Auctions can be very stressful and confusing for both buyer and seller on the big day. The real estate agent is trying to get a realistic reserve off the seller, and the buyer is trying to purchase it under that reserve.
At the end of the day both buyer and seller hopefully meet in between, and a sale will occur.
The hardest part of an auction is working out what the sale price will actually be at the end of the day. With new laws brought in by fair trading agents are now required by law to quote a price that is within 10% of what they have put on the sellers agency agreement. For the first time since the law got introduced in 2002 a prominent agent in Lane Cove has just got heavily fined by fair trading for under quoting a property by $300,000. The proposed buyers complained that they had spent money on pest and building inspections, lawyers, and wasted time to be told on the day that it was sold for $300,000 more than they were quoted. In a few words they were furious.
There are many creative techniques that can be used to beat your opponent at auction, and I will be going through a few of these today in my column.
A good tactic at auction is to know first of all that you are in control of your destiny, but most of all your money. Set a limit and stick to it.
If the auctioneer says that they are moving in $20,000 bids give him $5,000, if he or she doesn't like the colour of your money at $5,000 tell them to come back to you at a later date. The idea is to slow the auction down and concentrate on taking control of the auctioneer, and doing that will then lead to achieving a lower price.
The next tactic would be to make sure that where you position yourself at auction enables you to take in full view of your competition. It's important to read your competition so that you can see when they are coming to their limit.
And most importantly once you have set your limit, be sure to bid strongly and confidently so that the other competitors cannot read when you are getting to your limit. Make your performance a dramatic one, so that when you are bidding confidently the competition thinks you have money to burn, and that you will be buying it no matter what price it sells for.
If the auctions are in rooms be sure to attend early so that you can get a feel for the auctioneer and how they operate.
Register on the day for bidding not beforehand, because if the vendor gets a lot of pre registrations the week before the auction he or she will get greedy and set a high reserve.
It's important to get comfortable with the auction process, so a good idea would be to visit some auctions the week beforehand to see what goes on, or arrive early on the night and view some auctions before yours, that is if you're not up first. And by the way if you are up number one look forward to having some stiff competition on the auction floor, because the auctioneer always puts up the best properties first to get a good positive hype going in the atmosphere, so that buyers dig deeper into their emotional pockets.
The auction method is used widely around Australia, but where it is mostly used is Melbourne. And believe it or not they have only in the past two years started doing auctions in rooms. Yes every auction was done on site up until then.
What is also very common these days is hiring a professional buyer's agent to do all the bidding and negotiating for you at auction.
These people are very well trained at using bidding techniques to get a lower purchase price on the day.
Shop 1, 696 Military Road
Mosman NSW 2090
E. enquiries@pkproperty.com.au