Join Australia's most dynamic and respected property investment community

Buying at auction

Discussion in 'General Property Chat' started by Ethantheeel, 6th Feb, 2016.

Tags:
  1. Ethantheeel

    Ethantheeel Active Member

    Joined:
    12th Nov, 2015
    Posts:
    28
    Location:
    Sydney
    i am going to an auction hoping to buy an ip. Any tips on buying at auction. Have never done this before. Have been trying over the last two weeks buy pre auction but both the owners and agent both determined to have house go to auction.
     
  2. Cactus

    Cactus Well-Known Member

    Joined:
    18th Jan, 2016
    Posts:
    986
    Location:
    Melbourne
    Stick to your guns. You know what your prepared to pay for it and the yield your happy with. Don't get caught up in the emotion.

    As for strategy I always sit on my hands as long as possible and then bid with purpose.

    If you think it's going to be passed in bid so you can negotiate.

    Some people recomend try and reduce the increments to slow the auction down.
     
  3. Bran

    Bran Well-Known Member

    Joined:
    20th Jun, 2015
    Posts:
    3,213
    Location:
    At work
    I tried all the tricks yesterday
    Bid very late
    Weird and smaller increments But some strong bids late

    In the end, if there is an OO, they may just pay more Than you. Stop based on your predetermined number
     
    Perthguy and Cactus like this.
  4. Bran

    Bran Well-Known Member

    Joined:
    20th Jun, 2015
    Posts:
    3,213
    Location:
    At work
    I'm not making preauction offers anymore (at least in Bris) - they are being used to create an urgency with the buyers, and all to auction anyway
     
    Leo2413 likes this.
  5. Marg4000

    Marg4000 Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    913
    Location:
    Qld
    You can try any trick you can think of.

    But the person who is prepared to pay the most will win.
    Marg
     
    Cactus likes this.
  6. Leo2413

    Leo2413 Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    5,735
    Location:
    Sydney
    Auctions are an interesting beast. Part property, part sticky beaks and mostly theatre. I have bought many times at auction and I really think it depends on the market you are buying in. It goes without saying that in a hot market, auction tactics/strategy will most likely have limited effectiveness (at the very least it’s worth having to stop you from going over your budget) but it doesn’t mean that one shouldn’t have a strategy going into an auction, in my opinion. I have seen many times investors/OO go into an auction in markets that were not hot, and in my view ended paying 10s of thousands more because they never had a strategy.


    Everyone is different and this my personal strategy which suits my style:

    AUCTION STRATEGY
    1. Know the value of the property you are bidding for and do not bid over it no matter what.

    2. DO NOT let the agent know how interested you are in the property when you view it ect prior to auction. I let them know I am interested but never desperate.

    3. Dress decently on the day. I sit somewhere on the side so I can stare down other bidders if I choose. I often do.

    4. I never, ever start the bidding. I wait until the property is actually on the market. This can be tricky sometimes but you can notice a subtle change in the auctioneer’s language, indicating it is really on the table now.

    5. I bid quick, hard, and relentlessly. If the other person says 800, before he can even finish his words, I shout out 810!. When someone counters, I always beat their bid before or just after they finish saying it , always stealing the first place.

    6. I tend to use knockout bids, eg someone says 820 and it’s jumping in 10k increments but quite slowly, I might say 850, loudly and confidently while I have a fixed stare on them. My aim is to slightly intimidate and give the impression to other bidders that I have an endless supply of cash and that I am an emotional and unreasonable buyer who will buy at any price.

    7. Once it goes above my predetermined limit, I stop bidding and am out. No ifs or buts.

    8. If I am the last, highest offer and no others are making higher offers and the agent comes to talk to me saying something like " we are almost there and if can increase by X amount you will have a great chance. I just ignore their BS and say I have ALREADY passed my budget and that’s it for me thank you.

    9. Having the property passed in, and you being the top offer puts you in a very strong position to negotiate after the auction, and the vendor usually in a weaker position with more pressure. There is no need to increase your offer when you are already the highest offer with no other interest. It’s just bidding against yourself.


    I know everyone has a different style and this is what works for me personally. If 1 or 2 points resonate with you and is a little useful then great.


    Good luck mate!
     
