Buyer Advocate at Auction

[DaveM]

Personally I have no difficulty opening the bidding .....and closing it. I generally don't start the bidding, but I will if it drags on - I get bored easily and I generally have more properties to look at afterwards. It's not the only thing I do on a Saturday

Propertunity surely you just wait till the end of the auction before raising your arm to bid since its so weighted down with your gold plated watch? Dont want to get RSI.

 

[Tillie]

I completely understand if people engage BA for bidding in auctions. It can be really emotional situation especially when it will be your PPOR.

But I am not sure that I would engage BA to negotiate private sale. I am not sure what advantage BA will offer in private sale scenario. Please prove me wrong.

My friend was considering it, but eventually decided to do it by herself (with me helping). Also when we were selling our PPOR there were two interested parties and it turned out to be kind of 'dutch auction' that took entire day One of the 'bidders' was represented by BA. Please note that BA was used only to negotiate. Their client found the property by themself. Result: BA was not successful, the other party won by $10k.

 

[Propertunity]

Propertunity surely you just wait till the end of the auction before raising your arm to bid since its so weighted down with your gold plated watch? Dont want to get RSI.

Gold Plated? I think not It'd have to be solid surely?

Actually I haven't worn a watch for years and years - mobile phones has a clock so I don't see the point of doubling up.

 

[Propertunity]

Result: BA was not successful, the other party won by $10k.

At the end of the day, all tactics aside, if the other person has more money than you AND is prepared to spend it, then they are going to win and you are going to lose.

(All the tactics are really directed at stopping the other person with more money from feeling confident enough to spend it). Cheers, Alan

 

[belvoir]

At the end of the day, all tactics aside, if the other person has more money than you AND is prepared to spend it, then they are going to win and you are going to lose.

(All the tactics are really directed at stopping the other person with more money from feeling confident enough to spend it). Cheers, Alan

Here is a hypothetical for you. There is a property that you want to buy and the agent is quoting early $800k.

After your research you feel that the agent is under quoting (as usual) and you think its worth $950k.

Come auction day the first bid is $940k.

Are you saying that you won't bid to your limit of $950k?

Everyone goes to their limit, no one gets pushed out because of tactics. As you said, its always about who has the deepest pockets.

 

[Hypnotic Cat]

thanks mate.

my understanding is the 1% of purchase price fee is when you get a buyers agent to go out and find a property for you. that would be too much for me to be prepared to pay. but a $1000 for a winning auction would be reasonable. or i could do it myself??.

I think you could do it yourself. I think the most important thing is to do your research and DD on the property so you know the price range the property will likely fall into, then establish what is the maximum $ figure you will pay and don't exceed it.
If you really want it, get there early, have a final look, sign up, choose your spot, start bidding confidently and don't stop until you reach your limit.

I don't think tactics play into it very much.

A word of advice someone gave me, "Work out 3 prices: 1. the price at which you think the property is a bargain (unlikely on the day), 2. a fair price that you'd be happy to pay, 3. the max price you'd be willing to pay in competition against another bidder.

cheers

 

[Propertunity]

After your research you feel that the agent is under quoting (as usual) and you think its worth $950k.
Come auction day the first bid is $940k.
Are you saying that you won't bid to your limit of $950k?

I've seen this situation a few times before. This is the first strike killer bid by one buyer who wants to knock out the competition. It may work. It would certainly blow away all the bidders that thought they could buy it a little over the agent's (under-quoted) guide price.

What would I do in this situation? It would depend on what I saw in their body language. Are they nervous looking, playing it cool, pretending to get instructions over the phone (this all falls apart when the phone rings ), older male with thin young attractive female hanging off their arm (who will buy at any cost) etc? Mostly I have had the selling agent point out to me the registered bidders &/or watched them sign in at the registration desk.

I'd probably do a $941K bid straight back & then observe their next move before deciding mine.

But as I said, if they have more than $950K (my limit) and they're prepared to spend it, I'm going to lose.

