Post-lockdown auctions are likely to feature a mix of people still flocking to auction rooms along with an increasing number of others who take part via internet technology like Zoom, says Harcourts’ national auction manager Aaron Davis.
But while the auction method might be adapted, the strategies to sell for a good price – and to win and secure a good price - remain the same, he says.
Auctions have been taking place via technology far and wide with everyone from the auctioneer to the bidders and the vendors sitting at home and connecting via an online platform.
Everyone is learning, Davis says, and while the auctions being held mostly relate to properties listed pre-lockdown, the results have still been strong.
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Davis offered his top tips for buying and selling in an online auction:
Buyers need to be realistic
Number one is to make your intention to buy clear from the outset because if you don’t you might drop out of view.
“You’ve got to make your intention clear, so, okay, this person clearly has an intent on buying the property so the auctioneer will always go back and give you an opportunity versus people that are waiting in the wings to see what happens,” Davis says.
He also recommends a strong opening bid.
“Let’s say it’s a million-dollar property and you turn up and say, ‘Will you take $400,000?' That’s not going to psych any of the other buyers away. They’re just going to say, 'Oh well, we don’t have to worry here'. Compare that to someone who turns up and says, ‘Right, well I’m going to give you $912,500'."
Expect a slower auction pace
With Zoom, bidders have all been given an invite and they join the conference. Some keep the video off and some use aliases but everyone can see how many are competing.
The excitement of an auction can still build, though Davis concedes the action is a lot slower.
“It’s more of a conversation and it’s a clear identification of who has the current bid,
“The bidders can come out and give you an absolute rock star bid and blow the competition out of the water so it’s the same strategies that still apply. In some ways people have more time to consider their options.”
Online bidding cuts through a lot of the noise of an in-rooms auction because you know everyone there is registered and therefore a serious purchaser. “At an in-rooms sometimes there are a lot of lookers; people that are curious. That’s not the case with online auctions.”
Use random numbers
Davis’ next tip is to bid using random numbers that are more than the auctioneer is asking for. If bids are in increments of, say, $25,000 or $50,000, everyone, including phone bidders, can follow the sequence easily.
"But if the auctioneer asks, 'Who is going to give me $800,000?', you can say, 'I’ll give you $812,000-and- a-half'.
“It’s a game. There’s psychology around it. You’re trying to take charge and say, ‘I know what I’m doing’, and these are strategies that people are not used to seeing. Anyone can follow logical but few people can follow a randomness that they’ve never seen before.”
The confusion can plant seeds of doubt and other bidders may drop out.
Keep bidding
Tip number three is “don’t wait for the trial close” which is where the auctioneer calls, “first, second, third and final” but to keep bidding in random numbers as this can discourage others.
In other words, even if your limit is a million dollars, bid as if you have two million dollars to the point that others think you are going to keep going all day.
But don’t drop your bids to $1000 increments because then another bidder will see that you are at your limit.
“At $950,000, an experienced bidder goes, ‘Right, a million bucks', and the other person goes, 'Geez, they just bid 50 grand'."
Ask for variations
Once the country comes out of lockdown and normality returns, traditional auctions will make a comeback. For those who find themselves in the auction room, Davis advises not hide at the back; be in a position where you can look back at the competition.
You can also ask vendors pre-auction for variations on chattels, settlement terms and deposits.
“You might as well ask and get yourself better terms if they’re there. If they say no, you’ve got another decision to make but there’s no harm in asking.”
And be careful who you take along, he says. Family members with good intentions aren’t much help if they don’t know what they’re doing.
Vendors can lift or lower the reserve
Davis says get along to the auction so you can see and hear what the auctioneer is doing, and if it’s online join the auction.
The vendor always has the right to say when the property goes on the market to sell and can lower the reserve or put it up.
If the auction is going well with fierce bidding it is fine to tell the agent/auctioneer you would like to raise the reserve.
Likewise, if the auction isn’t going well the reserve can be lowered. “What vendors and a lot of buyers don’t understand is a reserve is just an opportunity, that’s all it is, and rarely are they fixed in stone," Davis says.
“If I did 50 auctions, I reckon one out of 50 would actually sell for the reserve, ironically because the buyers and the vendors actually don’t know what they’re going to do until they’re faced with it.”
