Auction can be many things, it can represent opportunity but it can also be a challenge.
Purchasing at auction, Sales Executive & Director Teresa Natoli points out, is often about the variables. One important factor about purchasing at auction is that you cannot control value. You cannot control market conditions, including buyer financing, competitors and most importantly not crumbling under pressure in the psychological game on the day – all which effect value.
Avoiding some of the common mistakes may make the whole difference when buying at auction.
Before you get a hold of that paddle, it’s a good idea to do some field research. Attend as many auctions as possible to understand how they work and observe bidding behavior. The experience will go towards informing your ‘game plan’ for auction. Begin taking note of the recently sold prices in your area of choice so you know what to expect. Many prospective buyers don’t want to make a bid, and would prefer watching the property pass in to another buyer. They would hang around after the auction, hoping a deal isn’t reached so they can swoop in and negotiate a bargain. You can also rehearse your bidding at home in front of the mirror or with your family. It may sound stupid, but putting in that extra practice helps you feel more confident going into an auction.
Stand right at the front with a good view of the crowd and auctioneer – ask a question at the start to show that you mean business. Keep calm and be aware of your body language – give the impression that you know what you’re doing. A buyer’s game-day performance can shake off competition. It’s important to dress like you have the means to buy the property. When you bid with confidence it shows that you have done your research, have your finances in check and are ready to challenge other bidders for the property.
People tend to think in round numbers, so set your limit as an uneven number. For example, instead of $700,000 set your limit to $703,000. Buyers should do their homework about exactly what they can afford, and consider being a bit more flexible if they have the capacity. If bids are crawling up, a tactic to try and eliminate all competition is to significantly outbid everyone, but go just short of your own price limit.
Start with a strong bid, then increase by smaller increments. Starting too low, in some cases, might invite other bidders into the auction ring and allow momentum to build. If you’ve done your market research, and hopefully you have, then making a ridiculously low offer is usually a mistake.