Most people dread auctions, and for good reason. They are highly tense and emotional events, where you are up against other people hoping to outbid you. Here are four key reasons why people miss out on property at auction and how you can improve your chances of being the winning bidder.
1. You’re not mentally prepared. Many would-be buyers don’t focus enough on the psychological aspects of auctions. Because of this, most bidders have lost before they have even turned up. So, what can you do be prevent yourself being ‘psyched out’ at an auction?
- Decide on your budget. Be clear on what you’re prepared to pay and not pay and be happy with that. And don’t second-guess yourself.
- Prepare a simple bidding strategy and stick to it.
- Accept you may be outbid, but don’t turn up if you know you won’t win (I have seen a lot of people turn up “just in case” they might be the winning bidder).
2. You don’t do your research. If you haven’t done your research, you are playing lottery at an auction. Don’t just accept the comparable sales the selling agent provides at inspections.
- Obtain a property report, which will provide you with at least 12 months’ history of past sales. This can be purchased from companies like Australian Property Monitors, or RP Data. Your mortgage broker or lender may also be able to provide you a report. Identify three or four of the most comparable previous sales and rank your property against them in terms of price, size, quality, location and aspect. This should give you a relatively accurate range where your property will sell.
- Physically inspect properties – This sounds obvious but it surprises me how often I come across buyers who try to bid on the first one or two properties they see. Ideally, you should at least have inspected eight to ten properties to get a good feel for what’s out there and how they compare with the property you want to buy.
- Conduct your due diligence and listen to your advisers. At the very least you should have your contract reviewed by a conveyancing lawyer and obtain a building/pest inspection (for a house) or a strata inspection (for an apartment). Don’t just rely on reading the written advice or reports call or meet with your advisers and ensure you understand what they have written and the level of risks they have identified. Knowing what you are getting before you go to auction will give you confidence in the budget you have set yourself.
3. Poor or no bidding strategy. If you’re a person who will just turn up to an auction without a bidding strategy, be prepared to to lose, or even if you win, to pay more than you should. Without a bidding strategy, or a poorly planned strategy, you will end up playing someone else’s game – it’s all too obvious at auctions. So how do you bid like a professional?
- Attend a couple of auctions as an observer and assess the bidders – what would you copy and what would you do differently to those bidders?
- Practice at home before the auction – have a friend/colleague help you role play the auction, so you can get a feel for what it’s like
- I can’t stress enough about the importance of body language. Dress smartly and stand straight.
- Project your voice and raise your auction number when you bid
- Poker-face – other bidders (especially professionals like me) will pick up any change in your facial expressions, your stance and any hesitation.
- Manage your emotions. Big sighs, rolling of eyes, frowning, cursing means you’re being played
- Consider engaging a professional – these days, you are increasingly likely to be bidding against a buyers agent or buyers advocate, who knows the game, so think about having your own professional bid for you.
4. Failure to manage emotion. Buying a home is emotional. If you’re not prepared at auction, your emotions will play out and get the better of you. Whether you bid too high, or too low this is the biggest issue most buyers have to deal with. So find a way to keep your emotions in check, such as:
- Follow steps one to three in this article. You will feel more prepared and therefore more confident.
- Engage a professional buyers agent or buyers advocate to bid on your behalf. A good professional will help you create an auction strategy for your particular situation and aren’t as emotionally connected to the property than you are.
- Don’t arrive too early – the auction environment is tense and hanging around will only make you feel the pressure.
- If you are bidding at the auction yourself, don’t be swept up by what others are doing. Stay focused on your bidding strategy.
- Always remember, at the end of the day there will always be another property for sale, so if you aren’t successful today you will still live to fight another day.
If you’re purchasing a Sydney property and would like an expert opinion, advice or the additional fire power of a buyer’s agent, contact the team at Cura Property! We’d love to help you with your search!