It’s important to prepare carefully for auctions. Here’s a few tips to help you get the best result.
- Be familiar with the auction process
Attend as many auctions as you can to understand the process.
- Organise your finance
Make sure you completely understand your financial situation or you may risk falling into serious debt. Remember, you cannot get out of the sale once it has been made as there is no cooling off period at auction.
- Have your solicitor/conveyancer check the sale contract
They will pick up on things you may have missed or don’t understand. To protect yourself, have them check the contract so you’re fully aware of all sale conditions, your rights and responsibilities.
- Inspect reports before the auction
Make sure that before you bid, you gain necessary pest, building and strata reports. This will ensure you’re not left with the cost of damages you only discover after the sale.
How does an auction work?
An auction is usually held in an auction room or on-site at the property. You’ll need to register before you bid and proof of identity such as a driver’s licence or passport is required. You’ll be given a number to display that you hold up during bidding. Some people ask an agent or family/friend to represent them if they’re unable to attend but you must notify the auctioneer in writing.
The auctioneer starts proceedings by explaining the contract, terms of the auction and a description of the property. Bids are then invited from registered bidders.
If the property fails to reach the reserve price and negotiations between the highest bidder and the vendor do not result in a sale, the property will be passed in and will now be open to the market.
If the property does reach the reserve price and you’re successful on the day you’ll be asked to sign the sales agreement and pay a deposit. This is normally 10% of the purchase price. This can be paid via cheque, bank transfer or DEFT payment.
Best techniques for bidding at auction
Here are a handful of strategies we recommend to buyers to help them towards securing a property.
1. Take control
Arrive at the auction early to choose the best vantage point and determine how many bidders are registered. If there are multiple bidders, open with a strong bid to knock people out.
2. Bidding increments can set the pace
Avoiding round numbers is a strategy that can work well for buyers. If you’re able to change the pace of the auction by bidding in odd increments it keeps your competition guessing, and it makes it more difficult for the auctioneer to add those numbers up. Auctions thrive on momentum, so controlling the pace of bidding is the key to keeping the price low.
3. Pay attention to body language
Understanding how the other bidders behave at an auction can reveal when they’re reaching their limit. Couples are guilty of some of the biggest tells, which can include having a discussion mid-auction, making a phone call if the other partner isn’t present, or even making eye contact with each other.
If you go to the auction with conviction, it will show in your body language and your competitors can read it too.
4. Stick to your limit
Calculate the amount you believe the property is worth, decide your limit, then don’t budge. Steady, firm and unemotional bidding is often the best tactic.