10 Tips for Auction Success
Whether you are new to auctions or have dabbled in them once or twice, experienced Cohen Handler Associate, Arija McQuillan shares her 10 expert tips on how to bid and win at an auction.
Rare is the person who loves buying at an auction. For most people, it is an intimidating and confusing process that requires a bold execution and emotional control.
If you keep missing out on auctions, you are not alone. Research has found that more than half of those in the market don’t know how to handle bidding at an auction and felt they had missed out on the home they wanted as a result.
The following tips will prepare you for all the bidding action, save you time and money and, most importantly help you win that property:
- Be Prepared − Find out as much information as you can prior to the auction including undertaking a building and pest inspection and reading through the contract. Don’t always expect an accurate answer (they are on the vendor’s side after all) but you should ask the real estate agent the following:
- How many contracts are out?
- How many registered buyers are there?
- Where does buyer interest lie?
- What is the reserve price?
- Understand value – To help you understand what a property is actually worth, do your due diligence on comparable property prices for a similar type of property in the same or neighbouring area. If you are an investor, double check any claims about rental yields achievable. This will all help you formulate the price that you are prepared to pay for the property.
- Set your limit – Once you understand the property’s value, set the maximum price limit you are prepared to pay, i.e. your ‘walk-away’ price. Come to terms with the fact that if the property was to sell one or two bids above this maximum price, you would be okay about it.
- Strategy – With all information at hand, prepare a strategy for bidding on the day. Go to a number of auctions beforehand and watch how others successfully do it. It will make you more comfortable and familiar with the process and you will be better able to develop your own strategy. Be prepared to be a little flexible depending on what unfolds on the auction floor on the day.
- Arrive early – Always arrive early to an auction so you can get a sense of the competition. It’s also important to keep your eye on the registration table to assess how many people are interested in bidding.
- Position – Don’t underestimate the importance of where you stand during an auction. You want to position yourself somewhere where the auctioneer can clearly see you and where you can clearly see the other bidders. Don’t go hiding up the back.
- Confidence – It is critical to exude confidence on the auction floor. If you are there to buy the property then act like you already own it.
- Open bidding – I am a firm believer that opening the bidding gives you control and allows you the opportunity to set the increments at which the price goes up. In addition, the earlier you enter the bidding, the more seriously you’ll be viewed.
- Bid strong – Be determined and bid strongly. After the auction has started − and you have opened the bidding − maintain your position and don’t pull back or wait to the end to re-enter the game. Make it crystal clear that you are here to buy the property. Create the impression that you will continue bidding no matter what, which will hopefully psych out some of the other bidders.
- Walk away or win – The best case scenario is that you are the highest bidder on the day and you successfully buy at auction. But if bidding goes above your budget, you need to be prepared to walk away. It is critical not to get emotionally attached and potentially overpay or spend money that you really don’t have or really don’t want to spend.
While buying at an auction is never simple, it can be rewarding if you put the time into your research, adopt a firm bidding strategy, be bold and stick to your maximum price.