Psyching out the competition at auction

Hi All,

I'll be focussing on Sydney and Melbourne markets initially and in these markets auctions are the norm.

I've been to quite a number of auctions recently to get a feel for the process and observing different tactics when bidding. I've paid particular attention when buyers agent have bid to see what they do. Personally, I love watching auctions even more than watching movies!

The drama, the emotion, the joy etc.

I thought I would share some observations that I thought worked well and looking for others to add their 2 cents.

Calling out the bid in a LOUD voice
Don't be afraid to bid first (often saw the first bidder win)
Ask if the house is on the market
Arrive early and register and observing who else registered (see the competition)
Stand in a prominent spot near the auctioneer so you can see most bidders
Do the stare down!! (look confident)
Dress like you have deep pockets
Rapid fire bids
Changing bids from $1K back to $20K back to $500. Seems to confuse everyone but appears effective.
Lastly....I've seen people drop out (reach their limit) fairly soon after they start consulting with wife/husband family etc. so I plan on going alone commando style.

From experience I know that every auction is different so playing the situation is important but these tactics (above) I have seen work to winning effect. Would love to here what others have seen work effectively.

 

Dropping out when you reach your limit is a sensible thing to do.

And it can be a good idea to bring someone who will help you to stick to your limit.

Isn’t the only sure way to win at auction to make the highest bid?

 

I’m not suggesting anyone go over their limit.

It’s more the cues your giving out to others bidding against you (people tend to consult when they are near or at limit on my observation)

Now if I know this I might use it against you with an aggressive bid.

I’m sure some people have dropped out because they felt like the other party had deeper pockets (which may not be the case). I think there is a real art/psychology to the bidding and I want the best chance to win.

 

I like your list and employ most of those tactics and then some. Only thing I wouldn't do myself is make any bid at all until I know its on the market. By not starting the bidding, it may take even a few minutes longer to get some bid in place. That means the sellers are sweating a little longer. All affects the mindset. Also if you are the only bid on the day (because you bid first), as opposed to having it passed in. I believe your in a weaker position. Let it get passed in. Then negotiate.

 

Agree, Never a good idea to take anyone along who could screw up your psyche. Auctions are for the most part, psychological warfare. The agents and their team have a plan to snatch every single cent from you as much as possible. And so they should. That's their job and I expect my agents to do the same when selling.

But doesn't mean you don't have your own war game in place.

 

Let the sellers sweat. Yes good point! Condition them down.

 

That was my thinking....I would go alone to not get distracted, know my limit and then use psychological war fare to try get an outcome.

From observing many auctions, first time buyers or novices stick out. I’ve seen some absolutely cold blooded killers (maybe abit dramatic) but they look like it’s just another day.

 

Not bidding is a big mistake. What if other buyers adopt your strategy and wait for the property to pass in. All that will happen is that you will have an auction after the auction when you could of bid, held the highest bid and the exclusive right to treat with the vendor at their reserve.

 

A very simple way to look at auction's is like this ..

The person that ends up watching the ink dry on the contract at the end may well have paid 30 percent more then the person that made the first bid or second bid and in those few brief seconds where you go into a different mental zone they may have been carried away then suffer buyers remorse a few days later..

From what i see in inner Brisbane if someone wants the property then just keep your hand in the air and stand down the back where you can watch everyone the agent's working the crowd ,then you have to watch and make sure you know 100 percent that you know more then the agents developers ppor buyers and the ones with serious money who dress down and play dumb,and wait till it comes into their buying range one bid could close the sale or you get carried away ...

 

I prefer to negotiate when its passed in. Has worked for me many times in the past. Exclusive right doesn't mean much.

 

Mate I've seen some agents have green buyers in absolute tears and disoriented from the pressure they put on. I feel for them.

 

Op, how many auctions have you won at a satisfactory price to you?

 

What's the purpose behind the question? Happily answer depending on your response.

 

Wondering whether its all just strategy in theory and not in practice.

For example, there are people who say sure when the market crashes ill go in and buy everything at 20c on the dollar. But if the market really gets to that point, they probably wouldnt pull the trigger.

wondering whether all these strategies will survive the first battle. Do you want to win the game or admire how good your moves are?

 

I agree with @Sackie. I've been going to auctions for 20+ years in Melbourne, it's fairly rare that the winning bidder was in there from the start.

A fairly common pattern (at a hot auction) is the bidding will start and a couple of people will bid. At some point the bidding will slow and the agent will go 'consult' the vendors, or the bidding will keep going as the bidding goes past the reserve price.

Eventually the property will be on the market. Often 2-3 more bidders will then emerge and ultimately win. The original bidders may have thought they had the property, but they'll now fall out, probably later complaining that they were 'underquoted'. They probably never saw the competition coming.

 

Most of those people I believe would do what they always do. Squat. Strategy is useless unless you have the right mindset to drive it.

 

I’ve been in real estate for 15 plus years and people that do not bid and allow the property to pass in are taking a huge risk.

 

I don't want to start a ******* competition Trainee but Iet's just say I've made and lost 7 figures a few times over (yes a few) by pulling the proverbial trigger.

Been in many battles in life. One day I'll share a few with you.

Now did you have something useful to add for everyone?

 

Not meant as a challenge. Just saying that strategies on paper should be tested in real life.

i dont do auctions because i feel i dont have enough control over the process, and i dont trust myself to stay unemotional.

 

Fair enough. I WILL (not maybe, not probably) execute on my investment strategy. Just want to de-risk as much as I can through knowledge as I move through.

I actually don't find making money difficult. I'm very good at making money through taking action. My past challenge is how the f&%*&^%* ... I can hang onto it. For me, it's been like trying to hold onto water without it seeping through the hands.