Most people’s first visit to an auction room is when they are bidding for a house.
Considering the amount of prep work they do in other areas, and the amount of money at stake, it’s alarming that Kiwi buyers who don’t scope out how to get the best out of an auction.
First, if you’re interested you should organise a buyer’s meeting with an experienced agent where you can discuss your plans, finances and let them know the amount you are working with.
Many buyers ask about the price the property is expected to be sold for as they don’t want to pay too much.
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However, under the regulation's property agents must not mislead the buyer and provide that information.
As a buyer you should find how much similar properties were sold for and analyse the market.
Harcourts agent Travers Smyth says the buyer should think about three figures – a market value for the property, what you are willing to pay for that property and a “top dollar” you would compete for.
“You want to be firm on that ‘walking away’ price.”
At the buyer’s meeting Smyth would also discuss bidding strategies for the auction day.
Get all ducks in a row and register your interest by contacting the agency before putting your hand up at the auction. That way you’ll be notified if the auction gets postponed or an important disclosure is released.
Of course, do your research and due diligence, have a building report, stay in touch with your lawyer and mortgage broker before you go to an auction to bid.
Have a 10 percent deposit prepared because immediately after the hammer falls the auction winner pays the deposit and signs the documents.
Get to the auction early – you don’t want to miss out on your dream home because you couldn’t find a car park and were a few minutes late.
Positioning in the auction room isn’t crucial. Just be where you are comfortable and seen by the auctioneer.
When your listing comes on – confidently lead the game and place the first bid.
Ray White auctioneer and Papatoetoe branch manager Ted Ingram, who has sold more than 10,000 properties and bought his first home when he was 17.
“Whatever the market value is on the day they [buyers] are going to pay it. The marketplace might be brutal but it’s never wrong.”
Also, go to watch a few auctions to get a feel of what goes on in a room.
“It’s about the mystique – it's theatre, it’s intrigue."
An auction is a level playing field.
No matter if you are a first, second or a third home buyer – everyone is equal and the highest bidder wins, Ingram says.
The vendor is normally open to meet the market and negotiate the reserve price, Ingram says.
“Vendors don’t know what they will take until they have something to say ‘no’ to.”
“If their reserve is at $450,000 and the best offer is $395,000 – they will take it...because people don’ sell a property for no reason.”
Ingram suggests on the auction day you introduce yourself to the auctioneer and let yourself known so they keep an eye out on you.
“Young people buying their first home and elderly need all the help in the world. I always take extra care with first home buyers because I want to see them get a home.”
Ingram encouraged bringing your solicitor to the auction but not so much family members.
“I’ve seen people not buying properties because family members unfamiliar with the market have talked them out of it and I thought to myself ‘poor you’.”
Ingram told OneRoof when he was buying his fourth property 32 years ago it was his favourite strategy since then was to attack.
“I opened the bidding and the moment anybody else bid, I overbid them immediately. I didn’t mock around.
“No one will ever know how close to underbidder was to getting that property because I was out of money at my last bid. If people bidding against me would have put one more dollar, they would have got that property.”
That day he spent almost $50,000 more than what was approved by a bank but found a way to get the money.
“Almost everybody will break their own rules at auction.”
His advice was to know your limit but have an amount you could wiggle and add on in case of emergency.
Decades later, he still believes that being aggressive, putting the first bid in and knocking your opposition over is the winning tactic.
Auctioneer, who represents the vendor, can often place bids on vendor’s behalf. That’s how you know the reserve price hasn’t been reached.
If he’s placed the bid and you are the only one interested in the place – hold back because you are just outbidding yourself.
If the property does not reach reserve price it’ll go back on the market and could be moved to a multi offer where each party presents an offer to the vendor who picks one to work with.
Ingnam says only a strong offer with conditions that are looking favourable to be satisfied will be selected.
