For many people, bidding at auction can be a daunting task. There are many things to consider, some of which require good judgement calls and quick responses.
- Do I open the bidding or hold back and wait?
- If I open the bidding, do I open high or low?
- What demeanour should I portray at the auction?
- How do I take control of the bidding process?
- How do I best fight off competitive bidding on the day?
- If the property looks likely to be passed in at a figure I can afford, what do I do to ensure I am open to the negotiation?
- If the property is passed in to me, how do I handle the negotiation so that I don’t pay too much?
These are only some of the many issues that may need to be dealt with at auction and if not handled professionally, can often lead to you either missing out on a property you really want, or possibly paying more than you needed to.
Rules to follow
To put all your chances on your side, you should engage the services of a professional buyer’s advocate but if you choose not to, here are some handy hints that may help during an auction:
- Never give the selling agent a hint on the price you may be prepared to bid to for a property.
- On the day of auction, arrive early and try to get a feel for who else is there and whether they are genuine buyers or just onlookers.
- Before the auction begins, place your self in a prominent, visible position in the crowd.
- Always project confidence throughout the entire auction process. It makes the other bidders think that you have deep pockets and no limit.
- Decide on the day if you are going to open the bidding or hold back. This will often be determined by the level of interest in the property. As a general rule, hold back when there is minimal interest; go hard early when there is strong interest.
- If you hold back in the first instance, ensure you are loud, clear and authoritative when you eventually enter the bidding.
- Call out your bids in full (in other words $700,000 instead of just increments of say $10,000).
- Avoid breaking down the bidding increments too early as it often signals a sign of a weakening buyer with not much capacity remaining.
- If you choose to break down the increments, don’t ask the auctioneer, tell him. In other words, don’t ask him if he’ll take $5,000 bids…just call “take 5” loud and clear.
- If the property is going to pass in, make sure you are the highest bidder, as this allows first right to negotiate with the vendor.
- If the property is passed in to you, remember that the next most interested party was only prepared to go to a price one bid less than your bid. To pay a significant sum higher than your auction bid may therefore be paying too much.
- Be prepared to miss out by “walking away” at anything above your predetermined limit. There will always be another opportunity.
- If you are uncomfortable bidding at auction, engage a professional. It can save you stress and often save you money.
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The content of this article was written by Shane Heffernan, Managing Director of BidPro. The information contained in it is general and is not intended to serve as advice. DPM Financial Services Group recommends you obtain advice concerning specific matters before making a decision.
Shane Heffernan – Managing Director, Bidpro Property Advocates