  7. Creamy

    Creamy Active Member

    Joined:
    27th Aug, 2015
    Posts:
    34
    Location:
    Brisbane
    Does anyone organise building and pest or valuations prior to auction? Could be a real money sink if you're interested in a few places.
     
  8. Bran

    Bran Well-Known Member

    Joined:
    20th Jun, 2015
    Posts:
    3,213
    Location:
    At work
    This is the dilemma I'm facing. It's too expensive doing it for 1-2 every week or so, but of course far cheaper if you miss something.
     
  9. USC

    USC Active Member

    Joined:
    2nd Jan, 2016
    Posts:
    36
    Location:
    Melbourne
    I've bought at auction multiple times too due to purchasing in Melbourne. Everything goes to auction :-(

    My strategy is to start late, but go in with enough of a buffer to allow me to go hard and not stop until my limit. Similar to @Leo2413 a return bid from me happens almost immediate. No hesitation. I don't do knock-out bids though, keeping the increments small allows me more buffer to keep going. Our most recent purchase the other bidder kept increasing by 4K whilst I immediately followed with 1K increments. After trying that 6 (!) times he realised that strategy wasn't going to work.

    Regardless of tactics it does come down to money and emotions.

    I suggest you go and watch as many auctions as possible in the area to:
    1) observe different tactics
    2) understand how the auctioneer you'll have to deal with operates on the day
    3) get a real feel of the market sentiments in your area

    I love bidding. What an adrenaline rush. I think in another life I could be a BA.
     
    HUGH72, neK and Leo2413 like this.
  10. Ember

    Ember Well-Known Member

    Joined:
    29th Nov, 2015
    Posts:
    54
    Location:
    Australia
    We have bought at auction. In one case we were a lot younger and bid and pretended to bow out early like it was overpriced. My dad was registered to bid on our behalf and bid hard and confidently from across the room. He ended up bidding 10k over our max budget but won the auction and we never regretted it.
     
    Perthguy and wylie like this.
  11. Ethantheeel

    Ethantheeel Active Member

    Joined:
    12th Nov, 2015
    Posts:
    28
    Location:
    Sydney
    Thank you for the great advice. Have taken it on board.
     
    Leo2413 likes this.
  12. adrian_christian

    adrian_christian Well-Known Member

    Joined:
    27th Jul, 2015
    Posts:
    147
    Location:
    Mauritius
    Never bid until the property is "on the market" and wait until second/final call.., why drive the bid up before you have to??
     
    Leo2413 likes this.
  13. Leo2413

    Leo2413 Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    5,735
    Location:
    Sydney

    The funniest thing i have seen a few times is when the auctioneer goes "going once....going twice...and going three times....are we all in.... " but the joke is that the gavel is on the table the whole time and his hand is in the air just for show lol! I kid you not.
     
    adrian_christian likes this.
  14. dabbler

    dabbler Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,677
    Location:
    Sid en e - olympic city

    lol....my thinking too, it purely depends on who is there and what they will pay, I hate auctions, I really could not care if someone has a strategy or game going on, I have my price, and that is it,would not bother in a hot market personally.
     
  15. Leo2413

    Leo2413 Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    5,735
    Location:
    Sydney
    But is paying the most, winning?

    Personally, I feel I have 'won' if i exit an auction without buying a bad deal, just as much as if i won the auction with a good deal.

    Just my thoughts.
     
    melbournian and Ed Barton like this.
  16. melbournian

    melbournian Well-Known Member

    Joined:
    2nd Sep, 2015
    Posts:
    1,322
    Location:
    melbourne
    I think walking away is the best no pt overpaying
    I've scored 0 out of 3 in last few auctions. Just went to one sub div site over the weekend looked great and got pulled in and only bid once after looking at the s32 halfway through the auction to see an easement. Feel sorry if the person bought it to sub divide Sometimes walking away is the best.
     
  17. Leo2413

    Leo2413 Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    5,735
    Location:
    Sydney
    Wouldn't you have known that there is an easement there before you started bidding at the auction though...?
     
    Bran likes this.
  18. melbournian

    melbournian Well-Known Member

    Joined:
    2nd Sep, 2015
    Posts:
    1,322
    Location:
    melbourne
    Only was passing by and saw the auction starting as it is s suburb not really go often
     
    Leo2413 likes this.
  19. Leo2413

    Leo2413 Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    5,735
    Location:
    Sydney
    wow.. your super brave ...even with the 1 bid...