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How to win at a property auction
With many Australian property markets still hotly competitive, any edge you can have at an auction can make the difference.
How to win at a property auction
With many Australian property markets still hotly competitive, any edge you can have at an auction can make the difference.
After presiding over more than 12,000 auctions throughout my career, I’ve seen all the tricks of the trade. These are my tops tips to winning at auction.
1) Ask the questions
Prior to auction day ask the agent how many pest and building reports have been issued on the home and also how many contracts have been issued on the property.
This often gives you a much more realistic idea of the level of interest on the home, rather than guessing by the number of people attending the open houses.
2) Make an offer prior to auction day.
If you like the property, make a strong offer prior to auction day quickly. Over the last 12 months areas such as Sydney’s Eastern suburbs have experienced certain months where up to 35% of auction homes are sold prior.
3) Have game plan
Auctions are much easier if you have a game plan when you arrive.
It’s a good idea to research the local area, including recent sales and comparable listings also available. Prior to auction day ask the agent who the auctioneer is and see if they have any auction you can watch (This gives you an idea of the auctioneer style and pace your auction will be like).
Also give yourself a limit on how much you will spend and if the auction goes above this amount then it’s okay to walk away.
4) Start big and blow your competition out of the water
When the auctioneer calls for an opening bid, rather than sitting back and waiting for someone else to open the bidding, start the bidding with a knock out bid. This may take out some of your competition and also establishes you as the leader of the pack. Psychologically you’re setting the pace now.
5) Use your poker face and be confident at the auction.
Couples buying the next family home tend to show a lot more emotion than investors, who are less emotionally attached. If you reveal too much, other buyers will find it easier to bid against you and the auctioneer will read your body language.
6) Use your agent to assist you
If your English is not perfect, it’s okay to ask the agent to write down the price as the auctioneer calls the bid. This gives you extra time to gather your thoughts and keep your emotions under control while taking better control of the auction.
7) Challenge the auctioneer
If the bidding is going up in rises of 25, rather than putting in a lower amount to slow down the auction down (e.g. $1000k), it’s more effective to put in an uneven increase bid such as $27,500. This will slow down the auction as the auctioneer will have to re think his bids. It will also disrupt the flow of the auction giving more control to the buyers rather than allowing the auctioneer to have so much control.
8) Make sure you have first right to negotiate.
If a property doesn’t reach the reserve price, don’t despair. As a courtesy most real estate offices offer the highest bidder the first right to negotiate and put in an offer after the auction when a property is passed, This is a big advantage in the Sydney market where the auction clearance rate is consistently high and there is often more than 5 interested parties.
James Pratt, director of auctions, Raine and Horne
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