Your Strategy At Bidding (Auctions)

[Kristine..]

So just getting back to the original question regarding tactics:

I attended an auction yesterday, good crowd, 'Will Be Sold Today' - 'Realistic Reserve' etc announced by the Auctioneer

Yep! Sold today - $76,000 above the reserve - again by a family outbidding the local developers by a whisker, People eager to get into this area - a very small, two bedroom,asbestos faux brick clad 'weekender' in a redeveloping residential area - land value but at least the house is habitable - and do you know what they did?

The buyer opened the auction at not far below the (later announced) reserve, was in the bidding all the way through, was sitting on a fence directly opposite the Auctioneer, was obviously absolutely determined to buy the place - this was a youngish couple with small children, both radiated determination although remained sitting on the fence (perhaps to stop their legs fromshaking?).

And good on them! They have now bought a property which will provide them with much enjoyment over many years to come, plus have happily paid $30,000 more than I paid for something similar in the next street five months ago.

Is Melbourne HOT? Sure, but more importantly, bidding at auction is quick, clean, transparent and brings forth a decision.

And did they immediately go inside their new treasure and eagerly sign the Contract? You bet they did, the Agent has the underbidder's details, too, but that property was definitely 'sold' on the fall of the hammer.


By the way, I paid particular attention to the Auctioneer's reading of the Terms of Auction.

These Terms are quite clear - by participating in the Auction you agree to these Terms, which are legally binding.

Sure, the Sale or otherwise transation regarding Land is covered by the Instruments Act and requires the agreement to transact to be in writing, and has already been mentioned, the Auctioneer has the delegated authority to sign on behalf of the Vendor or the Buyer

Over the years, I have known one property knocked down to one party to be sold later (minutes later) to the underbidder when the top bidder went inside and then thought they could negotiate a lower price! The very experienced agency had kept the underbidder engaged in coversation while the buyer was meant to be signing the contracts - so the top bidder was escorted out the back door and the underbidder was invited in the front door and they then signed the contract!

The law is one thing, dealing with inexperienced buyers is another - who knows what happened in there?

But yesterday, there was no doubt that the Terms of Auction impose a legal responsibility on any bidder and counting the number of Agents in the crowd, smiling and pleasant though they may be, they are there to perform a legal authority on behalf of the vendor and perform it they will!

Cheers
Kristine

 

[paul2299]

Raise your hand at the start of the auction and leave it up, let other bidders know whatever they bid it will be outbid.

Seriously though the best suggestion I can give is be confident, counter with bids straight away right to your limit, give the impression that you were willing to pay a high price and think alot about what you will go to before the auction. If it goes to $X will you still bid? I would watch some of the buyers agents in action.

I wouldn't necessarily bid in big increments though.

 

[Deltaberry]

Once you're in the bid, fire right back with whatever the other guy counterbids at, if it's still under your limit. Just blow them away. If you keep nibbling at it on the 2nd or 3rd hammer the other guy will think "hmmm maybe $1k more will work". In my last auction every time the guy fumbled around for 5 minutes to put a bid in, I shot back within 2 seconds. That really puts him on his toes. When he reduced the increments from $10k to $5k, I just stuck with $10k. Needless to say he was at his limit and just stopped... if I had followed him and bidded $5k, who knows, he might think "hmmm just $5k more"

 

[KateMelb]

Really good advice here.

I've stood to the side of the auctioneer, using a low voice but within the auctioneer's hearing range and looking straight at the crowd in front. Is intimidating for the inexperienced bidders huddled in their family groups.

I never bid until the property is on the market and the hammer is about to fall. And then the opening bid must be at least $10K more than the last bid (which had probably slowed to drip feed by the) - this really throws the leading bidder.

I've also had a phone in my hand and pretended to be taking phone bids - takes the emotion out of it and the control out of the opposing bidders' hands.

I've also worn sunglasses and chewed gum, to look as arrogant and indifferent as possible.

At the end of the day, it's a game of survivor - who'll be the last one standing...

