What are some Auction tactics?
This is intended only as a general guide to understanding this topic. Contact us to discuss your individual circumstances.
An auction is conducted in public on a date set by the vendor. If you intend to make a bid, you or your representative will have to attend the auction to make an offer. You will win the auction if you’ve offered the highest bid above the vendor’s reserve price. If all bids are under the vendor’s asking price, the property is “passed in” and the auction is finished. Private negotiations will then usually take place with the auction’s highest bidders.
✓You know who your competition is, and what they are willing to pay.
✓There is no Cooling off period, and your bids are unconditional.
✓Inspections & Searches must be completed and paid for prior to auction, without a guarantee that you will be the successful bidder
Things to consider
✓Always have your conveyancer review the sales contract prior to making a bid.
✓Before the auction, decide what your maximum price is and Stick To It.
✓Never set your maximum price at an even amount, as many other bidders will do, and an additional $1500 can often win you the property.
✓Go to several auctions to understand how they work, before attending an auction for a property you are intending on bidding at. If you need to, take your time between bids. The auctioneer is not going to sell to another bidder if they think you are still in the running.
✓Stand adjacent to the Auctioneer, so you can see clearly who you are bidding against.
Bid confidently, almost aggressively and without hesitation to give the other bidders the impression that you have ‘bags of money’ and no limit.
✓Don’t start the bidding, nor commence to early. Be patient & size up the competition.
✓Ask the auctioneer when the property is on the market, as this is when each bid is potentially the winning one. In Melbourne, properties most often are on the market once the auction has re-started after the auctioneer has paused the process and gone inside to “refer to the vendor”.
✓If the bidding doesn’t reach the reserve price and the auctioneer states that the property will be passed-in, ensure that it will be passed in to you by having the highest last bid. This will give you the right to negotiate with the vendor in the first instance.
✓If the bidding goes above your maximum purchase price. Stop bidding and walk away. There will always be another property – the streets are full of them.
✓If this is all too scary, consider hiring a Buyers Advocate, or get a family member or close friend to bid for you – taking the emotion out of the bidding process.
✓Bidding tactics you can use include:
- Slow down the bidding (e.g. if it has been jumping up by $5,000 – make a $1,000 bid).
- Make a “knock-out” bid to scare away the competition.