 

[Jacque]

Like Prop, I've bid at far too many auctions for clients to remember but one thing is clear to me. EMOTIONS CHANGE THE GAME PLAY

No matter how calm, cool and collected you think you are as a buyer, wait til your heart starts racing, your mouth runs dry and the sweat of anxiety breaks out on your brow when you are in charge of potentially securing your long-awaited dream home (or investment property- buyers still get emotional despite opinions to the contrary) in front of a huge captive crowd. Being harrassed/approached repeatedly by a professional selling agent during the process, encouraged/coerced by an award-winning auctioneer and stared down by your competition throughout is often enough for buyers to slip up and sometimes make the following errors (note: I have witnessed all of the below many times over):

1. Bid against themselves
2. Go past their limit despite best intentions not to do so
3. Indicate via body language or verbal means (mainly desperate whispering between partners, furious head-shaking, nervous nodding and numbered finger displays) when they're reaching their limit or about to pass it.
4. Watch the property sell before they've had a chance to call out their (often revised) "last" bid.
5. Re-enter the bidding after declaring they were "out"
6. Have the property passed in to them, and genuinely look terrified
7. Get on the phone during the bidding to ask mum/dad/sibling/friend for more money- a sure telltale sign that the limit has not only been passed but is about to be annihilated
8. Bid in higher increments than is necessary for the situation. A cool, calm and collected BA can sometimes save thousands in one ill-conceived and unneccessarily too-high bid by an auction virgin.

Regardless, and as others have said, of course you don't need a BA to bid for you if you are perfectly capable, confident and experienced. Negotiating after however is a whole new ballgame and when you're (often) facing 3-4 agents following auction across the table, it can be like lambs to the slaughter for those buyers who are unused to this type of negotiating.

 

[cu@thetop]

Like Prop, I've bid at far too many auctions for clients to remember but one thing is clear to me. EMOTIONS CHANGE THE GAME PLAY

No matter how calm, cool and collected you think you are as a buyer, wait til your heart starts racing, your mouth runs dry and the sweat of anxiety breaks out on your brow when you are in charge of potentially securing your long-awaited dream home (or investment property- buyers still get emotional despite opinions to the contrary) in front of a huge captive crowd. Being harrassed/approached repeatedly by a professional selling agent during the process, encouraged/coerced by an award-winning auctioneer and stared down by your competition throughout is often enough for buyers to slip up and sometimes make the following errors (note: I have witnessed all of the below many times over):

1. Bid against themselves
2. Go past their limit despite best intentions not to do so
3. Indicate via body language or verbal means (mainly desperate whispering between partners, furious head-shaking, nervous nodding and numbered finger displays) when they're reaching their limit or about to pass it.
4. Watch the property sell before they've had a chance to call out their (often revised) "last" bid.
5. Re-enter the bidding after declaring they were "out"
6. Have the property passed in to them, and genuinely look terrified
7. Get on the phone during the bidding to ask mum/dad/sibling/friend for more money- a sure telltale sign that the limit has not only been passed but is about to be annihilated
8. Bid in higher increments than is necessary for the situation. A cool, calm and collected BA can sometimes save thousands in one ill-conceived and unneccessarily too-high bid by an auction virgin.

Regardless, and as others have said, of course you don't need a BA to bid for you if you are perfectly capable, confident and experienced. Negotiating after however is a whole new ballgame and when you're (often) facing 3-4 agents following auction across the table, it can be like lambs to the slaughter for those buyers who are unused to this type of negotiating.

