It can be intimidating to go into an auction wanting to buy. Emotions run high and it’s easy to get swept up in the excitement.
But you need to keep a cool head when bidding so you don’t make any purchase decisions you may come to regret. We’ve come up with some hot tips to ensure you make the right buying decision at the next real estate auction you attend.
Pre-auction preparation
It’s important to carry out thorough due diligence ahead of an auction, so you know all you need to about the property. In some cases, you might even choose someone who is experienced in bidding to do the bidding work for you. This needs to be organised before the auction, so speak to your real estate agent ahead of time for more information.
Due diligence ahead of an auction
There are a number of steps you need to take before you venture out to the auction. Firstly, you need to ensure all your finances are approved and your deposit is ready to go if you win the bid.
It helps to attend other auctions to see how they work and to prepare yourself for what will happen on the date. Take special notice of the auctioneer and his or her language, just so you know what to expect.
Make sure you thoroughly research the building and others in the area to see how much they are selling for, rather than simply the asking price.
Understand the market and the area and decide on your budget and the most you want to pay for the property.
Make sure you keep your ideas and budget a secret: don't share it with real estate agents. Normally, real estate agents are very smart at getting information from potential buyers and, if they know how much you’re willing to pay, they’ll make sure you max out your budget! Play your cards close to your chest and don’t give away your negotiating and bargaining power.
If a real estate agent knows how much you plan to pay for a property they can also use it to influence other buyers or tell the vendor the reserve price he or she should set their property at.
Before you go to the auction, get in touch with your lawyer to smooth out the contract and make sure it’s ready to go should you win the bid. It helps to have an experienced buyer agent at hand to give you expert advice before the day too.
Remember that auction sales are binding so ensure you have completed any required building inspections as there won't be a cooling off period in which to do them.
What to do on the day of the auction
On the day of the auction, arrive early so you can see what the atmosphere is like. Do the other bidders seem serious or are they simply scoping out the scene?
It’s important you exude confidence to make it seem like you have a lot of money to throw at the property, as this will scare other buyers off.
Start by bidding high, around the reserve price, and then be quick and assertive with follow up bids.
If you ‘um’ and ‘ah’ over a bid, then it could show you’re lacking confidence and another buyer might trump you on the purchase.
When bidding, announce the full price you’re willing to pay, so $750,000 rather than just an extra $5,000, and so on. This way the bidding is clear.
If you feel the house is going to pass in, ensure you were the one who bid the highest because this will give you negotiating power with the vendor.
Things to remember throughout the auction
Understand that, if the bidding goes over your budget, you should just walk away. Try not to get caught up in the heat of the moment and pay more for the property then you planned – as you might end up regretting it later.
Keep your chin up if you don’t win the auction – it simply wasn’t the house for you and put it down to bidding practice for your next auction!
By Darel McBride
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