Auction strategies

[Paul j F]

I was wondering what people's auction strategies/tecniques are. Do you try to slow it down etc. Stay silent til it's on the market?

I was at a an auction recently there were 4 or 5 bidders. It got down to 2 bidders, increasing $1k bids. Was almost knocked down and a new bidder piped up with a $10k bid. One and only bid and got the property. I was impressed...

 

[Aaron_C]

Generally I don't bid until it's on the market.

However, if I like the property and for some reason there is no bidding and we still haven't reached the reserve, I may make a bid just to get the first right of refusal. I did this for the latest purchase and got it (albeit the agent ****ed me around which I was very unhappy about during the negotiations).

 

[travelbug]

I prefer to wait to see if it goes over my limit. If it does then I wasn't going to get it anyway so why go through the pain. Hubby gets frustrated with that. He wants to jump in and bid.

If it looks like the hammer is going down and it's still within my limit I'll join in.

I don't like bidding at the start, especially if there aren't many bidders as they keep looking at you to make the next bid.

 

[Phiber]

I reckon you have several kinds of strategies you can use at auctions.
The example you described is a classic closure strategy.
As you near your limit, you somehow communicate this to the others and the vendor: this is typically done in 2 ways: either as you pointed out: a large bid to indicate that "this is it", or by decreasing the amount of bids: 10k, 7k, 5k, 2k, 1k shows the room left for negotiation is quickly running out.
You can also use either in response to the other: if a buyer has been decreasing its bids, you might be able to snatch it with a larger one at the end.
If a buyer has just made a large bid, you can fight back with a 1K bid: what will she do?

These are only with regards to closure, but it would be interesting to look at different behaviours to initiate and drive the auction.
It's all about communicating (or lack of) to the others.

Interesting topic!
But in the end it really comes down to determining and sticking to a predefined maximum price you can pay for the property.You can then go and drive the auction, showcasing you want the property and are ready to respond to any bids placed against you (that might make some bidders think they cannnot win it), or sit quietly and watch it unfold and strike at the right time.

 

[ozsupra]

I love auctions they are great entertainment. Totally off the subject was at an auction last year (I have a set price I work out, and never go over). 5 registered bidders. Bidding commences and I put in a really low bid. Auctioneer makes a smart *** comment about, no not the garden shed the house, and asks for another realistic bid. I stand by my original bid. On the third call another bidder offers 10,000 more, I counter until we are at my maximum and the other bidder settles on another $10,000. No increases are forthcoming and the auctioneer says he will consult the bank.
Probably should have mentioned house is under repossession, original owner defaulted after seven years, so bank hasn't lost anything yet.
Auctioneer says that he has spoken to the bank and that the property is not on the market. Asks to speak to the highest bidder privately. They go in to a huddle and then the auctioneer asks for any final bids. The highest bidder then raises his bid by $150,000. The crowd goes wild and everyone goes "you fool" and we all walk off laughing knowing the bidder just paid at least $50,000 more for the house than any recent sales in the area.

 

[jackbak]

For me I think most of these strategies are a complete waste of time. Personally I'm never swayed by what others are doing, if someone puts in a 'killer bid' or 'knockout bid' it wouldn't change my technique at all. My advice is just to bid confidently, slowly and most importantly - within your limit.

Also, if you are the final bidder and the property is not on the market the agent will invite you inside to negotiate. Never go inside! Do your negotiating outside - let them come to you. If you are inside the house it gives them the power, it takes you out of your comfort zone into the house to which you might be emotionally attached and takes away your privacy to discuss it openly with your partner. If you are outside you can see what's going on, you can see if there are any other bidders waiting to negotiate if you don't agree on a price and you can give the agent the impression you are not that interested by taking a few deliberate steps towards your car every time they go inside!!

 

[jackbak]

I was at a an auction recently there were 4 or 5 bidders. It got down to 2 bidders, increasing $1k bids. Was almost knocked down and a new bidder piped up with a $10k bid. One and only bid and got the property. I was impressed...

Maybe it's just me but I don't see how this can do anything but ensure you pay too much for a property. If the bid is at 300k and your limit is 315k but someone comes in with a bid of 310k, nobody is going back away and think "Oh this guy is bigtime, I cant compete against them" and stop bidding. For all you know, the other 2 bidders might have had a limit of 301k and then this guy comes along and bids 310k and wasted 9k!

I've actually seen it before but on a smaller scale with a friend who was on his last bid and the bids were going up by $500 and then the guy he was bidding against threw in a bid of $5k and so wasted $4.5k.

 

[neK]

If its between you an another bidder, do you counter bid quickly or do it slowly?

