Auctions can be are a very intense way of buying a house, and for many prospective buyers, they can be intimidating. For one they highly unpredictable, one moment you may be a three-count away from securing the home of your dreams and the next someone undercuts you.
However, they are also a very simple and fast way of selling a house, and for many sellers, the preferred option as it gives them the best chances for exceeding their asking price. For prospective buyers, it is important you are prepared and confident in your ability to stay calm in order to hopefully come out on top.
Before you enter an auction, make sure you are armed with as much knowledge and information as possible. We suggest, going to several auctions in the suburbs you like as a spectator before you become an active participant.
Watching auctions will allow you to get a good understanding of the structure and format of auctions, bidding strategies, and housing values in the areas you are keen on.
Stay within your means
Auctions are often a fast-paced environment, where emotions run high and getting caught up in the bidding process is fairly easy, especially if you are already emotionally invested in the house.
To avoid getting carried away and committing to a figure you can’t really afford, make sure you know your limits. When you have found a house you like, we recommend coming up with three figures to guide your bidding strategy. Firstly, a minimum estimate you think the house will sell for, generally the CV. Secondly, what you think the house is actually worth and, lastly, the absolute highest you are will to pay for the house.
What is your bid strategy?
Like all things, auctions require a plan of attack. Before going into an auction, design a strategy for how you are going to bid. Knowing what strategies are working and what ones to stay away from, is one of the major reasons we recommend watching several auctions before you taking part.
But, you’ll need to find a bidding strategy that suits your budget and the auction you are attending. Do you come out all guns blazing and bid early, signalling your intent in the early stages? Or, do you sit back and watch, and at the last moment try and undercut the competition?
While, there are no guarantees, having a strategy that fits your budget will put you in a solid position to hold your own and hopefully secure the house.
Quick and confident
Whatever strategy you employ, when it comes time to bid, be quick, loud and confident. This will signal to the auctioneer and other bidders that you are serious and may even scare some rivals off. As you are bidding, firing back a counter-bid straight after a rival’s bid will put the pressure back on your rivals and requiring them to consider another bid faster then they would have liked.
Have someone else bid
If you aren’t comfortable or feel nervous about bidding, consider getting a professional or someone you trust to do the bidding for you. This will eliminate the chances that you either lose the auction or get carried away and overbid.
Watch other bidders
At auction time, keep an eye on your competition, you’ll be amazed at what you can learn from how people hold themselves. Much like a game of cards, body language will tell you a lot about how they are feeling about the auction.
At the same time, if you are watching people, people will definitely be watching you. So make sure you display a cool, calm and collected figure. If you start displaying too much emotion or how much you want the property, other bidders could bait you into an unwise decision.
Auctions are a massive game of cat and mouse. Depending on the amount of interest in the house, chances are you could get caught in a bidding war. If you find yourself at this point, make sure you know when to stop and live to fight another day.
Make sure you have someone with you at an auction that will be able to stop you if you start getting carried away. Because while buying a house is amazing, a home loan is a 25 plus year commitment. So, having a home loan that will put you in a difficult position in the future, may not be worth it.
If you are looking at buying a house in the near future, but don’t know where to start or need some advice, we are here to help. Get in touch with us today and our friendly and experienced advisors will be more than happy to help.
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