Jonathan Chancellor's 11 tips to avoid becoming auction pushover buyers

(Extract from an original article on posted on 'Property Observer' 17 September 2013)

By Jonathan Chancellor
Tuesday, 17 September 2013

My 11 tips for wise auction bidding include:

1. Never sit in the front row or with your back to the crowd. Take a corner position so you can survey all your competition.
2. Prepare with extensive research and due diligence starting by checking all the recent sales results in the suburb so you gain an accurate market value estimation of your desired property.
3. It’s wise to research the prior sales history of the house or unit, along with its recent on-the-market history. It helps to know if it’s been previously marketed or passed in at unsuccessful 2012 or 2013 auction.
4. It’s a good idea to find out what you can about the vendor's circumstances as this could be useful in your approach before or after the auction.
5. Given its most likely been some years since your last, its best you get an idea of how auctions work by attending a few.
6. Getting your finance ready with lender pre-approval before attending the auction is wise as if you are the successful bidder it will be an unconditional sale with no cooling off.
7. Setting a price limit is wise based not just on calculating what you can afford, but also common sense. Having a slight buffer is also worth considering, but not going in over your head and paying too much in the intensity of the auction.
8. By the time the auction comes around, you should have the contract checked by your conveyancer or solicitor, along with pest and building inspections.
9. One tactic is not bidding until the reserve is revealed by the auctioneer when the auction is well underway, although its not necessarily going to yield the prize. Bidding after what you sense as being the final vendor bid makes sense as it allows you to be in the box seat to negotiate with the agent. But don't rush into the negotiating room, hover to actually see who else was interested in the offering as they exit.
10. Never let the listing agent know what is your upper spending limit, so keep your cards close to your chest.
11. Confident bidding can work, but not bidding bullying. Quick reply bids can keep put pressure on other bidders, but slow bidding can equally yield the result too. It really depends on the specific circumstances of each auction and the bidding tone.

And to try to avoid the pressure; smart pre-auction offers can work by avoiding the looming competition and the owners might just been motivated to sell quickly as they have bought elsewhere and may just well agree to an offer beforehand to minimise their own stress.