Tips for buying at auction

I know that many property investors are a little intimidated by the thought of bidding for a property at auction.

I can understand why auctions are an emotional and exciting event.

Even after bidding at hundreds of auctions, I must admit I still get that surge of adrenaline every time I bid.

Then of course there’s the lead up to the auction with all the suspicion surrounding what the vendor really wants for his property, is the agent underquoting and enticing me to come along on the day, how much competition will there be.

Or the heartbreak many investors feel when falling in love with a property just to be outbid by someone with deeper pockets.

But if you avoid properties that are up for sale at auction, you’re going to miss out on a lot of good buying opportunities as usually the best properties are offered for sale by auction.

An this doesn’t only apply to Melbourne and Sydney anymore – auctions have become a popular method of sale around Australia.

What to do on the day

1. Arrive early – survey the landscape – see who else is there.

2. Do they look like serious bidders (they’re inspecting the contract, saying the right things) or are they just onlookers?

3. In today’s strong auction climate use the psychological advantage of projecting confidence – make the other bidders think you have deep pockets and no limit.

4. Open the bidding high, close to where the reserve will be (the property won’t sell below this), and make your bids fast and assertive. Procrastinating or agonising over your next bid is a sign of weakness.

5. Call out your offer in full (in other words say $550,000 instead of the increments just $5,000).

6. If it’s going to pass in, make sure you are the highest bidder, as this allows the first right to negotiate with the vendor.

7. Be prepared to miss out. Stick to your ‘walk-away price. After all, you’ve done your homework and you know what this particular property is worth to you. If you miss a property at auction, except that it wasn’t meant to be and look forward to finding something better soon. While no one likes to consider themselves the ‘loser’ in any sort of negotiation campaign, it’s far better to walk away and live to fight another day than over-commit to a property you’ve become emotionally blinded by.

Link: 13 tips for buying at auction (propertyupdate.com.au)