As one of the most popular methods of selling property in Australia, an auction can often achieve a higher sales price for a vendor while being a highly transparent way for a buyer to purchase property.
Whether it’s your first time bidding, or it’s been a while since you last attended an auction, it is normal to feel stressed, anxious and excited during the lead-up and on the day.
In this blog our Chief Auctioneer, Andrew Robinson, shares his top auction tips for buyers—including how to prepare beforehand and handle things on the day.
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 percent 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.
UNDERSTAND THE AUCTION PROCESS
As a rule, the first auction you attend shouldn’t be the one you intend to bid at. Instead, become familiar with the style of different auctioneers and sales agents by attending as many auctions as you can in the area you’re looking to purchase in. You will also 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 buy into 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 this information gives you an advantage when it comes time for you to bid.”
DO YOUR DUE DILIGENCE
Buyers need to do their due diligence before the auction because once you place a winning bid, it’s too late to then put the brakes on the sale. Before auction day, make sure you have your building and pest inspection reports done, and the contract of sale has been reviewed by your lawyer, especially the terms of sale and settlement period.
Get a good understanding of what the property is worth by asking the selling agent for comparable sales, or jump online and research 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? How do you know once it has hit reserve?
PLAN YOUR AUCTION STRATEGY
It’s imperative to have an auction day strategy. This means you should know how you will bid, at what stage you’re going to start bidding, and how much you are prepared to bid. Be clear about how much you want to spend and your 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 Carolyn.
Tips for auction day:
• 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 to avoid giving 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 nearby.
• 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 a lot of pressure and 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 auction day tips and expert advice on buying speak to your local Belle Property agent today.