Whilst I don't have a problem with OP bidder's fees (probably at least 2-3 hours work so $1100.00 isn't too much as my hourly rate is higher when I charge it) it's not too hard as a buyer to control these things in the post auction passed in stage. Drag it out until the other bidders dissipate so you are the only horse in the race. If you know your comparables then it's not too hard to keep a ceiling on the price.
I've bid at auctions before- unsuccessfully I should say because I wasn't prepared to pass my limit. I will only buy bargains. Last auction I was at I didn't bid as it got past my limit I was prepared to pay . Agent had the reserve written on his IPAD which I could see when the auction commenced. When I started to leave to go to an open (which I subsequently purchased) the agent thought I was going to make a "knockout bid" as the bidding was entering its final stages. What did it sell for ? Don't know and don't care as I was already moving on looking at the next deal.
Its not all that hard- know what the property is worth- factor a discount as it is to be an unconditional contract- and don't go above it. if it is passed in tough titties-I don't care if I'm the underbidder or not because there is no "right of 1st negotiation". I just go up to the auctioneer immediately afterwards and express my interest.

2 screaming bargains at last weeks auctions- and I know for a fact at least one there was no buyer/bidder's agent:

http://www.realestate.com.au/property-house-qld-fairfield-118059611
53 Turner Ave Fairfield Qld 465K

http://www.realestate.com.au/property-house-qld-graceville-118064467
59 Evadne St Graceville Qld 706K

It's a zen thing really. Just don't care whether you get it or not.

The bargain of the century comes around at least once a month if you look.

 

[kazeveryday]

The first auction I ever attended with the intention to buy something, I was young, there were around 100 people there and it was extremely intimidating. My legs were shaking and my heart was pounding. I took my dad with me and he did the bidding for me.

Fast forward 20 years or so, I now run a buyer's agency and bid at auction frequently. I still remember that first auction and how scary it was and understand that for many people, who don't understand the process of auction, or don't like the public nature of it or have shaking legs and a pounding heart on the day it can help to pay someone for their assistance.

Not everyone will see value in it or need it, but for some it will be invaluable. Horses for courses.

 

[Big Will]

I always find it interesting how someone can sell under the hammer and yet be under contract...

http://www.realestate.com.au/property-house-qld-graceville-118064467

UNDER CONTRACT

SOLD...UNDER THE HAMMER AT AUCTION.

Was it sold under the hammer?

 

[cu@thetop]

My little birdie tells me sold subsequently to one of the bidders.

 

[S.T]

I always find it interesting how someone can sell under the hammer and yet be under contract...

http://www.realestate.com.au/property-house-qld-graceville-118064467

UNDER CONTRACT

SOLD...UNDER THE HAMMER AT AUCTION.

Was it sold under the hammer?

Isn't it still under contract until settlement no matter which way the property is sold?

 

[Big Will]

Isn't it still under contract until settlement no matter which way the property is sold?

Technically yes but it is unconditional and is just awaiting final payment. Should the person choose not to proceed they will lose deposit and can be up for additional charges if the property is sold for less than the amount previously sold for.

Once a property is unco it is moved to sold as they are technically not for sale either and can you imagine having to look through 30 properties to find the 8 that are awaiting settlement?

 

[S.T]

Technically yes but it is unconditional and is just awaiting final payment. Should the person choose not to proceed they will lose deposit and can be up for additional charges if the property is sold for less than the amount previously sold for.

Once a property is unco it is moved to sold as they are technically not for sale either and can you imagine having to look through 30 properties to find the 8 that are awaiting settlement?

Yes, but technically the property is 'under contract' still and not actually sold.

 

[Hypnotic Cat]

1. Bid against themselves
2. Go past their limit despite best intentions not to do so
3. Indicate via body language or verbal means (mainly desperate whispering between partners, furious head-shaking, nervous nodding and numbered finger displays) when they're reaching their limit or about to pass it.
4. Watch the property sell before they've had a chance to call out their (often revised) "last" bid.
5. Re-enter the bidding after declaring they were "out"
6. Have the property passed in to them, and genuinely look terrified
7. Get on the phone during the bidding to ask mum/dad/sibling/friend for more money- a sure telltale sign that the limit has not only been passed but is about to be annihilated
8. Bid in higher increments than is necessary for the situation. A cool, calm and collected BA can sometimes save thousands in one ill-conceived and unneccessarily too-high bid by an auction virgin.

