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In it to win it: here’s how to tackle buying at auction

Straight talk: you can choose your future dream home, but you can’t choose how the seller wants to sell it. So, if you fall head over heels in love with a place, it’s a good idea to be ready for how it’s being sold, whether that’s through a private treaty or at auction.

Private treaties are fairly straightforward, but an auction is bit of a different ballgame – it can be sporting, competitive and way intense. But no matter whether you get pumped up at the thought of battling it out on the footpath or prefer a cool-headed negotiation, a little auction preparation can go a long long way.

It’s all about planning ahead, thinking through your auction-day tactics and knowing exactly what to do in the heat of the moment. Here are some handy tips to handle the auction action and have a better chance of nailing the winning bid, your way.

A few months ahead: starting your auction prep

Revel in research

Inspect as many properties as you can in the area you’re looking to buy in. Find out how much they’re actually selling for (not just the asking price). Hit up local real estate agents – they’re a great source of this information.

Head along to a few auctions to get a feel for how they run. You’ll experience the atmosphere, how people bid, how different agents operate – plus, seeing how much the properties sell for (or don’t sell for) can help with your price research.

This price probing can give you a better idea of what a property you’re interested in is worth in the market. And it will help you discover your upper limit (because you’ll see how much properties you like are going for) when you start shopping seriously.

Think about preparing with pre-approval

Auctions are different to private treaties in a couple of big ways (and not including the auction-day action). If you win at auction, there’s no cooling-off period and you pay a deposit straight away – usually 10% of the purchase price. So, you might want to think about having your home loan pre-approval sorted ahead of auction day and the deposit amount ready to hand over. Also, pre-approval, depending on the lender, could be valid for up to 90 days, so there’s no harm getting it well before you think you’ll be ready to get your bid on.

Initiate inspections and covet those contracts

If you’ve found a place you’re interested in, and you’re willing to bid, you’ll want to make sure you get all your inspections done (such as pest and building) and reports read (like strata reports, for one) before auction day. And ask the agent for a copy of the contract in advance so you can show it to your solicitor or conveyancer for a once-over. They might request some changes, or they’ll let you know that the contract is good to go. This is a vital step before auction, in case you do land the winning bid and need to sign on the day (yikes but woo!).

Consider making an offer before auction

If you’d prefer not to go to auction, or you love the place so much you want to try to make it yours asap (for a price you’re comfortable with, of course), you could consider making an offer before auction day. This can be a good strategy in a buyer’s market, when there may be lower interest in the property. You risk paying more than you might at a slow auction, but it can be a good way to make the house yours with a little less fuss.

A week (or so) out: talking tactics

In the weeks and days leading up to the auction, play your cards close to your chest when you talk to the seller’s agent. Don’t tell them too much – especially how much you’re prepared to pay. Holding back this info can help improve your negotiating position. It also helps to make sure the seller’s agent doesn’t use the info to sway other interested buyers.

As far as bidding tactics go, there are lots of different opinions out there – but you have to do you! So prepare yourself to go in with an approach you’re comfortable with. Some say to settle the nerves by bidding early, starting low and going slow to set the pace and avoid bidding wars. Others say to wait until the reserve is passed and the property is officially on the market. In the end, it’s all about what works best for you.

Today’s the day: let’s get it!

Register to bid

You can’t just turn up when the auction starts and start screaming bids. You need to register as a bidder if you want to be a part of the auction. Make sure you bring your ID – a drivers licence is fine.

Keep things on the down-low

The agent isn’t the enemy, but they are on the seller’s side. Ask them questions, but keep things like your budget and your emotions about the property close to your chest.

Stand up and be counted

Nudge to the front of the pack so the agent can see you easily. And angle yourself to check out the other bidders’ body language and facial expressions so you can get a read on them.

The waiting game

The agent will open the auction by asking for an opening price. As we said, you can start low and go slow or wait for the reserve to kick things into gear. Just remember, the property is only ‘on the market’ when the reserve is reached.

How to bid

A little swagger doesn’t hurt to make sure the agent knows you’re there. When calling out the number, do it in full numbers (i.e., “three hundred and one thousand”, not “301K”). This sounds impressive, shows other bidders that you’re confident with the price you’re putting forward, and hopefully scares them off. 👻

What to do if the property ‘passes in’ (aka doesn’t meet the reserve)

You could be about to snag yourself a bargain. If no one bids high enough to meet the reserve, the agent will seek more bids in an attempt to save the sale, and the closest bid to the reserve will get the chance to negotiate with the seller. If there are no bids at all, the agent might consider offers after the bidding has finished (but this may depend on where you live).

Bring a buddy

We’re all liable to get caught up in the moment, so take a friend along. Ask them to watch over you, keep you accountable and make sure you don’t let your emotions push you above your price ceiling. Afterwards, buy them a nice dinner.

Don’t forget the deposit

Hey, so, you won! You’ll need to hand over a deposit right then and there. Most people come armed with a bank cheque for 10% of what they’re prepared to pay for the property. Whatever you do, don’t let it blow away in the wind.