Property Observer- Five tactics that give you the best chance of winning on auction day
1 December 2014- A home will be sold to the highest bidder, simple as that. But there are ways you can tactically prepare to be at the end with the last bid.
As a prospective buyer, you will see a lot of places before you find 'The One' but even after you find what may be the perfect place for you, you need to put together a strategy to ensure you are successful on auction day, or at least give yourself the best chance of succeeding.
An auction can be a very nerve racking thing, and not having a strategy can result in you just missing out on your dream home, or even overpaying drastically for a home, that whilst you wanted it, has been sold to you for a price that is way out of your budget.
To avoid that happening you can put in some very simple strategies to make sure you stick to budget and follow a plan when the emotion kicks in. Here's how.
1. ESTABLISH WHAT IS MOST ESSENTIAL
It's really easy on auction day to get caught up in some things about a property that aren't specifically catered to what you want.
Before you go to any auction, have some certainties about how many bedrooms you want, bathrooms, parking spots, etc. Once you have these fundamentals sorted that should match to the figure you want to spend. If the property has some further benefits but starts to go out of your price range, try and pull back.
You didn't come to the home because of it's sauna, or jacuzzi, and trying to justify an extra $50,000 or $100,000 for features that you didn't say were essential can cause you to regret your purchase. Make sure you only focus on the essentials and don't spend more for things you don't require
2. PRACTICE, RESEARCH, PRACTISE, RESEARCH
When you have decided on a property that may be for you, you will likely have a few weeks before the auction. This can give you time to go and watch similar homes up for sale around the area.
Whilst they may not be exactly the same, try and go along and see how your bidding strategy would go on the day in that circumstance.
Also notice how other people bid, and both take a note on how you would respond if they acted like that on the day of the auction you want to buy, also try and envisage how your bidding strategy would go on the day.
Because you aren't emotionally attached, focus on dropping out when your budget has gone. This will help you on the day to know when to pull the pin if it has gone over budget.
3. ENGAGE TWO AGENTS
There are two agents you should have on side come auction day. The first is the selling agent, who should know your interest by engaging with them through the campaign.
Explain your budget to them and why you are interested, once they understand why you are buying it and the needs you have, they will know how to keep you engaged on the day. Secondly, you should engage an agent that isn't involved in that selling process.
Try and find a friend that works in the industry, explain your motivations for buying the home and what you want, also see how they suggest you act.
You can also call a competing agent, explain that you are interested and ask them for an honest valuation. They will be likely to help you because they will want to engage active buyers, and if you don't buy that property, you may be interested in one of theirs.
4. DRESS TO IMPRESS
"Dressing to impress can create the impression that you have an endless budget and can intimidate others so they stop bidding earlier," says Frank Valentic, a buyer's agent and director of Advantage Property Consulting.
Something as simple as appearance can knock people's confidence right out of the park. Turning up to the auction in a nice suit can make people wonder if you are bidding for yourself, or for someone else.
This can play on their mind and sometimes make them relent because they don't feel they stand a chance. People will respect you purely based on your appearance, so it's something to keep in mind.
5. BID WITH SUPREME CONFIDENCE
Part of an auction is guesswork. How much money does the other person have and should I stop because I don't stand a chance. A lot of people will be keen to keep bidding if they feel you are on your last bid, or every bid is a tough decision to make because you are close to your max. They will want to break you over your budget.
On the other hand, if you bid supremely confident up until your max, you may have them second guessing their chance to buy the home, as your pockets will seem much deeper than they really are.
If you are bidding for a home valued at $700,000 - $850,000 and you're happy to spend $850,000 when the bidding is at $720,000 go for a bid that gets it to $750,000 - this is really only maybe one or two bids advanced from where the auction is currently at, and the agent will most likely take $10,000 rises, but by placing that bid, you show the competition you are serious and could psyche them out from bidding further.
You need to approach this with confidence and determination you will win the home.
These tips will help you approach your day at auction. By putting this in to place, you give yourself the chance to succeed. And if you don't win the home on the day, don't be despondent.
Be proud of yourself that you stuck to your strategy and really persisted, and have confidence in the fact that the right thing will come up for you soon.
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