5 Tips for Auction Success
How to win at Auction
Worried about bidding at a property auction? You’re not alone. Auctions can be extremely daunting if you don’t know what you’re doing or have arrived unprepared.
There are many auction strategies you can employ – from starting low and keeping on bidding to placing your best and final bid first. Here are five expert tips, from our years of experience attending thousands of auctions, to help you buy the property of your dreams.
Tip 1: Know the real price guide
Something many buyers don’t realise is that the reserve price can be whatever the vendor decides on the morning of the auction, regardless of the price range supplied by the property’s real estate agents. Moreover, agents often underquote the indicative price range (then increase it gradually through the auction campaign) to get more prospective buyers through the door and create a greater illusion of competition. Don’t waste precious time and money on building and pest inspections, strata searches and contract reviews if a property isn’t actually in your price range. By doing thorough market research in advance you can also avoid bidding over and above what you should. In the weeks leading up to the auction be sure to find out everything you can about the values of similar property types in that location and set a bidding limit that is realistic and in line with current market values.
Tip 2: Get the inside scoop
The key to not overpaying is being certain of the likely selling price going in. TBAS® Buyers Agents have analysed the data from thousands of auctions to establish reliable probable selling prices. Knowing the average number of bids, average number of bidders and, most importantly, the percentage over the agent’s price guide properties sell for will ensure you have the information you need to make informed decision under pressure.
Tip 3: Do your due diligence
While it can seem like a waste of money to pay for building and pest inspections if you don’t end up buying a property this is not the place to cut corners. Given the major investment your property will represent, such costs are a drop in the bucket that can save you from financial ruin if it turns out that the property has a major flaw. Make sure that your inspection is done by a reliable building inspector with good credentials and reviews and that their report covers pests, water damage, foundations and electrical work. If buying a unit, obtaining a strata report is essential. Your solicitor or conveyancer should also make enquiries to find out if there are any submitted or approved development applications in the area or any major infrastructure developments in the works. Your research should extend to checking out the area’s history, doing a walk through at different times of day and night to check things such as noise levels, and talking to the neighbours.
Tip 4: Take emotion out of the equation
Let’s face it – emotion and drama is what makes an auction so entertaining. But the single biggest reason most people overpay at auction is emotion. Frequently, they’ve gotten their heart set on their “dream home” and logic flies out of the window in the heat of the moment when they fear losing it. Real estate agents know how to play on these emotions and get people bidding. A good buyer’s agent will insulate you from high pressure selling agents. They will be able to provide detailed information and data to support the potential sale price and will ensure you stick to your budget and not pay over the odds. Auctions are extremely stressful and emotional, so it’s important to have someone representing you who is not emotionally attached to the property.
Tip 5: Get expert representation
If you are planning on buying at auction, you should have a professional representing you on the day. Remember that the vendors have a selling agent representing their best interests and advising them every step of the way. If you don’t, you’re not on a level playing field. A professional buyer’s agent will prepare and execute a bidding strategy that’s tailored for the property you are buying and have the experience to alter the strategy if required. If the property is passed in, they will be instrumental in the negotiations post auction.