf. This is a fantastic strategy as having a neutral person who is not financially invested means the bidding will not be emotionally driven,” explains Andrew.
Top auction day tips for buyers from an auctioneer
- Only bid if you intend to buy. If you win at auction, it’s yours to keep.
- Introduce yourself to the auctioneer. They will remember you and look for you when seeking any higher bids. If you’re not successful this time around, they will look out for you at other auctions.
- Auctions are highly unpredictable and emotionally charged. Stay calm and master your poker face. You don’t want to give too much away.
- Auctions always have an open home inspection just before the auction begins. This is your opportunity to take a final look at the property, the contract and auction rules.
- Keep your eyes on the competition, especially when the bidding slows down. You can tell a lot by someone’s body language and who they’re talking to that’s around them.
- Never start bidding with your maximum amount – if you get caught up in the excitement and bid more than you can afford and win, that property is yours to keep.
- Just because an auctioneer requests bidding in certain increments, that doesn’t mean you have to comply. You can control the auction by bidding in odd increments – it forces the auctioneer to do more challenging arithmetic and naturally slows the pace.
- The sales agent and auctioneer are under the most pressure. They may try to rush you, but you can take a moment to think. If they believe you have more to bid, they will wait for you.
For more tips on auction days for buyers, speak with your local ACTON agent.
By Belle Property