Auctions are daunting, and it can be hard to not get caught up in the thrill of outbidding the competition. But with a good auction strategy at the ready, you'll be well placed to win your dream home when that hammer drops - without overpaying. While an auction may not be your first choice when it comes to buying a house, there are a lot of benefits to you as the buyer.
"Auctions can work for a buyer who is willing to pay market value," says Charles Tarbey, Chairman of Century 21 in Australia. "It's definite and on the fall of the hammer it's yours," adds Mr Tarbey, who notes that during private sales there's always a risk that the vendor may change their mind or accept another offer without giving you the chance to negotiate. Auctions allow you to see your competition and know exactly where you stand.
Every auction is different, however there are some strategies that can help you go in strong and hopefully come out on top. Here, we share expert tips for winning an auction.
1. WAIT TO PLACE YOUR FIRST BID
"Often it is best to let the bidding start and move in at a later stage with a strong bid," advises Mr Tarbey.
This gives you a chance to size up the competition, figure out when the property is on the market (once the reserve price has been reached), and it also weeds out those who are just looking for a bargain.
2. MAKE YOUR FIRST BID A STRONG FIGURE THAT REFLECTS THE MARKET VALUE
In today's transparent world where property values and estimates can be found on bank apps and the like, there's little point starting off too low.
Everyone at the auction will have a clear idea of what the property is worth and will have come prepared to pay that price, just like you. It's advisable to start near where you want to end and that way you knock out a lot of the low bidders immediately.
Make your first bid count, says Charles.
Photo: Shania Shegedyn / Styling: Alana Langan
3. BID WITH ROUNDED FIGURES
It is best not to place bids of odd numbers, such as $649,500, as someone will always go the extra $500.
Instead, go in with an even number – and if your opponent tries to slow down the bidding with small increments, go in above them with that extra $500 or so, to immediately put yourself back into first place.
4. GO IN WITH A COUNTER BID QUICKLY AND CONFIDENTLY
Bidding quickly after another bid is received lets people know you are serious and will also help you identify who your competition is.
A grand Hamptons style home with plenty of street appeal on the Gold Coast. Photo: John Downs
5. TALK WITH THE REAL ESTATE AGENT
It can be tempting to hide away in the back corner and fly under the radar, but it's important that the real estate agent and auctioneer see you and know that you're a serious bidder.
"Agents will always be available to guide you through the process, so you need to keep them updated on your position, without giving everything away," says Mr Tarbey. "I have seen many instances where buyers were upset at missing out, making comments such as 'I would have paid more if I knew it was going to sell for that amount' and blaming the agent, but were coy when the agent was seeking information."
6. SET A BUDGET AND STICK TO IT
One of the biggest mistakes buyers make at an auction is not setting a maximum price they can afford to pay... and sticking to it.
At the end of the day, as much as you may fall in love with a property and as close as you might think you are to winning, you should never exceed your predetermined budget.