There’s no doubt that the property market can be a tough battle to enter. Particularly, when there’s a slew of other buyers with their eyes on the same prize as you.
If you’re looking to buy a property to occupy or to use an investment property and it’s not available for private sale, then it’s essential that you arm yourself with the best strategies to ensure maximum success.
With auctions being so emotionally charged, doing the necessary preparation and potentially working with a buyer’s agent (also known as a buyer’s advocate) will help to prevent you walking out of the auction having overpaid or missed out on a great buy.
Here’s some tips to give you an edge next time you’re at an auction.
Do Your Research
If you’re going to be attending and bidding at an auction, it’s important to do your research on the market so you have some level of expectation before walking in. Start by looking at the clearance rates for the previous month so you can get a sense of what the level of interest from buyer’s is going to be. A clearance rate above 60% is going to indicate that the auction is likely to be more competitive. However, don’t let this deter you from still participating, as you never know what interest is going to be like on the day.
While in the market to buy, try to get to as many auctions as you can (if you have the time, otherwise a buyer’s agent might be your best option), even if you’re not planning to bid, as these present are a fantastic opportunity to get a feel for the process and to learn what other bidders are doing.
Know Your Strategy
Going into an auction, it’s crucial to have a strategy for how you want to bid. Do you want to start proceedings off with a high bid or wait for the end of the auction once other bidders have shown their cards?
If you start the bidding off early with a low offer, you may offend the seller. Whilst this may not seem like a big deal at first, this could come back to hurt you when going into negotiations. Or you may want to start with a large bid that takes out much of the competition. However, this could reduce your chances of nabbing a bargain as you push the purchase price up.
Many bidders at auction find success by coming into an auction during the second half once the bidding has calmed down. However, the risk that you could face is being too late to bid and missing the chance to submit your bid before the auctioneer has hit the gavel to confirm the sale.
Ultimately, whether you’re planning to bid early or late, it’s important to bid with confidence so that other participants know that you mean business. This may be crucial in them deciding to bow out when it comes to a bidding war.
Don’t Forget Your Budget
It can be incredibly tough going into an auction if you’ve fallen deeply in love with the property you’re bidding on. Auctions are designed to generate the best possible outcome for the seller and auctioneers are experts at working the room to push the purchase price as high as possible.
It’s so important that you go into an auction with a clear idea of what your budget is. Start by setting a budget for what you’re willing to spend, your ideal purchase price and an absolutely maximum budget.
You need to be diligent in sticking to this maximum budget and not getting caught up in the adrenaline. Some suggestions for this is to:
- Enlist the help of a buyer’s agent or a friend that can attend the auction with you and keep you on the right path
- Write your budget down on your phone or on a piece paper and have it in front of you at the auction, so you have a reminder of that absolute maximum amount you’re willing to pay for the property
Don’t forget that this won’t be the only property out there that you fall in love with and if you do miss out, there will be another property that comes along that meets your criteria. It’s better to wait for the right property that fits within your budget, then to overpay on a property that you can’t afford.
It’s the Little Details
The way you carry yourself and where you are positioned can be helpful in asserting your position at an auction. Dressing to impress and arriving in a luxury car, can give the impression of money and make other bidders more wary and intimidated of you.
Where you choose to place yourself can be key to how visible you make yourself to other bidders and how easily you’re able to watch them. Arriving at the auction early, will ensure you’re able to choose the best location to place yourself. If it’s a seated auction, you might like to position yourself right at the front, showing other bidders that you’re a serious contender. However, you might also like to stand, to differentiate yourself from the rest of the crowd that are seated.
Body language can be a key signifier of how a bidder is feeling, so looking for signs of weakness, such as long pauses and reluctant bidding, helps to establish when an opponent is likely to drop out.
Consider Using a Buyer’s Agent
Taking in all of the above can be overwhelming, particularly if you’ve got a million other things going on in life, but then you also need to put into action.
The experience that a buyer’s agent can bring to an auction could be what determines whether you nab that dream property or not. The market knowledge, expertise and emotional detachment from the property that a buyer’s agent has will be certain to work in your favour.
Once you engage the services of a buyer’s agent, you just need to confirm with them a budget and they’ll sort out the rest for you. Say goodbye to that emotional temptation to go over budget.
While buyer’s agents are not free, here’s some handy info on how much a buyer’s agent can cost, you’ll most likely make back the money you spend, on time and money saved.
Consider Becoming a Buyer’s Agent
If you really want to up your property game, then consider enrolling to become a buyer’s agent. The Buyer’s Agent Institute offers a comprehensive program that can be studied remotely and at your own pace, and will give you the skills and connections to really get your foot into the property market.