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Bid bold or go home: Top tips for auction success
With Australia’s auction market hotter than ever, buyers have been urged to bid boldly and push rivals to the limit, according to a leading NSW auctioneer.
McGrath Agent and Real Estate Institute of NSW (REINSW) Auctioneer of the Year, Paul Hancock, sat down with the host of The Property Nerds podcast, advising buyers on how to maximise their chances of winning at auction.
Buyers have been facing stiff competition, with recent Domain data showing national auction clearance rates hovering around 66 per cent in October, while volumes hit a seven-month high over the same period.
With 10 years of auctioneering experience, Hancock has seen that buyers often go wrong by turning up ready to purchase but then sitting back and waiting instead of acting like serious contenders.
“You’re there to set up your family for the next 10 or 20 years or buy your next investment. You should show everybody that you are serious,” Hancock said.
“If you are turning up and only bidding because someone else is bidding, then I don’t think you are quite prepared to buy that property.”
Hancock said that buyers who were waiting for others to start bidding were missing out on a great opportunity to control the auction's flow.
“Do you want to run into somebody and pay 100 grand more for the property than it is worth?”
“If you have done your research and you know the area, know the market, and no one else is bidding, fantastic.”
To demonstrate their intent to buy a property and remain within their budget, Hancock advised buyers to set three different prices around what they would be willing to spend, and start their bidding around the low range.
He said buyers should have a price at which they consider the property a steal, a fair value in line with the market, and a price they would stretch to because they really want to secure the property.
“I think people who go to the auction and are reactive instead of proactive, it’s not the right way to bid at auction,” he said.
While there has always been a wide range of tactics that buyers can employ at auction, Hancock said that no strategy could guarantee success.
“If someone’s got a bigger budget, there is very little you are going to do to stop them.”
Once in the bidding, Hancock urged buyers to stay aggressive and keep pressure on the competition, forcing other bidders to reveal and reach the maximum they’re willing to spend to secure the property.
“The best way to not be under pressure is to be the highest bidder,” he said.
“They’re the ones who are trailing and need to go again if they want to bid.”
Hancock said that buyers can give themselves a significant advantage by using larger bids to overcome stubborn bidders who want to pay as little as possible.
“Once it is getting down to the nitty-gritty, one big $5,000 or $10,000 bid will often buy it,” he said.
By doing smaller bids, Hancock said that it often keeps people in the competition for the purchase.
Additionally, Hancock said a two-to-three-week auction campaign is the sweet spot, which is shorter than the typical four-to-five-week campaign.
“A buyer seeing a property in week one and still being there and interested and ready to bid and compete in week four is a big ask,” Hancock said.
“If you are struggling, there is always flexibility to push it back or do different things with it.”
Listen to the full podcast here