A tale of three auctions; Why you can’t let your guard down in a Buyers market

After decades in the Real Estate industry, I still enjoy every auction I attend. I always learn something new or my beliefs are reinforced, and I never get complacent. It’s crucial to understand the core strategies of being successful at auction and knowing the signs to look for in your competition.

My recent experiences at three different auctions were the perfect reminder of that. 

Lesson one: Bid on the property, not the guide price.

At the first auction, my clients and I were one of only two registered bidders. The property was suitable, but it wasn’t perfect. We ended up with the highest bid before the property was passed in. But we negotiated a sale price well below the reserve at the time of the auction. So, how did this happen? 

The guide price was wrong. It was well above the realistic value of the property. While that turned away a lot of the competition, we could look past the guide, understand the property's real value, and bid appropriately at auction. 

Lesson two: Always pay attention to your competition

Auction two was almost the opposite of auction one. The guide price was grossly underquoted. Although I was confident the property would sell well above my buyer's budget, I knew it was worth attending the auction anyway so they could observe the process. 

There were 15 registered bidders, and the bidding quickly came down to two main parties after a very confident opening bid. There was a young couple up against a man with his dad by his side. 

In a few bids, the price went from $2.1m to $2.288m in favour of the young couple. Just before that bid, they’d been whispering to each other, and their body language gave away that they were at their limit or even a little over. I knew this would be their last bid.

Without missing a beat or even looking at the couple, the dad offered $2.4m to win the auction. 

Now, he got what he wanted and could help his son secure the property. Still, if he’d taken the time to observe his competition and pay attention to the couple, he could’ve won the property with a $1,000 bid on top of their $2.288m, potentially saving himself $111,000! 

Lesson three: Ask questions and prepare your bidding strategy accordingly

The third auction I attended was in Newtown, and again, a very different process despite the media telling us the market is moving as one big wave. 

I went in with my clients, and made sure we were the first ones to register, after which we could watch the competition come in. Knowledge is power, so by paying close attention to the other buyers we ensured to avoid the dad's mistakes at auction two. 

There were two registered bidders that we already knew about ( because we always gather knowledge from the agents prior to the auction) and one surprise bidder at the time of the auction. We were able to open the bidding strongly with a number carefully chosen based on the value of the property and the level of competition, and immediately blew two parties out of contention. 

With one other party to bid against, we took a measured approach and ended up winning the property on a $1,000 bid. Talking to the selling agent, scoping the competition and getting a read on the unique environment of that auction allowed us to form a confident strategy tailored to that property. 

So, while we have three very different auctions, the lesson is the same; take the time to assess the individual circumstances of each auction, the true value of the property and stick to the tried and trusted techniques of bidding at auction. Don’t get swayed by media hype and never get cocky! 

If you’d like help with your search or an auction strategy, please get in touch with our team.