Property Auction Tips from Paul Hill Realty Hope Island
Knowledge is power and nowhere is this truer than at a house auction. Before stepping into the bidding arena, you need to do research on the real estate market where you want to live. Inspect the property, arrange your finance, and get a property valuation for the houses you are bidding on.
Odds are if you’ve committed to attending an auction. You will have already spent a lot of time visualising your new life inside that property. The future of your dream-like fantasy is what’s at stake when you pick up your auction paddle.
With the added pressure associated with the competition, you are up against. It’s easy to understand why house auctions are often emotional events. This is why it pays to be prepared.
With that in mind, Paul Hill Realty Hope Island has broken down tips on how buyers should bid when attending a house auction:
1. You Need to Arrive Early.
On auction day, it’s a smart idea to arrive a little earlier, so you can inspect the property one final time. Ask the auctioneer if there have been late changes to the contract (they must announce the terms at the start of the auction).
Then you need to choose a place where you will stand for the auction, in order to be seen by the auctioneer when placing bids and to see who else is bidding!
2. Pick up your Paddle.
Whether or not your state law requires you to pre-register, you will need to show ID to the selling agent upon arrival at the house auction. They need to take down your details and hand over a unique identifier such as a numbered paddle.
You need to show the auctioneer your paddle every time you place a bid.
3. Watch Body Language
When you have your paddle in hand, stand in a place that permits you to keep an eye on the competition. The non-verbal cues offer important clues into an opponent’s purchasing power.
Probably the greatest mistake purchasers make is they don’t watch their opposition.
When you’re stuck in a bidding sequence that’s going $800,000, $810,000, $820,000, and then slows down. The other buyer has their partner with them and they’re all looking at each other and having a conversation, then finally bids $825,000.
There’s a very good chance that that buyer has reached their limit and they’re discussing this with their partner whether they’re out, or whether they should go another $5,000.
In the event, such a buyer comes back with a desperation bid of $5,000. Paul Hill Realty recommends immediately placing a higher bid – as it’s a signal of intent that can be compared to a knockout blow.
4. Place your Bids Strategically
You should have a strategy for how you’re going to place your bids.
If possible, wait until later in the auction or when the property has reached the reserve price (the minimum amount the seller will accept) prior to making your first bid so you can measure your opposition.
You can ask the salesperson any time if the property has arrived at the reserve price and is ‘on the market’.
Momentum plays a major part in deciding the result of an auction. Generally, the quicker the bidding, the more probable buyers are to get swept up in the feelings of the event and feel compelled to place higher bids.
An auctioneer’s job is to maintain speed and momentum with the bidding. Building a sense of urgency, and influencing people to bid more than they might have planned.
5. Bid Confidently at the End
If you are going up against a high number of bidders, you may decide that starting the auction with a forceful opening bid is a good method to figure out who the genuine opponents may be.
In a softening market, it’s safer to pull your punches until the end draws near. It’s more imperative to bid confidently at the end of the auction than it is toward the start.
The reason is you don’t want to… send a message of ‘too confident’ to the agent and auctioneer that you’re willing to purchase the house at any cost. At times that can work against you.
6. When a Property is Passed in.
In most states of Australia, if a property is passed in (eg. is withdrawn from the auction after failing to meet the vendor’s reserve price). The highest bidder gets the first right to negotiate a price with the seller.
When this occurs, buyers should not think that they’re the only person keen on purchasing the property and that the chips are completely stacked in their favour during that negotiation.
There’s a misconception that buyers are bidding against themselves when a property is passed in… But that’s not the case.
Ultimately, what happened is, the auction has got to the point where it’s stopped. Your price is not a price the seller will sell at. Full stop. It’s no more complicated than that.
If you want to buy the property, you will have to increase your bid…. don’t be excessively resistant during the negotiation.
7. What you Should Not Do at an Auction.
Purchasing a house is perhaps one of the most significant financial decisions you’re probably going to make in your life. Therefore you need to ensure you do it right, especially when buying a house at auction.
It’s no use finding the perfect house and turning up for the auction if you don’t have a strong auction bidding strategy when the time comes to raising your paddle to make a bid.
Paul Hill Realty know there are many common mistakes buyers should be aware of – and should try to avoid – at an auction.
- Don’t show your eagerness to buy.
Stay calm throughout the auction – you don’t want other bidders knowing your intentions. Also, skilled auctioneers will try to up the emotional state of the auction to entice people to bid more.
- Don’t jump the gun.
Start low and try not to yell your maximum bid as soon as bidding starts.
- Don’t bid if you’re unsure if you want to buy.
If you win the auction, the house is all yours. So ensure you do want to buy the property before you begin bidding. Because after the auction as the winning bidder you will be required to hand over the deposit to the seller. So be sure you want to buy.
- Don’t go over your budget.
Getting swept up in fast-paced bidding and your desire to own the home is easy… But this means you could end up paying more than you can afford.
Paul Hill Realty’s office is located on Hope Island Road, Hope Island. They have sold and managed residential properties all over the Northern end of the Gold Coast. Paul Hill Realty Hope Island is your best choice in property sales and management.