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Bidding at auction is undoubtedly stressful and an uncommon situation. At the end of the day, it’s a high stakes game of chance. Like with any game, the more prepared you are, the less you leave to chance.
While there’s no universal approach, there are tactics you can use to make yourself look and feel as though you’ve got an edge over other bidders. Simple things can have a big impact on your auction hopes. Who accompanies you to the auction, your behaviour on the day, where you stand and how you go about your bidding can all make a difference.
In fact, this approach was successfully used by James Turner and his partner Leon Williams at a recent auction in Sydney’s Inner West. The two-bedroom Petersham home was snapped up $100,000 under their limit. James’ mother, Freya, who attended the auction with her son, said this was all down to their detached and considered approach.
“We were very conscious that we didn’t want the auction to run away in a bash of emotion. We took our time with each bid and kept very quiet”, she says.
“No one wanted to make the opening bid, so we started it out at $100,00 under the reserve,” Freya recalls.
“The auctioneer began asking for $25,000 bids, but we deliberately kept slowing it down with smaller bids”, she says.
So what are the top tips for bidding at Auction?
Know your limit
You should always know your walk-away price before going to auction but this is not something you should just set and forget. Take the time to research and analyse what your limit will be so you don’t find yourself in a bidding war, unsure about what the ramifications of exceeding you walk-away price will be.
Set the tempo
Auctioneers and agents can be pushy and often ask for larger bids. Don’t be scared to let the bid increments drop even if the auctioneer is asking for larger amounts. If no one is making a bid, start dropping your increments and see what happens. You never know when someone might panic and start to bid again.
Remain calm
Stress, fear and excitement will cloud your judgement, so it pays to stay calm and collected to ensure you’re bidding for the right home for you.
If you know that your partner will make you nervous, go alone to the auction or bring a friend who can help you stay within your parameters.
Confidence
Your body language and facial expression are constantly giving other bidders clues. Be self aware, stand tall, bid loudly and clearly. Confidence is key.
There are a number of sale strategies that auctioneers and real estate agents employ to try and force higher bids. You’ve got to do your best to ignore these, particularly when they try to force you to bid against yourself.
Take James and Leon’s case as an example: “It was when the bids had dropped to $5,000 and $10,000 increments that we decided to jump up suddenly with a $15,000 bid. We wanted to show we were serious about the sale. It worked. Bidding halted even though we were still $80,000 shy of the reserve.”
At this point, the agent told Freya and James they would close the deal if they agreed to bid an extra $50,000.
“He tried hard to push us, telling us it was an opportunity not to miss, but we stood firm. We knew that we might end up bidding against ourselves, so we took the risk to let the auction run its course.”
Freya concedes this difficult decision wouldn’t have been possible if they hadn’t kept calm. This was the reason Freya went to the auction in place of her son’s partner Leon: they had to control their emotions and remain detached.
The auctioneer backtracked and declared the house on the market. They invited bids of just $1,000, but no one budged. Without another bid, James was able to purchase the property for $1.1 million – $100,000 less than the advertised sale price.
Importantly, Freya said they never laid eyes on the other bidders. How? The positioned themselves front and centre in front of the auctioneer.
“Although we couldn’t see the bidders, they could see us. James was holding the contract, with sticky notes poking out. There would have been little doubt in their minds that we were here to reach a sale.”
Formal pre-approval
One crucial step to take before going to an auction is arranging a formal home-loan pre approval. Have your finances organised will give you confidence, peace of mind and help you stay within your walk-away price limit. You’re much less likely to get into a bidding war if you know the limits of your borrowing power ahead of time.
Unsure about what’s involved in the pre-approval process? Reach out to us today to learn more!
