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Bidding at auction is a high-stakes game of chance and strategy. The more time and preparation you put into strategy, the less that’s left to chance.
While there’s no one-size-fits-all approach, there are tactics you can use to make yourself look and feel as though you have the upper hand. Who you take with you to the auction, where you stand in the crowd, how you behave and how you bid will all make a difference.
It’s an approach that worked for James Turner and his partner Leon Williams. They recently bought a two-bedroom home at auction in Petersham, in Sydney’s inner west.
James’s mother, Freya, went with her son to the auction. She explains that it was their detached, considered approach that enabled them to win the sale $100,000 short of their limit.
“We were very conscious that we didn’t want the auction to run away in a bash of emotion. We took our time with each bid and kept very quiet”, she says.
No one wanted to make the opening bid, so we started it out – at $100,00 under the reserve, Freya recalls.
“The auctioneer began asking for $25,000 bids, but we deliberately kept slowing it down with smaller bids”, she says.
Tips for Bidding at Auction
Project confidence. Be aware what clues your facial expression and body language are giving the other bidders. Stand tall and bid loudly and clearly.
Make your upper limit non-negotiable. Put time and research into deciding what your walk-away price will be so that you truly understand the ramifications of exceeding it.
Slow it down. Don’t be afraid to drop the bid increments even if the auctioneer is asking for more substantial amounts.
Stay calm. If you know your partner will make you anxious, go to the auction alone or take a friend who will support you to stay within your limits.
Be strong. Ignore the sales tactics that auctioneers and real estate agents use to force higher offers. Especially refuse to bid against yourself.
“It was when the bids had dropped to $5,000 and $10,000 increments that we decided to jump up suddenly with a $15,000 bid. We wanted to show we were serious about the sale. It worked. Bidding halted even though we were still $80,000 shy of the reserve.”
Freya explains that at this point the agent offered to close the sale if they agreed to bid an extra $50,000.
“He tried hard to push us, telling us it was an opportunity not to miss, but we stood firm. We knew that we might end up bidding against ourselves, so we took the risk to let the auction run its course.”
Freya concedes they wouldn’t have been able to make this difficult decision if they hadn’t kept calm. She says they knew how important it was to stay detached. That’s why she attended the auction with her son in place of his partner Leon, to keep a lid on emotions.
The auctioneer declared the house on the market and invited bids of $1,000. No one put in a bid, so James was able to buy the property at $1.1 million, $100,000 under the advertised sales price.
Freya says she didn’t see the other bidders because they chose to stand in front of the auctioneer.
“Although we couldn’t see the bidders, they could see us. James was holding the contract, with sticky notes poking out. There would have been little doubt in their minds that we were here to reach a sale.”
Formal pre-approval
Never go to auction without first arranging formal home loan pre-approval. Organising your finances in advance will give you confidence as a bidder and a maximum limit you can bid to. You’re less likely to overspend if you have an accurate idea of your borrowing power.
Speak to a Yellow Brick Road mortgage broker, and we’ll talk you through what’s needed to achieve pre-approval.