Here are Bryce Holdaway's top tips when buying at auction.
Why is it that auction process is hated by most buyers AND sellers but yet much loved by the real estate agent? Well, the answer lies in understanding what’s in it for the agent.
Auctions provide the following benefits to them:
• Vendor paid extensive promotion offering the agent great publicity with their branding prominent in the advertising
• It can attract buyers and sellers for other properties the agents have
• It filters out the genuine sellers as a result of the owner committing to the advertising and auction costs
• There is no cooling off period on auction properties – once the hammer goes down the agent banks their commission
• They can become desensitised to the auction process because they are doing them regularly as a systematic part of their profession in auction areas, and so they are largely unaffected by the emotion attached to them from both the buyer and sellers perspective
Robbie and Bec were not keen about going to auction at all and they were real estate rookies and saw it as a barrier to entry for them. Ultimately, the most common reason that buyers are reluctant to bid at auction is that they are concerned about paying too much in a highly emotional environment.
To make sure you don’t pay too much, here are my top 3 tips to buying at auction:
1. Have an intimate understanding of value
If you know the value of property in the area you won’t pay too much. Only people who are flying blind end up paying too much for a property. This means you need to inspect up to 100 properties – if you can’t do this or bid with confidence, then get a buyer’s agent to do it for you. And remember value is different to price – don’t rely on the agents price guide rather know exactly what has sold in the area that is comparable.
2. Slow down the bidding
As a bidder, your goal is to get the bids to $1k increments as quickly as possible. This is quite easy to do with an auctioneer that is inexperienced or lacking confidence; however an experienced auctioneer won’t let you! So, in this situation you will need to be creative and employ clever tactics. For example, when the auctioneer is inviting $10k bids you can bid $13k instead of the auctioneers’ increment of $10k. Whilst this sounds counter intuitive to slowing down the bidding by offering more the strategy starts to unfold on the NEXT bid. As auctioneers are humans to, they will likely accept the next bid to round to nearest $10k… effectively taking a bid of $7k. So your next bid is to match this – offer $7k. Again in attempt to round off to the nearest $10k, the auctioneer will likely accepts $3k bid which you will happily match. Before you know it the auction has slowed down and you will get it to $1k
3. Strong confident bidding
An auction is on part street theatre one part bluff and it’s a game of letting the other bidder think you are a confident and professional buyer… basically your there to buy! Body language is critical at auctions - I want to read other bidders poor body language and I want to project confident body language. To assist with this game of bluff, you need to offer strong and quick counter bids to never let your competitors have the satisfaction of ever being in front and ultimately create the illusion of having deep pockets… even though you do have a limit!