Have the confidence to make a winning bid.
Buying at auction can be a thrilling experience, but it can also be a very intimidating one. With so many potential buyers vying for the same property, it’s important to come prepared and know what to expect.
In this article, we’ll break down the key steps to successfully buying a property at auction. From understanding the auction process and researching properties, to bidding strategies and securing financing, we’ll provide tips and guidance to help you come out on top.
1. Make sure you’re financially ready
One of the big differences between making an offer and buying at auction is that, when you buy at auction, you’re buying on the spot. There’s no cooling off period, and you’ll be expected to sign the contract and hand over the deposit right away.
Before the auction, check in with the selling agent about the deposit expectations. Confirm that you only need a 10% deposit, not more, and find out which payment options are acceptable.
Remember, if you register as a bidder, you’re confirming that you have the funds to purchase the property should you give the winning bid – so it’s critical you have your pre-approval all sorted beforehand.
2. Do your homework
Starting strong at an auction means being prepared and knowledgeable. Before diving into bidding, take some time to research the auction process so you know what you’re getting into.
If you can, check out a few auctions to get a feel for the scene and see what other people’s strategies look like. And make sure to take a closer look at multiple properties, figure out what they’ve sold for in the past, and if possible what the auctions were like.
3. Get there early
When you arrive early to an auction, you have the opportunity to get a feel for the layout and atmosphere of the event, which can be helpful in making your bidding strategy. It’s always good to have an idea of who you’re up against. Keep track of who else registers to bid so you can gauge the level of competition you might face when the auction begins.
Arriving early will also give you the chance to scope out the physical layout of the auction, and find the best place to bid from, whether that be from the front row or from a different vantage point that provides a clear view of the auction proceedings.
4. Project confidence
When you’re at an auction, it’s important to look confident and in control. After all, our body language can speak volumes. Stand tall, maintain a neutral expression, and bid with purpose.
Ideally, you should project the sense that you have no limit – right up until you hit your limit and stop bidding. If you give off any hints of hesitance or uncertainty, other bidders may sense this and become more confident in their own bidding.
5. Be aware of your surroundings
Just as you should be aware of your body language, be sure to watch others’ as well. Look out for signs that other bidders might be hitting their max – things like pausing before bidding, glancing around, or having conversations between bids.
Noticing what’s going on around you could give you the edge you need to intimidate other bidders and put yourself ahead.
6. Set the pace
When it comes to bidding, you can have a say in how the auction goes down with the way you bid. Don’t feel pressured by the auctioneer or other bidders – set your own pace and go slow if that’s what you want. This can even keep the final sale price down!
Remember, you don’t have to match the suggested bids that the auctioneer calls out either. Once you’re in the swing of an auction, try taking control with a smaller bid. Bidding in odd increments – rather than round numbers – is another good strategy that can throw off your competition and slow down the auctioneer, giving you time to stay calm and focused.
7. Stick to your budget
The most important thing you can do to prepare for an auction is to decide on your budget. And the most important thing you can do while at an auction is stick to that budget. It can be easy to get caught up in the excitement and emotion, but don’t let that influence your decision.
Make sure you always call out your offer in full, not just in the increments of your bid. For example, say $787,000 instead of the increment of $7,000. It’ll help keep you – and your competitors – aware of the real amounts of money you’re dealing with.
8. Prepare to pass in
A property will only be sold at auction if it reaches the seller’s reserve price – the minimum price they’re willing to sell at. If the auction bidding doesn’t reach that price, the property may be “passed in” to the highest bidder. This means the highest bidder will have the opportunity to negotiate with the selling agent directly after the auction.
If you think a property you’re interested in might be passed in, try to make sure you’re the top bidder. Then you’ll be in a good position to negotiate a good deal – especially since appetite for the property clearly hasn’t met the seller’s expectations.