How to beat the competition on auction day

The best theatre plays out at auction, especially in a heady market of fierce competition. People will resort to all kinds of tactics to beat other contenders to the knock down. But what tactics actually work? Here’s what the experts say.

WoledgeHatt director and buyers’ advocate Kristen Hatt says local market intelligence is the best weapon on auction day.

“No two auctions are the same and the only thing you can really do is be prepared – know your market. It all comes down to research – the information you obtain in the days and weeks leading up to the auction. What have similar houses in the area sold for? How many like-for-like homes are on the market that weekend? How much competition are you likely to have?”

Hatt says market conditions can change from week to week and prices vary from one pocket in a suburb to another, so it’s important to know the area well and go to as many auctions as possible. “This will help you obtain intelligence about prices, the type of tactics others use, as well as how much they are prepared to spend. You might come across some of the same buyers you’ve seen at other auctions.”

Hatt says those who are well prepared and armed with knowledge can bid confidently at auction and “feel confident in their decisions”.

Hatt recommends buyers have a plan and stick to it. “Recently, two properties were auctioned in Hampton Street, Brighton [Victoria], on the same day. The houses were fairly similar in age and condition and there was only about 50 square metres difference in the land size. One sold for about $2.3 million and the other for about $3.5 million.”

Ray White Double Bay auctioneer and agent Gavin Rubinstein says an auction is “a bit like a game of poker”. “The best bidders go in with tactics and strategy,” he says.

Regardless of strategy, bidders must be realistic about how much they are prepared to pay, he says. “You can’t expect a bargain in this hot property market, especially around here. If you’re not in tune with the prices, you’re not in the race.”

Rubinstein says bidders need to give others the impression “you have a never-ending budget”. When another bidder makes an offer “come straight back at them with a rise,” he says.

Laing Real Estate Potts Point director Vicki Laing says “you’re there to play, don’t sit on your hands” and encourages buyers to “have a go”.

She says strong, confident bidding helps scare off competitors. “I can give you a classic example where an older woman came in with a strong bid from the start and finished with the highest bid. It was a one-bedroom apartment in Wylde Street, Potts Point [Sydney], and we were quoting about $750,000. There were four registered bidders and the woman opened the bidding with an uneven $783,000, blowing off two other bidders. She won the property with a final bid of $875,000.”

Laing cites another recent auction for an apartment in Macleay Street, Potts Point, where the successful bidder “blew the others out of the water” with a knockout bid.

“The bids were going up in rises of $25,000 and this man trumped the others with a $100,000 rise and secured the property for $2.7 million,” she says.

NAB Head of Mortgages Product Management Robin Lim says there are a number of things to consider before bidding at auction. “First up, you have to have a deposit and home loan approval,” he says.

“Understand what your maximum borrowing power is; understand your income and your expense position.

“The second thing that you probably need to do is attend a couple of auctions. It’s always a daunting process; make sure you know what the mood is going to be like, understand the vibe of the day so that you’ll be more confident when you make your own bid.

“And thirdly, make sure you’ve inspected the property properly. Get your building inspection done, get your pest inspection done – you don’t want any surprises,” says Lim.