Jacque,
Too true! In the last couple of years I have seen all that at auctions. I am always amazed at how much people give away through their body language, and as you aptly put it, the desperate whispering and head shaking, as well as the bidding against themselves. I have seen how agents observe that kind of behaviour very carefully and pounce, convincing them to pay more than they might have. Auctions can be a nerve wracking and emotional experience. It is hard not to get caught up in it, it takes strength and a cool head.

When I bought my PPOR at auction this year, the final bidding came down to me and a couple. After my final bid they were fumbling around on the phone trying to get someone on the line, but they couldn't get through, so somewhat to my surprise it was knocked down to me when I thought the bidding would go at least 20k higher up to my maximum.

As I'd missed out on at least 10 previous properties at which I made offers (and which I'd talked too much about to friends and family) I resolved to keep my mouth shut and only tell one other person I was bidding on the day (my first time) but they were not to come with me. I said to that person, "If I win, I will you call you straight after. If I don't, see you at home for dinner."

I'm off to an auction this morning!

 

[Logica]

Despite what some may say, auction tactics play a significant role in winning a property for a reasonable amount. It is a skill which develops with experience, so sending a friend may not always work...
Same with auction mistakes as neatly summarised by Jacque. The more experience you have the less likely you are to make mistakes and the more likely you are to spot others making them (and taking advantage of this). Emotions are a significant part of the auction game. Negotiations during auction in front of dozens of people may not be everyones cup of tee. After auction can be worse with all the smoke and mirrors...
NB: estimating what the property is worth is important but developing (prior to auction) a good feel what the property might actually sell for can be equally important.

 

[johnpendles]

What about submitting an offer prior to auction?

-is this advisable? I've read elsewhere on the forum, not to give an indication to the REA what your price range might be prior to an auction, so i presume trying to purchase the home prior to auction might be a bad move?

-ive seen quite a few properties as "Sold before Auction" lately, what would make a vendor more likely to accept such an offer rather than going to auction?

-is a premium typically paid if one is trying to secure the property prior to auction?

all advice welcome

 

[Big Will]

What about submitting an offer prior to auction?

-is this advisable? I've read elsewhere on the forum, not to give an indication to the REA what your price range might be prior to an auction, so i presume trying to purchase the home prior to auction might be a bad move?

-ive seen quite a few properties as "Sold before Auction" lately, what would make a vendor more likely to accept such an offer rather than going to auction?

-is a premium typically paid if one is trying to secure the property prior to auction?

all advice welcome

You can but a couple of things.

1. If there is a lot of interest they will let it go to auction unless the offer is really good and they don't want to run the risk.

2. If the offer was good and there was comp then they will know where you might be heading to and risk that for more money as you will most likely bid that amount on the day.

3. Usually when it is sold prior to auction would mean that there was little interest and they asked the buyer for an offer prior to auction 'as the vendor is willing to accept offers prior to auction'. This was a decision that they vendor and REA made cause if it ran at auction with the limited interest it would likely flop.

4. Paying a premium? Depends on interest

 

[alicudi]

Hi

I think the fees mentioned earlier in this thread are well priced.

I have never used a BA but I remember the first time I ever bid at an auction in my early 20's I was as nervous as hell. On another occasion I wish I had used a BA at an auction as I was a little stupid!

And that was after working in a real estate agency!

So if someone requires a BA, they will be happy to pay a fee to take the opportunity of perhaps securing the property at a better price had they undertaken the bids themselves.

By using a BA you simply instruct them before hand with your limit and no emotion can go above that preset limit.

But by employing a BA you are making the task a little easier for yourself by removing the stress at that crucial moment.

A good buyers agent is worth using and I also recommend the OP build up their skill level to bid in the future when they feel more comfortable.

If other people in this thread don't think a BA is good value and you want or need to use the services of a BA, next time you jump in a taxi offer the driver $50 to bid at an auction for you and be happy with the service and outcome you receive...simple really.

Regards,

alicudi