How to Beat your Competition at Auction

How to beat your competition at auction.

If you’re a first home buyer looking to purchase your first property in Melbourne, it’s highly likely you’ve attended a few auctions over the recent weeks.

At these auctions, properties may be going for prices well above what the agent has been quoting.

Even more frustrating is that you’ve probably forked out a couple of hundred dollars on building and pest inspections, only to be swept aside by a monster bid on the auction floor.

It’s not a nice way to enter the property market, but unfortunately that is the nature of the beast at the moment.

When the market is strong and demand is high, most real estate agents in urban regions will recommend vendors take their property to auction simply because it is a very good way to get a high price over a short campaign.

That sucks for you. You may dislike the auction method but if the house of your dreams is up for auction – you will have no choice but to play the game.

How Can You Increase Your Chances at An Auction?

What are some savvy ways you can maximise your chances of owning your first home when it is under auction conditions?  

It may raise an eyebrow, but one of the best strategies to win the home is to avoid going to auction all together. And you can do this by getting in early.

Many real estate agents will tell you during an auction campaign that the vendor is not ‘entertaining’ offers until Auction Day.

“You may dislike the auction method but if the house of your dreams is up for auction – you will have no choice but to play the game.”

Do yourself a favour and don’t listen to them. The fact is, you can make an offer at any time during the auction campaign and any written offer must be brought before the vendor – it’s the law.

So, if you like a property, put forward your strongest offer well before Auction Day with a 24 hour time limit for the vendor to accept.

The truth is, selling a home at auction is as stressful for the vendor as it is for the buyer, and if the price is right, most vendors will sell their home prior to auction.

Get to Know the Agent

During the busy spring selling season, most of the good agents will have multiple listings on the go at any one time. Often, all they want to do is shift their stock.

You can make this work to your advantage. At the next open home, have a good chat with the agent. Discuss the current situation of the vendor, the market and their own work load.

Often you will gain some important insights regarding upcoming properties and the price range the property is expected to sell for.

Get to know the agent.

Some Questions to Ask the Agent:

“What is the vendor’s motivation for moving?“

If the vendor is an investor or in a ‘must sell’ situation, there is a good chance an early offer from a buyer will be jumped on.

“Do you have any similar properties coming on the market?“

The agent may have a number of properties in the pipeline that are about to come onto the market and it pays to know about them.

“If you get in before the property is advertised, you automatically eliminate most of your competition.”

Ask to inspect one before it come on the market. If you get in before the property is advertised, you automatically eliminate most of your competition.

In addition, if the vendor doesn’t have to advertise, they will save thousands of dollars in marketing while the agent will get a commission without having to do an open house every weekend. Everybody wins.

“Do you have any properties on your books that are not currently being advertised?“

Some agents will also have older listings on their books that have not sold. Often the vendors for these properties have engaged in an expensive marketing campaign and had no success. They’ve exhausted their marketing budget and as a result, the listing is still on the market but may be hidden from most buyers.

Again, if it is hidden it means you won’t have much competition, giving you greater chance of a sale.

Have Your Finances Ready to go

Before you attend your first open home, it is smart to get your finances sorted.

All too often a buyer will have their offer accepted only to be gazumped on a property because they were still waiting approval from their lender.

 A better option is to get the lender’s approval before you go house hunting. That way you can make an offer from the first open, if you wish.  Nothing says “take me seriously” like a written offer with a signed contract and that all important attached deposit cheque.

Bid Strong, Bid First

If you do find yourself on the auction floor with your hand in the air, then it is in your best interest to be the first bidder and to bid strong.

Jumping in with the first bid will show all interested bidders on the day that you are determined to win this property; and a strong first bid may immediately knock a few buyers out of the running.

“If the property looks as if it’s going to be passed in, try to be the highest bidder.”

Moreover, if the property looks as if it’s going to be passed in, try to be the highest bidder. It’s common for a property to sell immediately after being passed in and the highest bidder is always the first person a vendor will negotiate with.  

The highest bidder is also in a very good negotiating position because the vendor has seen the market value of their home played out in the open market and now understands that they may need to adjust their expectations.

The highest bidder gets the first crack at these new expectations.

If you are thinking of buying selling or investing and would like a FREE 5 minute chat
with Street News Director Peter Sarmas, please contact him on 0418 740 606
or via email at [email protected]