 

[jackbak]

If its between you an another bidder, do you counter bid quickly or do it slowly?

If you asked 10 people you would probably get 10 different answers. I reckon it's best to slow it down a bit but keep it consistent.

 

[goonandtell]

i have nfi how much difference it really makes but i like to have a bit of fun anyway. I think you are wasting your time playing against the other bidders, most people i have been up against at auction are fixated on the agent and the property they might quickly glance at their 'compeditor' but tend not too.

I prefer to attack the agent, if i can throw him of his game and lower his confidence then all the people watching him are influenced. And as i said if nothing else its fun as you will get a reaction off them. Anything from a low ball, constantly asking if its on the market, bidding in annoying increments (e.g. if its goign in 10s go in 1s and insist on it being taken). I also like to have put in conditions prior to the auction e.g. very small deposit as it means the agent has already done some work and is more likely to play if they get you in the room afterwards.

I wouldn't be afraid of the room, you have less incentive to buy than them to sell, they have just had a stalled auction and this is your chance to get their full and instant attention to an offer, no time for them to think about it, sit on it or shop it around. I can't imagine its this simple if its a PPOR you love with but i have never purchased a PPOR i loved so its always been a good opportunity for me.

 

[Brady]

First property I purchased was at Auction.

There was an opening bid very low, then after that was between myself and another bidder.

I was very slow to bid at the start just got my feel for the other bidder.
After that I would make quick, but not super quick bid increases staight after him. The quick return bid left the other bidder wondering how much more I had left, I could tell by his reactions that he was getting close.

In the end it helped as he slowed the bidding down and I still was able to pick it up $10k less then my max. Although he should of stoped $5k earlier but the auctioneer played him well for a few more bids.

 

[Jacque]

Every auction is individual and requires a different "gameplan". You need as much prior knowledge as possible, a likely strategy (and backup negotiating plan) worked out as well as oodles of confidence.

It's not rocket science but I've seen grown men almost faint from the pressure of the moment (one of them was my client!). As some on here can no doubt attest, it's so easy to say "I'm not emotionally attached" yet emotions can override on the day and bidders end up going wel over when their head told them otherwise....

 

[wylie]

It's not rocket science but I've seen grown men almost faint from the pressure of the moment (one of them was my client!). As some on here can no doubt attest, it's so easy to say "I'm not emotionally attached" yet emotions can override on the day and bidders end up going wel over when their head told them otherwise....

Heck, I get palpitations when I'm down to the last minute and trying to win something on ebay .

I've bought at auction and it is the same feeling.

 

[DJBarnstar]

As an auctioneer I have seen and called plenty of auctions and the best strategy for the average punter is:

1. Set your own limit
2. Slow the bidding down (Wait till the first or second call before bidding)
3. Bid in decreasing amounts steadily
4. Relax, if you don't get it then there is another around the corner

As a side note don't p*ss the agent / auctioneer off as they can help you secure the property by negotiating with the vendor.

I've had stupid questions yelled at me, people walking in front of me bad mouthing the house trying to discourage other bidders and general a*s-hatery. This doesn't help your cause just makes the auctioneer try to get more out of you, or sell it to someone else.

 

[BMan]

although i havent bidded id try and slow it down smaller bids take my time etc
as if its going fast the other bidder might be hyped up and just keep going... gotta give them time to think and calm then down and think about it. but if your against someone that wants it then it doesnt matter how well you play.

 

[Jenko]

I have always been keen to buy a house at auction but never fully understood how it works. Say if your successfully buy a house you pay a 10% (I think) depoisit upfront then have 30 days to pay the balance, is that right? So that would mean you have 30days to arrange finance and settle? So it would best to get a per approval from your broker first I guess.

 

[Aaron_C]

A broker wouldn't get you a 'pre-approval' necessarily but they would tell you whether you could get the finance or not with good certainty.

 

[matto_]

was at one the other weekend (eventual) winning bidder slowed down auction by asking about specific questions about the auction. This rattled the other bidders.

 

[wylie]

was at one the other weekend (eventual) winning bidder slowed down auction by asking about specific questions about the auction. This rattled the other bidders.

What soft of questions? And was he asking them during the auction?

I've sometimes been tempted to ask "how much rail noise is there?" or "do you hear the freeway?" or "is parking an issue during school hours?" or whatever else is a perceived issue, just so that anybody not knowing there could be an issue is made very aware before they bid... but I'm not game enough.

 

[jackbak]

was at one the other weekend (eventual) winning bidder slowed down auction by asking about specific questions about the auction. This rattled the other bidders.

That is mind boggling... He/she must have been bidding against some strange people if they are so rattled by someone asking a couple of questions that it affects how much they are going to bid!