Buying Property at Auction

[damoocow]

Any tips or traps?
Actually wanted to avoid going to the auction [tonight] but seller did not want to take our offer prior to auction date. Agent advised [fwiw] that we were the only ones to submit a contract on the property and it was above what guides others at the open houses had indicated the value to be.
Have pre approved finance and a max number we want to go to.

[Daves]

Have you done all your searches, inspections etc? Buying at auction means nothing is conditional.

If you aren't confident, I would highly recommend using a bidding agent. But sounds like you have very little time to get ready.

[PerryGroves]

You have basically played your hand, albeit not sure if you used the old Ozgolf lowball bid.

When the agent rings today, I would be non committal about whether I turn up to the auction or not, you may garner some information on other potential buyers if he is indifferent to you fronting or not. Do you know how many contracts are out on the property, info is subject to agent lying but it's worth asking.

Upping a bid by say 10k means nothing in the long run but is important now, you need to balance your short run position against the future.

And the most important factor, does your wife want it?

Best of luck.

[Looney]

What the start and see if anyone else is interested in bidding, a Low ball starting bid from you can help get this started and get screw with the sellers minds. I always hold back on bids until I am forced to bid and try to set the amount myself not letting the auctioneer control the increases, if he wants to go up by $10k give him a $7k increase only and stay firm to that increase. Don't forget you don't need to buy on the fall of the hammer if the price doesn't reach the reserve the sellers will be keen to talk to you seeing as you have already put in an bid.
Good luck

[damoocow]

Price offered was about 50 under what we originally thought was an OK price - based on our own research and pricefinder.
Only concern I have tonight is having an agent 'advising' us during the auction - he'll be told early to 'go away'.
Had the property and pest done but searches didn't even figure in our thoughts until Dave mentioned it - offer was rejected Wed night so very little time to get anythingmuch organised. Wife LOVES the property, at the right price I will love the property too...

[Looney]

Tell the wife to have a quick look before the auction starts they go for a walk otherwise the agent will pray on her emotions

[Daves]

Building and Pest are the main ones Damo. Most of the rest would need to have been declared if there were any issues e.g. easements, resumptions etc or you are still covered for under the contract terms. Auctions sales are unconditional;

http://www.fairtrading.qld.gov.au/regulated-sectors/property/buying/ways-to-buy/buying-at-auction

Neil Jenman has a pretty good checklist for bidding at auction;

http://www.jenman.com.au/BS_B_Auction.php

[damoocow]

Thanks for the info folks - we'll see how it goes tonight. It's not a PPR but investment so no emotions will be involved - wife will be gagged and bound - it's simply a numbers game.

[goughy]

We had some sort of two stage auction out my way a couple of years ago. The first stage was a normal, everyday auction, where it passed in with no bids. So they then ran a second auction immediately after, which included the winning bidder having the right to all conditions, such as financing, pest, building inspection etc. If never heard of it before, and the auctioneer claimed it was like a first in Qld or something. Only got one bid, that was passed in. But I did notice a few months later the couple that did bid on it were moving in. It had been on the market over 12 months by the auction. Houses generally don't sell quickly out my area, I think it's an average 6 months to move a property out here.

Good luck tonight damo. Myself, I'd hate to be buying at an auction.

[damoocow]

No win tonight.
Was our bid on 2nd call at our maximum and another bidder went 5K more and I refused to bid any more than we had set. Wife tried to get me to go another 2500 and then 1000 but I stood to our agreed limit.
I found the whole process a pain, smartarse auctioneer, room stacked with Agents etc etc.

[goughy]

Well you passed the first rule of auctions, being don't bid over your top dollar. Sorry you missed it.

[Wardy101]

Another one will come up mate

[Bluey]

Another one will come up mate
+1

[damoocow]

Agreed - Mrs was OK afterwards - she said thank god she wasn't bidding or who knows what would have happened.

[markTHEblake]

I found the whole process a pain, smartarse auctioneer, room stacked with Agents etc etc. And at least one dummy bidder.

[PerryGroves]

Well you passed the first rule of auctions, being don't bid over your top dollar. Sorry you missed it.

Mmmmmmm, assuming in 12 months you don't buy a worse house for more money because you eventually get the shits chasing place after place.

[BGH]

Buying at auction is the absolute pits, but unfortunately the state of the market in some cities makes it the norm for 99% of sales. Took about 12 months before we eventually won one. Such a pain wasting ~$600 on building/pest reports only to get blown out of the water by ridiculous bidding at auctions. We must have bid at a two dozen or so and attended 2 times as many.

In that time we saw all the tips and strategies, and tried a few different ones ourselves. Some people swear coming out strong and making all the initial bids in large increments to scare others off works best. Others think that waiting until the very last call and then jumping in with your bid is the best.

In the end I think the "strategy" doesn't really matter that much, the person who is willing to pay the most is always going to win it. Don't beat yourself up about not going the extra $2500 etc. For all you know the other guy might have been willing to go another $50k.

Only tips I would suggest are pretty obvious ones. Auctions are unconditional, as soon as the hammer comes down the place is yours. So make sure you are willing to walk out of there that day with a signed contract for that place. Making it subject to finance, building inspection, pest inspection etc just isn't an option.

Secondly, make sure you have the final bid in before the auctioneer makes the final call, even if he hasn't said the property is on the market yet. Some people dont bother bidding unless the auctioneer says the property is on the market and hope to start bidding in the "second round" after the auctioneer has been in to speak to the clients. This can backfire as the auctioneer isn't obliged to confer with the sellers and come back out again and may just take the leading bidder at the time in to negotiate.

Thirdly, don't ever respond to vendor bids if you are the leading bidder. There is absolutely no point. If the property doesn't end up making it to the reserve price as long as you are the final bidder you will be called in to negotiate regardless.

Fourthly, give the agents absolutely nothing. I know it's a stereotypical thing to say but they really are scummy pricks. It might seem like they are just making polite conversation but they are sizing you up, or more accurately sizing up how much you are willing to spend. Be very vague if asked how much you are willing to spend. If they ask what other properties in the area you have been interested in they know how much they went for so now know what sort of price-range you are looking at. They will use this info to dictate how the auction plays out, starting bids, vendor bids etc. Keep your cards close to your chest.

[damoocow]

It would have to be an exceptional property for me to attend another auction. Not in any hurry to secure another - just when the right opportunity arises. We could have bid higher and not been stretched but we had established what we felt the value was and don't feel any regret about missing it.

[markTHEblake]

Secondly, make sure you have the final bid in before the auctioneer makes the final call, even if he hasn't said the property is on the market yet. Some people dont bother bidding unless the auctioneer says the property is on the market and hope to start bidding in the "second round" after the auctioneer has been in to speak to the clients. This can backfire as the auctioneer isn't obliged to confer with the sellers and come back out again and may just take the leading bidder at the time in to negotiate.
.

The auctioneer wont confer with the sellers if only dummy bidders are bidding. If a real bidder has been bidding he will.