Bidding at auction in a heated market
Apr 28, 2021
Being a buyer in a heated property market is stressful, no doubt about it. Here are a few tips to give you the best chance of getting the property you want without overpaying.
Before the auction
- Have a solicitor check the Contract of Sale and discuss any desired changes to the contract, such as settlement period and deposit amount, with the agent.
- Get a copy of the building and pest inspection (for houses) or the strata report (for units).
- Organise a loan pre-approval, and know all the extra costs of buying (such as stamp duty).
- Have the funds for the deposit ready to bring on auction day (usually a bank cheque but confirm with the agent).
- While you should always remember that the agent is acting for the seller, try to get as much info from them as you can, including what the reserve figure might be.
- Know what the property is worth and decide on the absolute maximum you are prepared to pay. In a hot market, this may be more than it would be in a 'normal' market, but you still need to decide on a figure. Mid-auction is not the time to make these decisions. Also, get comfortable with the scenario that you might be outbid, and that's okay. Very recent sales in the same area will give you the best idea of what a property is 'worth' in this market.
During the auction
- A relaxed, confident poker face is essential no matter what happens. Bid as if you have deep pockets, even if you don't. If other buyers think you'll stop at nothing to win, they can give up earlier. Remember that other buyers are just as nervous as you.
- It can be best to get in there and make yourself heard. Don't be afraid to open the bidding; it shows other buyers and the auctioneer you are confident and you want the property. While you don't want to start too high, going in too low can make you look inexperienced and lacking in confidence.
- There is pressure on the auctioneer and the agent to get the highest price for the vendor. This means they are beholden to the bidders, although they won't let you feel that. So, don't let the auctioneer pressure you on the bidding increments. In many cases they will accept half the increment they asked for. Bear in mind, however, that going up in bigger increments is more intimidating for other bidders so if you are comfortable doing so, this may be a better strategy.
- Bidding quickly is also a good way to intimidate other buyers; however, take a moment to think if you need to. If the auctioneer knows you’re a serious bidder, they'll wait for you. Remember that taking time to discuss things with your other half could make other bidders think you are near your limit.
- Don’t wait until the auctioneer says 'final call'. If you are going to make another bid, do so before they get to this point. Once that gavel comes down, it will be too late.