15 essential auction tips for success
Here's 15 essential auction tips so you can bid in confidence and get the property you want!
Auctioneer Andy Reid recently joined Emily on my millennial property to talk about all things auctions! Auctions can feel really daunting and watching auctions on TV shows just outlines *drama*, right? Let’s dilute the chaos a bit and chat about the top 15 auction tips you need for success!
Come auction day, everyone is anxious! Not just the buyer. Where does the anxiety come from? The vendor (property seller) needs the money from the sale for something. You, the buyer, desperately want and need somewhere to live or invest in. Stakes and emotions are high!
But despite the stress, auctions are a transparent process and for many people are the preferred method of sale. You can physically see everyone who’s bidding in one location and you can respond in real time (instead of going back and forths with a real estate agent). You’ve also typically done inspections like pest & building before auction day so you’re informed about the state of the property. Also, it’s typically done and dusted quite quickly so although it may feel stressful, it will subside pretty quick.
Let’s dig into the auction tips you need now!
Preparation is power
#1 pre-approval is a must
Have conditional pre-approval sorted as a matter or priority. You don’t want any delays in the buying process so get as far down the finance line as you can by getting a pre-approval sorted. Have your expenses lean, get rid of consumer debt (credit cars, personal loans, buy-now-pay-later accounts etc), and have an amazing mortgage broker working your corner to assist you (reach out to our team if you need help finding one). A conveyancer is also a must at this point!
#2 know your limits
Know your bidding parameters. Write these down long before you are at auction - it’s crucial to write these down when you’re calm and not in the heat of auction day:
Bargain price - what price would you class the property as a bargain?
Fair price - what price is reasonable given the property?
Stretch price - what price is reaching your ceiling? Be prepared to stop bidding when you reach this price.
#3 register for the auction
In some states and territories you will need to register before you’re able to place bids. In some instances you’ll be given a paddle to assist in placing bids. The real estate agent selling the property will typically ask for your basic details and some form of identification to confirm your identity. You don’t have to bid if you’ve registered, but registering gives you the right to bid if you wish to.
#4 get inspections organised
Get your inspections like pest & building done before auction day so you know as much as possible about the property. You’ll weed out the properties that don’t suit what you want or need and narrow down your search to the golden few. Also - an auction contract is an unconditional contract - that means when it's knocked down to you, you sign the contract as it is and take the property, as it is. You can't complete any due diligence post-auction, so get it done before the day.
#5 have your deposit ready
You’ll need to be prepared with your deposit on the day of the auction if you’re successful. Make the process easy for everyone and have that deposit tucked away and ready to send if you win at auction.
#6 observe some auctions
Go and watch some auctions where you are not bidding before you actually begin bidding at auction. Learn the process and get a feel for the energy and get a sense for the roles everyone plays. Plus it’s pretty fun to watch! It’s also a great way to shake off the nerves - the more you’re in an environment like that, the less nervous you’ll be as you start bidding at auction.
#7 know your bidding strategy
Be concrete on your strategy for auction day ahead of time - don’t leave decisions to the day of auction. Be firm, clear and determined. Know when you’ll start placing bids and remind yourself of your bid ceiling. And know that there will be auction days you won’t win - be comfortable with that idea. You’ll land the right property for you.
#8 practice by visualising
Get ready for the day by running through practice as if you were at the auction. Where will you stand? What will you do when bids start going over your personal limit? Run the possible scenarios in your mind. By attending auctions for research you can run scenarios in your mind around when you might bid or when you might back away - research and practice is key.
#9 understand auction specific terms
Vendor bid/seller’s bid - the nature of these depends on the state or territory you live in but a vendor bid is typically added into the ring by the auctioneer on behalf of the vendor to help move bids along. These bids must always be below their reserve.
Reserves - the reserve is the price that the vendor will sell at and when you hit the reserve, the property is deemed 'on the market'. These can change! Be prepared and stay in the loop.
Auctioneer - the person running the auction (aka the person yelling the most hehe).
Pass in - this means the vendor's reserve hasn’t been met and it falls to the highest bidder to negotiate with the vendor directly.
On the day
#10 get there early
Ensure you’re up early, well caffeinated and get to the site of the auction! Use this time to scope out the crowd, find your preferred spot to stand and shake off the nerves. Pro tip - go and say hello to the auctioneer. You’ll be on their radar for bids. Be human with them and they’ll be human with you.
#11 get to know your competition
When attending open homes and on the day of auction get a good look at your competitors and follow their behaviour. Get a sense for their body language and see how quick they respond with bids. Are their bids slowing down? Perhaps they’re reaching their bid ceiling. This is the time to work on your people observation skills. You can alter your own strategy to try and one-up their moves based on their behaviour.
#12 turn up the volume
Be loud on auction day - there can be hundreds of people at auctions, and often the auctioneer can be using a microphone and speaker. You need to be heard if you’re bidding. If you don’t have a loud voice, find someone who does to bid on your behalf.
#13 be confident
Be bold - stand right up front near the auctioneer to create a little bit of intimidation! Being up close to the auctioneer also gives you prime position to see everyone placing bids, but also makes it clear that you’re in this to win and will be an active bidder. We know you might be feeling quite nervous and a bit scared but that’s why we set our strategy ahead of auction day - we do it at a time when we aren’t scared, nervous or run by our emotions. Focus on your personal game plan, and know that those nerves will subside. Sometimes all it takes is that first bid and you’ll start feeling more confident!
#14 keep a firm grasp on your limits and strategy
Be careful - be certain of how much you’re increasing your bids by, and keep a firm grip on your personal price ceiling. Don’t let emotion throw you way off budget. Your thoughts should always come back to: “does this meet my strategy and the criteria I set for myself?” If it doesn’t, don’t be afraid to step back and try the next property. No one’s guaranteed a win, but if you stick to your strategy you’ll find the right place for you in time.
#15 set the pace + get in there
Now’s not the time to shy away! You set the pace, even if the auctioneer is driving things hot and fast. Pump the brakes to help keep the price lower and move through bids at a reasonable pace. Don’t let emotions drive things off the charts. Don’t sit back too long to see what others are going to do - get in early and set the tone. You’ll get a sense of others' intentions and behaviour as bids are placed, but don’t sit back and let the auction get away from you. Welcome to the ride! Go for it!
Where to now?
Subscribe to the my millennial money podcast
Read our blog: how to buy a house: before you buy
Read our blog: how to buy a house: finding a property
Read our blog: how to buy a house: once you win at auction/have an offer accepted
Read our blog: 8 property investor fundamentals
Ready our blog: 8 first home buyer fundamentals
Enrol for Emily’s first home buyer course!
If you’re in the Melbourne area, consider Emily Wallace’s buyers advocate service
If you’re interested in property investment, check out John Pidgeon’s buyers agency service, Envisage Property, or Solvere Wealth for property resources and coaching