 

[stevie_sloth]

What happens at an auction is you stop bidding when someone else is prepared to offer more than you. Whether you get to that limit slow or fast is irrelevant. If your prepared to go just over your limit because that will beat the other guy, then its not really your limit is it?

I fully agree with this.

The only "tactic" I'd ever use is not to bid until the last minute. I'd just let the others push the price higher if they so choose, and if it's still in my budget by the time the majority of them have worn themselves out, then I might have a chance, so would try my luck bidding.

But at the end of the day, it's all about the price limit. No tactics can change that.

 

[buckerooni]

In terms of bidding early, I don't see any benefit.

I always thought there's no point of bidding until it's on the market, or to counter a bid. One of the hopes is if they can't get a single bid in the initial 'round', they may lower their reserve price when they go inside to get 'vendors instructions'. In reality, I don't know if this happens or not.

Also, I don't want to show my hand to the REA's by bidding if I don't have to. There's been a few auctions that we've been very interested in, but went for more than we were prepared to pay. By not putting our hand up at any point kept the REA from knowing how much $ you're willing to throw around.

 

[buckerooni]

also, I don't see the so-called 'knockout' bid being an effective tactic at all. I think it has the opposite effect, that the bidder putting a large bid out there is most likely really close to their limit...I smell blood!

 

[Kristine..]

... By not putting our hand up at any point kept the REA from knowing how much $ you're willing to throw around....

Hello buck

Sorry, not sure what you mean with this tactic

If I was out buying a two bedroom unit for renovation, and happened to come across an Agent with whom I was also discussing the purchase of a snazzy new Principal Place of Residence, these two transactions are not some sort of composite transaction but are about what I think a particular property is worth to me and what I am prepared to pay for each specific opportunity

However, I have never had money to 'throw around', willing or not, and I have always found Agents to be very pleasant and helpful people. Without expert help from some Agents over the years I doubt that I would have nearly as many light bulbs to change today.

But, then again (as per my earlier post in this thread) I have never been all that clever and last time I bought a property I bought at auction and I bid all the way through and ended up paying $1,000 more than the underbidder. I knew exactly what I was prepared to pay for the property and I bought it for significantly under my own limit. I also bought it with $5,000 deposit and a five month settlement which ended up being only a few days short of six months.

If it wasn't for the very pleasant, calm, unruffled Agent I would not have been able to negotiate those terms and to end up with everyone (particularly me) happy six months later.

If he hadn't known a bit of my background he would not have been able to encourage the vendor to accept my terms and conditions

But, as I say, I never was too flash. Try and be a team player if I can. Except, of course, when it comes to wiping the underbidder off the court, then it's no holds barred!

Cheers
Kristine

 

[buckerooni]

Hello buck

Sorry, not sure what you mean with this tactic

...

However, I have never had money to 'throw around', willing or not, and I have always found Agents to be very pleasant and helpful people. Without expert help from some Agents over the years I doubt that I would have nearly as many light bulbs to change today.

Hi Kristine,

The circumstances we've been in is at auction with an agent who we knew well (& who I didn't trust for a second!) and the auction had nearly stalled, we had not placed a bid, but it was pretty much at our max. There were still a couple of parties slogging it out, so I didn't bother raising my hand. No point unless it completely stalls I thought.

As this was for a PPOR, they knew we were prolly a little more susceptable to being swayed emotionally and pushing out a few extra $ if prodded, so I was of the belief that once they know exactly how much $ we were prepared to spend, they'll do their job to get it out of us at the next auction/private sale. The REAs were big in the area, so it would be pretty much unavoidable!

I've always been pretty straight forward about the range though, but once you stick your hand out (esp. if it's near your max) and confirm a figure, I think it can be little too revealing. That's pretty much the jist of what I was getting at.

I sound a little like an agent hater, but boy, it was justified with this fella...

 

[csc2]

simple strategy....i stand to the side partly facing the auctioneer and the crowd to see who im bidding against...

dont be scared to ask the auctioneer who made the bid if things look dodgy with fresh air bids from no one...

if your not flash at auctions, get someone to bid on your behalf..this way it eliminates the temptation to bid over your max budget.

personally i detest auctions.....they are easily corrupted.