Five tips on how to outbid the competition

Buying a property can be a fierce fight among numerous buyers, particularly when the property market is buoyant.

When seeking to come up trumps at an auction to secure that dream property, most people have their own tricks and methods. From dressing very shabbily when attending the auction to make other buyers underestimate the depth of your pockets to entering the bidding late in the game to avoid pushing up the eventual price, you may be surprised at the lengths some people will go to come out on top on auction day. But of all the clever, creepy and downright crazy tactics some buyers use to try to head off their competition, which ones actually work?

The short answer is, sadly, none – you can’t really control other bidders any more than you can control the weather. Your best chance for succeeding at an auction is to go in prepared, know your price limit and stick to it.

We asked LJ Hooker auctioneer Paul Moore for his top five tips for bidding at auction. Here’s what he had to say.

Do your research

Moore suggests that arming yourself with knowledge so you understand the value of the property compared with similar ones in the area is one of the keys to auction success. “Also, do your research on how many properties are available in the area, as that will have an impact on the auction,” he says. There are plenty of places to go to for help with your research – The Domain Group’s  Home Price Guide is a good place to start.

Finances

Unlike the private treaty (the most common method of buying property, in which you negotiate over the advertised asking price), Moore notes that an auction is an unconditional sale. “[So] do your research on your finances to understand your position,” he advises. Check out the consumer affairs or fair-trading office of your state or territory government for more information on auction conditions. Most lenders also have information about buying property.

Be prepared

“Undertake all investigations on the property beforehand, such as building and pest reports, title searches and easement searches,” suggests Moore. That way, you’ll know before you start raising your hand exactly what condition the property is in, how that compares with other similar properties on the market and – with it – where the bidding is likely to go. Being proactive in your searches will also help show the vendor that you are a serious prospective purchaser of their property.

Communication

“Build a good relationship with the auction agent prior to the day so they understand your interest,” Moore says. Many buyers think they’ll stand a better chance if they keep their cards close to their chest. However, this tactic can easily backfire, as the selling agent may overlook you as a serious buyer – particularly in the event that auction passes and discussions commence with the highest bidder. The agent will also be able to tell you whether your budget fits with the expected sale price of the property or if you should be focusing your efforts elsewhere.

Bid with confidence

Vendors like the auction method in a rising market, as it gives all interested buyers the chance to show what they think is a fair price for the property. As Moore explains: “Fair market value will most likely be reached. Auctions are not fire sales in the current environment. Don’t be afraid to open with a reasonable bid.”

Although they may not be sneaky ways to get ahead of your fellow buyers, these tried-and-true auction tips will go a long way towards helping you bid successfully. Ultimately, though, outbidding the competition is far less important to the whole buying process than is knowing how far you yourself are prepared to go to buy your dream property at auction.