Auction tips

I intend to go to an auction next week. I really like this property.
However, I made a mistake by telling the agent my budget and my budget is 300k-400k above the price guide. The agent knows that I will be a serious bidder.
Is there anything I can do to undo my mistake? How will it affect the reserve price?

 

Not really.
Tell'em you seen something much better in your budget, turned up cause you're curious.
And don't bid until you hear "it's on the market" and after the words "going twice".

 

Tell them your cold on the property and only interested in the property at a lower price range.
When bidding use caution there arent strategically placed bidders in the crowd used to get your bid up, slow the the bidding if you decide to go ahead and dont fall for the agent pressing you to bid higher as 'your close'.
Keep asking if the property is on the market before bidding or after others bid.
If you really want it make sure your the last bidder if you think its going to pass in so you can negotiate at the end.
If it gets passed in and its down to negotiation dont increase your position considerable amounts, especially if the passed in amount is lower than your budget as the agent will be pressing you to pay more knowing your budget.

On the other hand If the property has strong bidding and its within your budget bid strong but keep the bidding slow to try stop the momentum. Bid in increments larger than your nearest bidder.
eg. if they are going in 1s I would go in 6s or 11's, throws off the other bidders and people struggle with the odd numbers. Not sure the price range but adjust to suit.

Best of luck, at the end of the day do what you feel comfortable with.

 

Just because someone has a certain budget doesn’t mean that they will spend that amount on just any property.

 

Absolutely. Budgets mean nothing as each and every property should be bought on its merits and own value. We give agents general budgets of each client as they need to know which off-markets to tell us about! If we didn't and just said "Hey we have a client looking for a house in X suburbs then they could theoretically send us an off market worth $1.5million or $5million. Total waste of time for all involved unless we narrow it down.

Agents know that if we say "Our client has a budget of $2million" that sending us a property that is worth $1.8million doesn't mean we'll pay $2million for it. If you know how to bid at auction, and more importantly, negotiate in person afterwards, you won't pay a dollar more than you have to and what it's worth. Don't worry that you've told them your budget.

 

As long as you havent negotiated special terms. Meaning - if the auctioneer announces 10% deposit, settlement 30/60 days and you have a variation negotiated prior [say 5% deposit or settlement 90 days], simply dont turn up to the auction and have a friend bidding.

A much better way than standing there and lying to the agent about you've seen one thats cheaper and better. (Especially if you didn't - agents know their market and their competition. They also know that buyers don't just turn from one suburb to another one 6 burbs over - which is what you would have to say in order to minimise the risk of getting caught out if there is no batter value competing with the property you are looking at buying)

Should everything about the terms be straightforward though - easy.

What may happen when you presented yourself as a standout candidate and don't turn up is that the agent will tell the vendor during the pre auction brief that buyer-x has not turned up, putting downward pressure on the vendor. In a normal market, like we are seeing in most parts of Melbourne at the moment, the pass in rate or number of one-bid-auctions means there is a good chance for this little manoeuvre to go a long way.

In case the property gets passed in, have your friend negotiating and draw it out a bit.

In terms of signing the contract, that's up to you what you are comfortable with. If you are uncomfortable going in after an agreement has been reached, you may have your friend sign the contract in their name 'and/or nominee'. (Ask your solicitor about this terminology and what it means)

 

Always have a price in mind. Stop when/if bidding goes above this. If you don't get this property, there's plenty of fish in the sea and move onto the next. If you are the underbidder, and the Agent tries to lift your bid due to you saying what your budget is, you can counter that with, "this property is only worth X to me." Stand your ground.