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Auction experts dish their tips on how to beat the competition

Buying at auction can be tricky, but there are ways to beat the competition.

Buying at auction can be tricky, but there are ways to beat the competition. Photo: AAP

More Australians are heading to auctions as competition picks up for the most in-demand properties. But many people find an auction is not what they had expected.

Large crowds, a frenetic atmosphere and thousands of dollars being added in seconds to the price tag of a home can be difficult to navigate, buyers agent Wendy Chamberlain said.

“It’s very daunting for people,” Chamberlain said.

So how can you prepare for success ahead of an auction, and what do you do once it starts?

Ducks in a row

Succeeding at an auction starts long before the big day rolls around, Chamberlain said.

You’ll only want to consider showing up and making a serious bid for a property if all your financial ducks are in a row first, including not just a deposit but pre-approval from your lender.

That way you can go into any auction process with confidence and a firm budget to work with, because you can easily be caught out if you bid without backing, or it’s over the limit of your loan.

“There’s no point in bidding for a property if you can’t buy it,” Chamberlain said.

“Under auction terms you have to complete the sale, there’s no cooling off period.”

Knowing your finances empowers you to take an auction into your own hands, said Eric Wong, a property agent and founder of Lucca Property.

Wong suggested buyers consider making an offer for a property before the hammer.

“If the property is listed as auction only, don’t hesitate to make an offer directly to the vendor’s lawyer,” he said.

“This ensures the vendor is aware of your interest and can sometimes lead to a deal before the auction day.”

Keep quiet on your budget

If the auctioneer does step up and bidding begins, then there are a few things to be aware of.

First, while it’s important for you to know your budget, it shouldn’t be something you share with the auctioneer or anyone else who might be there.

“If the agents know your budget before the auction proceedings start it can tie into where the vendor sets the reserve on the day,” Chamberlain said.

You won’t know where the seller has set the reserve, but the bidding is likely to start below that price and the auctioneer will have an incentive to get the most money for the property as possible.

That’s why it also pays to have a good idea of what the property is worth, how long the vendor has had it on the market, and whether any bids were made previously.

“If you’re there to seriously bid on the property get involved in the process,” Chamberlain said.

“Make strong bids and make sure that the auctioneer acknowledges [your] bid and can hear them.”

Take control

Wong said that would-be buyers should start with a strong opening bid.

“Avoid small increments, as these can encourage more bidders to participate, driving the price up quickly,” he said.

“Instead, assertive, higher bids can intimidate competitors and potentially lead to a quicker win.”

Chamberlain said that being assertive and taking control is the best approach.

“You should try and take control of the increments of the bids,” she said.

Keep in mind, however, that it’s the auctioneer’s job to get as much money for the property as possible, so if they’re increasing the increments by large amounts it indicates the reserve price may not have been reached.

“As an auction goes on [then] the increments and the bids get smaller and smaller,” Chamberlain said.

“Other buyers start to run out of budget and you can put yourself in the box seat by controlling the increments of the bid.”

Topics: Property
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