How to win at property auctions
Use a bidding style that works for you to avoid auction angst, writes Carolyn Boyd.
Tension fills the air. Your heart beats a little faster. It's auction time.
While it may all come down to who has the deepest pockets on the day, sometimes how you play the game will influence just how high the other bidders are prepared to go.
"The tactics really are a mind game in an auction," says auctioneer and the owner of Think Real Estate, Brian Cannan.
"I hear buyers say: 'What's the point? He's going to beat me.' So the other purchaser has done his job well. He's just psyched them out."
Bidding at auction can be nerve-racking for all. Here are seven ways bidders tend to approach it:
Eagles can spot the prize from a long way off and have played the game before. They are happy to circle until a move is needed. But they're just as comfortable diving in early.
"They're a knowledgeable buyer, they've probably bid at auction before and that would also include buyer advocates," says an auctioneer with Cooley Auctions, Christopher Mourd.
They tend to come in confidently and bid strongly throughout.
Eagles are never rude, sarcastic or obnoxious but they will calmly meet the gaze of others to let them know they are determined get their catch.
Mourd says they will stand looking forward to the crowd to make it clear where they are and will make very clear, bold bids.
It's a good tactic, he says. "If you make the first bid loud and strong, well, you're controlling the auction. You're saying to everyone else: 'I want this property. Now if you want it, you've got to beat me for it."'
Where there is not a lot of interest on a property, Eagles will sometimes sit back and let the property pass in on a vendor bid and then attempt to negotiate a deal.
The High Flyer wants to blow competitors out of the water on the opening bid. They hope to secure the house with one bid and go in big with an offer at or above the price expectation.
The risk is they may pay too much. The advantage is they could scare off competitors, particularly if they are nervous and less experienced.
Cannan says it's a tactic that could work where there is plenty of interest in a property - and one he has used. If there's not a lot of interest, you'd probably hold back.
"As an auctioneer, it takes a while to convince the other bidders that they should join in [after a high opening bid]," Cannan says.
"They sit back and go: 'Wow, we're starting there!"' Mourd says the High Flyer is a rare breed and often a buyer's agent, bidding on behalf of a client.
MEEK AND MILD:
Lacking in confidence, Meek and Mild buyers may be new to bidding and are often first home buyers. They can be slow to make decisions and risk finding the auction has finished before they make a bid.
"Because auctions move so fast, often it can be difficult to keep up with the pace of it," Mourd says. He says these bidders respond well when auctioneers give them time, and experienced auctioneers will do just that.
Meek and Mild buyers tend to cluster at the same auctions - the properties that attract first home purchasers, but they can face a real challenge if there is an investor in the room.
"Quite often they go for similar properties and you'll find that often the investor really understands what they're doing," Mourd says.
While Meek and Milds are still making up their mind, Experienced Eagles may have swooped on the property and flown off with it.
If you're not sure if you might comes across as Meek and Mild, psychologist Grant Brecht, who specialises in leadership development and coaching, suggests asking friends and family for feedback.
On auction day, take a few deep breaths to calm yourself and stick to your bidding plan. "The plan will get them there, especially if they've been to a few auctions to see how it works," Brecht says.
Usually the last to show up before the action begins, Last-Minute Nellies reserve their first bid until the hammer looks certain to fall.
Cannan says Last-Minute Nellies are adopting a risky tactic that requires precision timing - and the auctioneer's eye.
Be a split-second too late and the auctioneer may have sent the gavel down, which means the deal is already done with another bidder.
"If the gavel comes down, I can't reopen it and people get upset," says Cannan, who was confronted with that very scenario at the auction of an eastern suburbs penthouse.
"The gentleman got very upset and I said: 'Well sir, you haven't made a bid.' And he said: 'Well, I just did."'
Cannan suggests letting the auctioneer know you are in the hunt. "Make an early bid and then sit back if you want," he says. "A good auctioneer will come back to you before the hammer comes down."
FAST AND FURIOUS:
Fast and Furious buyers hope to put their opposition off with their pace - or simply tire them out. They seemingly have deep pockets and can make a decision in a nanosecond.
"People turn around and go: 'He's just not going to stop, is he?"' Cannan says.
Brecht says Fast and Furious bidders can unnerve those around them. "They don't understand what the hell is going on," he says. "Are they going to pull out early? Or are they going to stay in there for the long haul?"
If you find yourself up against such a bidder, Cannan says try not to get spooked because everyone has a limit, even if they're not showing it.
LOUD AND OBNOXIOUS: Once abundant, Loud and Obnoxious bidders are now a rare species. "Ten or 15 years ago, it was very commonplace for people to be obnoxious and want to take on the auctioneer and be quite outrageous," Mourd says.
Obnoxious bidders may try to put buyers off by asking questions about the property before and during the auction - such as whether a nearby development will block the property's view.
Cannan says such tactics could leave the bidder open to a challenge of collusive practice as it is an offence to attempt to get others to abstain from bidding.
There is a chance Loud and Obnoxious bidders could undermine the confidence of other buyers - or they could just infuriate them.
"Some people say ... 'even if it costs me another 20 or 30 grand, I'm prepared to go there just so that someone that obnoxious doesn't get their way'," Brecht says.
Mourd puts the disappearance of Loud and Obnoxious bidders down to stronger regulation to make auctions fairer and more open.
"People know they're going in and bidding against genuine bidders and all that passion and heat has long since left," he says.
THE OUTSIDER: Wrangled in to bid on behalf of a friend or family member, The Outsider is aloof. It's not their money, after all.
"They can be very offhand because they're not emotionally attached to the property themselves," Mourd says.
Auctioneers can usually spot The Outsider and so can other bidders. Their presence can elicit one of two responses, Mourd says.
"They might seem more experienced and more confident and therefore can put that feeling to the other bidders that this is a person who is going to own it," he says.
Alternatively, they can sometimes come across as arrogant.
"Anyone displaying arrogance at an auction can upset the other buyers to the extent that they will be determined to beat them."
PREPARE TO BID:
* Go to a few auctions to get comfortable with the process.
* Learn who the auctioneer will be and attend some of his or her auctions.
* Ask the agent how many building and pest inspections have been done, to get an indication of the likely interest level.
* Set a limit. Auctioneer Brian Cannan says your maximum should never be a round number, as that is where other bidders will set their limits, too. So if you are thinking of $800,000, try to stretch it to $802,000.
* Think about your strategy. Psychologist Grant Brecht says if you are naturally less assertive, a strategy can get you through.
* Remember to take identification and your deposit to the auction.