Essential tips for bidding at auction with confidence

As one of the most popular methods of selling property in Australia, an auction often achieves a higher sales price for a vendor and provides a highly transparent way for a buyer to purchase property. 

Whether it’s your first time bidding at auction, or it’s been a while since you last threw your hat in the ring, it is normal to feel apprehension, nerves and excitement during the lead-up to the day. 

In this blog, our Chief Auctioneer, Andrew Robinson, shares his top tips for buyers, including how to prepare beforehand and how to bid at auction when the day comes. 

Get your finances in order

Before registering to bid at an auction, ensure your finances are in order. Having pre-approval from the bank means you know what you can afford. You’ll know exactly what price you’re willing to pay, and what your absolute stretch price is. This will shape your strategy come auction day and prevent exceeding the limit. 

“If you’re successful at auction, you will need to have a 10 per cent deposit ready to go on the day. To avoid any embarrassing hold-ups, make sure your maximum bank transfer limits have been lifted, and your bank is aware that a large sum may be transferred from your account,” advises Andrew. 

Understand the auction process

As a general rule in real estate, the first auction you attend shouldn’t be the one you intend to bid on. Instead, familiarise yourself with different styles of auctioneers and sales agents by attending as many auctions in your scope area as possible. You will get a strong sense of who the competition is while understanding the demand for similar properties. 

“Buyers should always attend several auctions in the area they’re looking to buy into before they bid themselves,” says Andrew. “Watch how people bid, the different strategies they use, what increments people increase by and the pace of the auction and how the auctioneer manages the auction. Being armed with all this information gives you an advantage when it comes time for you to bid.” 

Do your due diligence 

Once you place a winning bid, it’s too late to put the brakes on the sale. Before auction day, make sure you have your building and pest inspection reports done, and the contract of sale has been reviewed by your lawyer, especially the terms of sale and settlement period. 

Get a good understanding of the property value by asking the selling agent for comparable sales or jumping online and researching recent sales in the area. 

Finally, get to know the auction rules and procedures of your state – do you have to register before you can bid? What happens when the property passes in? How do you know once it has hit reserve? 

Plan your auction strategy

It’s imperative to have a clear strategy for auction day.  

You should know how you will bid, at what stage to enter the bidding, and how much you are prepared to pay. Be clear about how much you want to spend and your stretch limit – think of this as what you can reasonably afford without impeding your quality of life. Set a firm limit, and stick to it. 

If you aren’t cut out for the pressure of the auction, it is worth considering having someone bid on your behalf. This way, not only will they step in for you on the day, but they will never go over your limit without consent. 

“It’s common for buyers who are not comfortable with bidding at auctions to engage someone to bid on their behalf. This is a fantastic strategy as having a neutral person who is not financially invested means the bidding will not be emotionally driven,” explains Andrew. 

Top tips for bidding on auction day: 

• Only bid if you are ready to buy. If you win at auction, it’s yours.

• Introduce yourself to the auctioneer as an interested buyer. They will remember you and look for you when seeking any higher bids. If you’re not successful this time around, they will look out for you at other auctions.

• Auctions are highly unpredictable and emotionally charged. Stay calm and master your poker face to avoid giving too much away. Remember, you can always have someone bid on your behalf.

• Attend the final open home inspection just before the auction begins. This is your opportunity to take a final look at the property and understand the contract and auction rules.

• Keep your eyes on the competition, especially when the bidding slows down. You can tell a lot by someone’s body language and who they’re talking to nearby.

• Never start bidding at your maximum amount – if you get caught up in the excitement and bid more than you can afford and win, that property is yours to keep.

• An auctioneer may request bidding in certain increments – you do not have to comply. Controlling the auction by bidding in odd increments forces the auctioneer to do more challenging arithmetic and slows the pace.

• The sales agent and auctioneer are under pressure and may try to rush you, but you can take a moment to think. If they believe you have more to bid, they will wait for you.

By now, you have a few handy tips up your sleeve to prepare you for auction day. Remember to chat with your bank and know your limit, attend the final inspection, stay calm and control the bidding. With confidence and these top tips on how to bid at auction, your dream property is one step closer. Good luck, and happy bidding. 

If you want to get ahead of the crowd, check out our blog on making a pre-auction offer that stands out.