Auctions are a popular way of selling houses in Sydney. For someone who has found their dream home, it can feel like a nerve-wracking way to go about purchasing property, but there are many benefits to buying this way. One of the best things about it is having a set time and day that the property will be sold, meaning the entire process is often over within hours. This is a quick result when compared to the days of going back and forth with offers, responses and counter offers with a normal sale. There is also a chance that, depending on the other registered bidders on the day, you might end up paying less at auction than you may have offered earlier.
A common fear of first-time bidders at an auction is that the property might slip through their fingers in the excitement and fast action, but this is very unlikely. It can feel fast and furious while you’re in the process of bidding, but the auctioneer will always make sure everyone has had a chance to put in their final bid before declaring it sold. Unlike a regular sales process, where there is a chance that the vendor may accept an offer before you’ve got your finances sorted, there is a fair bit of control at an auction.
Follow these tips below to get rid of your auction day nerves and to give yourself the best chance at winning:
Before auction day
The best thing you can do before heading to an auction as a registered bidder, is to attend other auctions purely as a spectator. Observe and absorb the action and how the day runs, because understanding this process will give you the confidence you need for your real auction day. Take special note of the people bidding and what kind of signs make it obvious that they are getting close to their budget limit. Other ways to prepare before the big day are to get your finances in order, have all building inspections complete and go through the contract of sale thoroughly.
On the day
Auction day has finally arrived for the property that you want to buy. Follow these easy tips to give yourself the best chance at a positive outcome.
This piece of advice may be surprising, but it is better to start out strong than to come in too low. That isn’t to say your first bid should be above market value, far from it. But in a world where property prices are more transparent than ever thanks to apps, websites and speaking to your real estate agents, there is less chance of bagging a way below-market bargain. However, putting in a reasonable bid that reflects market value but isn’t your highest number will help weed out the low-bidders or the ones who are looking for a bargain. It will also show you are a legitimate player.
Be confident and fast
Once the bidding is off and running, don’t hesitate with your counterbids. The other bidders don’t know what your top budget is, but when they hear you placing bids quickly and confidently, they will recognise you as a serious opponent.
The upside to this is that they may bow out of the race earlier than they would if they felt like you were hesitating or close to your absolute limit. If they think they are close to winning, they might keep pushing themselves just that little bit more. If they get the impression from you that you are going strong while they are getting close to their budget limit, they will be more likely to retreat.
Don’t bid small / odd numbers
By now you’ve been to other auctions, and you know there is always a time when the bidding slows down. There are usually only a couple of people left in the race and sometimes what happens is that one of the bidders will increase the bid by about $500. This can be tempting to do if you are running out of money, but it isn’t a good move. The other buyer you are up against will almost definitely come in and round off your bid by another $500. After all, an extra $500 doesn’t sound like a lot of extra money to win the auction of a great house. But if you are bidding confidently on the next full $1,000 or more, other bidders will be less tempted to even up your bid.
Be strict with your budget – but have wiggle room
It goes without saying that you need to work out your absolute top budget before you turn up to an auction. In the heat of the moment, with the adrenaline flowing, it can be easy to let your emotions lead the charge and start bidding over your head.
Having said that, it’s also a good idea to go in with two budgets. The first is your top limit that you’d want to pay – the amount you’d offer if the house wasn’t at auction. The second is a small slush fund of sorts, for that off-chance that the other bidders also slow down around the same price as you. An extra thousand or two is a lot of money, but if it’s the difference between winning your dream home or walking away, it might just be worth it.
There is no need to be nervous about the idea of buying at an auction. If you are prepared, are familiar with the process and you are certain about your finances, it can be an exhilarating way to purchase your next property!