I recently sat down with Michelle McKinnon from Aussie Home Loans to talk all things auction for the Aussie Blog..
Buying at auction is increasing in popularity in many capital cities around the country. If, like me, you’ve never had to bid at an auction it can be hard to work out what’s the best auction strategy.
We’ve gone straight to the source and asked Stuart from Benson Auctions our top questions on buying at auction and how to prepare.
Q. Should buyers start on a high bid or low bid, and doesn’t it make a difference?
In my experience, bidding high (but within your limits) can knock many other buyers out of the competition. You’ve either completely out-bid their limit, or you’ve come out of the gates so strong that there is a belief that it may be too hard to compete with you. Besides, an auctioneer will tell you if you’re too low!
Q. What tactics do auctioneers use to get buyers to bid more?
A lot of the flow of an auction is momentum – we are there to create it, maintain it, and to allow everyone the opportunity, funds willing, to be able to buy the property.
An auctioneer will give a bidder time to speak to their buying partner or perhaps someone on the phone. We understand what’s at stake, and being flexible with our time, and to a degree the bidding increments, will allow the market – not the auctioneer – to dictate the final sale price.
Q. What tactics have you seen people use to win auctions?
The most common tactic in the current market is, as mentioned previously, is for a bidder to come out of the gates with a strong, commanding and high first bid. We saw on ‘The Block’ with buyers advocate Nicole Jacobs’ opening bidding at $1.7m, which actually took three of my buyers for Jess and Ayden’s apartment completely out of the running.
The Sydney market is moving so fast that missing out on a property might mean having to spend a few thousand dollars more for the exact same type of property just one week later. Because of this, many bidders are leaving it all out on the auction floor.
Q. How should buyers handle their first auction?
Research! Go and watch other auctions, particularly in similar price bands or for comparable properties. Like anything in life, experience matters. Also, work closely with the real estate agent; speak to them throughout the campaign and build a rapport.
That will ensure that the auctioneer knows who you are, and will look for you throughout the bidding. Get a good night’s sleep, ask as many questions as you need to, and allow an extra 15 minutes travel time, no matter how well you know the route.
Q. What are some things that people do during auctions which auctioneers hate?
I love all types of auctions, but the one thing that can get a bit old is the clearly low-ball offer. Whilst I can appreciate that if you don’t ask, you don’t get, the reality is that if an agent has advertised or expressed that bidding is expected from $900K, an auctioneer is simply not going to accept an attempt to start bidding at $500K.
Another funny one is the age old question ‘is the property on the market?’ The property has been on the market since the day it was advertised for sale. The more pertinent question is an auctioneer’s reply – ‘Sir/Madam, are you buying? You’ve got three chances to find out; first call… second call… third and final call.’
Q. Top tips for bidding at auction?
- Get a good night’s sleep and leave home early;
- Bring your ID and cheque book;
- Be flexible in your limits if this property ticks all your boxes – those properties can be few and far between, and property should be purchased with a view of long term investment;
- Make sure you’re prepared and do as much physical and online research before the auction as you can; and
- Keep in regular contact with the real estate agent.
Have you bought at an auction? What approach did you take?