A look at auction strategies

No two auctions are ever alike; they’re like snowflakes, and that’s why there are a range of common strategies for auctions that you can take.

View.com.au chatted to buyers agent Nicky Cadry, who has extensive experience in representing clients at auctions, for his view about the best way to approach them.

“Every single auction is unique,” he said.

“It could be held in a specialised auction room, a real estate agent’s office or on-site; the auctioneer could be the best in the industry or could be inexperienced; there could be one registered bidder or there could be ten. Each time you bid at an auction all these factors need to be taken into account.”

Not being aware of the various ways that auctions can proceed and the way in which auctioneers handle a crowd can quickly place you on the backfoot.

“We have seen, time and time again, buyers placed under pressure by agents and not understanding the situation.”

With a new home being one of the largest financial decisions a family can make, it can often be beneficial to use the expertise of a buyer’s agent, whether finding properties and/or bidding at auction. If you do decide to go it alone, View.com.au lists a few things to consider.

Make a bold bid early on

This can be an effective strategy to effectively silence other bidders before they begin. It shows you don’t want to waste time reaching the reserve and are happier bidding at the potential limits of other bidders’ budgets.

“In some cases, going in strong with an early bid shows confidence and bravado,” Mr Cadry said.

This involves significant research into the local market and using an agent’s Statement of Information to be sure about the property’s value. But of course, it doesn’t suit every auction.

Bidding late

One of the most common techniques used by
bidders at auctions, and one that places more pressure on the agent, is to remain out of the game for as long as possible to see how the auction proceeds.

The biggest risk of this strategy is that if everyone else adopts it, the vendor may become dissatisfied with the level of interest in the property (due to a lack of bids) and pass the property in.

The best way to decide whether to go in strong or hold back is to look at the other bidders.

Bidding strong

One common strategy involves bidding quickly after any other bids, showing no signs of hesitation. Much like a poker game, this technique projects confidence and gives nothing away to other bidders.

Bidding techniques are ultimately targeted towards slowing down the momentum of an auction, to keep the price low.

Using odd numbers

Rather than shout out the total that your bid comes to (i.e. “$1.35 million”), use increments instead, so that both the auctioneer and other bidders have to do the maths. This can help slow the momentum of the auction: a bidder’s main goal.

Adjust your maximum bid in your head (your personal limit) to an odd number, for instance, rather than $800,000, can your maximum be $816,000? Many bidders have a whole number as their maximum and won’t go above this.

Tip: Find out who the auctioneer is for your property then attend that agent’s various auctions for the preceding weeks. You will get an idea of what strategies the agent uses to drum up interest and what will work best for you to drive the price down.