Winning at auctions

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From: Roderick Aguilar


Hello everyone,

I normally do not buy at auctions anymore, since I've discovered how to get houses at wholesale but a friend of mine asked me to go along with him at an auction to give him a hand.

We won! with only $2500 to spare before we hit our limit!

Below are the tactics we used which worked yesterday (most of these are from the Peter Spann course I had done last year):

1. Arrive early. We were one of the first ones there. Auction was on-site.
2. Start a conversation and befriend the real estate agent. Make sure you do this at the front porch of the house so that everyone can see.
3. Fortunately, for us the auctioneer was running late and everyone got to see us talking with the real estate agents for a good 10 minutes. I came well-dressed in business attire so it gave the perception that I must have oodles of money.
4. When the auctioneer finally arrived we then proceeded to position ourselves at the front just a little to his left as he faced the crowd. This way we could make eye contract with everyone who was bidding against us. What he sees we can see.
5. Fortunately for us, the real estate agent which we had struck up a conversation with, had decided to come to our corner and we asked if he could bid for us. We did not tell him initially what our limit was. We figured this would give everyone the perception that we are a friend of his and that he was determined to get the property for us. ( I only met this guy about twenty minutes ago!).
6. Since no one wanted to go first we started the bid at a low mark.
7. People attempted to blow us away with a mixture of 10K, 1K and 5K bids.
8. The key is to slow things down. We only bid in $500 increments.
9. Fortunately, the real estate agent was very seasoned and he only put in our $500 bid at the end of every second call just before the third and final call.
10. We merely dragged out the process to the point where everyone else became frustrated and eventually gave up.
11. As people bid against us, we would scan the crowd and make eye contact, wait until the second call and then bid our $500.
12. Everyone quickly realised that we wanted the place and that we could keep going up in $500 increments for as long as it takes. Little did they know that we had a limit and were prepared to walk away if the limit was hit.
13. As the reserved priced was hit and the property was on the market (and we began to approach our limit) the real estate agent asked us what our limit was. He only had less than 10K to play with. So he slowed the auction down even further. The timing of your bid in an auction is everything! He
only put our bid in at the last possible second. And it paid off.

It does not matter how often I go to auctions, winning one always gives you instant gratification! At the end of the auction, all the real estate agents (there were four of them) came round to
congratulate us on a very good buy. We bought below market value and just above the reserve price. It never ceases to amaze me how you can influence people's perceptions by just trying on a few tricks.

Cheers,

-Rod.
 
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Reply: 1
From: Michael Yardney


Rod
Congratulations on your purchase. Auctions can be an intimidating affair. I think you presented some good auction tactics.
Just a few points:-
1. If you bought at an auction where there were a number of genuine bidders and you paid more than they were prepared to and the property was sold above the reserve, I would be careful jumping to the conclusion that you bought below market price.
2. The agents have been taught to always come up to the successful bidder and tell them how well they bought or how cleverly they bid. It's called "post purchase reassurance." Its a little trick they play whether you have bought well or overpaid. Don't believe a thing most agents tell you.
3. If you are trying to "psych out the crowd" and create the impression you are an experienced property buyer and bidder, then don't get an agent to bid for you - do it yourself. Having said that, if you are inexperienced and not confident in your skills, definitely have an agent or a friend bid on your behalf, but NEVER an agent from the firm auctioning the property. They stand to get a commission from the sale and they usually know the reserve. They are NOT on your side. They are there for the vendor and to ensure that the property is sold at the highest price.
Michael Yardney
Metropole Properties
 
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Reply: 1.1
From: Roderick Aguilar


Good points Michael,

1. The property is a 3-bedroom brick veneer with polished floor boards and car port near the Liverpool area. 580-590msq of flat land I think. Next to schools and close to shops and the train station. On any given day the property is worth $150-160K. This my friend knows from his research. We bought below this. He aims to rejuvinate for 6-8K and place it back on the market for $180-190K. He does have an advantage in that he saw the place in its former glory before the place became "looking quite ordinary" through years of neglect.
2. He'd had his eye on the property for a while now and knew he bought well.
3. The agent we asked to bid for us was not getting the commission as it was not one of his properties. In this instance, having him bid worked as a tactic and made our job easier. The other bidders only stopped because the other real estate agents stopped prodding them to keep bidding when they realised we wanted the property. Our real estate agent bidding for us must have given his friends the signal that we were close to our limit and hence to stop prodding.

It's really all a game in the end! A very fun one to be in and even better when you win!

Cheers,

-Rod.
 
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Reply: 1.1.1
From: Jeremy Laws


Auctions are fun! How often do you get to spend $500k+ in one day - may as well enjoy it.
You need to slow the bidding down as much as possible.
My best effort was purchasing a property for 390k when the bidding had reached $397,750
My technique infuriates people, but does work. You need to be confident and not easily intimidated. Also you need to be able to walk away without the property. 'Well if you don't like my money, which is just as legal as theirs, you will hurt my feelings, and I will leave..'
Wait till the last bid 'going, going, .....' Interrupt as the hammer is about to fall. A friend of mine screwed this up, so DON'T leave it too late!
At this point put your hand up and say 'and $1'. You will get into a long and protracted argument about what is the minimum bid allowable. Much confusion and arguing. This will then proceed into a process where the bidding may even get as low as $20-50 increments. Hence the price change possible - VERY hard to follow where the bidding is sometimes. This dos work, very well! Also I have on occasions demanded a Stat Dec from other bidders attesting to the fact the are NOT bidding on behalf of the owner. Throw that one in for extra confusion. Esp if it is (as is the case now) a slowing market.

Have a lot of fun!
 
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Reply: 1.1.1.1
From: Roderick Aguilar


Hi Jeremy,

One dollar?!!!!! Geez, that too would infuriate me! Remind me not to take you on when you're bidding :) You'd need a very, very thick skin in order to pull that one off. ;-)

But hey, my friend has also tried this and it does work. They've been going up in $5K chunks and then he put one in for $50. The auctioneer scoffed at this to which he replied with, "Why won't you take my money? Is my money not good enough for you, mate?" to which drew cheers and applaud from the crowd as this particular auctioneer was a bit of an arrogant fellow. This raucus took the auctioneer by surprise and he decided to take the bid. And sure enough, the bidding increments began working at the $50 mark. My friend eventually won the auction. And what a satisfying one at that!

Cheers,

-Rod.
 
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Reply: 1.1.1.1.1
From: Jeremy Laws


Rod,
Your friend did as well as I have ever done! It IS SO MUCH FUN when it works! well done! Be seeing you - we should do the same at the same auction one day! he he he he he!
 
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