Buying at Auction - best technique

[HeadsOnBeds]

Looking at buying in Brisbane today at auction. Anyone got thoughts on the best tactics! Also do you need to pay the deposit on the day or on the Monday morning?

I read a great post earlier in the year on somersoft about auction tactics but can't find it. Was written by one of the buyers agents, can anyone remember it?

 

[Jamie_]

http://somersoft.com/forums/showthread.php?p=1184600#post1184600
Post #38

 

[C-mac]

Good thread on the auction procress.

 

[Hypnotic Cat]

From personal experience of buying at auction, here's my 2c worth:
- Get there early, have a last look at the property.
- Get a good spot so you can see who's bidding and when.
- More important than anything, know your max price and stick to it.
- Bid confidently. Don't give away too much with body language or conferring with a partner. Be poker faced. Save the excitement for after the hammer fall.
- You can negotiate to pay the deposit by bank transfer the next business day. Make sure you have this agreed to in writing prior to the auction.

 

[Ed Barton]

I suggest blocking off the street, Bonanza style.

 

[DaveM]

Hack the web listing, change the auction time to 2 hours later, adn be the only one at the auction

 

[Truly Exotic]

One of my techniques that I use that most dont agree with is

to bid by phone, even if im just around the corner

I find that people are more intimidated by phone bidders, plus it keeps my emotions out of it as well

works for me

 

[LeoT]

There is definitely a skill to buying well at an auction.

1. Goes without saying to do your research beforehand to know exactly what its worth and how much you are willing to go maximum.

2. Never let the agent know how eager you are and what price ceiling you have (I know it sounds obvious but I have seen many ppl disclose all kinds of stuff to agents, THEY ARE NOT YOUR FRIENDS IN THE SLIGHTEST. They will eat you up and spit you out if you let them.

3. DO NOT bid at the auction until the property is on the market. Otherwise you are bidding against yourself which is ridiculous. (this is one of the biggest mistakes I see at auctions all the time. massive mistake). You can know its on the market when there is a distinct change in their tone/comments about the property now being on the market/will be sold today/must sell now/orders are to sell now etc. Sometimes its very subtle but its always there. DO NOT bid before that point.

4. At the auction, DO NOT let the agents intimidate you. they love to stand near you, egg you on, make you feel like a loser at times if you don't counter a bid etc etc. Stay calm, cool and level headed. I have told auctioneers many times when they try to pressure me, I have said calmly " I am under no pressure, I have 3 more auctions this week that I am more than happy to attend". Don't let them mess with you. their game is a psychological one all the way, know this, recognise this and don't let them use it against you.

5. When you decide to bid, bid hard, confident and fast. Don't let the other side hold the ball for too long before you confidently counter and smash their bid (as if you have an endless supply of money)

6. Once you reach your maximum, DO NOT continue. Save your game for the next auction.

good luck

 

[Truly Exotic]

4. At the auction, DO NOT let the agents intimidate you. they love to stand near you, egg you on, make you feel like a loser at times if you don't counter a bid etc etc. Stay calm, cool and level headed. I have told auctioneers many times when they try to pressure me, I have said calmly " I am under no pressure, I have 3 more auctions this week that I am more than happy to attend". Don't let them mess with you. their game is a psychological one all the way, know this, recognise this and don't let them use it against you.

I usually tell them before the auction starts, that I only bid near the absolute end, that usually stops them from 'egging' me on

 

[antistar]

3. DO NOT bid at the auction until the property is on the market. Otherwise you are bidding against yourself which is ridiculous. (this is one of the biggest mistakes I see at auctions all the time. massive mistake). You can know its on the market when there is a distinct change in their tone/comments about the property now being on the market/will be sold today/must sell now/orders are to sell now etc. Sometimes its very subtle but its always there. DO NOT bid before that point.

Or start throwing in $5k's and $1k's instead of $10s and $20s as early as possible (way before reserve). Agents will ignore and hate you but it eventually it does slow eveything and everyone down.

 

[TMNT]

My number one tip for best technique at auction - bid the highest, always works for me!!!

 

[holztor]

3. DO NOT bid at the auction until the property is on the market. Otherwise you are bidding against yourself which is ridiculous. (this is one of the biggest mistakes I see at auctions all the time. massive mistake). You can know its on the market when there is a distinct change in their tone/comments about the property now being on the market/will be sold today/must sell now/orders are to sell now etc. Sometimes its very subtle but its always there. DO NOT bid before that point.

Looking at my first auction in a couple of weeks and had a question about this tactic - I agree with it, but what happens when the property is passed in?

For example, other people are bidding, and you know that the reserve has not been met. The property is passed in, and the highest bidding has first option to negotiate.

What position does this leave you in? Say it passes in for $500k, and agreement is reached for $520k. If I was willing to bid up to $550k once the property was on the market, have I completely missed my chance?

 

[LeoT]

Looking at my first auction in a couple of weeks and had a question about this tactic - I agree with it, but what happens when the property is passed in?

