Six winning strategies for auctions

Auctions are competitive and stressful for most bidders. Here are six smart strategies that could
improve your chances of winning.

1.Don’t show your hand

Revealing your maximum bid limit to the agent before the auction could encourage them to push
you a little further. For example, during the auction the agent might indicate you’re close to
meeting the vendor’s expectations, to try to persuade you to bid above your limit. It’s in their
interest because they’re usually earning a commission based on the sale price.

2.Ask if the reserve has been met
Bids must reach the vendor’s reserve price before the property is officially ‘on the market’ and
then sold to the highest bidder. If the property doesn’t meet the reserve it will be ‘passed in’.
The reserve price is usually set on the day of the auction, or the day before. The auctioneer often
doesn’t know the reserve until just before the auction begins, and they don’t have to reveal it to
bidders – but you can still ask.
If you discover the reserve, you can wait to bid until it’s reached. This tactic might even persuade
the vendor to lower the reserve during the auction if they’re not getting enough bids.
If you’re the highest bidder for a passed-in property, you may be invited to negotiate with the
selling agent. Be wary of high-pressure sales tactics here, and remember that cooling-off periods
don’t apply to contracts signed on auction day.

3.Ask questions (but know the rules)
You can talk to the auctioneer during the auction to find out information that may be helpful in
winning. For example, Consumer Affairs Victoria says you can ask the auctioneer a ‘reasonable’
number of questions, and you can ask them to identify who has made a bid. You can also ask
whether the prop5.erty is 'on the market' yet (has it met the reserve price?). Be visible and within
earshot of the auctioneer to avoid miscommunication.
Make sure you know the rules, as it’s illegal to disrupt an auction. The auction rules are generally
made available at least 30 minutes before the auction, and the auctioneer should also announce
the rules before bidding starts.
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4.Bid like a pro

Bid with confidence and state the full price to let your rivals know you’re serious. A confident call of
‘$500,500’ (as opposed to a quiet ‘500’) will remind the room of how much is at stake.
You can also try ‘knockout’ bids and offer well above the last bid or the auctioneer’s suggested
figure, to intimidate less-confident buyers. If bids are being made quickly you might want to try to
slow things down by bidding in smaller increments than the auctioneer suggests.
Pre-auction tip: Ask the selling agent how many people have requested property reports. This will
give you an idea of the number of serious bidders.

5.Employ a professional
You can enlist a buyer’s agent (also called a buyer's advocate) to bid for you. They’ll have no
emotional attachment to the property and should only bid what they believe it’s worth (within your
limit). They should also have plenty of auction experience and know the tricks of the trade.
The Real Estate Buyer’s Agents Association of Australia offers some tips for choosing a buyer’s
agent.
You could also ask a friend or family member with auction experience to bid for you. But remember
that you’re the one who has to pay, even if they win by exceeding your limit.
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7.Be prepared to cut your losses
Accept property reports and legal fees as sunk costs that are part of the auction process. You’re
better off spending a few hundred dollars checking a property than bidding hundreds of thousands
without doing the pre-auction groundwork. On auction day, if you hit your limit, walk away to avoid
temptation.
Auctions can be challenging, especially when there are emotions involved. Sensible, practical
strategies can give you the best chance of being the last person standing – or at least stop you
from overcommitting – on auction day.