- Buying your property via an auction is a very transparent way to buy a property
- Knowing your limits and hitting the ground running are some auction tips noted by a leading buyers agent
- Need to all in or nothing, he added
When it comes to winning a property at auction, it isn’t just the “luck of the draw” says a leading buyers agent.
Lloyd Edge of Aus Property Professionals said that many buyers who are having difficulty in securing a property at an auction are of the belief that they are “unlucky” when they miss out. However, there is actually more to bidding at auction than these prospective buyers think, Mr Edge said.
“In Australia, there is still a lot of fear surrounding the auction process with many people losing out on securing their dream home because they’re too scared to participate in the auction process altogether,” he said.
“However, buying a property through the auction process is actually a very transparent way to buy a property, and if you understand the process it can be a very successful strategy.
“Experienced buyer’s agents are in the business of buying property and even develop strategies on how to bid at an auction to ‘up their chances’ of securing the property.”
In light of this, Mr Edge has provided six tips to help win an auction in the current property market.
How to Win at an Auction in the Current Property Market
- Know your limits
- Hit the ground running
- Read the competition
- Set a poker face
- All or nothing approach
- Get an expert on your side
1. Know your limit
Firstly, Mr Edge said the maximum amount you are able to spend on a property should be clearly set. And, you should stick by it.
“Don’t go over your limit even by $1 because this can risk your lender not approving the mortgage. Do not think about what you are willing to pay for this property, but rather what is your absolute limit,” he said.
“If you set an unrealistically low limit that does not align to your borrowing capacity it is likely you will fall into a trap of continually upping your limit during the auction which just comes across as disorganised and let’s your competition know you are inexperienced.
“Whatever your borrowing capacity is, once the property reaches this limit then you’re out.”
2. Hit the ground running
Mr Edge noted that there is no successful auction strategy that doesn’t involve bidding, so you will need to be preprared to hit the ground running.
“You need to keep a clear head and listen to where the price is at,” said Mr Edge.
“The strongest bids come directly after the competition has bid as this gives the impression you have limitless cash, as well as intimidates the competition as they will need to make a quick decision on what they want to do next.
“Most people that are put under a lot of pressure would rather back down than make a quick, life changing decision.”
3. Read the competition
Mr Edge noted that if there is a lot of interest in the property, and you want to stir up the competition, start out with a strong first bid – perhaps 80% of your limit.
“As this will knock out a few who aren’t at your level and it will put pressure on the remaining buyers,” he said.
“If there is a lack of buyers, then it’s important you are the highest bidder so if the property does not meet the reserve price you can ensure you are the one negotiating on the property post auction.”
4. Set a poker face
Bidding at an auction can be extremely stressful, particularly when bidding is increasing and nearing your limit, Mr Edge said.
“Keeping cool, calm, and collected will give off the impression that money isn’t an issue and you have the ability to challenge any bid,” he said.
“It is important to set a poker face and remove emotion from your bidding to not give away to the competition that the auction is reaching your upper limit. If your competition is under the belief that money is no issue for you, they will admit defeat.”
5. All or nothing approach
You need to be willing to spend your budget rather than take a back seat approach, Mr Edge noted, when discussing winning at an auction.
“This isn’t a market where you can wait to see what happens next and just expect things will fall in your favour,” he said.
“Sitting back and not bidding is not an auction strategy at all. It is amazing how many buyers will assume they will be able to sit back and see whether they are able to grab a bargain before they will start bidding.
“Auctions are a great way to buy a property because the sale price is transparent and by buying at auction you will reduce the risk of overcapitalising from paying too much on a property. This is because the market value for the property is the highest price someone is willing to pay on auction day.”
6. Get an expert on your side
Lastly, Mr Edge said that the competition can be intimated if you employ an experienced buyer’s agent to bid for you at auction.
“This will show the competition that you are serious about buying as well as allow you to remain anonymous at the auction should you cross paths with any of the other buyers at auctions in the future,” he said.
