Buying at auction - any tips for bidding strategy?

Thread title, pretty much says it all.

I'm planning to bid on a property at auction in a couple of weeks. I haven't bought via auction previously.

Any tips?

 

Attend as many auctions as you can beforehand to get a good idea of the atmosphere and generally how things are conducted.
Marg

 

Is it for an investment of OO? If OO would you consider making an offer prior to auction. Generally speaking the later you leave it to come into the auction the better it is considered. Not too sure I agree with that though. Just make sure you are the last bidder if it does not meet reserve to make sure you can negotiate afterwards.

 

Thanks for the feedback. It is for an OO property, and we did make an offer on the property when it first came on the market.

Unfortunately we weren't in a position to make an unconditional offer at the time and, although it would have been unconditional well prior to the auction date, the vendors decided to proceed to auction. Time will tell whether that was a good decision for them.

Am a little annoyed at myself has we have now shown our hand in terms of what we were prepared to spend on the property.

I've been attending a few auctions recently. Many properties seem to either be selling before they get to auction or being negotiated afterwards.

The people who seem to be most comfortable in the auction setting seem to keep their bidding fairly consistent and come in quickly after another bid has been made - to be honest I haven't been able to discern a greater probability of these people being successful on the day though. I guess it does all come down to being the last bidder!

 

Expect it to go 30-50k higher than the Price guide. Let everyone bid until it looks like they're all finished and jump in on a second call, if it's down to 1k bids if you have any steam left throw a big 10k bid in to blow them all out of the water.

 

Be the last person to bid = win

 

Since you've already made an offer, I'd be tempted to let the entire auction go to the close without bidding. If it comes under your offer amount, then you are in the best seat to lower your offer in negotiations after the auction downwards towards the highest auction bid. Presumably your offer was something closish to what you think it is worth (and thus what you're going to pay for it.... right? ...) Therefore you only need to pre-think what to do in the (hopefully) small area between your maximum and what you already offered.
One of the hardest things to do is be prepared not to bid! Remember that your offer has already influenced where they will set the reserve - it is incredibly unlikely they have set it under your offer! So anyone bidding under your offer isn't going to get it anyway - so stay out of it. It's almost certain that they will set the reserve anything from a bit to a lot over your offer. So again, how much do you want the property - enough to bid a lot more (to get over the reserve) or a bit more (and try and be the highest bidder while again giving information to the opposition).
Again, I would think you should sit on your hands no matter what occurs until the property goes "on the market"; if it doesn't, then don't bid at all, but if another is the highest bidder then make sure the agent knows you are still around! If it does go "on the market", make sure you have decided beforehand whether at a particular dollar value that it does go on the market that you want to be part it. If so, bid loudly and well and because you'd be a new bidder you have an advantage I would think.

Not specific advice ...

 

Bring a friend to bid on your behalf.

 

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Get a professional to bid on your behalf....

@Propertunity comes to mind if the place is in Sydney / central coast region.

There is strategy and then there's money.
Strategy is to stop the emotional bidders from bidding...

But if you got two seasoned / professional bidders bidding, it's whoever has the deeper pocket.

Having a professional (not the real estate agent) do it on your behalf has a few advantages,

1. They discuss with you in advanced what your limits are

2. They can employ strategies to get the better of inexperienced emotional buyers

3. They are not fazed by other bidders.

 

Know your limit and go hard straight up to that limit, this blows other punters off at the same time, or if you've previously made an offer on this property then when the bidding opens I'd bid straight up at you're existing offer, again with the intention of blowing off your rivals.
The strategy of sitting back an offering at the end is a risk because you're letting others build momentum, ego's and emotion is pumping...you don't want that.
When I buy at Auction myself I go hard to bid it up as soon as possible to knock out others and to take away momentum which Auctioneers don't like.........Oh and I'm a qualified Auctioneer..

 

Walk through a full house and make sure that you mention the word Asbestos

 

This worked for me, agent would barely have the other other bidders numbers out his mouth before I'd throw up my next bid. Go hard or go home

If you can make it appear that you're emotional and will pay whatever you need to in order to secure the property (while sticking carefully to your limits) it has the potential to throw off the other bidders... unless they are actually emotionally involved in their bidding

Am sure it very much depends on the market and mix of interest at any auction as to what works best though.

 

here is one approach
1.Decide how much you are willing to pay for the property.
2. Let others fight out the initial bidding
3. Wait until the auctioneer says the property is on the market
4. Place your bid when he says 3rd call..
5. If bid goes against you, wait until 3rd call and bid again
6. keep bidding until you reach your limit.
7. If you win - congratulations
8. If it goes for more than you were willing to pay - move on.

We have purchased twice at auction - the reason we won was that we had deeper pockets than the other biddders and our winning bid was within our price limit.

 

Oh Magoo, you've done it again!

 

Wow - thanks for all the insights. The property is in Queensland, so no price guide.

We are very clear on what our limit is - and it is very close to what we previously offered (figured we needed to go in strong if it was going to entice the vendors to take the property off the market). The vendors actually took 3 days to give us a response, so I think that the $ we offered was on the money, but they didn't want a due diligence period. Perhaps we should have been braver and used the cooling off period for our DD (understanding the possible cost of this) - lesson for next time (if auction is not successful)

It will be interesting to see how it plays out, and who has the stronger interest in the property - owner occupiers or developers/landbankers (there are some development hurdles (character house, sewer line etc) that would add some complexity to development, but not insurmountable).

 

Can you go back with an unconditional offer now. You will be buying unconditional at auction so I do not see a difference. From my experience a lot of owners would be happy to avoid an auction if the terms and $$ stacked up beforehand.

 

Yes, I have had that conversation with the agent, but it seems that after getting our offer in the first week on the market and good turnouts at the opens, they are fixed on going to auction.

Seems a little strange to me as they have purchased elsewhere and have some pretty definitive requirements regarding settlement dates... If I was in their shoes, (and selling a property I'd had for 15 years with a good capital gain) I'd be taking the money on offer, rather than running the risk of no sale at auction.

 

If they are going all the way they must have intending registered bidders. How far way is the auction ?

 

Next Saturday - 29th July. Agent hasn't given any indication as to whether there are / how many other people interested in bidding (and probably nor would they). Perhaps it would be worth us putting our offer back in on Monday (ie after this weekend's open) when they may have a better idea how many bidders they may have?