What is your Auction Strategy?
Nothing tests the nerves more than bidding at an auction. Here's some helpful tips on successfully purchasing a property at auction.
One in two Australians report experiencing anxiety ahead of attending an auction and 48% of people said they’d lost sleep over it, recent research suggests.
Worryingly the St George Bank research also found a lot of us are ill-prepared to buy properties at auction, with 62.1% of buyers saying they do not have a bidding strategy when attending a home auction.
So, what do you do if you want to secure that dream property at auction? There are three key things you can do:
Engage a professional buyer’s agent, to whom you pay a fee.
Ask a friend or family member to bid on your behalf.
Bid for yourself (if you’ve got the nerve).
We look at each option and review the perks and pitfalls.
Use a buyer’s agent
Many buyers left to their own devices are scared off by aggressive bidders and stop bidding prematurely. While many others derive confidence from a competitive auction and end up bidding well above their limit. When you are being advised by a buyer’s agent, you are going to have a much greater chance of success, while also limiting the possibility of paying too much.
Advantages of using a buyer’s agent:
No chance of emotional ‘must have at all costs’ bidding.
No risk of paying beyond your pre-auction agreed maximum bid.
A professional who can read the crowd, knows bidding strategies and bids with confidence.
Disadvantages of using a buyer’s agent may include:
Feeling detached from the purchase experience.
Engaging a buyer’s agent can add extra cost to your budget.
Do the bidding yourself
Can you keep a poker face? Do you have a good head for figures and thrive under pressure?
The most important things when doing your own bidding is knowing your upper (bidding) limit, make sure it is realistic and never go above that figure. I cannot stress enough how important it is to appear confident, in control and cool.
Pros of DIY bidding include:
Can save lots of money;
Puts you in the box seat to watch rival bidders;
Can quickly respond with counter bid/change strategy.
Cons of going it alone include:
Not suitable if you don’t like crowds;
Attending spouse/young children can distract/pressure;
More likely to bid too high the heat of an auction
Ask a friend or relative to bid for you
If you decide to engage someone else to bid on your behalf, make sure:
The auctioneer has been advised your proxy bidder is acting on your behalf;
Your stand-in understands the auction process;
Your proxy knows your top price before bidding begins and what bidding strategy to use.
Perks of asking someone else to bid for you include:
No emotional connection with the property so unlikely to bid higher than agreed;
Trusted and expects little in return;
Can help hold you to your limit, reducing temptation to bid beyond your means.
Pitfalls of friends and family members doing your bidding:
May feel they’ve let you down if they don’t win;
If things go bad it could put relationship at risk;
It is a big responsibility and they too may get nervous, so choose your proxy wisely.