Bidding at Auction
This can be a very stressful experience. To prepare yourself for the auction, you should do as much research as possible and set yourself a limit on what your maximum bid will be.
To prevent yourself from potentially getting caught up in the emotions running in the room, part of your research should involve developing solid reasons for the price you believe the property is worth. Never forget that there are other properties. This will help keep your emotions in check.
Go to as many local auctions as possible before hand so you can watch and learn from others.
Read the “Bidders Guide” which can be downloaded from www.fairtrading.nsw.gov.au/realestaterenting.html
An independent valuation
If you were to ask a real estate agent what they feel a property is worth, their answer will depend on how they are managing the sale. One tactic would be to tell you the property should sell for a lower price than what it probably will. This is to get people thinking it is going to be a bargain.
An independent valuation, by a qualified property valuer, will also provide you with more guidance and hopefully stop you from getting caught in the auction hype and paying too much.
Hide your level of interest
Try not to let the agent know the full extent of your interest in the property. Agents are very good at reading people. They are experienced at highlighting the features of the property, making the property feel unique and counteracting any concerns.
The agent needs these conversations to gauge the level of interest in the property and assist the vendor in setting the reserve. If you show little interest – who knows, the reserve may be set lower.
Only Bid when it is “on the market”
Unless auction conditions state that you must be the under bidder to enter post-auction negotiations, your lack of interest may subdue the competition and you will have more chance of getting a bargain if the property is passed in.
Have a strategy
Consider how you will handle different possible situations you may face at the auction. Watching other auctions prior to this one should give you some ideas.
Think about how you will bid - ie large or small increments.
Making an offer
In a relatively flat market, making an offer before an auction can work as the vendor may be concerned with the lack of interest. The vendor may agree to a lower offer rather than go through an auction with no sale - but think carefully before doing this as your offer could set the reserve price.
In a rising market, making an offer before auction will only really work if the offer is good enough to tempt the vendor away from going ahead with the auction.
Warning
Don’t pay too much
Don’t exceed your budget
Don’t show emotion
