Home buyers going head-to-head at property auctions across the country this spring selling season need to remember one key thing: confidence is key.
While buyers can't outspend a competitor with more funds, there are steps they can take to boost their odds when facing those with similar budgets, experts say.
“At the end of the day the person who has the biggest budget should be the purchaser,” said Sydney auctioneer Damien Cooley, of Cooley Auctions.
“However, you can outbid someone if they have a similar budget,” he added, if you lead them to believe you have deeper pockets, or a higher limit.
After spending months conducting home inspections, property research and due diligence, buyers owe it to themselves to put their best foot forward. Given every auction is different, there's no one set approach, but tips that can help.
Pick your position
Whether at an auction big or small, buyers want to stand in a spot where they have a good view of the auctioneer and other buyers, said Sydney buyer's agent Peter Kelaher, managing director of PK Property. Avoid bidding over the phone or online where possible.
“You want to be in a physical position where you haven't got people behind you so that you can see [any of your competitors] and their actions,” he said.
Melbourne buyer's agent Jarrod McCabe, director of Wakelin Property Advisory, adds: “It's important to position yourself in clear sight of the auctioneer, particularly if you're a bit nervous. But it's also important to be able to see ... who you're bidding against.”
Start bidding or hold back?
When an auctioneer calls for an opening offer, it's not unusual for the crowd to remain silent.
Buyers often believe it's best to hold back, said Sydney auctioneer Karen Harvey, of auctionWORKS, but showing interest early won't hurt their odds.
“Don't be frightened to go first … it doesn't have to be your best bid, it's just something to get started and show your competition that you're serious,” she said.
“If you look around and there are paddles in the crowd everywhere, you might want to start with a slightly stronger bid … if there's not as many bidders there you might want to play your cards closer to your chest.”
If buyers do start, McCabe suggested an offer towards the bottom of the price range, or a little above, which would be unlikely to be topped by a vendor bid. He would be more likely to hold back at an auction with little interest.
When there is strong interest, Cooley recommends starting with a high opening bid.
“Sometimes if you start at a high number it knocks a lot of those buyers out and puts a dampener on the other buyers.“
Bid confidently
Melbourne auctioneer Paul Filippone, a partner at Barry Plant Essendon, said a winning strategy comes down to confidence.
“Bid with a tremendous amount of confidence, and quickly counteract any other offer that does come in,” he said.
“If an auctioneer is calling for a particular increment, stick to that if you can, as soon as you start breaking down from that it does show weakness.”
Speed was key, added Cooley, noting big increments weren't necessarily required to deter competition.
“The number one strategy I see winning at auction is bidding with intensity and speed, and of course, you've got to have the budget to go with it.”
If it's within your budget, a strong bid towards the end could be a good move, said Harvey.
“A slightly higher increment than the other bidders, will make them feel like you have more money, even if it's your absolute limit.”
Is there anything to be gained from unique bid increments? The unanimous answer was that it gave no advantage.
Watch your competitors closely, and assume they're doing the same
One of the biggest errors that bidders make is not watching their competition, Cooley said.
“Their body language, it tells you a lot…if you get the impression that they're almost out or are out, [you want to bid quickly as] sometimes the time that you take to place a bid can ... leave them thinking that if they bid one more time, they could get it.”
Buyers need to watch their own actions. Conversations with partners or family members should be kept to a minimum, or avoided if possible.
“Make decisions on who is bidding [and where to beforehand] because as soon as the consultation starts it shows weakness,” Filippone said.
“Then there's body language as well … if your shoulders are back, hands in pockets or by your side…[you'll present better than the] guy at back with his shoulder drooped talking with his partner about whether to keep bidding.“
Know your limit and stick to it
To keep conversations on the auction floor to a minimum, it's important to know your limit before auction, McCabe said.
“Not what you want to buy it for ... but what are you prepared to miss it for,” he said. “And make sure everyone is clear.”
Stating the amount you're bidding each time, as opposed to just agreeing with proposed increments, will reduce the risk of losing track of bids, he added.
It can help to have an experienced family member, friend or professional, bidding on your behalf, as they are less likely to get caught up in the emotion.
Kelaher suggests buyers write a clear limit on a piece of paper and keep looking at it through the bidding.
At a slower auction
When bidding comes to a halt before hitting the reserve price, agents will pass the property in and give the highest bidder the first right to negotiate with the vendor.
Before that, some may place a vendor bid to encourage more offers, or urge the highest bidder to increase their offer to the reserve.
Buyers should consider the price gap left to bridge, Kelaher said.
“If it's very small ... you might very well do that because it's better that [the property is] on the market than having to negotiate after the auction,” he said.
“But understand that in a lot of cases there's that other lurking competitor in the crowd that hasn't bid and is just waiting for it to go on the market.”
He advised against topping a vendor bid, if no buyers had made offers, as buyers could potentially secure the property for less post-auction if there was little other interest.
Others felt it was best for buyers to ensure a property passed in to them.
McCabe said: “If a property is going to pass in, and is within my budget, then I want it to pass in directly to me ... but there's obviously exceptions to every rule.”
When negotiations ensue he warns buyers to be realistic, as low ball offers can backfire.
“If it's the right property, and it's a fair price for everyone, don't be afraid to pay a little more than what it passed in at,” he said.
*** Source: Kate Burke – Sydney Morning Herald**