4 Rookie Errors Made At Auction
Last Thursday evening saw me heading over to the Place Auction Rooms in East Brisbane.
For two weeks, my clients and I had been anticipating the Auction of a Riverfront property they had engaged me to buy on their behalf.
Bank Road in Graceville is one of those homes where the moment you step inside, you instantly fall in love.
Veejay walls, and all the classic trimmings of a beautifully refurbished Queenslander, perched high overlooking the Brisbane river is every woman’s dream home.
It was obvious there was going to be strong interest, but then again, who has a spare $3 million dollars lying around to bid at an Auction?
Turns out, only two of us.
Waiting in the wings were two other buyers who wanted the home, but could only go to Contract with finance conditions and so my mission, I quickly realised, was to knock this other buyer out of the game as quickly as possible.
Bidding at auction is certainly not for the faint hearted, and it’s often buyers will approach me to “do the dirty work” for them. No one likes to feel out of their comfort zone and no one likes to feel like a loser if they’re the underbidder, but the reality of the situation is this… sure you can bid yourself, but it’s likely a professional is going to do a much better job of it, and know what to do when shit gets real and bids are flying around the room at lightening speed.
Was that a buyer bid, or a vendor bid? Is the property on the market, and what the hell does that even mean?!
Yes, it can be confusing to the first timer or novice bidder and time and time again, I play witness to rookie mistakes.
Here’s the top 4 errors I see...
Bidding Against Yourself.
The number rule in Auction is never to bid against yourself. Now you might think this is obvious but in the heat of the moment, and with the swift words of a slick talking real estate agent or Auctioneer, it CAN and will be done.
Are We Even On The Market?
Unless the Auctioneer announces the property is on the market, and actually selling, is there even a point in making a bid? Yes, there certainly is, but don’t be fooled that you’re the only player in the game if the property isn’t yet on the market and bids are being made. A more experienced bidder will often pipe up with a bid only after the property is declared “on the market” so watch out for the sniper in the back of the room who could steal your thunder in the final moments.
No Set Strategy Or Firm Walk Away Price.
I always know when a buyer is running low on their budget. They slow their bidding down, converse with their partner, and their body language screams "I’m not comfortable with this situation". This is when I strike back the hardest. Essentially, this behaviour tells me this buyer has NO strategy and probably getting out of their depth.
I’ll also know when a buyer has gone above their limit and is just costing me money.
Buyer’s remorse is a yucky feeling to have and Auctions are the worst culprits for creating this scenario.
Plan your strategy, set your walk away figure and don’t let any swift talking real estate agent or Auctioneer convince you of otherwise.
Offers Prior To Auction.
Buyers who hate the thought of going to Auction try to avoid the process altogether by attempting to buy the property before Auction.
An agent will almost always encourage an offer prior to Auction because then they’ll know where your budget is at, and what your perception of the property's value is.
It’s a rarity that I will buy a property before the Auction and it takes careful strategy and game plan to do so. You need to be able to trust what the agent is telling you and this can be tricky, because ultimately, the agent is working for their seller. They’ll do everything in their power to maximise the sale price and meet their sellers wishes.
It's not unethical or shifty... this is their job.
I’m not saying to never attempt to take a property off the market prior to Auction, but tread carefully in the process.
A better approach is to gear up for the Auction and roll the dice on Auction night. Just be sure to make it crystal clear to the agent that if an offer is made prior to Auction and it’s looking like the owner will sell before the Auction, to make you aware so you can be included in the negotiations.
Let's be clear... Auctions are not for novice buyers.
There's a lot more strategy involved than just making a bid and hoping for the best.
Ultimately, Auction strategy is complex and one blog article simply cannot cover it all, so if you’re looking to sharpen your Auction skills, understand the process and better prepare yourself for an upcoming Auction, you need to check out my Auction E-Book.
It's packed full of helpful information and you can download it HERE.