In past years, buying a house was a matter of attending an open inspection, making an offer, and negotiating in your own time with the Vendor. However, this isn’t the case in the current market.
A recent survey of 1000 real estate agents in the key Sydney and Melbourne markets, found that a staggering 90% of them believe auctions are the best way to maximise the selling price.
For the buyer, this represents a challenge. How should you best negotiate the trickier process of buying when a property is being auctioned - without missing out or paying too much?
Indeed, many Vendors are going down the auction route because they have a unique property that a buyer like you might just fall in love with on auction day - and regret the big price ticket the following day (or forever!)
On the other hand, a highly prepared auction bidder can learn some of the tricks of the trade - and even get a bargain!
Our advice? Read our 4 crucial tips that should stand you in good stead on auction day.
1. Know the property
How are you going to make confident, life-changing bids if you're still wondering 'Is this the right house for us?'; 'Wait ... does it have three or four bedrooms again?'; 'I wonder if the wiring has been re-done in the kitchen?'
Just because it's an auction doesn't mean you can go into the buying process with any less clarity than if it was a traditional sale. So inspect the property thoroughly, and if you feel the need for a building inspection, don't hesitate.
2. Know your stuff
If your plan is to start preparing five minutes before bidding kicks off, you're making a big mistake. In fact, you should probably attend one or more 'practice' auctions, just to watch and learn without all the stress.
Like absolutely everything that involves high stakes, homework is the key. Yes, the auctioneer will read the rules before it all begins, but this big day is not the moment to do your cramming.
For instance, do you know all the conditions of sale? The proposed settlement date? Have you got your deposit on you? And is your finance all sorted?
Moreover, too many bidders aren't even fully aware that once the reserve price has been surpassed, the higher bidder will own the property. So while that's big pressure for the bidder, it could also mean losing out on your dream home if you let it slip away.
Similarly, if the reserve price isn't hit, the highest bidder will be first in line to negotiate with the Vendor, so knowing all the ins and outs is crucial.
3. Be confident
It might sound silly to dress to impress or even get your car looking at its best prior to the auction, but this is also a psychological game - and confidence often wins these battles.
For instance, imagine a scruffy person in runners next to what appears to be a successful business professional dressed formally with a leather satchel and notebook standing next to each other. When it comes to bidding, who is already ahead?
It may seem superficial, but don't underestimate the effect that the impression of bottomless pockets could have on whether your main rival keeps upping the bidding ante or calls it quits. So, dress well, find a prominent place to stand, be confident and call out your bids with a strong, clear voice.
4. Bid to win... and bow out
Get the most important part right- the actual bidding.
If you ask auction bidders who regularly win the day and secure great prices, they'll tell you to forget about starting the bidding low. Rather, aim close to the reserve with your opening bid.
Then, when a rival or two enters the fray, don't hesitate: keep hitting them with fast, confident counter-bids, and make your opponent nervous by saying the entire monetary value each time. Why? Because "five hundred thousand dollars" sounds a heck of a lot more daunting than "five hundred".
Finally, once you've hit your pre-determined limit, bow out with style. Losing your dream home may be disappointing, but paying way too much will hurt much, much more the next day.
The final word: Never stop learning
The big four rules aren't all there is know about succeeding at your next auction. The most seasoned and successful auction buyers will tell you they never stop learning. Even so, knowing the basics should ensure you bid smartly the next time the auction hammer drops - and with a bit of luck secure your dream home at a dream price.
Happy bidding from the FNCJXRE Team!