It's a fact of property life that a lot of good real estate is sold via auction.
It's also a fact of property life that not many people know how to bid at auction, let alone, how to win!
In fact, the vast majority of bidders at an auction are nervous wrecks who end up going way above their limit because they just have to "win". The problem is they often end up the loser anyway because they pay way over the odds for the property.
At Right Property Group, we've literally attended hundreds of auctions on behalf of our clients and we know the difference between a good and bad auctioneer, and a prepared and unprepared bidder.
We have a number of strategies that we use to make sure that we have the best chance of being the winning bidder – but we never ever go above the agreed limit. Never.
You see the main problem with auctions is that people get emotional due to their Fear Of Missing Out or FOMO.
That's why auctions are such a sound selling technique. The sense of competition that's created on the day by all the bidders being there physically and by the auctioneer saying such things as "It's against you sir or madam" means that the majority of people get carried away. Of course, that makes the vendor, the sales agent and the auctioneer very happy, but the "lucky" new owner has likely paid far too much.
Long before auction day we do our due diligence on the property, complete all the necessary inspections (which must be done before an auction so bidders need to get used to forking out some money to be prepared, whether they win or lose), and we also do thorough research on the agent and the auctioneer.
This is where relationships with agents are paramount so we can discover as much information as possible about the property, the vendor and their motivation for selling. This intel can help determine our auction strategy, including establishing what special conditions may be negotiated before the day, such as a longer settlement or a lease-back agreement.
One of the special things we do at RPG is to study the auctioneer, because there are some good ones out there but there are also some bad ones. The bad ones are quite mechanical in nature and can give their game away because they use the same tactics every time they call an auction. So, to learn their "tricks", we go to a few of their auctions beforehand where we might learn how they open and close the auction and can therefore adjust our strategy to suit theirs.
It goes without saying that all bidders must have finance approved before an auction (not pre-approved) as well as understand the peculiarities of the auction legislation in the state or territory that the property is located. You must also know the specified deposit amount that will need to be paid on the day if you are winner.
One of the most significant skills, however, is to keep to your pre-determined price limit on auction day.
Whatever price has been decided you must not go offer that amount. No matter what. You also should never write it down on a piece of paper and have it in plain view of other bidders (like me!) on auction day for very obvious reasons.
Also, don't get pressured by agents who are attempting to siphon more money out of you during the auction. Just say, "I'm good" and they'll literally move on to their next target. A good strategy is to stand at the front, either left or right, so the auctioneer can see you and you can see the other bidders, too.
So, the secret to winning at auction is to be prepared and to understand that the devil is in the detail. You must know your limit, have your finance approved, complete all required due diligence, and not suffer from FOMO when it matters the most. If you're worried about getting too emotional during an auction and going over your limit, then it makes sense (and will likely save you loads of money) to use a professional to act on your behalf. That way, your limit will be your limit, no matter how much you plead with us to bid just one more time on your behalf. We're quite good like that.
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