For example, other people are bidding, and you know that the reserve has not been met. The property is passed in, and the highest bidding has first option to negotiate.

What position does this leave you in? Say it passes in for $500k, and agreement is reached for $520k. If I was willing to bid up to $550k once the property was on the market, have I completely missed my chance?

HI holztor,

In theory, the person who was left with the highest bid gets to negotiate first with the agent however in reality, If you are still interested after its passed in I would make sure you approach the agent and let them know you are interested to further negotiate on the property (regardless if you are the highest bidder or not). If you really want the property then at that point I would let them know what your prepared to go up to. Be confident and let them know that if they agree then the deal is done and your not messing around. They will take it back to the vendor and of course they will also talk to the highest bidder. At that point its a bit of luck and not really transparent anymore ..if your left with the highest offer they most likely would accept yours at the end of the day. Also terms of contract is important. Sometimes you can offer more money but they prefer the other guys terms of contract and don't mind accepting a bit less.

Regardless, if its passed in and you think its still worth fighting for then let the agent know your there to stay and negotiate on it. You can offer your best at that point or continue to play hard ball and offer a little higher but not your absolute best. Needless to say you risk losing the property again. So it depends on your strategy and how much you want to pursue the deal.

I must say some agents are in la la land and may not even be bothered to chase you up (knowing full well you were interested in the auction) and just accept an easy negotiation from the highest bidder (unbelievable I know). So MAKE SURE the agent knows your there, and ready to fight for it.

hope this helps somewhat.

Good luck mate!

Leo

 

[Big Will]

Looking at my first auction in a couple of weeks and had a question about this tactic - I agree with it, but what happens when the property is passed in?

For example, other people are bidding, and you know that the reserve has not been met. The property is passed in, and the highest bidding has first option to negotiate.

What position does this leave you in? Say it passes in for $500k, and agreement is reached for $520k. If I was willing to bid up to $550k once the property was on the market, have I completely missed my chance?

If it was me I would bid until it went to 550k that way you know you are out, otherwise it becomes a silent auction and you wont know what the other person is bidding/offering. They might only go to 530k and yet you put down 550k and win meaning you paid up to 19k more than you had to....

Or it could be the other way of you put down 548k and they put down 549k meaning you missed out by 1k but could have gone to your highest and won for another 2k.

I would rather bid to 550k and win than put an offer of 550k and win, the agent will always say you only just beat the other person. After all if an agent said you paid $20k more than the other person you will feel pissed off. It is one of the lessons I learnt when I was a REA the only person who doesn't know how much more they paid than other offers is the winning person.

Using your example as an example lets pretend 3 offers came in

Vendor & REA know as they know all the offers and can see a difference (Offer 1 - 550k, Offer 2 - 530k, Offer 3 - 500k)
Buyer (offer 1) only knows their offer and are told 'you just beat the other person' as they will be annoyed saying you paid 20k more than offer 2 and 50k more than offer 3.
The under bidders knows how much the property sold for and what their offer was so know they were beaten by (offer 2 beaten by - 20k, offer 3 beaten by - 50k)

The vendor is ecstatic having 20k more than the next highest but the buyer, who could become a future vendor will never know the good job the REA did. Cause if they did will get angry and never use the REA when they list as they felt ripped off and would rather an agent that did hard negotiating and apparently only just beat the competition by a couple of $1,000s.

 

[LeoT]

However assuming your the highest bidder and they are going to pass it in unless you increase your bid, in that situation to let the REA pass it in puts you in quite a strong position.

Leo

 

[Jaggannath]

The vendor is ecstatic having 20k more than the next highest but the buyer, who could become a future vendor will never know the good job the REA did. Cause if they did will get angry and never use the REA when they list as they felt ripped off and would rather an agent that did hard negotiating and apparently only just beat the competition by a couple of $1,000s.

Ummm what? I'd use them because what worked on me will work for me too...

Usually in an auction they'll tell you when they're about to finish it, just before they do raise $1k to get first right to negotiate.

 

[Big Will]

Usually in an auction they'll tell you when they're about to finish it, just before they do raise $1k to get first right to negotiate.

And then the other person bids back $1k now you have lost your first right.

 

[FrugalOne]

@OP

If your question is really "how do I win at an auction"?, then my answer is easy:

Bid the highest amount over reserve

But if your question is "how do I bid best according to *my XYZ circumstance*"?:

Then I am sure a lot of the above posts are well and truly valid, and will help.

 

[Jaggannath]

And then the other person bids back $1k now you have lost your first right.

You should write a book with insight like that

Then you bid another small amount to try retain that right, but you never bid large amounts, and only when they're passing it in. Goes without saying you'd never exceed what you consider the value

 

[Big Will]

You should write a book with insight like that

Then you bid another small amount to try retain that right, but you never bid large amounts, and only when they're passing it in. Goes without saying you'd never exceed what you consider the value

Thinking of it so far I am up to 15 words